PhRMA’s Special 301 comments to the U.S. Trade Representative include a section on the compulsory licensing provisions in India’s Patents Act.  PhRMA recommends that “India should ensure that the CL provisions comply with TRIPS by… Eliminating price as a trigger to CL.  (Section 84(1)(b) of the Indian Patent Act which would permit a CL if the patented invention is not available to the public at a reasonably affordable price’).”

But TRIPS does not prevent WTO Members from using price as a justification for the grant of compulsory licenses.  TRIPS Article 31 acknowledges that countries can allow use of a patent without authorization of the patent holder as long as certain conditions are respected, usually including prior negotiation with the patent holder and the payment of adequate remuneration.  TRIPS gives countries a lot of flexibility in the way they structure compulsory licensing provisions in their national laws, and the Doha Declaration on TRIPS and Public Health explicitly states that  “Each member has the right to grant compulsory licenses and the freedom to determine the grounds upon which such licenses are granted.”

Moreover, many WTO countries have laws that explicitly permit compulsory licenses in situations where patented goods are not being made available at reasonable terms.  For instance, the French Intellectual Property Code allows a compulsory license to be granted if  “…neither the owner of the patent nor his successor in title has marketed the product that is the subject matter of the patent in a quantity sufficient to satisfy the needs of the French market.” (Art. L 613-11(b))  Specifically regarding medicines patents, the law states that “…products may be subject to ex officio licenses …in the event of such medicines being made available to the public in insufficient quantity or quality or at abnormally high prices.” (Article L 613-16, Emphasis added)

Other examples include:

  • In the UK, the Patents Act 1977 allows compulsory licenses when “…demand for the product in the United Kingdom (i) is not being met on reasonable terms.”  (Art. 48(2)(b))
  • In Denmark, the Consolidated Patents Act allows compulsory licenses when a patents are not “worked to a reasonable extent.” (Art. 45(1))
  • In Portugal, the Industrial Property Code states that a patentee who “does not exploit an invention, directly or under licence, or does not do so in such a way as to meet national needs, may be obliged to grant a licence for its exploitation.” (Art. 108 (1))

 

[For a description of TRIPS Article 31 and options for implementing its obligations, see Chapter 25 of the ICTSD Resource Book on TRIPS and Development.  Thanks to PIJIP fellow Chelsea Masters for researching compulsory licensing provisions in OECD laws.]