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Compulsory Licensing during a pandemic: Patent Law and COVID-19

The article analyses how Patent Law in different countries would act as a barrier to the ease of availability of drugs and other medical facilities to fight COVID-19.

Dhruv Nayar

As the world battles with the Coronavirus pandemic, the search for the perfect drug to treat and cure COVID-19 is at full tilt.

While some preliminary research and treatment has shown positive results by using mixtures of well known and established drugs, there is no pharmaceutical drug or treatment registered specifically for the treatment of COVID-19, nor is there a vaccine to protect against the virus.

The World Health Organisation (WHO) has announced a worldwide clinical trial to test drugs to treat COVID-19. The drugs to be tested include Remdesivir, Lopinavir and Ritonavir in combination; Lopinavir/Ritonavir plus interferon-beta; and Chloroquine and Hydroxychloroquine. All are known medicines originally developed for other indications.

The products have shown some efficacy in laboratory and animal experiments, but unless a large human trial is carried out, it is not possible to make an evidence-based recommendation about their use in the treatment of COVID-19. WHO aptly named the effort a Solidarity trial.

The lack of pharmaceutical drugs and vaccines is not the only cause of concern at the moment, as the world battles with an acute shortage of Personal Protective Equipment (PPE), diagnostic kits and ventilators. The development of all of the above mentioned pharmaceutical drugs and equipment would be handled by the R&D wings of the leading pharmaceutical companies of the world, as well as research groups worldwide.

With worldwide borders being shut down to contain the spread of the disease, availability of pharmaceutical drugs, vaccines, PPE’s, diagnostic kits and ventilators will be scarce and difficult to obtain.

The physical boundaries of international borders, however, is not the only barrier to easy access to these. Another barrier to the ease of availability of the so-called weapons to fight COVID-19 would be patent law and the patent regimes in different countries. However, many countries, in such a war-like situation, are turning to Compulsory Licensing of Patents.

What is Compulsory Licensing ?

Compulsory licenses are authorizations by a sovereign state that allow a third party to manufacture, use, sell and/or distribute a product which has been patented, without obtaining consent or explicit permission/license of the patent owner.

Provisions pertaining to compulsory licensing are governed internationally by the international legal agreement called Trade-Related Aspects of Intellectual Property Rights (TRIPS) between all the member nations of the World Trade Organization (WTO).

In India, Compulsory Licensing is dealt with under Chapter XVI of the Indian Patent Act, 1970. The conditions of Compulsory Licensing are provided for under Sections 84 and 92 of the Patent Act.

Under Section 84, any person, after three years from the date of grant of that patent, can make an application for grant of a compulsory license, on any of the following grounds:

a) The reasonable requirements of the public with respect to the patented invention have not been satisfied;

b) The patented invention is not available to the public at a reasonably affordable price.

c) The patented invention has not worked in the territory of India.

However, in the present scenario, it would be the Government of India that would be most interested in acquiring such compulsory licenses to cater to the needs of the citizens of India.

As per Section 92(1)[4] of the Patent Act, in case of a national Emergency, in circumstances of extreme urgency, or in case of public non-commercial use, the Government of India, if satisfied, may grant Compulsory Licenses in respect of any patent in force.

Upon such deceleration, any person interested may apply to the Controller for a compulsory license, which shall be granted without any prolonged process. The Controller, however, shall endeavor 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.

Furthermore, Section 100[5] of the Patent Act provides for the Central government to grant specific companies authorization to use any patents or applications pending grant of patent for the “purpose of government”.

Upon the Central Government giving such authorization to Indian companies, they are at liberty to commence manufacturing while negotiating royalties with the patent owners.

The Patent Act, in subsection 3 of Section 100, further provides that if the Central government or company so authorized fail to reach an agreement with the patent owner with respect to the amount of royalty, a reference to the High Court may be made under Section 103[6] of the Patent Act. The High Court shall in turn fix the reasonable royalty that is payable to the patent owner.

The Centre would be under the obligation to inform the patent owner in such a situation at the earliest, except, in the case of national Emergency, in circumstances of extreme urgency, or in case of public non-commercial use.

Lastly, the Central government, under Section 102 of the Patent Act, may simply acquire the patents in question along with their stockpile. Upon the Gazette Notification, much like a notification for land acquisition, the invention (product) or patent and all rights in respect of the invention or patent shall stand transferred to and be vested in the Centre.

Such an acquisition would be immediate. Similar to the provisions of Section 100, if the Central government is unable to reach an agreement with the Patent Owner with respect to the quantum of royalties, a reference under Section 103 may be made to the High Court to fix the quantum of royalties.

Worldwide Wave of Compulsory Licensing

In the wake of the pandemic, many countries are introducing Compulsory Licensing in an emergency situation. India being a Compulsory Licensing regime from the beginning, already has laws to initiate such emergency action as may be necessary. However, some countries do not have laws relating to compulsory licensing in place.

On March 19, 2020, Israel issued compulsory patent licences related to Lopinavir/Ritonavir (brand name Kaletra), a medicine used to treat HIV, which as mentioned above, is currently being tested for effectiveness in the treatment of COVID-19 in combination with other drugs. The licence allows the importation of lopinavir/ritonavir from a generic company.

It was later reported that AbbVie has since announced that it will not enforce its patent rights throughout the world over the Kaletra drug. AbbVie has become the first big drug maker to waive its rights to profit from a drug that might be used to treat the Coronavirus.

On March 25, 2020, the COVID-19 Emergency Response Act received royal assent in Canada. The Patent Act amendments add to the section on the use of patents by government, providing a new compulsory licensing regime.

The Current Situation in India

At present, India faces a shortage of PPE such as three ply masks, N95 masks, and overalls.

In fact, India has recently floated international tenders for supply of PPE. However, it has been noticed that the scarcity of the end products is also because of lack of raw material required to manufacture these.

Some local manufacturers, having no expertise or technical know-how, have also undertaken manufacture of masks using various raw materials such as mesh and cloth, which at present, have not been tested for their efficacy. The Food and Drugs Administration (FDA), Haryana has also busted manufacturers of counterfeit hand sanitizers.

With prices of raw materials soaring and some becoming unavailable as a whole, India may be forced to take drastic measures as stated above. This would certainly create big pushback from Big Pharma, who are the patent owners worldwide.

Big Pharma companies are known for being litigious and the Indian patent jurisprudence being an evolving one, it can be said that implementation of any of the measures stated above will not be without a fight. Even if the “cost” in form of royalty, present or future, will not be decided without a long drawn battle in the court rooms.

The battle against counterfeit manufacturers would also become a big issue that Intellectual Property Rights owners will have to deal with, not just for commercial interests, but also in public interest.

The author is an Advocate currently working with MV Kini Law Firm at New Delhi.

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