[A2k] Pradeep Mehta in the Financial Express: Green implications of compulsory licensing

Thirukumaran Balasubramaniam thiru at keionline.org
Mon Sep 10 02:02:58 PDT 2012


http://www.financialexpress.com/news/green-implications-of-compulsory-licensing/1000252/

COMPETITION MATTERS
Green implications of compulsory licensing

Pradeep S Mehta

Posted: Monday, Sep 10, 2012 at 0100 hrs IST
Sound Technologies
       
Govts need control over transfer of technology in their territories

The Rio+20 summit was a disappointment for many, but it is pertinent to keep repeating its larger sustainable development agenda for the safe future of humankind. Nation states need to continue taking steps to mitigate adverse environmental effects, and learn about successes and failures from each other, from different fields. One such learning is from the recent grant of a compulsory licence to a cancer drug in India.

One of the three grounds on which compulsory licence was granted to Natco for the drug Nexavar was that Bayer, the patentee, had failed to ‘work the patent’ in India. This provision has the potential to facilitate unused patents, covering Environmentally Sound Technologies (ESTs), as well as provide a way forward for their transfer, dissemination and diffusion.

It is widely believed that big global energy firms strategically acquire patents from the inventors of possible new energy solutions and put them on the shelf so that it cannot be ‘worked’. This enables them to continue their monopolistic and rapacious approach because any new energy solution might change the status quo and curb their rents. International energy politics, which is at the core of determining the direction of the climate change negotiations, tend to look the other  way.

On the one hand, there are issues related to transfer of technology. On the other hand, there are cases where inventions have not seen the light of the day. It needs to be kept in mind that the owners of patents are at liberty to decide whether or not they would like to transfer their technology; and with what terms and conditions. Many a times, governments have little or no influence over such decisions in the private sector. But one thing governments can do is that to make the patent ‘work’.

The provisions of the Indian Patents Act, 1970, provides a good template for countries to ‘work’ the patents. The Natco case clarifies this provision. Through the order dated March 9, 2012, the Controller of Patents granted India’s first compulsory licence under Section 84 of the Patents Act on the following three grounds: (1) reasonable requirements of the public with respect to the patented invention have not been satisfied; (2) patented invention is not available to the public at a reasonably affordable price; and (3) patented invention is not being worked in the territory of India.

Such an approach involves the use of the ‘essential facilities doctrine’, where access is to be made available to others if the original IPR-holder denies it to them to use and sell at an affordable cost. The same applies in all networked industries such as telephone, electricity and gas, where access is necessary to transmit goods through other media. In such cases, the problem is how will the patent authority know whether a patent has been locally worked or not, when a large number of patents are granted every year in a large number of countries? The Indian Patent Act puts the onus on the patentee by virtue of Section 146(2), which makes it mandatory for the patentee to furnish periodically the extent to which the patent has been worked on a commercial scale in India. According to Rule 131 of the Patents Rules, 2003, such information shall be furnished for every calendar year within three months of the end of each year.

These patent provisions are unique in the world and are, inter alia, aimed at ensuring that “protection and enforcement of patent rights contribute to the transfer and dissemination of technology, to the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare, and to a balance of rights and obligations”. The provisions also ensure that patents are not granted merely to enable the patentees to enjoy a monopoly for importation of the patented article.

Such provisions are particularly relevant for countries where patents are granted using lax patentability criteria without pre-grant opposition, resulting in an exponential increase in patents. For them, it would be useful to track whether the granted patents are being worked, and benefits accruing to the society at large. Such provisions would help identify as to which relevant inventions have been put into cold storage, and subsequently enable appropriate action, including compulsory licences. The provisions would hence help in both “working” of patents in the country of invention and/or registration, and giving some control to governments with respect to transfer and dissemination of technology in their territories.

In the context of compulsory licence for ESTs, it is pertinent to mention Section 308 of the US Clean Air Act, which provides for a mechanism for mandatory patent licence. When a patent is necessary to enable someone to comply with other provisions of the Clean Air Act and is not otherwise reasonably available, the US government may require the owner of the patented technology to grant the non-complying party a patent licence in exchange for a reasonable royalty. But there are stringent conditions attached to the grant of licence that makes the provision near impossible to be invoked. Considering the political economy of the US, one can easily appreciate that this provision has never been invoked in the forty-odd years since the legislation was enacted. This confirms to the US policy on patents and compulsory licence, which was also visible enough when the matter of compulsory licence on climate mitigation issues was raised at Rio+20.

However, in the case of pharmaceuticals, the US is very active in pushing compulsory licences itself while criticising India for the Natco case. Their criticism was that Nexavar is meant for liver cancer, which is not a public health crisis. Critics accused the US of double standards.

At a time when the climate change negotiation is struggling to achieve a multilateral solution, countries can adhere to such unilateral patent reforms for the ‘working’ of possible climate change technologies, and their transfer and dissemination. Viewing the not-so-successful environmental tamasha of Rio+20, the hidden message is to adopt suitable domestic measures rather than expect effective multilateral solutions. In an adverse negotiating environment, small domestic steps like reforming the patent regime could yield larger environmental and economic benefits.

The author is Secretary General, CUTS International. Ujjwal Kumar of CUTS contributed to this article


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Thiru Balasubramaniam
Geneva Representative
Knowledge Ecology International (KEI)

thiru at keionline.org



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