Building national initiatives of compulsory licences. Reflecting on the Indian jurisprudence as a model for developing countries

Author:Thaddeus Manu
Position:School of Law, University of Hertfordshire, Hatfield, United Kingdom.
Pages:23-48
SUMMARY

Purpose - The purpose of this paper is to examine the extent to which developing countries could build national initiatives of compulsory licences. Design/methodology/approach - The focus of this article is only on developing countries. The author reflects on the Indian patent jurisprudence regarding the operational relationship between the... (see full summary)

 
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Building national initiatives of
compulsory licences
Reecting on the Indian jurisprudence as
a model for developing countries
Thaddeus Manu
School of Law, University of Hertfordshire, Hateld, UK
Abstract
Purpose – The purpose of this paper is to examine the extent to which developing countries could
build national initiatives of compulsory licences.
Design/methodology/approach – The focus of this article is only on developing countries. The
author reects on the Indian patent jurisprudence regarding the operational relationship between the
general principles applicable to working of patented inventions locally and the grant of compulsory
licences. The discussion that follows is based on a review of the case: Bayer Corporation versus Natco
Pharma with a view to presenting a model for developing countries to maintain that the public interest
principle of patent law is well-founded in their domestic patent regimes.
Findings – The analysis conrms that failure to work locally continues to be abusive of the patent
right under the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement, and remains
a valid condition on which to grant a compulsory licence. Thus, this reverses the often-contrary
misconception that has become almost a unanimous assumption that failure to work basis for granting
compulsory licensing would violate Article 27(1) of TRIPS and its enforcement provisions on patent.
Originality/value – The author argues that as no member state has challenged the legality of Indian’s
decision in the World Trade Organisation, under the dispute settlement understanding (DSU) system is
more supportive of the contention that failure to work locally continues to be permissible under TRIPS
and remains valid conditions on which member states can grant compulsory licences. This further adds
weight to the understanding that nothing in the light of TRIPS would, in fact, preclude any possibility
of developing countries amending their patent laws accordingly to maintain that the public interest
principle underlining patent law is well-founded in their domestic patent regimes.
Keywords Compulsory licensing, Developed countries, Essential medicines,
Local working requirements, The TRIPS Agreement
Paper type Research paper
Introduction
While a great deal of importance is placed on the act of obtaining patent rights over an
invention, it is also the case that the primary purpose of patent law is to stimulate
technological innovation, transfer and dissemination of it to ensure optimum social
welfare and economic growth[1]. This suggests that the most fundamental aspect of
patent law – the limited exclusive rights granted to patentees to exercise control over
who uses them, when and under what terms and conditions is it best to sell or grant
licences are not absolute but rather qualied by several limitations, particularly those
associated with public interests[2].
One legal mechanism embedded in the legislative tradition of patent law is a
mandatory requirement that the patented inventions be manufactured locally in the
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1477-0024.htm
Compulsory
licences
23
Received 19 July 2014
Revised 2 January 2015
2 March 2015
3 March 2015
Accepted 3 March 2015
Journalof International Trade Law
andPolicy
Vol.14 No. 1, 2015
pp.23-48
©Emerald Group Publishing Limited
1477-0024
DOI 10.1108/JITLP-07-2014-0015
patent-granting country to safeguard that patentees satisfy the reasonable
requirements of the public. The legal basis for local working requirements in the context
of patent law is the mandatory obligation dictating that, to maintain exclusive rights,
the owner of a patent must manufacture the patented products or apply the processes
thereof within the patent-granting country (Halewood, 1997, p. 249). In other words, once
patentees take patents on inventions, they must seriously exploit them locally in the
country where the patent was taken out[3].
Thus, this interpretation signies that if the patent-granting country demands, as
mandatory duties on the part of patentees to manufacture the patented invention locally
than they, patentees would be obliged to satisfy those requirements (Doane, 1994,
p. 479). A close or narrow reading of the principle underlining local working
requirements of patents would imply that importation of patented products and putting
them on sale, even on reasonable terms, would not satisfy a mandatory local working
condition of it – a legal prerequisite, which actually demands that patentees locate and
manufacture their patented inventions locally in the granting country[4].
By default, such a patentee will certainly be in contravention of the constitutional
intent behind the grant of patents – local application of the patented invention through
industrial establishment to foster technological progress that would increase
socio-economic welfare in the fundamental interests of the public[5]. This contention is
premised on the understanding that local manufacture or working of the patented
inventions is deemed the most efcient way to transfer technology, which in itself is one
of the primary objectives of the present global patent system[6]. Furthermore, satisfying
the reasonable requirements of the public and improving socio-economic welfare are
only possible if patentees manufacture the patented inventions or sufciently apply the
processes in the patent-granting country.
Signicantly, one crucial instrument to ensure patents work in the fundamental
interest of the public is the threat of compulsory licensing if patentees fail to be bound by
an afrmative duty to remain under the obligation to exploit patents locally in
accordance with the laws of the granting country[7]. Considerably, following the
inception of the Agreement on Trade-Related Aspects of Intellectual Property Rights[8]
(TRIPS) into the World Trade Organisation (WTO) system[9], it seems that the
traditional patent law concept – a requirement that the patented invention be
manufactured locally in the patent-granting country has been brought into prodigious
dispute[10], especially at a time when several developing countries are predominately
facing high burden of diseases and a lack of essential medicines[11].
The common claim along this viewpoint, although remains a subject that is founded
on profound misconceptions, advocates argue that Article 27(1) of TRIPS subsequently
redened “working” to include the possibility of being or adequately satised by
importation[12]. In other words, the conclusion often drawn from this misinterpretation
of Article 27(1) of TRIPS is that it provides local manufacture be dened as made
available in the country, including through imports, rather than a direct local
manufacture in the patent-granting country (Adelman and Badia, 1996, p. 517).
Nevertheless, it seems that the preceding contradictory claim conicts with what
several scholars view as the correct interpretation of Article 27(1), in accordance with
Vienna Convention on the Law of Treaties[13] on which GATT/WTO jurisprudence has
been built up[14]. In fact, the true interpretation drawn from well-established
understandings of the canons of international treaty interpretation thereof suggests
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