The word compulsory licensing empowers the government to authorise the third party to make, use, or sell a particular patented product or process without getting consent from the patent owner’s consent. The coronavirus outbreak had significantly impacted the entire world and forced all the pharma giants to start working in the process of inventing the coronavirus vaccines. Even after inventing the vaccine successfully, the demand expected by each country can’t be fulfilled. Due to the deficient supply of coronavirus vaccines, many people have suffered a lot, and the death rate has also started rising consistently. Especially in densely populated and developing countries like India, the lack of vaccines worsened the situation. In order to stop the vaccine deficiency, compulsory licensing should be given in order to produce vaccines for its own people. Before the pandemic itself, the TRIPS agreement, Uruguay round, Doha Declaration had stated that compulsory licensing should be issued to all countries during national emergencies. The present article is going to stress the concept of compulsory licensing and its need for compulsory licensing in the Covid era.

Introduction

The word compulsory licensing is nothing but the power of the government to grant a third person to make, use or sell a particular patented product or process without getting consent from the patent owner. As a result of compulsory licensing, the monopoly right will get rejected by the patent owner. This concept is applied only at the time if there is any national emergency. As the result of the coronavirus widespread, the entire world had started getting into lockdown in order to contain the virus from its widespread. Even after taking the efforts to contain it, due to its highly contagious in nature, the virus had continued to widespread, just like an Australian forest fire. The result of such widespread made all the pharmaceutical giants start working on the invention of coronavirus vaccine. Even after it was invented successfully, all the international borders were being closed because of lockdown, and all means of transportation had also been restricted. So, importing vaccines in such situations is too expensive, and there are furthermore chances of Covid-19 widespread. In this present situation, for developing countries like India, the concept called compulsory licensing is the most needed right to be applied in order to produce and provide vaccines for the people of India at an affordable price. Because of the rapid widespread of this virus, many people are getting affected and started suffering from this virus, resulting in a consistent increase in death rate, which makes the concept of compulsory licensing a most needed right, particularly for India. So, in this article, we will discuss the need for compulsory licensing, especially for developing countries like India.

Compulsory Licensing – An Outlook: Before we get into the topic of compulsory licensing, we should know where the word licensing is derived and what it exactly means. The word ‘Licensing’ is derived from the Latin word ‘Lacentia’, which means “authorisation” or “freedom” and is based on the Latin verb Licere, meaning “to be allowed”. In a general sense, license refers to permission. But it most commonly refers to official permission, especially from a government.¹ The concept of compulsory licensing is quite unique from the IP field. According to historian Adrian Johns, the idea of compulsory licensing “seems to have originated as a serious proposition in the 1830s, although predecessors can be traced back into the eighteenth century,” and it was popular in the British anti-patent movement of the 1850s and 1860s.² The term “Compulsory Licensing” is nothing but which empowers the government to allow the third party to make, use or sell a particular patented product or patented process without getting consent from the patent owner. Whenever the government of states provides compulsory licensing to a third party, the monopoly right of the patent owner gets cancelled, and the patent owner can have a right to get valid compensation during such type of circumstances.

As per Section 84 of the Indian Patent Act, 1970 states that “Any person who is interested or already the holder of the license under the patent can make a request to the controller for grant of compulsory license or expiry of the three years when the given conditions are fulfilled”;

That the reasonable requirements of the public with respect to the patented invention have not been satisfied, (or)
That the patented invention is not available to the public at a reasonably affordable price, (or)
That the patented invention is not worked in the territory of India.³

However, Compulsory Licenses may also be granted when:

Section 92 – Special provision for compulsory Licenses on notifications by the central government.
Section 92(3) – In case of National Emergency, extreme urgency of public Non-commercial use by notification of the central government
Section 92 A – To a country that has insufficient (or) No manufacturing power in the pharmaceutical sector to address public health.⁴

These are all about the concept of compulsory licensing. Let’s move further on its International background of Compulsory Licensing.

The Law of Compulsory Licensing around the Globe:

TRIPS: The topic of compulsory licensing were also discussed in the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). The topic of compulsory licensing was discussed in Article 31 of the TRIPS Agreement. Article 31 of TRIPS Agreement states that “Where the law of a member allows for the use of the subject matter of a patent without the authorisation of the right holder, including use by the government (or) third parties authorised by the government”.⁵

GATT – Uruguay round: Before the TRIPS Agreement, the Eighth GATT round (Uruguay round) was launched in September 1986 and ended in 1994. The GATT stated that “The patent owner of a process will have full rights to use it and also use, sell pr import a product obtained directly by that process”. However, a patented product or process can also be used without the patent owner’s authorisation under some conditions on national emergencies, pandemics, etc.⁶ In the case of process patents, an identical product would be considered as having been obtained from the patented process if

The identical product is new,
There is much to indicate that it has been obtained as a result of the patented process,

The patentee fails to determine the actual process.

Doha Declaration: It refers to several aspects of the TRIPS Agreement, including the right to grant compulsory licenses and the freedom to determine the grounds upon which licenses are granted, the right to determine what constitutes a national emergency and circumstances of extreme urgency, and the freedom to establish the regime of exhaustion of Intellectual property rights.⁷

EU – European Union: The European Union gives way more important to the compulsory licensing to boost the production of medicines in a larger quantity within a short span of time, during national emergencies such as a pandemic, etc. In recent times, the European Union had granted compulsory licensing to boost the production of Coronavirus vaccines in the pandemic. So, it is evident that European Union is a major supporter of compulsory licensing. In a tweet posted by the European commission president ‘Ursula Von Der Leyen’ stating that “Our priority is to boost production, diversify manufacturing and share vaccines”. This tweet clearly states that the European Union is a major supporter of providing Compulsory licensing during national emergencies.⁸

US – United States: The United States does not have any provisions for a compulsory license. The closest provision that it does have to the licensing of medicines and vaccines is what is called “March-in rights”.⁹ March-in rights allows the US government to grant licenses to patented inventions in time of emergencies without getting consent from the owner. If the US government uses the term called March-in rights, it means nothing more than compulsory licensing. It was defined under Chapter 2: Government use under 28 USC 1498, which states that “concerning uses of patents or copyrights when the use is by or for the government”. Under this statute, the US government does not have to seek a license to negotiate for the use of a patent or copyright. Any federal employee can use or authorise the use of a patent or copyright. The right owner is entitled to compensation but cannot enjoin the government or a third party authorised by the government to prevent the use. Any contractor, subcontractor, person, firm or corporation who receives authorization from the federal government to use patents or copyrights are construed as used by the federal government and cannot be sued for infringement.¹⁰

Effects of Compulsory Licensing in India:

This is the first case in Indian History that had been dealt with under the topic called compulsory licensing, which comes under the Indian Patent Act, 1970. Natco Pharma Limited (vs) Bayer Corporation. It is the case between two Pharma giants, which had been held in the year 2012. Bayer Corporations is an innovative drug-producing multinational company in Germany, which invented a drug named “SORAFENIB TOSYLATE” in 1990. It had been sold in the name called “NEXAVAR” in India, which is especially used to treat Liver Cancer. In 2008, Bayer obtained the patent for the medicine NEXAVAR in the Indian patent office.¹¹ Natco Pharma Limited, another Pharma company from Hyderabad India, had applied for compulsory licensing to the controller of India in order to produce the generic version of Bayer’s patented Medicine NEXAVAR in 2011. The Natco had used some statistical data in their claims. It claimed that the production of Bayer’s NEXAVAR is not available at a reasonable price, which had been estimated at a price of 2.58 lakhs for a single dose, and it is not affordable to the people of the middle and lower class. The Natco further claimed that the Patent that Bayer bought for NEXAVAR is not working in India. Lastly, it claimed that Bayer is importing the medicine instead of getting manufactured in India. Bayer had defended the claims and stated that this Reasonable price to be calculated on the basis of public and patentee, the class of patients who can afford at present price and it further argued that the main reason for importing the medicine because it has relatively very small demand (only 2%) for the medicine NEXAVAR in the Indian market. The Natco had further claimed that the generic version of the NEXAVAR price will be 8900 rupees only for a single dose. It also guarantees that it won’t change its prices in any of its circumstances in the upcoming future. After analysing all its claims and arguments, the controller dismissed the arguments placed by the Bayer corporations and granted India’s first compulsory licensing rights to Natco Pharma Limited. This case had marked a place in Indian history in the IP field. Bayer appealed against the controller’s decision to the Intellectual property Appellate Board (IPAB) in the Bombay HIGH COURT and also in the SUPREME COURT. In all places, the Bayer corporations appeal had got rejected. This is all about the case of Natco Pharma Limited (vs) Bayer’s corporation.

Need for Compulsory Licensing:

At the beginning of the year 2020 itself, the coronavirus, also named COVID-19, started to widespread around the globe. As a result of its widespread, all the member nations of the UN had mandated to get into a lockdown in order to contain the widespread of this fatal virus. Because of this lockdown, all the international borders worldwide had been closed, and all the means of transportation had also been stopped, which had also resulted in the loss of economy for the whole world. Amidst this crisis, the coronavirus had started to spread in a very rapid manner. Because of its highly contagious in nature, more people had been getting suffered. They started dying in large amounts, which also made the global pharmaceutical company immerse themselves in creating a vaccine to fight against this Covid-war. The research had undergone a very serious manner to create a vaccine that should be immune to the fatal coronavirus. Even though several pharmaceutical companies had invented the vaccine, the main problem again raised is that the vaccine available to treat the covid-19 affected patients is ultimately lower compared to the number of people affected by it. At the same time, even the production of vaccines had undergone in a faster manner, the demand placed by the countries is proportionately much higher than its production. Especially in densely populated countries like India, comparatively had higher demand for vaccines than other countries around the globe. It is very difficult to transport the vaccines at the time of this pandemic, which may also induce widespread. Furthermore, as a result of such a situation, the only way to solve the vaccine problem is that the vaccines are needed to be produced by their own country based on its demand. For this reason, each and every country needs the right to compulsory licensing in order to produce the vaccine in their own country using their own facility. If compulsory licensing had been granted to all the countries, the countries would start to produce the vaccine in their own territory by using their own facilities. As the result of the production of vaccines in their own countries, the quantity of demand available for the vaccines is compensated by producing the vaccines to the amount that it needs. The price of vaccine and treatment cost can get drastically reduced. So, it is evident that compulsory licensing is the most needed provision for each and every country in the world amidst of pandemic. This is the reason behind why all the countries needs the grant of Compulsory licensing in this pandemic situation.

Suggestions: The present article suggests that it is necessary to provide compulsory licensing amidst of this emergency situation. It is not the right time for getting a patent and enjoying the monopoly rights at the time of emergency situations. The aim of each and every pharmaceutical companies is not only producing proper medicine and selling all those for the purpose of earning money with the business intent, but it should also have the responsibility to protect the people from such fatal situations. Suppose a company invents the coronavirus vaccine first. In that case, it will definitely get its patent, and the companies price value of the shares are definitely going to rise even in the middle of economic downfall. A business without people is nothing. So, the company that invented the coronavirus vaccine should provide the right of compulsory licensing to each and every country in the world to fight together against this highly contagious and fatal virus. Every human in the world has fundamental rights, which also includes one should have the right to get proper medicine and vaccine free of cost in order to save themselves from any type of disease around the world. So, instead of selling the vaccines at higher prices in such risky situations for one’s own companies benefit, it should provide every pharma company in the world to have the right of compulsory licensing to produce the vaccines in their own country to make the vaccine affordable to a common man. Especially developing countries like India, which had a relatively larger population and also had relatively higher demand for coronavirus vaccines. So, it is mandatory to provide compulsory licensing rights to manufacture the vaccine at its lowest price and make it affordable to the people of developing countries. So, this article suggests again to provide compulsory licensing to all the countries in the world without any exceptions.

Conclusion: The most important fundamental component of the basic human right is to have access to drugs and have a healthy and safe life. Patented drugs are highly priced, and therefore the low-income population have restricted access to them. The pandemic has also made us realise that there is an urgent need to analyse and strike a balance between the relationship of the human right to health and the individual-private monopoly on Intellectual property rights. I firmly believe that the trade regime should not in any way provide the big pharma giants whose only motive is to make an enormous profit even during a pandemic. Health rights advocates state that pharma companies should refrain from patenting any of the coronavirus vaccines, at least until the pandemic is over. While granting compulsory licensing to domestic drug makers is an economical way to manufacture cheaper drugs, one cannot ignore the possibility of local pharmaceutical companies in low-income countries not having the requisite capacity to undertake the manufacture of such vaccines. In such a situation, if any foreign investor wishes to invoke investment treaty obligations against the host nation, it would be nothing but problematic. I believe that public health concerns outweigh the complete protection of intellectual property.

References:

Disclaimer: The present article intends to provide general guidance on the subject, and you can also consult us in your specific case.

Author

A. Gokulkrishnan
A. Gokulkrishnan is a BA LLB (Hons) student at Hindustan University School of Law Padur, Kelambakkam, Chennai, Tamil Nadu.
View all posts