COVID-19 and the Compulsory Patent License

31 March 2021

In the fight against the pandemic, the issue of compulsory patent licenses, (sometimes called “patent breach”) due to public interest or national emergency, is notoriously one of the most important issues in the area of intellectual property as a means of placing in second plan economic interests in the name of the greater good: public health.

31 March 2021

In general terms, Industrial Property provides for the appropriation of inventions through the mechanism of a Patent, with justification in the social interest and in the technological and economic development of the country. However, international treaties are permeated by the understanding that there must be a balance between trade policies (WTO – World Trade Organization), health policies (WHO – World Health Organization) and intellectual property rights (WIPO – World Intellectual Property Organization).

In extreme cases, of emergency or public interest, we have what in popular jargon is known as “patent breach”, but in the correct terms of the Law it is provided for as “compulsory license”, in Brazil regulated by articles 68 to 74 of the Industrial Property Law (N. 9279/96).

It is important to know, that the term “patent breach” is mistaken because it does not mean that the holder has lost the right, but has had the temporary suspension of the exclusive right. This mechanism follows national and international standards. At the international level, we can mention agreements such as TRIPS – Trade-Related Aspects of Intellectual Property Rights and CUP – Treaty of the Paris Union Convention, which aim to harmonize the worldwide legislation on Intellectual Property.

The controversy is not new. The specialized literature is extensive and full of positions favorable and contrary to the compulsory license institute, both in the public and private interests. It turns out that the hypothetical, and sometimes even hard to imagine, example used in practically all manuals on patent law to introduce the issue of compulsory public interest licensing materialized with the pandemic.

Since the patent consists of an instrument of technological and industrial development, by which the State grants exclusive (and temporary) exploitation in exchange for the description of the technology contained in the patent, it is necessary to understand that the compulsory license constitutes an instrument of exception and it cannot be used as a rule.

The concession of the compulsory license is such an extreme measure that, although the rights of the holder to receive a value for that license are still respected, its realization weakens the national credibility vis-à-vis foreign partners, international organizations and before the agreements of signed intellectual property.

Caution must be exercised before decreeing compulsory patent license. It cannot be forgotten that the right of exclusive use is a counterpart to the investments made in the search for new technologies. Thus, resorting to patent infringement without due reflection, may discourage industries in the search for new technologies that are so essential for the preservation and development of society. Governments will have the difficult task of weighing the values involved in the compulsory patent license in light of one of the greatest health and economic crises in society, seeking the alternative that is most appropriate to the spirit of the Industrial Property Law and international treaties, without, however, failing to observe the public health needs.

It is important to mention that the compulsory licensing is not without the due guarantees provided by law to the holder of the medication, with international and national rules that deal with the procedures to be taken and fair remuneration of the holder. Although it is not based on the free negotiation of percentages or fixed values, as licenses are usually, the proponent of compulsory licensing must first try to reach an agreement with the titleholder, and the values imposed by normative act can later be reviewed by the competent body.

Some understand that the breach of drug patents harms inventiveness and the time spent by the private sector on research and researchers. Thus, it must be a maneuver within the rules and very well founded, even, to be viewed with good eyes by international organizations.

However, as it is a public health emergency, it is necessary to think about ways to guarantee the population access to these inventions, making it possible to grant compulsory licenses.

With the advent of vaccines against COVID, compulsory licensing, therefore, presents itself as a way out of the shortage of immunizers, serving the market more efficiently and more quickly, given the urgency and need of the moment.

It makes it possible to temporarily suspend the property rights of patent holders, in order to meet the social function of property – something completely appropriate for a pandemic scenario. In this sense, it is essential that the holder cannot supply the market himself.

The overcoming of the protection-repression binomial seems to be a reality announced in this scenario, being replaced by a protection-easing logic for emergency reasons. It is up to those involved to understand how to act to benefit society and themselves in view of a pandemic of almost unprecedented proportions.

The first case of compulsory licensing in Latin America occurred in Brazil in 2007, with the patent for the drug Efavirenz, used to treat AIDS (Acquired Immunodeficiency Syndrome). This was a government measure to expand access to the drug since, with the patent in the public domain, its supply may increase and its costs decrease.

In the private sector, there are two cases that can be cited as examples in which the relativization of their protection has brought benefits to those involved: the case of Medtronic, a North American technology and medical device company, and the case of AbbVie, a global biopharmaceutical company focused on both contextualized in the year 2020 and in the fight against the pandemic caused by Covid-19.

Medtronic chose to open the source code, design and manufacturing specifications of the Puritan Bennett 560 (PB 560) medical respirators for the production of any of its competitors. In addition, it joined the Taiwanese electronics manufacturer, Foxconn, to cooperatively produce and accelerate the production of respirators.

AbbVie, in its turn, held a patent for the drug Kaletra, for antiretroviral use, was sued by the Israeli government for compulsory licensing of the drug as it seemed to suggest some efficacy in the treatment of Covid-19.

The license would allow other laboratories to produce the respective vaccines, in order to serve the market more efficiently and more quickly, given the urgency and need of the moment. India recently pointed out that one of the worst fears of scarcity and supply have come true, with vaccination programs in almost every country in the world being delayed because of insufficient production and the availability of the required number of doses. Thus, they made a request for a compulsory license with the World Trade Organization (WTO) raising a debate on the issue.

The counterpoint of the countries that developed the respective vaccine patents, in addition to protecting their industries, is the fact that other countries would not have the necessary technology for the production of vaccines.

There is now a clear need for global collaboration, thinking about the conditions of access (to drugs and financing) for treatments that arise.

The decision to implant a compulsory license should only be taken as a last resort, when there are no alternatives and taking into account the context of the situation that led him to consider such an instrument, as is the case of the current pandemic.

In this case, licensing is not just a simple “patent breach” for reasons of unfair price, but the urgent need to adjust access to a fair and wide population level. Patents are created to guarantee the inventor the due return on his inventive step, but it always has the public benefit as a background. If it deviates from this premise, the need arises to adapt it.

Outside the pandemic context that is covered by the emergency situation, it is emphasized for information purposes that compulsory licensing through the public interest is also a means of preventing the abuse of economic power by the holder of pharmaceutical patents that is restricting access to medicines, mainly in developing and less developed countries where access is even more restricted.

In times of pandemic, it is essential to reflect on the consequences of the exclusive use of the medicine or vaccine. The compulsory patent license institute finds similar provisions around the world, and could be an alternative if the exclusive right to the drug and vaccine overrides public health.

In a situation in which many regions and countries without resources are being affected and the delay of days for adaptation would mean hundreds or thousands of deaths, it must be remembered that the compulsory license institute is not an infringement of a functional intellectual property system, but rather integral and necessary part of it. It appears as a solution to a problem common to the entire population, in the midst of a critical and difficult-to-resolve state that, at least temporarily, puts economic interests in the background in the name of the greater good, which is public health.

Rafaela Mattos

Rafaela Mattos

Lawyer.

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