Intellectual property lawyers in India and the Philippines, two of the region’s most affected countries, explore how compulsory licensing regulations may assist in fighting the pandemic
The coronavirus disease has taken a toll on human lives, crippled the world economy and displaced millions of people from their daily jobs. While the world grapples with the situation, a quick look at history tells us that we witnessed an even greater catastrophe during the 1918 flu, also known as the Spanish flu. Although not much is recorded as to what happened in various parts of the world during that time, some estimate that the casualties touched about 50 million, wiping out 3% of the world’s population. Even lesser is known about the medical measures taken during the Spanish flu, as there were no vaccines or drugs available to treat it.
However, the patent system was active during those days, and on expiry of a patent for aspirin, owned by Bayer, in 1917, several companies started producing it, which was used to treat the Spanish flu. In 2020, the patent system around the world, and in India, has evolved, and we are living in times where legal remedies like compulsory licensing, and medical patent pools, are available to human beings to collectively come together and counter unprecedented outbreaks like the present-day pandemic. This article discusses some of the tenets of licensing rooted in the Indian Patents Act, 1970, and how these tenets are being effectively used during this time of the covid-19 pandemic.
Licensing and Patents Act
A patent gives an exclusive right to the patentee to prevent third parties who do not have consent from the act of making, using, offering for sale, selling, or importing for those purposes, the patented invention. Patents contribute to the promotion of innovation, economic growth and social welfare, and therefore act as an instrument to promote both private and public interest.
To protect the public interest, the legislative scheme of the Patents Act, 1970, contains in-built mechanisms that have been declared non-intrusive of the patentee’s exclusive rights, such as the following actions:
- Importing or manufacturing the patented invention by, or on behalf of, the government for merely its own use;
- Merely for experiments or research, including imparting education; and
- Importing a patented medicine or drug by the government for the purpose merely of its own use, or for distribution in any dispensary, hospital or other medical institution.
Patents are granted to encourage invention. The working of the patented invention on a commercial scale in India should be at reasonable price to ward off any abuse or misuse of patent rights, by or through the patentee. The government has been given march-in rights to take appropriate action for using patented inventions to protect public health, in case of national emergencies or a public health crisis.
Section 66 of the Patents Act, 1970, discloses the provisions where the government can revoke a patent in the public interest. It reads: “Where the central government is of the opinion that a patent, or the mode in which it is exercised, is mischievous to the state, or generally prejudicial to the public, it may, after giving the patentee an opportunity to be heard, make a declaration to that effect in the official gazette and thereupon the patent shall be deemed to be revoked.”
It is understood that patent rights are to encourage the balance between the private and public good. Chapter XVI, section 84-99 of the act explains various provisions related to a compulsory licence, where a licence is being granted to the applicant by the Controller of Patents under certain circumstances, and more particularly on refusal of the patentee to work the patent on its own or through voluntary licences.
Reference to the compulsory licence was first introduced in Indian patent laws in 1950 (Act XXXII of 1950) on the recommendations of a report submitted by Justice Tek Chand’s committee. The circumstances under which the provisions were made for issuance of a compulsory licence were:
- Misuse/abuse of the patent monopoly by the patentee (section 84);
- Public interest/national emergency, extreme urgency, etc. (section 92); and
- Export of patents related to pharmaceutical invention (section 92-A).
Section 84 discloses the provisions where anyone can make an application to the controller to grant a compulsory licence after expiration of three years on the following grounds:
- That the reasonable requirements of the public with respect to the patented invention have not been satisfied;
- That the patented invention is not available to the public at a reasonably affordable price; and
- That the patented invention is not worked in the territory of India.
Section 92 of the act allows the government to grant a compulsory licence in the public interest, after making a declaration and notifying in the gazette under certain conditions including: a national emergency, extreme urgency and public non-commercial use; to make available the patented invention to the public at an affordable cost; and also the patentee to get royalty for his/her patent rights.
Section 92 reads, “If the central government is satisfied, in respect of any patent in force, in circumstances of national emergency, or in circumstances of extreme urgency, or in case of public non-commercial use, that it is necessary that compulsory licences should be granted at any time after the sealing thereof to work the invention, it may make a declaration to that effect, by notification in the official gazette, and thereupon the following provisions shall have effect, that is to say:
- The controller shall, on application made at any time after the notification by any person interested, grant to the applicant a licence under the patent on such terms and conditions as he thinks fit;
- In settling the terms and conditions of a licence granted under this section, the controller shall endeavour to secure that the articles manufactured under the patent shall be available to the public at the lowest prices, consistent with the patentees deriving a reasonable advantage from their patent rights.”
Section 92A describes the provisions related to the grant of a compulsory licence for export of patented pharmaceutical products in certain exceptional circumstances.
Section 92A reads: “Compulsory licence shall be available for manufacture and export of patented pharmaceutical products to any country having insufficient or no manufacturing capacity in the pharmaceutical sector for the concerned product to address public health problems, provided compulsory licence has been granted by such country, or such country has, by notification or otherwise, allowed importation of the patented pharmaceutical products from India.”
Licensing during the pandemic
Initially in India, a handful of pharma companies came together to counter the pandemic. Voluntary royalty-free licensing agreements were signed between Gilead and nine generic pharmaceutical companies based in India, Pakistan and Egypt, to manufacture and export Remdesivir, which is useful for treating filoviridae virus infection – the coronavirus coincidentally belongs to the same family.
India and South Africa, on 2 October 2020, sent a proposal to the World Trade Organisation (WTO) for waivers from certain provisions of the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement for the prevention, containment and treatment of covid-19.
The complete proposal points out how intellectual property (IP) rights are hindering timely provisioning of affordable medical products to patients. The waivers requested are along the lines of article 31b on compulsory licences, and a waiver from the implementation, application and enforcement of sections 1, 4, 5 and 7 of part II of the TRIPS Agreement in relation to prevention, containment or treatment of covid-19. At the time of writing, India has launched two vaccines, one is Covishield by Serum Institute of India, and the other Covaxin, by Bharath Biotech.
It is said that history repeats itself. Even if this statement is incorrect, it is unwise to ignore the times in which we are living. In his book, The Meaning of the 21st century, James Martin tells us the 21st century is a make-or-break century, and say that we are at a crossroads of human history, and our actions, or failure to act, will determine the fate of the earth and human civilisation for centuries to come.
We can expect our patent laws to continue to evolve, treading on the right path, and taking corrective and preventive measures for the betterment of science, technology and humanity. This will give the necessary impetus for governments, organisations and individuals to collaborate and address the challenges of the times that lay ahead.
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Philippine intellectual property (IP) laws offer several avenues of hope for fighting the pandemic. It may use voluntary or compulsory licensing to bring in life-saving vaccines and anti viral medication.
While reaction to the pandemic did not cause significant policy shifts, government agencies including the Intellectual Property Office of the Philippines (IPOPHL) and the department of health have carried out special measures. Homegrown efforts have led to some licensing from innovation and technology support offices for testing kits, and others await results of patent applications.
IP licences are governed under Republic Act No. 8293, as amended, or the Intellectual Property Code of the Philippines (IP code), and in certain cases involving compulsory licensing, as regulated under Republic Act No. 9502, or the Universally Accessible Cheaper and Quality Medicines Act of 2008. IP licensing may be either voluntary or compulsory.
Prohibited and mandatory clauses. A voluntary licensing agreement or technology transfer arrangement (TTA) requires the inclusion of certain mandatory provisions and the exclusion of certain provisions for being unduly restrictive of competition and trade. TTAs that comply with these clauses need not be registered with the IPOPHL.
Registration requirement. Failure to comply with the above-mentioned provisions on mandatory and prohibited clauses renders the entire agreement unenforceable, unless: (1) an application for exemption in exceptional and meritorious cases has been filed and subsequently granted; and (2) the TTA or voluntary licensing agreement is approved and registered with the IPOPHL.
Exceptional or meritorious cases. Under the recently issued Revised Rules and Regulations on Voluntary Licensing, the IPOPHL considers the following to be exceptional or meritorious cases:
- High technology content;
- Increase in foreign exchange earnings;
- Employment generation;
- Regional dispersal of industries;
- Substitution with, or use of, local raw materials; and
- Pioneer status registration with the Board of Investments.
Requests for exemption. Requests for exemption are evaluated based on the adverse effects of the terms and conditions of the TTA on competition and trade, such as:
- Acceptable worldwide industry standards and practices as it relates to the TTA;
- The existence of a purchase option in favour of the licensor to purchase the licensee’s stocks or inventory, after the term of the agreement or arrangement;
- Recognition of valid IP rights subsisting even after the termination or expiration of the TTA; and
- Payment of all Philippine taxes relating to the TTA.
Under the IP code. The IP code gives the IPOPHL director general the power to grant a licence to exploit a patented invention, even without the patent owner’s consent, based on certain grounds including the existence of a national emergency, or other circumstances of extreme urgency, or when the public interest requires.
This compulsory licence is issued after a verified petition has been filed, and patent owners and other parties with rights, interests or title on the patent are given an opportunity to respond or oppose the petition.
Special compulsory licence. In recognition of the provisions of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS agreement) and the Doha declaration, Philippine law allows the grant of a special compulsory licence for: (1) the importation of patented drugs and medicines, on the recommendation of the secretary of the department of health, to ensure availability of quality affordable medicines; and (2) the manufacture for export to countries with insufficient or no manufacturing capacity to address public health problems. With respect to the first point, as a special compulsory licence is meant for domestic consumption, a grantee of a special compulsory licence may not re-export the products subject of such licence.
Use by the government or authorized third person. Patents may also be exploited by the government, or an authorised third person without the consent of the patent owner, in cases of public interest or the national health emergency through a written authorisation from the IPOPHL director general. Only the Supreme Court may issue injunctive relief in these cases. Compulsory licences must contain basic terms and conditions defined in the IP code, including rate of royalties, scope and duration limited to the purpose, non-exclusivity, non-assignability, and use to be devoted predominantly for the supply of the local market.
Adjusting to lockdown
In the Philippines, the pressure on the supply chain has meant that patent owners were unable to manufacture, import, or supply and sell enough products necessary to deal with the pandemic. Registering medical devices that can be used to help breathing was also hampered by extensive lockdowns. The government has imposed social distancing and online processing solutions as part of the “new normal”.
For this, the IPOPHL has an online filing portal. The technology transfer division of the IPOPHL also has a guide to its online filing services, as regards TTA services. It requires the completion of the applicable form, and the submission of digital or scanned copies of the listed documentary requirements to firstname.lastname@example.org. An electronic statement of account is then sent to the applicant by e-mail with payment instructions.
Vaccines and antivirals
In April, Philippine President Rodrigo Duterte offered a reward of PHP10 million (US$208,000), later raised to PHP50 million, and a grant to the Philippine General Hospital for the development of a vaccine. This reward has not been claimed. While local governments import newly developed antivirals that have not yet completed scrutiny, such as Remdesivir, if they are not yet registered with the Food and Drug Administration (FDA), they may only be used by patients or institutions that have first secured a compassionate special permit (CSP) from the FDA, unless they are being used in a duly approved clinical trial.
Application for a CSP must include:
- The name of the requesting party (personal/ doctor/specialised institution/specialty society);
- Name and age of the patient, and a brief medical history;
- Itemised, detailed description of the product (generic and brand name, if applicable) with dosage form and strength;
- An estimated quantity/volume needed, prescribed by a doctor;
- A written commitment on the part of the authorised specialist to submit a clinical study report for every patient given the product, describing the quantity administered/used, therapeutic/desired effect, and any adverse reaction, to the institution or specialty society; and
- A waiver of the FDA’s responsibility from any damage or injury arising from the use of the unregistered drug or device, to be signed by the responsible official of the institution or specialty society.
The issuance of a CSP for individual use also requires proof of payment, the names and addresses of the specialists qualified and authorised to use the product, including their curriculum vitae, the medical abstract of the patient, and a prescription from an S-2 licensed doctor for dangerous drugs or ones containing controlled chemicals.
If the CSP is for institutional use, the letter of application must be accompanied by proof of payment and reports as prerequisites for the renewal of permit; a reconciliation of the number or volume of products requested; number used; the corresponding patients, and the product details. These requirements must be submitted in PDF format to email@example.com.
Recently, the government has established a procedure for granting emergency use authorisation for covid-19 drugs and vaccines. While Pfizer and Moderna have announced vaccines that they claim are 95% effective, the cold chain logistics may require their own TTAs for the supply chain to materialise. Voluntary and compulsory licensing may hasten this deployment. However, as with Remdesivir, and without further issuances from the FDA, CSPs will still be necessary for the use of unregistered drugs.
The IPOPHL also reached out to its network of innovation and technology support offices to develop innovations aimed at fighting the pandemic. A notable outcome is the GenAmplify RT-PCR Detection Kit, manufactured by Manila HealthTek, under a licence from the University of the Philippines National Institutes of Health. Its patent belongs to the university under the Technology Transfer Act of 2009. Other pending applications include face masks and face shields, protective suits, alcohol hand sanitisers, sensor-enabled hand spray, aerosol boxes, disinfection chambers and an “anti-covid” drink.
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