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GSIPA2M, Parallel session 2, Making compulsory licenses routine - James Love
1. Non-voluntary use of
patents
GLOBAL SUMMIT ON INTELLECTUAL PROPERTY & ACCESS
TO MEDICINES
PATHWAYS TO ACCESS
Marrakesh, Morocco
James Love, Knowledge Ecology International
15 January 2018
2. Legal terms
There are several different legal terms used to describe legal
pathways for non-voluntary use of patents, including, for
example:
Compulsory licenses, ex officio licenses, statutory licenses,
government use, crown use, court sanctioned running
royalties for infringement, remedies to anticompetitive
practices, FRAND obligations, etc
3. TRIPS and non-voluntary use of patents
Article 30
Non-voluntary uses satisfy a 3-step test
Article 31
Non-voluntary use permitted when certain rules are followed, involving
procedures, limitations and remuneration to right holders
Article 31.bis
Narrow and limited authority to waive certain restrictions on exports
when non-voluntary use is authorized
Article 40
Members may adopt measures to prevent or control abuses of
intellectual property rights having adverse effect on competition
Article 44
Governments or courts can withhold or even eliminate injunctions,
particularly when compensation or remuneration is provided.
4. 2001 Doha Declaration on TRIPS
and Public Health
• 540 words
• Requires TRIPS to be “interpreted and implemented in a manner
supportive of WTO members' right to protect public health and, in
particular, to promote access to medicines for all.”
• Four clarifications of flexibilities, including to use compulsory licenses
and exhaustion of right
• Temporary extension of LDC exemption for drug patents (recently
extended to 2033)
• Council for TRIPS required to find "an expeditious solution" to
compulsory licensing when a country has "insufficient or no
manufacturing capacities"
5. TRIPS 31.bis
31.bis is a complex amendment to the TRIPS. In 2070 words,
sets outs procedures for waiving Article 31.f of the TRIPS,
regarding the limitations of exports to countries with insufficient
or no manufacturing capacity for pharmaceuticals.
31.bis is designed to regulate and frustrate developing country
access to medicines.
31.bis is the worst way to authorize exports under compulsory
licenses. TRIPS Articles 30, 31.k, 40 and 44 offer much better
frameworks for exports.
6. eBay Inc. v. MercExchange, LLC.,
547 U.S. 388 (2006)
In a unanimous decision, authored by Justice Thomas with concurring opinions by Roberts and
Kennedy, the U.S. Supreme Court held that before a permanent injunction is granted to prevent the
infringement of a patent:
“A plaintiff must demonstrate:
(1) that it has suffered an irreparable injury;
(2) that remedies available at law, such as monetary damages, are
inadequate to compensate for that injury;
(3) that, considering the balance of hardships between the plaintiff
and defendant, a remedy in equity is warranted; and
(4) that the public interest would not be disserved by a permanent
injunction. “
7. Injunction proceedings (1/4)
Since 2006, dozens of compulsory licenses have been granted by U.S. courts. Courts
order a royalty, sometimes referred to as a running royalty, as a forward looking remedy for
the infringement of a patent, as an alternative to the granting of an injunction. Several of
these cases have involved medical technologies, including, for example
• Angioplasty guide catheters
• Arthroscopic surgical instruments
• Contact lenses
• Grafts, stents and cardiovascular patches
• Hepatitis C Virus diagnostic tests
• Oral contraceptives
• Surgical Spine-Stabilizing Devices
• Transcatheter heart valves
• Transcervical contraceptive devices
8. Injunction proceedings (2/4)
The US Biologics Price Competition and Innovation Act (BPCIA)
includes a mandatory compulsory license when patent holder
fails to timely litigate certain infringements.
35 U.S.C. § 271(e)(6)
(B) In an action for infringement of a patent described in subparagraph
(A), the sole and exclusive remedy that may be granted by a court,
upon a finding that the making, using, offering to sell, selling, or
importation into the United States of the biological product that is the
subject of the action infringed the patent, shall be a reasonable royalty.
9. Injunction proceedings (3/4)
28 U.S.C. Sec. 1498 - Patent and copyright cases
(a) Whenever an invention described in and covered by a
patent of the United States is used or manufactured by or for
the United States without license of the owner thereof or
lawful right to use or manufacture the same, the owner's
remedy shall be by action against the United States in the
United States Court of Federal Claims for the recovery of his
reasonable and entire compensation for such use and
manufacture. . .
10. Injunction proceedings (4/4)
The flexibility to withhold injunctions is now used by several
other countries, for a wide set of technologies.
One set of cases are for Standards Essential Patents (SEPs),
where injunctions are not available on the grounds the
infringed patent is necessary to implement a standard.
In some cases, a patent holder has an obligation to a
standard setting organization (SEO) to provide licenses to
the patents on Fair, Reasonable, and Nondiscriminatory
(FRAND) terms.
11. Germany: Fabry Disease patent
In 2010, the Mount Sinai School of Medicine (Now named the
Icahn School of Medicine at Mount Sinai) obtained an
injunction of the sale of Shire’s Fabry disease treatment,
Replagal (agalsidase alfa), in Germany.
Shire sought a compulsory license in Germany. Mt. Sinai
subsequently resolved the compulsory license case by granting
Shire a license.
12. Germany: Bundesgerichtshof gestattet
weiteren Vertrieb eines HIV-Medikaments
On July 11, 2017, the German Federal Supreme Court affirmed a compulsory license allowing Merck
to continue selling its HIV drug, raltegravir (marketed as Isentress), despite infringing a patent held by
Shinogi. In announcing the decision, the Federal Court issued a statement that said:
The Federal Court shares the assessment of the Federal Patent Court that a public
interest in the granting of a compulsory license is credible. It is true that not every
HIV or AIDS patient is required to be treated with raltegravir at any time. There are,
however, patient groups that needed raltegravir to maintain the safety and quality of
treatment. These include, in particular, infants, children under 12, pregnant women,
people who need prophylactic treatment because of the risk of infection, and
patients who are already treated with Isentress and who are threatened with
significant side effects and interactions when switching to another drug.
13. Some early compulsory licensing
cases involving Chiron/Novartis
patents on HCV
Australia
Italy
Germany
The Netherlands
United Kingdom
United States
14. Italy competition cases
2005 Merck antibiotic (Imipenem Cilastatina)
2006 Glaxo, Sumatriptan Succinate, migraine drug
2006 Merck patents on Finasteride, used for drug to treat
prostate cancer and male pattern baldness
16. Recent interest in EU countries
Romania
Greece
Spain
France
The Netherlands
UK
17. Compensation/Remuneration
Uncertainty over compensation or remuneration for a
compulsory license can be a deterrent, particularly for a product
where the patent involves a drug.
More experience with compulsory licensing and reduce the
uncertainty.
Royalties need not necessarily be based upon a percentage of
the generic value.
18. Stylized example of TRM
A reference drug reimbursed in the UK for $20,000 is deemed
to have a reasonable price and adequate access in the UK.
The average royalty rate for the pharmaceutical industry is 6
percent.
The UK had a 2016 per capita income of $40,341.40.
Poland had a 2016 per capita income of $12,421.30
The TRM royalty for Poland would be $20,000 x .05 x
(12421.30/40341.40) = $307.90.
19. Other nuances
Utilization factors are used when the invention only represents
a fraction of the product’s value.
Royalties should not in themselves present a barrier to access
for all.
In some cases, a simple percent of generic price/sales is easier
to manage and understand.
Royalties on a particular product can decline, when cumulative
global revenues for the product exceed certain benchmarks.