Compulsory licensing is the process whereby an authorization is given to the third party by the government to make, use or sell the particular product and even to use the process of the patent, without the consent of the patent owner. This process gives a free hand to the third party to exploit the patent as they want according to the use in that particular circumstance. This compulsory license found its genesis in the Agreement on Trade-Related Aspect of Intellectual Property Rights (TRIPS). The adoption of TRIPS which formed a part of the agreement establishing the World Trade Organization (WTO), established a minimum level of protection with respect to various forms of Intellectual Property Rights, replacing the erstwhile General Agreement of Trade and Tariff (GATT).

[Image Source: ipwatchdog]

Article 31 of the TRIPS Agreement specifies the ‘Other Use without authorization of the Right Holder’. Through this article TRIPS explains the provisions which the member countries should follow while pursuing with the “other use”. Interestingly, TRIPS does not use the phrase ‘compulsory licensing’ in Article 31, rather we see this phrase being used under Article 21 where it talks about the Licensing and Agreement with regards to Trademark. Under article 31(b), it specifies the requirement of having previous efforts to obtain authorization from the right holder on reasonable commercial terms. This way it gives the scope to the member states to obtain authorization without even issuing compulsory licensing. If the country issues a statement to make the patent product and process available, which can be effectively reached on a commercial basis, then there seems no need to issues compulsory licensing. But these types of agreements are seldom reached. In the same clause, TRIPS specifies to waive the above requirement in time of national emergency or extreme urgency. This particular clause becomes the basis of using compulsory licenses by various member states during the pandemic. But it has to be understood that having a national emergency is not the pre-requisite of issuing a compulsory license. The countries are free to determine the grounds for granting the license without even resorting to the voluntary license, as was also reiterated under the 2001 Doha Declaration on TRIPS and Public Health. 

A very important development took place at the 2001 Doha Ministerial Conference with regards to article 31(f) of TRIPS. This development becomes very important in the light of pandemics. This article states that the authorization by the member states will only be for the supply to the domestic market and not for import. In the 2001 conference, it was discussed that there are some countries that can issue compulsory licenses but they are unable to manufacture pharmaceuticals due to their lack of sufficient resources. In 2003, meetings among WTO members were held which was popularly known as the 2003 waiver decision. An amendment was done to this effect in 2017 in TRIPS. This amendment increased the jurisdiction of article 31(f). If the country needs to produce pharmaceuticals, the producer overseas can step up and supply the need. It’s, therefore, a compulsory license for the production to another country. This amendment could be used by various under-developed and least developed countries in the current time of the pandemic. But it has to be clearly understood that this type of compulsory license in amended arrangements will only be for the purpose of exports and not for the domestic market as opposed to the original arrangement. 

It is imperative to discuss some of the leading cases in India with regard to Compulsory licenses. Bayer vs. Natco (2012) was the first-ever case which made to grant a compulsory license to Natco for the production of a generic version of Bayer’s Nexavar. This case brought the regime of compulsory license in India. In BDR Pharmaceuticals International Pvt. Ltd. vs. Bristol-Myers Squibb Co. (2013) the controller rejected the BDR’s application for a compulsory license as the plaintiff failed to make a prima facie case under section 84 of the patent law. Another recent case in 2015 was that of Lee Pharma vs. AstraZeneca AB in which the plaintiff was again denied to have a compulsory license on the ground of reasonable requirements of the public for the drug. Till now, India has not resorted to a compulsory license for the Covid-19 vaccine.

The philosophy of getting a monopoly over a drug must have a reasonable approach to prioritize public health over any other incentives. This priority must be aimed at any cost. If public health is put at risk then it will prejudice the historical, epistemological, and jurisprudential foundation of intellectual property. The provision for the compulsory license is well within its ambit as mentioned in TRIPs coupled with the amendment in 2017. The developing and the least developed country must take an optimum utilization of the said provisions in their local law.

Author: Saransh Chaturvedi (an advocate) currently pursuing LLM from Rajiv Gandhi School of Intellectual Property Law (IIT Kharagpur).  In case of any queries please contact/write back to us at support@globalpatentfiling.com.