[Ip-health] Compulsory licenses, not limited to emergencies, at all. WTO FAQ

Jamie Love james.love at keionline.org
Thu Feb 19 09:56:40 PST 2015


In PhRMA's Special 301 submission, PhRMA asks USTR to sanction countries
when compulsory licenses are not responding to "a true health emergency."

--------PhRMA Special 301 submission------------

Page 109

"PhRMA and its member companies are particularly concerned about the
compulsory license process in Ecuador, in addition to the volume and rate
at which such licenses are being granted. The compulsory licenses that have
been granted to date have not been based on a clear demonstration of an
urgent public health emergency or due process provided to the patent owners
consistent with Ecuador's international obligations.

A close monitoring of this subject should be maintained to ensure that a
compulsory license for a patent covering a medicine is granted only when
there is a true health emergency and as a measure of last resort."
------------------------------------------------

Wholly aside from the question of whether or not access to a life saving
drug is an emergency, is the question of whether or not compulsory licenses
are in any way limited to emergency situation by the WTO or
other international norms on patent rights.  Of course, as most readers of
this list know, the answer is, compulsory licenses are not at all
restricted to cases of emergencies, and in fact, are used in a wide range
of cases, involving defense, energy, consumer electronics, software, mobile
phones, agriculture, medical devices and drugs, and automobile, to use just
a few examples. Below is a 2006 FAQ written by the WTO Secretariat, to
explain this very issue.  The WTO explanation is quite clear, and should be
shared with policy makers, journalists and academic researchers who do not
have the facts.

Jamie

http://www.wto.org/english/tratop_e/trips_e/public_health_faq_e.htm

TRIPS AND HEALTH: FREQUENTLY ASKED QUESTIONS

Compulsory licensing of pharmaceuticals and TRIPS

A certain amount of confusion exists about the TRIPS Agreement’s provisions
and compulsory licensing for medicines. These are some answers to questions
that are frequently asked.


September 2006

This note has been prepared by the Information and Media Relations Division
of the WTO Secretariat to help public understanding. It is not an official
interpretation of the WTO agreements or members’ positions.


What is compulsory licensing?

Compulsory licensing is when a government allows someone else to produce
the patented product or process without the consent of the patent owner. It
is one of the flexibilities on patent protection included in the WTO’s
agreement on intellectual property — the TRIPS (Trade-Related Aspects of
Intellectual Property Rights) Agreement.


Are these flexibilities new?

No. They always existed in the TRIPS Agreement, ever since it took effect
in January 1995.


But what about the November 2001 Doha Ministerial Declaration on TRIPS and
Public Health? Didn’t that change the rules?

Not in general. Two provisions to do with least-developed countries and
countries that do not have production capacity directly involved changes to
the rules of the TRIPS Agreement. For the main part the declaration was
important for clarifying the TRIPS Agreement’s flexibilities and assuring
governments that they can use the flexibilities, because some governments
were unsure about how the flexibilities would be interpreted. Let’s focus
on the general case first.


OK. What is the general case?

For compulsory licensing, it’s when the generic copy is produced mainly for
the domestic market, not for export.


Is this the same as tearing up the patent?

No. The patent owner still has rights over the patent, including a right to
be paid for the authorized copies of the products.


Does there have to be an emergency?

Not necessarily. This is a common misunderstanding. The TRIPS Agreement
does not specifically list the reasons that might be used to justify
compulsory licensing. However, the Doha Declaration on TRIPS and Public
Health confirms that countries are free to determine the grounds for
granting compulsory licences.

The TRIPS Agreement does list a number of conditions for issuing compulsory
licences, in Article 31. In particular:

normally the person or company applying for a licence has to have tried to
negotiate a voluntary licence with the patent holder on reasonable
commercial terms. Only if that fails can a compulsory licence be issued, and

even when a compulsory licence has been issued, the patent owner has to
receive payment; the TRIPS Agreement says “the right holder shall be paid
adequate remuneration in the circumstances of each case, taking into
account the economic value of the authorization”, but it does not define
“adequate remuneration” or “economic value”.

There’s more. Compulsory licensing must meet certain additional
requirements: it cannot be given exclusively to licensees (e.g. the
patent-holder can continue to produce), and it should be subject to legal
review in the country.


You said “normally” …

Yes, this is where the confusion about emergencies arises. For “national
emergencies”, “other circumstances of extreme urgency” or “public
non-commercial use” (or “government use”) or anti-competitive practices,
there is no need to try first for a voluntary licence. It’s the only
instance when the TRIPS Agreement specifically links emergencies to
compulsory licensing: the purpose is to say that the first step of
negotiating a voluntary licence can be bypassed in order to save time. But
the patent owner still has to be paid.


Who decides whether the payment is “adequate”?

The authorities in the country concerned. The TRIPS Agreement says the
patent owner must be given the right to appeal in that country as well.


And that’s always been the case under the TRIPS Agreement? What has changed?

Yes, it’s always been the case. What has changed is a provision that used
to say that compulsory licences must be granted mainly to supply the
domestic market (paragraph (f) of Article 31). The 2001 Doha Ministerial
Conference decided that this should be changed so that countries unable to
manufacture the pharmaceuticals could obtain cheaper copies elsewhere if
necessary.

The legal means of making the change was agreed on 30 August 2003 when the
General Council decided to waive the provision, allowing generic copies
made under compulsory licences to be exported to countries that lack
production capacity, provided certain conditions and procedures are
followed.

All WTO member countries are eligible to import under this decision, but 23
developed countries are listed in the decision as announcing that they will
not use the system to import: Australia, Austria, Belgium, Canada, Denmark,
Finland, France, Germany, Greece, Iceland, Ireland, Italy, Japan,
Luxembourg, Netherlands, New Zealand, Norway, Portugal, Spain, Sweden,
Switzerland, United Kingdom and the US. Since they joined the EU, the list
now includes 10 more: Czech Republic, Cyprus, Estonia, Hungary, Latvia,
Lithuania, Malta, Poland, Slovak Republic and Slovenia.

As recorded in a separate statement that is not part of the waiver, 11
other members announced voluntarily that they would only use the system as
importers in situations of national emergency or other circumstances of
extreme urgency: Hong Kong China, Israel, Korea, Kuwait, Macao China,
Mexico, Qatar, Singapore, Chinese Taipei, Turkey, and United Arab Emirates.


So all obstacles have been removed?

Not entirely. The WTO waiver on its own is not enough. To use the system,
potential exporting countries probably have to change their laws too. This
is where their laws complied with the original TRIPS provision by requiring
production under compulsory licensing to be predominantly for the domestic
market. So far Norway, Canada, India and the EU have formally informed the
TRIPS Council that they have done so.


And least-developed countries?

They can now delay protecting pharmaceutical patents until 2016. So long as
a medicine is not patented in a least-developed country, the government
does not need to issue a compulsory licence to import. But the supplying
country would have to issue a compulsory licence to export a generic copy
of a medicine that is patented in that country.


Just to be clear, if a compulsory licence is issued it could be under the
original TRIPS Agreement and not under the newer 2003 decision?

Correct. The 2003 decision (sometimes called the “Paragraph 6” decision
because it refers to that that paragraph of the Doha declaration) only
deals with compulsory licences to produce for export. Many news stories are
about the possibility of issuing compulsory licences to supply domestic
markets. That was always possible.


> More frequently-asked questions on TRIPS


The World Trade Organization (WTO) deals with the global rules of trade
between nations. Its main function is to ensure that trade flows as
smoothly, predictably and freely as possible.


-- 
James Love.  Knowledge Ecology International
http://www.keionline.org/donate.html
KEI DC tel: +1.202.332.2670, US Mobile: +1.202.361.3040, Geneva Mobile:
+41.76.413.6584, twitter.com/jamie_love



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