In testimony before the U.S. House of Representatives Subcommittee on Intellectual Property, Competition and the Internet on 27 June 2012 (Hearing: Protecting Patents, Trade Secrets, and Market Access), the Deputy Director of the U.S. Patent and Trademark Office, who also serves as Undersecretary of Commerce for Intellectual Property, grossly misrepresented the scope of permissible compulsory licensing under the WTO TRIPS Agreement.
In her misleading testimony, Teresa Stanek Rea said: “We are consistent on our efforts … of trying to stop these compulsory licenses.” Rea said she was particularly disappointed in March, when India’s Patents Office ordered Bayer AG to grant an Indian generics maker (Natco) a compulsory license for the cancer drug Nexavar, ruling that it was too expensive for most people to afford. (Note: the generic was 3% the cost of overpriced Bayer product and reached only a tiny fraction of eligible cancer patients in India.) “I was quite dismayed and surprised when they issued that compulsory license,” Rea told the committee, saying she believes the issuance of the Indian compulsory license was in violation of the Agreement on Trade Related Aspects of Intellectual Property Rights, an international pact administered by the World Trade Organization which sets minimum standards for intellectual property regulation. Rea said the USPTO is working to stem the tide of IP infringement in foreign countries by the use of a host of training programs and educational efforts aimed at foreign officials and judges along with the placement USPTO overseas IP attaches in Thailand, China, Russia, India, Brazil and Egypt.
Article 31 of the TRIPS Agreement expressly permits compulsory licenses as does the much earlier Paris Convention on the Protection of Industrial Property. The U.S. Itself routinely makes government use of patented inventions pursuant to Congressional authority under 28 U.S.C. Sec. 1498, but also has other laws allowing compulsory licenses in specific circumstances. Compulsory licenses have been allowed globally in the vast majority of intellectual property regimes since the 19th century. And, the patent on Nexavar in India had been granted under a 2005 Amended Patents Act that clearly articulated compulsory licensing rights at the time that Bayer prosecuted its patent and the patent was granted.
Finally, and most to the point, the US signed the Doha Declaration on the TRIPS Agreement and Public Health that pointedly grants countries the right to issue compulsory licenses, to define the terms upon which such licenses are granted – without restrictions, and to define the emergency circumstances that permit licenses to be granted without any prior notice to or negotiation with the patent holder (note: these expedited, no-negotiation procedures were not used in the Natco case). Under the Doha Declaration, countries are permitted to issue compulsory licenses in order to ensure “access to medicines for all” – something that India has attempted to do via the license granted.
I assume Ms. Rea knows better about the global framework and its authorization of compulsory licenses. I also assume that she knows that the India Patents Office used three independent grounds to issue the license in question. Unlike a good lawyer, she has failed to specify how the Indian license is non-TRIPS compliant, though its very hard to see how anyone could conclude that Nexavare wasn’t obscenely overpriced, grossly inadequately supplied in relation to patient demand, and lacking any local manufacturing such as required. Bayer remains freely to cynically pursue its appeal rights in court, but US officials should avoid misleading Congress about other countries’ sovereign rights to issue compulsory licenses pursuant to national law and international norms.
Unfortunately, the sub-committee members themselves showed a blinding ignorance of international and IP law as well, going so far in one instance to suggest that US patents should have extra-territorial effect and in another instance suggesting that compulsory licenses are theft, even though they are issued pursuant to sovereign authority and involve payment of royalties to the right holder.
One of the scariest parts of Ms. Rea’s testimony is her promise that the USPTO will spread its disinformation about global IP/compulsory licensing standards to Thailand, China, India, Brazil, and Egypt. Of course, these markets are all growing cash cows for Big Pharma, and the USPTO willfully pursues its monopoly interests at home and abroad. Why not call the training/education sessions exactly what they are – propaganda and strong-arm bully tactics designed to undermine access to affordable medicines for poor people in developing countries.