COVID-19 – Patent Rights in the Time of a Pandemic

 

First published in Australian Intellectual Property Law Bulletin Vol. 33, No. 2, Jun 2020: 35-38

 

The COVID-19 pandemic and the urgent global need for effective treatments and/or a vaccine has implications for Australia’s new Crown use and compulsory licencing patent provisions as well as similar provisions from around the globe. With these provisions, a government and in some cases a third party can access and exploit a patented invention without authorisation of the patentee.

 

Introduction

 

The COVID-19 pandemic and the urgent global need for effective treatments and/or a vaccine has implications for Australia’s new Crown use and compulsory licencing patent provisions as well as similar provisions from around the globe. With these provisions, a government and in some cases a third party can access and exploit a patented invention without authorisation of the patentee.

 

Key Points

  • Australia has the tools to authorise government use of patented medicines both domestically and for export to treat a global pandemic. 

  • The same types of legal tools are promulgated in international treaties assented to around the globe and implemented in national legislation. 

  • The majority of the world recognizes public health needs above any individual’s patent rights.

Australia

 

At the end of February 2020, the Intellectual Property Laws Amendment (Productivity Commission Response Part 2 and Other Measures) Act 2020, introduced a number of controversial measures, the most high profile being the phasing out of the innovation patent and the introduction of an objects clause into the Patents Act. Prior to these changes being introduced, many commentators and industry groups, such as the Australian Chamber of Commerce and Industry, AusBiotech and the Institute of Patent and Trademark Attorneys of Australia expressed concern that these changes would negatively impact on available rights for Australian innovators. There was much less interest, if any, from stakeholders in the proposed changes to Australia’s, little or never used, Crown use and compulsory licensing patent provisions.

 

Now that the world is in the grip of the COVID-19 crisis, the logistics of rapid development and global supply of treatments and/or vaccines is paramount, and the Crown use and compulsory licensing provisions are magnified. In this regard, at the end of March 2020, Johnson and Johnson announced that they were scaling their manufacturing capacity with a goal of providing more than a billion doses of a COVID-19 vaccine. Thus, the control or eradication of the COVID-19 virus represents a significant logistical challenge for pharmaceutical companies to satisfy an unprecedented global demand for medical supplies. This could be complicated if COVID-19 treatments/vaccines are subject to a patent monopoly.

 

Crown use of inventions

 

Crown use of patents in Australia allows Federal, State and Territory governments to exploit patented technology without authorisation of the patent owner. Specifically, the newly implemented Crown use patent provisions allow governments to exploit patented inventions, in certain circumstances, without infringing patent rights. The circumstances, set out in subsection 163(3) of the Patents Act, are:

  1. the Minister considers that the relevant authority has tried for a reasonable period, but without success, to obtain an authorisation to exploit the invention on reasonable terms, and has approved the exploitation;

  2. the invention is exploited for Crown (Government) purposes; and

  3. written notification and reasons are provided to the patentee.

Under section 165, the patent owner is entitled to remuneration, which can be determined either by agreement between the Government and patentee or, failing this, by a Court.

 

The recent amendments to the Patents Act introduce section 163A which relates to Crown use of inventions during emergencies. Although the term “emergencies” is not specifically defined in the Patents Act, the explanatory memorandum associated with the amendments states that “an emergency would include an unforeseen occurrence or a sudden and urgent occasion for action. It could include a public health crisis such as a plague or epidemic, or a medical emergency such as a pandemic”. Relevantly, under section 163A, there is no requirement for the Government to attempt to negotiate with the patent owner to obtain an authorisation. Therefore, Crown use under section 163A could be used without delay by the Government, if necessary, to ensure a sufficient supply of pharmaceuticals for treating or preventing COVID-19 infections.

 

The Patents Act also includes provisions under section 171(1) and 171(2) that allow rights in a patent to be compulsorily transferred to the Government, if directed by the Governor-General.

 

Compulsory licensing

 

The Australian Patents Act also includes compulsory licensing provisions under which third parties can seek a non-exclusive license to exploit a patented invention in certain exceptional circumstances. The circumstances, which are relevant to the current COVID-19 pandemic, are set out in subsection 133(3) and are:

  1. demand in Australia for the original invention is not being met on reasonable terms;

  2. authorisation to exploit the original invention is essential to meet that demand;

  3. the applicant has tried for a reasonable period, but without success, to obtain authority from the patentee to exploit the original invention on reasonable terms and conditions;

  4. the patentee has given no satisfactory reason for failing to exploit the patent to the extent necessary to meet the demand for the original invention in Australia; and

  5. it is in the public interest to provide the applicant with authorisation to exploit the original invention,

A court may also grant a compulsory license if exploitation of the patent is found to be anti-competitive under Part IV of the Competition and Consumer Act 2010.

 

The recent amendments to the compulsory licensing provisions, replaced the previous “reasonable requirement of the public” with a broader “public interest” test.

 

Like the Crown use provisions, the patentee is entitled to remuneration, which can be determined either by agreement between the third party and patentee or, if that is unsuccessful, by a court, having regard to:

  1. the economic value of the licence;

  2. the right of the patentee to obtain a return on investment commensurate with the regulatory and commercial risks involved in developing the invention; and

  3. the public interest in ensuring that demand in Australia for the original invention is met on reasonable terms.

The Australian Patents Act also has specific provisions under section 136 which permit the granting of a compulsory licence to exploit a patented pharmaceutical invention for manufacture and export to an eligible importing country to address a public health issue in that country during a national emergency, or for public non‑commercial use of the product.

 

Thus, the Australian Government is in a position to authorise Australian companies to manufacture patented medicines both for the benefit of Australian citizens and citizens of other countries.

 

International Treaties And Global Adoption of Compulsory Licences

 

The original purpose of a compulsory licence can be found in early international treaties concerning patent rights, such as amendments introduced in 1925 to the Paris Convention for the Protection of Industrial Property, which introduced the compulsory licence as a remedy to forfeiture for failing to work a patent. Later international agreements, such as the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), disconnected the compulsory licence from a working requirement and expressly contemplated government exploitation without obtaining the permission of the right holder for reasons of national emergencies or cases of “extreme urgency”. Thus, Australia’s Crown use provisions can be viewed as an enactment of the provisions contemplated by TRIPS.

 

Such emergency provisions, however, would be of little use for a signatory country that lacked the pharmaceutical manufacturing capabilities to produce therapeutics, as was recognized by the Doha Declaration at Paragraph 6. The Doha Declaration Paragraph 6 provisions were incorporated in new Article 31bis of TRIPS, which must be accepted by signatory states by December 2021. Provisions in section 136 of the Australian Patent Act reflect the new amendment to TRIPS by allowing exploitation and exporting of patented medicines to another country facing a national emergency. Like Australia, other countries have also implemented this provision that could be used to combat the COVID-19 pandemic both domestically and through exportation. 

 

Canada became the first exporting country to use Paragraph 6, when it authorised Apotex to manufacture and export to Rwanda an HIV treatment, which was protected by nine patents. Subsequently, Canada implemented Paragraph 6 of the Doha Declaration in Canada under its Access to Medicines Regime. Canada is not alone in taking steps to ensure access to medicines, other countries with strong pharmaceutical manufacturing facilities, like China, have also implemented compulsory licencing provisions that allow the Chinese Government to exploit a patented medicine for domestic use as well as exportation for the benefit of the public health. Similarly, India with its strong generic drug manufacturing industry, has implemented legislation allowing compulsory licencing provisions for the exportation of patented medicines.  Although, India also criticised the system created to use Paragraph 6 as “too complex, cumbersome and administratively unwieldy for further use. Despite the potential intricacies in practicing Paragraph 6, many other nations have likewise adopted laws to address the needs of underdeveloped countries.

 

The present COVID-19 pandemic, however, has now caused some countries to assess the willingness to export critical medicines.  India’s recent restrictions on the export of anti-tuberculosis medicines was deemed necessary to maintain a domestic supply of these medicines.  The United Kingdom has likewise restricted the export of more than 80 key medicines to prevent shortages during the fight against COVID-19.

 

Moreover, in implementing the Doha Declaration Paragraph 6 provisions, these nations essentially declared that patent rights could be set aside domestically such that medicines could domestically manufactured and exported to qualifying countries in need. At the same time, several of these same countries, including Australia, Germany, and France, declared that they would not use Paragraph 6 to import protected medicines. However, now, in the time of a pandemic like COVID-19, countries which had previously focused on government authorisation to exploit patent medicines for domestic manufacture and export, have now turned to strengthening their own ability to obtain and use patented medicines domestically for the benefit of its own citizens.

 

Although Canada had already implemented TRIPS Article 31(b) allowing the Commissioner of Patents to “authorize the use of a patented invention by the government”, the Canadian Government recently increased its authority to exploit patented medicines in response to COVID-19.  At the end of March, Canada introduced legislation to “make, construct, use and sell a patented invention to the extent necessary to respond to a public health emergency that is a matter of national concern”. European nations facing huge COVID-19 outbreaks, have similar introduced new measures. Germany amended its patent law to allow Government use of a patented invention for public safety reasons. France did not amend its patent law, but rather introduced legislation enabling the French Government to appropriate medicines for the health crisis. Recently, Israel took steps beyond implementing legislation by granted a compulsory licence to import Kaletra® (lopinavir 200mg/ritonavir 50mg) to treat COVID-19 patients. Although Kaletra® is protected in Israel by three patents, the patentee, AbbVie, was unable to supply the quantity Israel deemed necessary and therefore authorised the import from an Indian manufacturer. Ultimately, AbbVie agreed to waive its patent rights to Kaletra®.

 

Even without such COVID-19 specific legislation, it is likely that most national patent acts contain some authorisation of government use that could be exploited for the public health.  For example, in the United States (“US”), the law sets out that a patent owner is entitled to reasonable compensation for the use of a patented invention by or at the direction of the US Government. Unlike the Australian Crown use provisions, the United States law does not contain an express provision authorising infringement but rather specifies a remedy in the form of reasonable compensation should infringement occur. Despite the lack of a direct authorisation, this law could provide the US Government a means to domestically exploit patented medicines to fight the COVID-19 pandemic. But, in view of the recent negotiations between the Israeli Government and AbbVie, it seems that in this global health crisis, pharmaceutical patentees may be willing to quickly address needs of a particular country and/or waive patent rights where they lack the capacity to supply the needed medicines.

 

Conclusion

 

Australia, along with the rest of the world is armed with the necessary legislation to use patented medicines to treat the COVID-19 pandemic.  And, we have now seen steps in this direction, with Israel authorising the importation of a patent protected medicine to treat COVID-19 patients. Now we must wait to see which medicines may ultimately prove successful in this fight and whether any nation needs to exercise its authority, as Israel did, to obtains such medicines for the benefit of its citizens.  

 

 

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