TWN Info Service on UN Sustainable Development (Jun17/09)
28 June 2017
Third World Network
WTO TRIPS Council debates IP and the public interest
Published in SUNS #8484 dated 19 June 2017
Geneva, 16 Jun (Kanaga Raja) -- The WTO Council for TRIPS on 13 June discussed
a major proposal tabled by Brazil, China, Fiji, India and South Africa, which
cited growing concern about the "imbalance between intellectual property
and the public interest."
In their proposal (IP/C/W/630), the five countries for the first time called on
WTO Members "to exchange views and experiences on measures within the IP
system that they have adopted to promote the public interest, including but not
limited to compulsory licensing, patentability criteria, IP and competition,
and the Bolar exception."
For the present meeting of the TRIPS Council (13-14 June), the co-sponsors
invited delegations to share their experiences on the use of compulsory
licenses for accessing health and other technologies.
"There is a need to pursue a development-oriented approach towards
formulating IP laws and policies rather than pursue an iconoclastic approach of
IP for development," the co-sponsors emphasised.
PROPOSAL ON IP AND PUBLIC INTEREST
In their proposal, the five countries noted that the Trade-Related Aspects of
Intellectual Property Rights (TRIPS) Agreement established minimum standards of
protection that each government has to give to the intellectual property of
fellow WTO Members.
WTO Members have the flexibility to design their national intellectual property
(IP) systems within the minimum standards set by the TRIPS Agreement, in
cognizance of a country's economic, developmental and other objectives,
including public health.
The TRIPS Agreement attempts to strike an appropriate balance between the
interests of rights holders and users.
The co-sponsors said an important consideration in the WTO's work has been the
search for a balance between the need to protect IPRs to provide incentives for
R&D on the one hand and, on the other, to address concerns about the
potential impact of such protection on the health sector - in particular its
effect on prices.
The TRIPS Agreement also recognizes that the principles of IP protection are
based on underlying public policy objectives.
Article 8 of TRIPS Agreement entitled "Principles" states that WTO
Members may, in formulating or amending their laws and regulations, adopt
measures necessary to protect public health and nutrition, and to promote the
public interest in sectors of vital importance to their socio-economic and
technological development, provided that such measures are consistent with the
provisions of this Agreement.
Article 8(2) further states that appropriate measures may be needed to prevent
the abuse of IPRs by right holders, or to resort to practices which
unreasonably restrain trade or adversely affect the international transfer of
The five countries pointed out that a number of safeguards or flexibilities
have become an integral part of the TRIPS framework.
These flexibilities can be used to pursue public health objectives. However, to
implement these flexibilities, action is needed at the domestic level by
incorporating them into national IP regimes keeping in mind each country's
individual needs and policy objectives.
Key TRIPS flexibilities include transition periods for LDCs (extended by the
WTO until 01 January 2033), differing IP exhaustion regimes, refining the
criteria for grant of a patent (patentability criteria), pre-grant and
post-grant opposition procedures, as well as exceptions and limitations to
patent rights once granted, including the regulatory review exception
("Bolar" exception) to facilitate market entry of generics,
compulsory licences and government use.
According to the proposal, for pharmaceutical patents, these flexibilities have
been clarified and enhanced by the 2001 Doha Declaration on TRIPS and Public
WTO Members have the flexibility to interpret and implement TRIPS provisions in
a manner supportive of their right to protect public health.
Another new flexibility was added by the Doha Declaration, which was put into
practice in 2003 by the WTO with a Decision enabling countries that cannot
manufacture medicines themselves, to import pharmaceuticals made under
In 2005, Members agreed to make this decision permanent through a Protocol
Amending the TRIPS Agreement, which entered into force on 23 January 2017 after
two thirds of Members accepted it.
"The amendment provides legal certainty that generic versions of
patent-protected medicines can be produced under compulsory licences
specifically for export to countries with limited or no pharmaceutical
production capacity," said the co-sponsors of the proposal.
"Many governments have not used the flexibilities available under the
TRIPS Agreement for various reasons, such as capacity constraints or political
pressure from states and corporations mentioned in the UN Secretary- General's
High Level Panel Report on Access to Medicines."
Moreover, even where some developing countries used the flexibilities available
to them under the TRIPS Agreement to address public interest objectives through
measures which are fully consistent with the TRIPS Agreement, these attempts
have been challenged legally as well as politically.
The co-sponsors said that "political and economic pressure placed on
governments to forego the use of TRIPS flexibilities violates the integrity and
legitimacy of the system of legal duties and rights created by the TRIPS
Agreement, as reaffirmed by the Doha Declaration."
They also warned that a slew of regional trade agreements containing
"TRIPS plus" standards of IP protection and enforcement have the
potential to significantly affect the policy space available for effective and
full use of the TRIPS flexibilities.
The most common "TRIPS plus" provisions in free trade agreements
(FTA) that affect the pharmaceutical sector are: the definition of
patentability criteria; patent term extensions; test data protection; the
linkage of regulatory approval with patents and enforcement of IPRs, including
"Such provisions can delay market entry of generics and increase prices of
medicines," they said. Investor-State disputes under regional or bilateral
investment protection agreements are also emerging as significant threats to
the use of TRIPS flexibilities in the public interest.
Ironically, they said, the abovementioned challenges to the use of TRIPS
flexibilities to further the public interest objectives underlying IP
protection, have been occurring in spite of the emergence of laws and
jurisprudence in developed countries that seek to limit the scope of IP
protection and enforcement.
For example, in the Myriad Genetics (2013) case, the US Supreme Court had ruled
unanimously that naturally occurring genes cannot be patented, even if they are
isolated. In 2003, the US Federal Trade Commission had proposed tightening the
non-obviousness standard, in order to limit the grant of unwarranted patents.
"There is a growing concern about an imbalance between intellectual
property and the public interest," the five countries underlined.
With regard to health technologies, for example, patents and related monopoly
rights in test data, without sufficient use of balancing exceptions and
limitations to protect the public interest, permit companies to maintain high
prices and exacerbate crises of access around the world, where many patients
cannot afford medicines, and force governments with finite health budgets to
Increased copyright protections create similar problems of access to knowledge
goods, limiting the ability of many people around the world to access print,
audio, or visual works of education or entertainment that we take for granted.
"These are only a few examples of the problem. There is a need to pursue a
development-oriented approach towards formulating IP laws and policies rather
than pursue an iconoclastic approach of IP for development."
More than 20 years after the adoption of the TRIPS Agreement, there is a need
for discussion in the TRIPS Council on the relationship between IP and the
public interest and to broaden the understanding of how the IP system can be
more responsive to public interest considerations, the five countries said.
While this issue is very pertinent for developing countries, it has also been a
topic of significant policy debate even in developed countries.
Calling for a sharing of experiences on the use of compulsory licences, the
five countries said that compulsory licensing occurs when a government allows
someone else to produce the patented product or process without the consent of
the patent owner. Article 31 of TRIPS lays down a set of conditions for issuing
compulsory licenses of patents.
The Doha Declaration on the TRIPS Agreement and Public Health states that,
"Each Member has the right to grant compulsory licenses and the freedom to
determine the grounds upon which such licenses are granted".
"In spite of the clarity of this language, WTO Members around the world
seeking to make use of compulsory licences as a tool to increase access to
affordable medicines have faced various challenges/barriers," the
co-sponsors pointed out.
The Doha Declaration on the TRIPS Agreement and Public Health confirmed what
was already implicit in the TRIPS Agreement - that WTO Members have the freedom
to determine the grounds upon which compulsory licenses are granted.
They are thus not limited to emergencies or other urgent situations, as is
sometimes mistakenly believed. A range of grounds have been set out in national
laws like (i) non-working or insufficient working, (ii) anti-competitive
practices, (iii) public interest, (iv) dependant and blocking patents, (v)
In inviting Members to share their national experiences and examples of using
compulsory licenses, the five countries highlighted some guiding questions:
* What grounds are available in their national laws to issue compulsory
* What are the difficulties faced by WTO Members in using compulsory licenses,
including constraints, such as insufficient or no manufacturing capacities?
* How the measure of compulsory licence was used by governments to obtain price
reduction from patent holders?
* What was the result of using compulsory licenses in terms of price and access
to affordable products and technologies?
DISCUSSION ON IP AND PUBLIC INTEREST
According to trade officials, some fifteen delegations spoke on this issue.
South Africa (which introduced the proposal on behalf of the co-sponsors),
India, El Salvador, Indonesia and Colombia, amongst others, underlined that WTO
members must have the complete freedom to decide the grounds upon which
compulsory licences are granted.
They pointed out that political and economic pressure placed on governments to
forego the use of TRIPS flexibilities violates the integrity and legitimacy of
the system of legal duties and rights created by the TRIPS agreement and
reaffirmed by the 2001 Doha Declaration.
Citing the report of the UN Secretary-General's High Level Panel on access to
medicines, the co-sponsors of the proposal stressed that governments should
adopt and implement legislation that provide for quick, fair, predictable and
implementable compulsory licences for legitimate public health needs, and
particularly with regards to essential medicines.
In its statement, India said the TRIPS Agreement attempts to strike an
appropriate balance between the interests of rights holders and users. The
TRIPS Agreement also recognizes that the principles of IP protection are based
on underlying public policy objectives.
In furtherance of the objectives and principles of TRIPS enshrined in Articles
7 and 8, a number of safeguards or flexibilities have become an integral part
of the TRIPS framework. These flexibilities can be used to pursue public health
India noted that during the 1980s and 1990s the antiretroviral (ARV) medicines
used to treat HIV/AIDS were priced beyond the reach of most people who needed
them in developing countries.
Countries like Brazil, Thailand, South Africa and others have used
flexibilities under the TRIPS Agreement, including compulsory licenses to bring
down the price by increasing the supply of generic ARV medicines for a fraction
of the price of the patented equivalents.
Indian generic companies, especially CIPLA, played an important role by
announcing in early 2001 that triple therapy could be manufactured for less
than a dollar a day compared to the price of standard triple therapy of
US$10,000 per patient/year.
Indian generic companies made ARV medicines accessible to all those who needed
the drugs but had previously not been able to afford them.
On the issue of compulsory licensing, India said Article 31 of TRIPS Agreement
provides members the complete freedom to decide the grounds for issue of the
The Doha Declaration on the TRIPS Agreement and Public Health has also duly
confirmed what was already implicit in the TRIPS Agreement - that WTO Members
have the freedom to determine the grounds upon which compulsory licenses are
There have been many studies that examine the possible grounds for issue of
For instance, said India, the diversity in the grounds for issue of compulsory
license is documented in the United States Congressional Research Service
Article titled "Compulsory Licensing of Patented Inventions" by John
R. Thomas dated 14 January 2014, which mentions that "depending upon
particular national laws, the grounds for government award of a compulsory
license may include:
-- Circumstances of national emergency or extreme urgency.
-- Where the invention serves vital public health needs.
-- A strong societal interest has arisen in access to the patented invention.
-- The patent owner has failed to practice the patented invention in the
jurisdiction that granted the patent within a reasonable period of time.
-- The patent owner has abused its economic power in such a manner as to
violate the antitrust laws.
-- In circumstances where multiple patents held by different owners cover a
particular technology. For example, combination therapies - such as triple
antiretroviral drugs - may be subject to more than one patent. In such cases,
if one patent owner refuses to license, then the technology may not be marketed
absent a compulsory licensing."
India provided some details of its own law with regard to compulsory licensing.
It said that Sections 83 to 94 of India's Patent Act contains detailed
provisions regarding compulsory licenses including those that generic companies
can apply for, government use licenses, those issued in cases of national
emergency, extreme urgency and public non-commercial use and compulsory
licenses for exports.
India has issued only one compulsory license so far. In March 2012, Indian
generic manufacturer NATCO Pharma was granted compulsory license to manufacture
Bayer's drug Sorafenib Tosylate (Nexavar) used for the treatment of kidney and
Bayer was granted a patent and received marketing approval for Nexavar for the
treatment of liver and kidney cancers in 2008. Bayer would have supplied 200
patients in 2011, which was a little more than two percent of the affected
According to India, the primary reason for the abysmally low coverage vis-a-vis
the need was the exorbitant treatment cost of nearly Rs. 2,84,000 (US$4,370)
for a month's treatment which priced the medicine out of reach of almost all
people in India.
Patent rights cannot be allowed to impede protection of public health, India
NATCO proposed to sell the generic form of Nexavar for Rs 8,800 (US$135) a
The Controller of Patents in India granted a compulsory license under section
84 because the TRIPS Agreement allows members to adopt measures to protect
public health and Bayer did not meet its duty under the Indian Patents Act as
the patented invention was not available to the public at a reasonable price,
and it was not worked in the territory of India.
The Indian Courts have upheld the decision of Controller General of Patents to
grant Compulsory License to NATCO Pharma to manufacture the generic version of
Nexavar in India.
India also provided some details on the use of compulsory licenses in a few
other WTO Members.
It said according to an article entitled "Compulsory licensing of patented
pharmaceutical inventions: evaluating the options" by Jerome H. Reichman
published in the Journal of Law, Medicine and Ethics in 2009, 37 (2): 247-263,
the United States threatened Bayer with a compulsory license on ciprofloxacin (Cipro)
in 2001, which the US intended to stockpile as a defense against anthrax. Bayer
drastically lowered its price in response.
The Italian Competition Law authorities issued compulsory licenses against
Merck, on certain antibiotics, for abuse of a dominant position in 2005;
against Glaxo, for refusal to license a patented migraine headache drug in
2006; and against Merck again for a refusal to license a treatment for baldness
India further said in Apple vs. Motorola case filed in the United States
District Court for the Northern District of Illinois (Eastern Division), Judge
Richard Posner, in June 2012, while dismissing with prejudice the patent
infringement suits, cited the decision in eBay Inc. v. MercExchange, L. L. C
and specifically noted that a "compulsory license with ongoing royalty is
likely to be a superior remedy in a case like this because of the frequent
disproportion between harm to the patentee from infringement and harm to the
infringer and to the public from an injunction".
India also cited the September 2016 report of the UN Secretary-General's
High-Level Panel (HLP) that states that many governments have not used the
flexibilities available under the TRIPS Agreement, including compulsory
licenses for various reasons, ranging from capacity constraints to undue
political and economic pressure from states and corporations, both express and
The HLP report also refers to resolution No. 2475 by the Ministry of Health of
Colombia that was a pathway for issuance of compulsory license to access
Imantib, in the public interest, for treatment of leukemia.
The report also states that many domestic and foreign parties have tried to
dissuade the Colombian government from issuing a compulsory license as provided
by the TRIPS Agreement and the Doha declaration.
India underscored that political and economic pressure placed on governments to
forego the use of TRIPS flexibilities violates the integrity and legitimacy of
the system of legal duties and rights created by the TRIPS agreement and as
reaffirmed by the Doha Declaration.
It concluded by quoting the recommendations on compulsory licenses in the HLP
report: "Governments should adopt and implement legislation that
facilitates the issuance of compulsory licenses. Such legislation must be
designed to effectuate quick, fair, predictable and implementable compulsory
licenses for legitimate public health needs, and particularly with regards to
essential medicines. The use of compulsory licensing must be based on the
provisions found in the Doha Declaration and the grounds for the issuance of
compulsory licenses left to the discretion of governments".
In its statement, Brazil said that IP addresses the public interest by
providing incentives for innovation. At the same time, governments have the
responsibility of safeguarding the public against a potential negative impact,
notably on competition.
"A balanced IP system, therefore, provides powerful incentives for
innovation with the least effects on the competitive landscape; in economic
terms, it will stimulate the pro-competitive dynamic effects of intellectual
property while limiting and controlling its potential anti-competitive static
Under Brazilian law, right holders may be subject to compulsory licenses if
they exercise patent rights in an abusive manner, or if they engage in abuse of
In the case of dependent patents, for instance, anti-competitive behaviour can
be established if the holder of the main patent fails to reach agreement with
the patent-holder of the dependent patent on the exploitation of the earlier
Brazil said in 2007 it issued its first and only compulsory license to date,
regarding the anti-retroviral Efavirenz for public non-commercial use. The
underlying intention was to guarantee that HIV patients received appropriate
treatment from the Brazilian Public Health System, as Efavirenz was used by 40%
of all HIV patients in Brazil at the time.
Previously to the compulsory license, the Brazilian Government engaged with the
patent owner in several meetings with the view of reaching a negotiated
solution. Those negotiations, however, did not lead to an agreement in terms
and conditions adequate for addressing the public interest.
In conjunction with the procedures necessary for the compulsory license, the
Brazilian Government initiated the preparation for the production of Efavirenz.
In spite of strictly following the requirements contained in the national and
international legal framework, the Brazilian Government faced legal disputes in
national courts, which were initiated by the owner of the patent. These
disputes, however, were not successful.
As a result of such efforts by the Brazilian Government, and taking full
advantage of legally permissible limitations and exceptions, it was possible to
substantially reduce the price of Efavirenz from US$1.59 to US$0.45 per tablet
at nominal prices.
This helped to ensure the adequate provision of medicine to HIV patients who
need to take it on a daily basis to keep the disease under control.
According to Brazil, thanks to successful public policies combined with the
steady availability of innovative drugs, it is able to provide treatment to the
vast majority of patients diagnosed with HIV/AIDS.
Nowadays, among those receiving treatment, 90% of them have no detectable viral
load, a sign of success of the treatment. This is a result only possible with
the active participation of Government, pharmaceutical companies and patients'
associations, in line with the higher level goals of the IP system.
Brazil believes that respect for intellectual property and efforts to promote
the public interest in sectors of vital importance to their socioeconomic and
technological development are not mutually exclusive.
It said a balanced intellectual property system, with built-in flexibilities as
well as complementary policies and incentives, is the best way to incentivize
innovation in all fields of technology.
According to trade officials, the United States warned against the potential
negative effects of the co-sponsors' view of public interest, in the sense that
it could discourage members from striving towards upholding robust domestic IP
regimes, and therefore deny the public the benefit of critical future
innovations and creative endeavours.
According to the US, IP and patents should not be viewed as intrinsic barriers
to access. To properly address barriers to access, it is necessary to look at
relevant factors outside the IP system, such pricing and procurement policies,
taxes, mark-ups in tariffs, and other national policies that in the US view
result in higher cost for consumers and health systems.
The US claimed that compulsory licensing diminishes the exclusivity of the
patent grant and undermines the incentive for innovation and investment that is
a critical component of technological progress.
Switzerland maintained that the current system of IP protection fully
integrates a balance between private and public interests, while constantly
nurturing the pipeline of new generic products.
Reliable and solid rules on IPRs provide for the necessary legal certainty to
encourage the investment in new and better drugs for unmet medical needs, it
Instead of advocating for the use of compulsory licences, Switzerland said it
supports the promotion of initiatives and approaches which incentivize research
and development, and improve access to medical products for people in low and
middle income countries.
This is one example of how the IP system serves the public interest, it added.
According to Switzerland, the way forward is building on voluntary and
inclusive efforts such as the Medicines Patent Pool, the Global Fund's
e-procurement platform or WIPO research, rather than dis-incentivizing research
for the development of new and experimental drugs.
According to trade officials, the European Union said that a balanced system of
IPRs which takes into account legitimate interests of users and rights holders
fully serves the public interest.
TRIPS provides a reasonable balance and its rules and flexibilities allow
countries to have a pragmatic and flexible approach that can help them to
maximize the potential of their own intellectual assets and their integration
into international trade while achieving broader societal welfare, it said.
The European Union maintained that this debate confirms that the current system
is well suited and has reached a carefully crafted balance. Even countries
asking for more flexibilities have decided not to use them, it said. +