COMPULSORY LICENSING IN INDIAN PATENTS ACT, 1970: WITH A SPECIAL FOCUS

ON PHARMACEUTICALS

A DISSERTATION SUBMITTED TO THE GURU GOBIND SINGH INDRAPRASTHA UNIVERSITY IN

PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF BACHELOR OF LAWS

SUPERVISOR:- SUBMITTED BY:-

MR JASDEEP AHUJA MOHD. SAAD NASIR

(ASST. PROFESSOR) (Xth SEMESTER)

ROLL. NO:- 09913403812

IDEAL INSTITUTE OF MANAGEMENT AND TECHNOLOGY

(SCHOOL OF LAW)
GURU GOBIND SINGH INDRAPRASTHA UNIVERSITY, DWARKA, DELHI

I
 DECLARATION

I, Mohd. Saad Nasir, student of BA.LLB.(H.), hereby declare that the dissertation titled “Compulsory
Licensing under Indian Patents Act,1970” which is submitted by me Ideal Institute of Management and
Technology & School of Law, Delhi in partial fulfillment of the requirement for the award of degree of
BA.LLB.(H.) by the Guru Gobind Singh Indraprastha University, Delhi is my original work.

It is further declared that all sources of information used have been duly acknowledged.

I understand that the dissertation may be electronically checked for plagiarism by the use of plagiarism
detection software to assess the originality of the submitted work.

Date: 6th April 2018

Mohd. Saad Nasir

Xth Semester

Enrollment No.

09913403812

II
 CERTIFICATE

On the basis of declaration submitted by Mohd.Saad Nasir, student of BA.LLB.(H.), I hereby

certify that the dissertation titled “Compulsory licensing in the Indian Patents Act, 1970: With
a special focus on pharmaceuticals” submitted to Ideal Institute of Management and Technology
& School of Law, DELHI in partial fulfillment of the requirement for the award of the degree of
BA.LLB.(H.) BY GURU GOBIND SINGH INDRAPRASTHA UNIVERSITY, DELHI has been
carried out under my guidance and supervision.

Date: 6th April 2018

Jasdeep Ahuja

(Asst. Professor)

IIMT & School of Law

(GGSIP University, Delhi.)

III
 ACKNOWLEDGEMENT

As the research has been successfully concluded, the researcher would like to take this opportunity
and sincerely thank a number of people for their continual guidance and unceasing support, without
which it would’ve been impossible to compile this research.

The researcher would like to express my sincere thanks to Mr. TPS Rathore (Principal of School
of Law) Ideal Institute of Management and Technology and School of Law, Delhi of the GGSIPU
for infusing the vital art of legal research in the curriculum through the preparation of the
Dissertation and thereby also providing an invaluable opportunity to the researcher to present this
viewpoints on the area of his interest.

In addition, the researcher would like to express his indebtedness towards Assistant Prof. Mr
Jasdeep Ahuja, who undertook the pivotal role of supervising the researcher’s arduous journey
of preparation of this dissertation and without those constant nurturing guidance this paper could
not have materialised.

Date: 6th April 2018

Mohd. Saad Nasir

IV
TABLE OF CONTENTS ...............................................................................................................

TABLE OF CASES

I. CHAPTER I ........................................................................................................................... 1

A. INTRODUCTION ................................................................................................................ 1

B. STATEMENT OF PROBLEM:................................................................................................. 5

C. OBJECTIVES OF STUDY: .................................................................................................. 5

D. SURVEY OF LITERATURE ................................................................................................ 6

a. Books ................................................................................................................................ 6

b. Articles and Journals ....................................................................................................... 8

E. Hypothesis: ........................................................................................................................ 11

F. RESEARCH METHODOLOGY ............................................................................................. 11

G. SOURCES ........................................................................................................................ 12

a. Primary Sources ............................................................................................................. 12

b. Secondary Sources ......................................................................................................... 12

II. CHAPTER- II .................................................................................................................. 13

A. COMPLUSORY-LICENSES ............................................ ERROR! BOOKMARK NOT DEFINED.

a. Concepts and History ..................................................................................................... 18

III. CHAPTER- III ................................................................................................................. 21

A. THE DOHA-DECLARATION ON TRIPS-AGREEMENT................................................ 21

B. THE ROLE OF TRIPS AND IPRS............................................................................... 23

b. Scope and changes brought by Doha-Declaration ........................................................ 24

i. Public-health Measures............................................................................................... 26

ii. Flexibility in TRIPS.................................................................................................... 30

iii. Interpretation ........................................................................................................... 31

V
 iv. Emergency .............................................................................................................. 33

....................................................................................................................................................... 33

v. Exhaustion .................................................................................................................. 34

vi. Members with insufficient or no manufacturing capacities .................................... 36

vii. Extension of Transitional period for LDCs ............................................................ 38

viii. Special treatment under TRIPS ............................................................................... 39

ix. Legal status of Doha-Declaration ........................................................................... 40

c. The TRIPS-Agreement .................................................................................................... 42

i. A multi-dimensional problem set ............................................................................... 42

ii. Article 31(f) of the TRIPS-Agreement ....................................................................... 43

IV. CHPATER IV .................................................................................................................. 47

A. CONTROVERSIES SURROUNDING THE STIPULATIONS AND ACTION OF COMPULSORY

LICENSING................................................................................................................................. 47

V. CHAPTER V .................................................................................................................... 51

A. THE INDIAN SCENARIO .............................................................................................. 51

B. INVOKING PROVISIONS UNDER INDIAN PATENT ACT, 2005 ..................................... 51

C. THE GLEEVEC CASE ...................................................................................................... 52

D. THE NEXAVAR CASE .................................................................................................. 54

VI. CHAPTER VI .................................................................................................................. 55

A. APPROACHES OF VARIOUS COUNTRIES TOWARDS COMPULSORY LICENSING (CL) 55

a. South Africa s Approach ................................................................................................ 55

b. Brazil’s Approach .......................................................................................................... 56

c. United States’ Approach ................................................................................................ 56

B. DIVERGING VIEWS OF THE DEVELOPED AND DEVELOPING COUNTRIES ..................... 57

VI
 a. Arguments supporting stronger Intellectual Property Protection for Generic Medical-
drugss by the Developed Countries and their Pharmaceutical Industry .............................. 57

i. Investment in Research and Development ................................................................. 58

ii. Increase in FDI and transfer of Technology ............................................................... 59

iii. Assured Quality of Pharmaceutical products .......................................................... 59

iv. Other Factors areto be considered affecting access ................................................ 59

b. Arguments of the Developing Countries against stronger Intellectual Property Rights

Protection for Generic Medical-drugss................................................................................. 60

i. History Repeats Itself; Colonisation v Sovereignty ................................................... 60

ii. Research and Development ........................................................................................ 61

C. RE-EVALUATING INTERNATIONAL INTELLECTUAL PROPERTY AND THE RIGHT TO

HEALTH RELATIONSHIP ........................................................................................................... 61

VII. CHAPTER VII ................................................................................................................. 68

A. PROPOSING SOLUTIONS: ARTICLE 31 BASED SOLUTIONS ........................................... 68

a. Article 31 ........................................................................................................................ 68

b. Parallel compulsory licensing........................................................................................ 68

c. Regional market arrangements ...................................................................................... 70

d. The legal fiction of the pharmaceutical production export zone (PPEZ) ...................... 71

e. Anticompetitive practices remediation ........................................................................... 74

f. Article 31(f) conclusion .................................................................................................. 75

B. OTHER SOLUTIONS ............................................................................................................ 76

C. THE ISSUE OF REMUNERATION ..................................................................................... 78

a. Compulsory licensing ..................................................................................................... 79

b. Exceptions ...................................................................................................................... 81

D. ALTERNATIVES TO COMPULSORY LICENSING.............................................................. 83

VII
 a. Anticipating Volatility .................................................................................................... 83

b. Patent Linkage................................................................................................................ 84

c. Patent Pools ................................................................................................................... 85

d. Price regulation.............................................................................................................. 88

e. Research grants .............................................................................................................. 90

VIII. CHAPTER VIII ............................................................................................................ 92

A. CONCLUSION .............................................................................................................. 92

IX. BIBLIOGRAPHY ............................................................................................................ 93

A. STATUTES AND CONVENTIONS REFERRED ................................................................... 93

B. WTO COVERED AGREEMENTS......................................................................................... 93

C. BOOKS ............................................................................................................................ 93

D. ARTICLES AND JOURNALS ............................................................................................. 94

VIII
 TABLE OF CASES

1. BAYER CORPORATION & ANR. VS U. O. I AND ORS.

2. NOVARTIS VS U. O .I AND ORS.

IX
 I. CHAPTER I

A. INTRODUCTION

“IPR protection is the key to bring forward new medical-drugss, vaccines and diagnostics
urgently needed for the health of the world’s poorest people” – Kofi Annan

“Compulsory licensing refers to a grant of IP licenses, particularly of patents or copyrights by a

government of a sovereign state without the consent of the owner for the purpose of wide
utilization of the protected right by a third party”1. The grant of such a patent license can be for
fulfilling the following objectives: substantial production of patented products (e.g. patented
drugs) to cure a disease, anti-trust act to allow fair competition and non-commercial usage in the
interest of the general public. However, “because they limit the power conferred by patents,
complusory-licenses have long become controversial”2.”

“At the Doha World Trade Organization (WTO) Ministerial Conference (9-14 November 2001),
the WTO Members took the unprecedented step of adopting a special declaration” 3 on issues
related to the “Agreement on Trade-Related Aspects of Intellectual Property (TRIPS) and Public-
health”4. “Discussion on this declaration was one of the outstanding issues at the Conference”5,

1
F.M. SCHERER & JAYASHREE WATAL, 'POST-TRIPS OPTIONS FOR ACCESS TO PATENTED MEDICAL-
DRUGS IN DEVELOPING COUNTRIES ' (www.cmhealth.org 2001) < http://www.cmhealth.org/docs/-
wg4_paper1.pdf > accessed 20 October 2014.
2
Love J and Hubbard T,, 'Prizes for innovation of new medical-drugs and vaccines' [2009] AHL , 155
3
Paragraph 17 of the general Ministerial Declaration states: “We stress the importance we attach to
implementation and interpretation of the Agreement on Trade-Related Aspects of Intellectual Property Rights
(TRIPS-Agreement) in a manner supportive of public-health, by promoting both access to existing medical-drugs
and research and development into new medical-drugs and, in this connection, are adopting a separate
Declaration”.
4
“Doha Ministerial Declaration on the TRIPS-Agreement and Public-health” (hereinafter “the Doha-Declaration”),
WT/MIN(01)/DEC/W/2, 14 November 2001 (see the full text in Annex 1) .
5
The Director General of WTO emphasized the importance of this issue on the opening day of the Conference,
indicating that agreement on public-health and TRIPS was the “deal breaker” of the new round. Pascal Lamy, the
EU Commissioner for Trade, stated at the Conference that “… we must also find the right mix of trade and other
policies — consider the passion surrounding our debate of TRIPS and Access to Medical-drugs, which has risen so
dramatically to become a clearly defining issue for us this week, and rightly so”.

Page 1
which launched a “new round of trade negotiations on a broad range of issues”6. This was the first
result of a process that started in early 2001 when, upon the request and plead of the African Group,
the Council for the TRIPS agreed to deal specifically with the relationship between the TRIPS-
Agreement and Public-health.”

“The African Group’s request, supported by other developing countries, reflected growing
concerns about the implications of the TRIPS-Agreement (particularly the Agreement's provisions
on patents) with regard to access to drugs. The HIV crisis in sub-Saharan African countries, the
attempts by the pharmaceutical industry, “backed by some governments” 7 , to block the
implementation of TRIPS-compatible and in consistent measures by the South African
Government and “the complaint brought by the USA against Brazil in relation to complusory-
licenses”8, were looked upon as manifestations of a conflict between the recognition of intellectual
property rights (IPRs) and more essential public-health objectives. “Although one of the stated
goals of the TRIPS-Agreement was to reduce tensions arising from intellectual property
protection”9, intellectual property protection for pharmaceuticals and its effects on public-health,
and access to drugs in particular, remained commonly a controversial issue.”

“The developing countries moved to specifically addressedpublic-health issues at the Council for
TRIPS were grounded on the conviction since theTRIPS-Agreement should have not prevented
Members from adopting measures necessary to ensure access to medical drugs and to satisfy other
public-health requirements. Several documented papers, particularly by World Health

6
Including implementation, agriculture, services, industrial tariffs, subsidies, anti-dumping, regional trade
agreements and environment.
7
US Public Law 105-277 (105th Congress, 1999) established that “..None of the funds appropriated under this
heading may be available for assistance for the central Government of the Republic of South Africa, until the
Secretary of State reports in writing to the appropriate committees of the Congress on the steps being taken by
the United States Government to work with the Government of the Republic of South Africa to negotiate the
repeal, suspension, or termination of section 15 (c) of South Africa’s Medical-drugs and Related Substances Control
Amendment Act No. 90 of 1997”. After the adoption of the TRIPS-Agreement, the US Government continued to list
countries according to the Special 301 section of the US Trade Act, in many cases challenging provisions in national
laws relevant to public-health
8
The declared intention of the Brazilian Government was to procure anti-retrovirals at prices lower than those
charged by patent owners, in the framework of its government-supported program against AIDS. The USA
withdrew its complaint upon an agreement with the Brazilian government in March 2001
9
Preamble of the Agreement, paragraph 7: “Emphasizing the importance of reducing tensions by reaching
strengthened commitments to resolve disputes on trade-related intellectual property issues through multilateral
procedures”.

Page 2
Organisation and U.N. conference”10, as well as “extensively submitted academic work”11 and
NGO statements12, had highlighted the flexibility allowed by the TRIPS-Agreement, especially in
relation to exceptions in patent rights, parallel imports of medical drugs and compulsory licensing.
The developing countries sought to a declaration, not because of the lack of clarity in the
Agreement, but as an outcome of the resistence that the authorities in those countries had
experienced when they were trying to make effective use of such flexibility at the national level.”

“The relationship between public-health and the TRIPS-Agreement had been examined in 1996
by the World Health Assembly, which addressed the subject in a resolution on the “Revised Drug
Strategy” 13 . Subsequent resolutions were adopted by the World Health Assembly in 2001” 14 ,
addressed the need to evaluate the impact of the TRIPS-Agreement on access to drugs, local
manufacturing capacity and the development of novelty drugs15.”

“The Council for TRIPS-agreement systematically considered the relations ofpublic-health and
TRIPS-agreement for the very first time in a special session in June 2001. Some of the developing
countries16 and the European-Commission and its Member-States17 each submitted documents to
the Council. In August and September 2001, the TRIPS-Council held some additional sessions for
discussions on this issue at hand and the June meeting by the African Group and other developing

10
UNCTAD (1996)
11
annotated bibliography in WHO (2001).
12
Oxfam (2002 ), Médecins Sans Frontières (2001); VSO (2001).
13
WHO was mandated “to report on the impact of the work of the WTO with respect to national drug policies and
essential drugs and make recommendations for collaboration between WTO and WHO, as appropriate”
(Resolution WHA49.14, 25 May 1996).
14
Resolutions WHA54.10 and WHA54.11.
15
The UN Sub-Commission for the Promotion and Protection of Human Rights also pointed out the "apparent
conflicts between the intellectual property rights regime embodied in the TRIPS-Agreement, on the one hand, and
international human rights law, on the other", including human rights to food, health and self-determination
(Commission on Human Rights, Sub-Commission on the Promotion and Protection of Human Rights, Fifty-second
session, Agenda item 4, The Realization of Economic, Social and Cultural Rights, Intellectual Property Rights and
Human Rights).
16
The submission by the African Group, Barbados, Bolivia, Brazil, Cuba, Dominican Republic, Ecuador, Honduras,
India, Indonesia, Jamaica, Pakistan, Paraguay, Philippines, Peru, Sri Lanka, Thailand and Venezuela (IP/C/W/296).
17
See IP/C/W/280, 12 June 2001

Page 3
countries18 presented a draft text for a ministerial declaration on the TRIPS-Agreement and Public-
Health. “This proposal was to be a comprehensive text addressing political principles to ensure
that the TRIPS-Agreement does not undermine the legitimacy of the right of WTO Members to
formulate their own public-health policies, as well as practical clarifications for the provisions
related to compulsory-licensing, parallel-importation, production for export to a country with
insufficient production capacity, and data protection.The text also included a proposal for
evaluation of the aftermath of the TRIPS-Agreement, with particular and specific emphasis on
access to medical-drugs andresearch&development for the preventive treatment of diseases
predominantly affecting people in developing and least developed countries (LDCs).”

“The USA, Japan, Switzerland, Australia and Canada circulated an alternative text stressing upon
the mutual-importance of intellectual-property-protection for research&development, questioning
what intellectual property contributes to public-health objectives globally. An EC non-paper had
also been circulated containing that proposed possible solutions to the problem of production for
exports to fulfill a compulsory license in a country with no or insufficient production capacity. All
Negotiations on these texts took place at the General-Council. The eventual adoption of a
declaration on Public-Health and TRIPS-Agreement was the aftermath result of a carefully
elaborated and explained strategy by developing countries 19 . Despite the initial resistance and
obstacles by some of the developed countries20, the Doha-Declaration was adopted in consensus,
on the basis of last minute compromises and adjustment of a delicate balance in written-
documents21 .””

18
Bangladesh, Barbados, Bolivia, Brazil, Cuba, Dominican Republic, Ecuador, Haiti, Honduras, India, Indonesia,
Jamaica, Pakistan, Paraguay, Philippines, Peru, Sri Lanka, Thailand, and Venezuela.
19
“Doha is a concrete success to which developing countries and NGOs can point. Whether Doha represents a
significant shift in the power of developing countries to influence the standard-setting process in intellectual
property within WTO remains a matter of conjecture” (Drahos, 2002, p. 26).
20
For some observers, the “anthrax crisis” shifted the balance to the public interest side in the Doha debate on
public-health and TRIPS (see, e.g., South Centre, 2001, p. 11). “The US was suddenly faced with a situation where
there was a perceived need for immediate and widespread access to a product still on-patent, where the exclusive
owner of that patent, Bayer in this case, appeared unable or unwilling to offer enough supplies to meet immediate
demand. The US Government’s first instinct was to consider the compulsory licence option and seek out
alternative manufacturers.” (Kettler, 2002, p. 9) The Canadian government also took actions to ensure supply of
the anti-anthrax drug despite the patent held by Bayer (see, e.g., Harmon, 2001).
21
Developing countries, in particular, abandoned for study their original position asking for the declaration to state
that “Nothing in the TRIPS-Agreement shall prevent Members from taking measures to protect public-health”

Page 4
“Most of the L.D.S or L.D.C suggested that pharmaceuticals should be excluded from the purview
patent law, due to the possibility of abusing monopoly rights and unfair advantage as well as
exploitation of the absence of competition that results from the grant of patent.“This became
problematic in case of medical-drugs, since it was possible that the inventor raised the prices of
the patented drug making it inaccessible to the poor and needy. On the other hand, Holders of
patent law justify patents on drugs by arguing that removing or limiting patent rights will
drastically affect research and development in the pharmaceutical sector.Both Indian-Patent Act,
1970 and the TRIPS-Agreement have provided fir the conditional grant of compulsory-licenses.”

B. STATEMENT OF PROBLEM:

“The reason why researcher has opted for this topic is because through his research he found out
that even after the passing of TRIPS-Agreement for compulsory-licensing for all practical
purposes the benefits of the TRIPS-Agreement continued to evade the masses and to the present
date causes international controversies and interference in the field of law and national decision
making policy.”

“The researcher has analyzed the effects of the TRIPS-Agreement in improving the status of
greater and wider access to medical-drugs for the masses and till what extent they have been
successful and other effects. The reason the researcher has opted for this topic is because he feels
that it is socially very relevant for the sake of humanity and concerns a lot of people. He wants to
voice the concerns of the voice-less and are not audible to the law makers and in lieu to help them
out and spread legal knowledge with awareness towards their rights to break stereotypes through
this dissertation helping them get what they deserve.”

C. OBJECTIVES OF STUDY:

Through this dissertation, the Researcher has certain objectives he wants to fulfill:

 “He wants to voice the inherent rightsof healthcare granted to every human.”
 “He has an opportunity to spread legal awareness and share knowledge by doing his bit
through his dissertation for society and make a difference to at least a few lives by
bringing them from the darkness of ignorance to the light of knowledge.”

(IP/C/W/312, WT/GC/W/450, 4 October 2001), which had been one of the main points of contention during the
preparatory work

Page 5
  “The researcher intends to explore an area which hasn’t been dwelled upon before and
to throw light and bring the real picture before people’s eyes and how there is the need
for reform.”
 “Pertaining specifically to the right of healthcare, the objective of this dissertation is to
give suggestions for future policy decision making at the international level in a way
that no bias is left in the same vis a vis producers and consumers.”

D. SURVEY OF LITERATURE

a. Books

1. “Johns Adrian, Piracy: The Intellectual Property Wars from Gutenberg to Gates (The
University of Chicago Press, USA 2009).
Since the rise of Napster and other file-sharing services in its wake, most of us have
assumed that intellectual piracy is a product of the digital age and that it threatens creative
expression as never before.” The Motion Picture Association of America, for instance,
claimed that in 2005 the film industry lost $2.3 billion in revenue to piracy online. But
here Adrian Johns shows that piracy has a much longer and more vital history than we
have realized—one that has been largely forgotten and is little
understood.“Piracy explores the intellectual property wars from the advent of print culture
in the fifteenth century to the reign of the Internet in the twenty-first. Brimming with
broader implications for today’s debates over open access, fair use, free culture, and the
like, Johns’s book ultimately argues that piracy has always stood at the center of our
attempts to reconcile creativity and commerce—and that piracy has been an engine of
social, technological, and intellectual innovations as often as it has been their adversary.”

2. “Scherer F M, Competition Policy and Intellectual Property Rights in the Knowledge-

based Economy (University of Calgary Press, 1998)”

“The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs)

requires all WTO Member countries to adapt their laws to the minimum standards set out

Page 6
 in the Agreement, within established transitional periods. Conforming with the Agreement
by recognizing or strengthening the protection of pharmaceutical products and processes
by intellectual property rights (IPRs) has posed a special challenge for developing
countries. “The way in which the required legislative reform is made may have a significant
impact on public-health policies, and particularly on the population’s access to drugs.”

“This book presents options for the design and implementation of public-health-sensitive
patent policies in developing countries.”

3. “Frederick M Abbott , Rudolf V Van Puymbroeck, Compulsory Licensing for Public-

health: A Guide and Model Documents for Implementation of the Doha-Declaration
Paragraph 6 Decision (The World Bank, 2005)”
“This work addresses the complexity of the WTO's August 30, 2003 decision on the
implementation of paragraph 6 of the Doha-Declaration on the TRIPS-Agreement and
Public-health. “It provides an explanation of the decision and model legal texts for the
required notifications to the WTO and for the amendments of their patent law that most
developing countries will need to pass in order to incorporate the decision in their domestic
legal framework.”

4. “WolradPrinzzuWaldeck und Pyrmont Martin J. Adelman Robert Brauneis Josef Drexl

Ralph Nack, Patents and Technological Progress in a Globalized World (Springer, 2008)”

“In the last two decades, accelerating technological progress, increasing economic
globalization and the proliferation of international agreements have created new challenges
for intellectual property law. In this collection of articles in honor of Professor Joseph
Straus, more than 60 scholars and practitioners from the Americas, Asia and Europe
provide legal, economic and policy perspectives on these challenges, with a particular
focus on the challenges facing the modern patent system. Among the many topics
addressed are the rapid development of specific technical fields such as biotechnology, the
relationship of exclusive rights and competition, and the application of territorially limited
IP laws in cross-border”

Page 7
5. “Herbert Hovenkamp, Mark D. Janis, Mark A. Lemley, Christopher R. Leslie, IP and
Antitrust: An Analysis of Antitrust Principles Applied to Intellectual Property Law (2nd,
Aspen Law & Business, 2009)”

“While intellectual property licensing arrangements are typically pro-

competitive, antitrust concerns may nonetheless arise. Licensing arrangements raise
concerns under the antitrust laws if they are likely to adversely affect the prices, quantities,
qualities or varieties of goods and services -- either currently or potentially available. The
Justice Department's rekindled interest in intellectual property licensing arrangements now
requires that companies factor antitrust considerations into the drafting and review of
intellectual property licensing arrangements. Thus, licensing agreements
involving intellectual property must now be drafted with two considerations in mind:
maximizing the commercial value of intellectual property rights, and minimizing antitrust
risks.”

b. Articles and Journals

1. “Brook K. Baker, Arthritic Flexibilities For Accessing Medical-drugss: Analysis Of WTO

Action Regarding Paragraph 6 Of The Doha-Declaration On The TRIPS-Agreement And
Public-health in Indiana International & Comparative Law Review, 14 Ind. Int'l.”

“According to sources 40 million people are infected by the AIDS virus in developing
countries, with 26.6 millionon the African continent. About 93% of those infected with the
AIDS virus cannot afford tobuy the anti-retroviral medication which they need (1). The
Joint Program of the UnitedNations on AIDS believed that unequal access to treatment at
acceptable prices is one of themain reasons for the low levels of survival in poor
nations.“Although it may seem a paradigm, the problem of access to patented medical-
drugs is notlimited to anti-retrovirals for the treatment of AIDS, as Brook K. Baker notes.
In developingcountries the poor are victims of a large number of infectious diseases such
as tuberculosis,malaria, respiratory infections, diarrhea, and Chagas disease, for which
there is little or noaccess to medication (2).”“The treatment of other illnesses such as

Page 8
 diabetes, asthma, heartdisease and mental illness is insufficient as the medication available
is beyond the purchasingpower of a large part of the population.”
“The 1994 Agreement on Trade-Related Aspects of Property Rights (TRIPS-Agreement)
states that all signatories are obliged to grant patents to pharmaceutical products.”
“As a result, the price of medical-drugss has tended to increase, affecting people in
developing
Countries.”“The adoption of a patent system in these countries has harmed poorer people
whocannot afford to buy medical-drugs. Nevertheless, the TRIPS-Agreement contains
some provisionsthat allow countries to eliminate the negative consequences of granting
patents.””

2. “Nabila Ansari, International Patent Rights in a Post-Doha World in International Trade

Law Journal, 11 Currents Int'l Trade L.J. 57, page 3, winter 2002.”

“This paper aims at studying the various provisions of the TRIPS-Agreement, covering the
Compulsory licensing aspect under it. The Indian provision in this regard has also been
studied, and an analogy to TRIPS has been drawn where necessary. “The objective of the
paper is to analyze the manner in which Section 92A of the Indian Patent Act has been
interpreted and extrapolated in the light of the first compulsory licensing application ever
to be filed in India.”
“The facts and rendition in the Natco case, with respect to awarding a hearing to the
patentee has been examined herein, and the consequent drift from the tenets of the TRIPS-
Agreement elucidated.”

3. “F. M. Scherer and JayashreeWatal, Health And The WTO *913 Post-Trips Options For
Access To Patented Medical-drugss In Developing Nations in Journal of International
Economic Law, by Oxford University Press, 5 J. Int'l Econ. L. 913, page 2, December,
2002.”
“The thesis of this book is that, despite the risks, we should strive to increase the
use of differential pricing with respect to pharmaceutical products. The chapter begins
witha brief review of the economic theory associated with price discrimination. It then

Page 9
 examinesthe degree to which pharmaceutical firms already employ this practice and the
factors thatinfluence their behavior. The final section of the chapter identifies a set of legal
andinstitutional reforms that could enable greater use of this technique by pharmaceutical
firms,while preventing them from employing it in ways we would find pernicious. The
conclusion:disciplined differential pricing would surely not be sufficient to resolve the
health crisis inthe developing world, but it would help.”

4. Divya Murthy, The Future of Compulsory Licensing: Deciphering the Doha-Declaration

on the TRIPS-Agreement and Public-health in American University International Law
Review, Washington College of Law, American University, 17 Am. U. Int'l L. Rev. 1299,
page 4, 2002.

“The obligations of WTO members to grant substantial protection to IP rights resulted

from concerns of technology exporting countries, like the U.S. in particular, afraid of
losing out to newly industrialised countries culminated in the adoption of the
TradeRelatedIntellectual Property Rights (TRIPS) Agreement in 1994 of the World
TradeOrganisation . The case against IP protection is that, simply put, fordeveloping
countries the cost outweighs the benefits. The traditional view is that developing countries
receive little or nothing for the price they pay in grantingforeign monopolies over
technology and industry within their national borders.”
“It is further argued that the IP rights stifle domestic innovation and impede thediffusion
of technology in the developing countries. Therefore, with quite somejustification,
developing countries considers TRIPS as an instrument serving theinterests of rich
countries . This paper argues that: TRIPS servethe best interest of developed countries and
that the MFN clause of the GATT/WTOhas little or no significant benefits to the
developing countries with regards to theTRIPS; TRIPS cannot guarantee transfer of
technology from the developedcountries to the developing countries; Consumers in
developing countries willhave to pay for technology even if no transfer of technology takes
place to theirrespective home countries; Legal protection of IP rights is not a
necessarycondition for technology transfer (Abbot, 1998); and That TRIPS

Page
10
 constituteexploitation machinery for economic control of the developing countries by
thedeveloped nations in the WTO.”

E. Hypothesis:

The researcher’s hypothesis is:

Rights granted under TRIPS-Agreement:

a. Developing countries have not been given their due rights in the global society and
there has always been a preference of the developed world over developing countries.

b. The guarantees given under TRIPS still are to find complete utilization by the required
countries.

F. RESEARCH METHODOLOGY

“The Researcher through his dissertation will be doing a Doctrinal research. He will start
with discussing the social aspect of access to medical-drugss and analyze the laws with
respect to the TRIPS-Agreementand would also be taking case studies pertaining to
compulsory licensing. The Researcher would also through his case studies try to voice what
people from each of the community expect both socially as well as legally.”

“By way of methodology, apart from secondary sources, The Researcher would be relying
upon articles and cases reported in law journals. The Researcher would be using examples
of international country policies in the sphere of compulsory licensing. While in most cases
the policies are conservative and carry an inherent bias, there may have also been instances
of creative interpretations where countries have gone beyond the statute to expand the
scope of rights. The Researcher will also be referring to recent case laws from the year
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11
 2000 onwards and pertain his research to the Honorable Supreme Court and Honorable
Delhi High Court.”

G. SOURCES

a. Primary Sources

1. “Indian Patents Act, 2005”

2. “Patent Act B.E 2522, 1999 (Thailand)”
3. “Patent Act, 2006 (Canada)”
4. “Agreement on Trade Related Aspects of Intellectual Property Rights , 1994”
5. “Declaration on the TRIPS-Agreement and Public-health, 2001”

b. Secondary Sources

1. “Brook K. Baker, Arthritic Flexibilities For Accessing Medical-drugss: Analysis

Of WTO Action Regarding Paragraph 6 Of The Doha-Declaration On The TRIPS-
Agreement And Public-health in Indiana International & Comparative Law
Review, 14 Ind. Int'l.”
2. “Nabila Ansari, International Patent Rights in a Post-Doha World in International
Trade Law Journal, 11 Currents Int'l Trade L.J. 57, page 3, winter 2002.”
3. “AdiGillat, Compulsory Licensing to Regulated Licensing: Effects on the Conflict
between Innovation and Access in the Pharmaceutical Industry in Food and Drug
Law Journal, The Food and Drug Law Institute, 58 Food Drug L.J. 71, page 6,
2003.”
4. “Philippe Cullet, Patents and Health in Developing Countries in Law and
development: Facing Complexity in the 21st Century, Cavendish Publishing,
London, 2003, page 82.”
5. “F. M. Scherer and JayashreeWatal, Health And The WTO *913 Post-Trips
Options For Access To Patented Medical-drugss In Developing Nations in Journal
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12
 of International Economic Law, by Oxford University Press, 5 J. Int'l Econ. L. 913,
page 2, December, 2002.”

II. CHAPTER- II

A. COMPLUSORY-LICENSES

“A compulsory license provides a government with the authority to exercise one or more of the
exclusive rights without having to obtain the patent holder’s permission to do so.22 The use of
compulsory licensing has been recognized internationally for more than 125 years, however in
recent years there has been a distinct expansion in scope.23”

“Through a compulsory license, a government authority interferes directly with a privately owned
patent to authorize its use by the government or by one or more third parties, subject to certain
terms. For example, a compulsory license might be issued by a government agency with
conditions, such as removing restrictions on the use for which the license is authorized, specifying
which third parties are entitled to use the patent, imposing time restrictions on the use, and A
compulsory license provides a government with the authority to exercise one or more of the
exclusive rights without having to obtain the patent holder’s permission to do so.”

“The purpose of a compulsory license, in the pharmaceutical context, is presumably to increase

access to essential medical-drugss by providing a broader use of the invention than intended by
the original patent holder.24 As a result however, the patent holder is forced to give up a large

22
Daniel R. Cahoy, Confronting Myths and Myopia on the Road from Doha, 42 GA. L. REV. 131, 133 (2008).
23
ADRIAN JOHNS, PIRACY: THE INTELLECTUAL PROPERTY WARS FROM GUTENBERG TO GATES 274 (University of
Chicago Press 1st ed. 2009
24
Carlos M. Correa, Investment Protection in Bilateral and Free Trade Agreements: Implications for the Granting of
Complusory-licenses, 26 MICH. J. INT’L L. 331 (2004).
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13
amount of control of the patent for the alleged benefit of the larger public.25 Despite the centrality
of exclusive rights within the intellectual property system, the compulsory license claims to
provide a safety valve for occasions where there is an overriding public interest.26”

“The compulsory license thus enables a government to make an exception to the exclusive
protection by allowing usage of the patent for itself or a third party on certain conditions it deems
appropriate.27 Given the powerful nature of complusory-licenses, it is easy to see that if misused,
there is a potential threat to the security of private property, as well as innovation.28 In this regard,
a compulsory license can be compared to a governmental taking of real property by use of eminent
domain power.”

“Like a governmental taking, a compulsory license can considerably erode the confidence in
private property and protected innovations.29“The use of a compulsory license often triggers WTO
trade law considerations. Most of the scholarly commentary concerning the use of compulsory
licensing has focused on international trade laws and public-health issues.30 The most relevant
commentary is focused on the WTO’s Trade-Related Aspects of Intellectual Property Agreement
(“TRIPS-Agreement”), which sets conditions for the issuance of a compulsory license in Article
31.31”

“Additionally, the Doha-Declaration on the TRIPS-Agreement and Public-health (“Article

31bis”), a statement of intent adopted by the WTO in 2001, serves as a companion to the TRIPS-

25
e Kurt M. Saunders, Patent Nonuse and the Role of Public Interest as a Deterrent to Technology Suppression, 15
HARV. J.L. & TECH. 389 (2002).
26
Ibid
27
Ibid
28
Ibid
29
Ronald A. Cass, Compulsory Licensing of Intellectual Property: The Exception that Ate the Rule? 16-17 (D.C. Legal
Found., Working Paper Series No. 150, 2007),
30
Sandra Bartelt, Complusory-licenses Pursuant to TRIPS Article 31 in the Light of the Doha-Declaration on the
TRIPS-Agreement and Public-health, 6 J. WORLD INT’L PROP. 283 (2003)
31
Agreement on Trade-Related Aspects of Intellectual Property Rights, Apr. 15, 1994, Annex 1C, 1869 U.N.T.S. 299,
Marrakesh Agreement Establishing the World Trade Organization, available at
http://www.wto.org/english/docs_e/legal_e/27-trips.pdf [hereinafter TRIPS-Agreement].
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14
Agreement, although there has yet to be a formal amendment. 32 ”“Article 31bis clarifies and
confirms that member states have the right to grant complusory-licenses to protect public-health
and gives broad discretion to do so.33”

The general purpose of Article 31 is to allow any WTO Member to issue a compulsory license
after fulfilling certain requirements 34 – many of which are unclear or subject to broad
interpretation.35”

“Interestingly, nowhere within Article 31 of the TRIPS-Agreementdo the words “compulsory

license” appear.36 However, in reference to patent usage Article 31 does allow for “use without
authorization of the right holder,” thus allowing a compulsory license to be issued.37 Before a
country can grant a compulsory license each license must be “considered on its individual
merits;”38 attempts to obtain authorization from the right holder on reasonable commercial grounds
must have failed;39 the compulsory license must be limited in scope and duration to the purpose
for which it was issued;40 The license must be used “predominantly for the supply of the domestic
market” of country issuing the license;41 and lastly the owner of the patent must be “paid adequate
remuneration in the circumstances of each case, taking into account the economic value of the
authorization.”42 These requirements are much too lenient and imprecise to protect the interests of
countries with legitimate pharmaceutical patents.”

32
Catherine Saez, Drug Access Waiver Debate Looms for June TRIPS Council Meeting, Intellectual Property Watch,
available at http://www.ip-watch.org/weblog/2010/05/31/drug-access-waiver-debatelooms-for-june-trips-council-
meeting/
33
Ibid
34
Ibid
35
See World Trade Organization, Decision of the General Council of 30 August 2003, Implementation of Paragraph
6 of the Doha-Declaration on the TRIPS-Agreement and Public-health, WT/L/540 (Sept. 2003)
36
TRIPS-Agreement, supra note 31, art. 31.
37
World Trade Organization, Fact Sheet: TRIPS and Pharmaceutical Patents, http://www.wto.org/
english/tratop_e/trips_e/factsheet_pharm00_e.htm (last visited Oct. 18, 2010)
38
TRIPS-Agreement, supra note 33, art. 31(a).
39
id., art. 31(b)
40
id., art.31(c)-(e), (g).
41
Id. art., 31(f).
42
Id. art., 31(h).
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15
“The language of Article 31 gives wide deference to WTO members in deciding what grounds a
compulsory license can be used, no longer referring strictly to failure to adequately use the patent
in the market as the only justification.43 In addition to this broad deference, Article 31 provides
several potential reasons for authorizing a compulsory license. First, Article 31(b) suggests that a
national emergency, circumstances of extreme urgency, or public non-commercial use could
justify issuance of a compulsory license.44”

Next, Article 31(k) provides that a compulsory license may be used to correct anticompetitive
behavior such as “failure to work.”45 And lastly, Article 31(l) allows a compulsory license for the
use of an essential “second patent,” which cannot be exploited without infringing on another “first
patent.”46 In this case, the compulsory license is allegedly justified only where the second patent
involves an important technical advance of considerable economic significance in relation to the
invention claimed in the first patent.47

“The use of a compulsory license will only be permitted if there have been unsuccessful efforts to
obtain authorization from the patent holder – which requires reasonable commercial terms and the
commencement of negotiations for a reasonable period of time.48 However, the requirement of a
reasonable negotiation period will be waived for a WTO Member country under three scenarios:
(1) in the case of a national emergency, (2) other circumstances of extreme urgency, or (3) in cases
of public non-commercial use.49 Lastly, and possibly most contentious, Article 31(f) of the TRIPS-
Agreement states that after a WTO Member nation is authorized to issue a compulsory license, the
use must be limited to the “supply of the domestic market.””50

43
Id
44
id., art.31(b), (k), (l).
45
id., art.31(k).
46
id., art.31(l).
47
Id.
48
Sandra Bartelt, Complusory-licenses Pursuant to TRIPS Article 31 in the Light of the Doha-Declaration on the
TRIPS-Agreement and Public-health, 6 J. WORLD INT’L PROP. 283 (2003);
49
TRIPS-Agreement, supra note 33, art. 31(b).
50
Id., art.31(f).
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16
“Article 31(f) has been sharply criticized as being too restrictive because pharmaceutical
production is predominantly concentrated in high-income countries, and many developing
countries lack the capacity for pharmaceutical production entirely. 51 Article 31(f), therefore,
allegedly acted to prevent countries with insufficient or non-existent pharmaceutical
manufacturing capabilities fromissuing complusory-licenses. 52 In response to the human rights
activists’ outcry on this matter, the Ministerial Conference of the WTO met in Doha Qatar in 2001,
and developed a Declaration of the TRIPS-Agreement and Public-health, commonly known as the
Doha-Declaration.”

“The Doha-Declaration was made effective in 2005 when an amendment was added to Article 31
known as Article 31bis, inserting the language from the Doha-Declaration and an Annex to the
WTO Article 31 framework.53 The amendment was composed of three waivers under Article 31.63
The result of these waivers was to significantly ease the requirements that production be
“predominantly for the supply of the domestic market.”54“This change is significant because the
exporting countries’ duty under Article 31(f) is now waived, thereby allowing complusory-licenses
to be produced in one country and then exported to another.”55

Additionally, under this new framework, only the exporting country is responsible for adequate
remuneration.56“The result is that multiple countries are benefiting from the compulsory license,
but the responsibility is borne solely by the exporting country – thus creating an incentive for
countries with manufacturing capabilities to urge those without to acquire complusory-licenses.
Similarly, re-export of the pharmaceutical produced under the license is allowed among members
of a regional trade agreement.”57

51
Vera Zolotaryova, Are We There Yet? Taking “TRIPS” To Brazil and Expanding Access to HIV/AIDS Medication, 33
BROOK. J. INT’L L. 1099, 1103 (2008)
52
Id. at 1107
53
TRIPS-Agreement, supra note 33, at 7.
54
Id at Implementation of Paragraph
55
Id, at 6
56
Id
57
Id
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17
“Thispractice expands the reach of Article 31 and diminishes the capacity for the patent owner to
profit in foreign markets – which can lead to a decrease in total foreign investment.68 These
changes create the possibility for complusory-licenses to be granted such that one country can
produce pharmaceuticals for another, opening the floodgates for potential misuse and further loss
of patent control. Although there had been some debate about whether the grounds on which a
compulsory license can be issued under Article 31 were exclusive, the Doha-Declaration
confirmed that member states have the” “freedom to determine the grounds upon which such
licenses are granted.”58

This “freedom” creates a great deal of subjective power resting with developing nations in the
determination of whether to issue a compulsory license. 59 Similarly, under the new WTO
framework, each member shall have the right to determine what constitutes a national emergency
or other circumstance of extreme urgency.60This deference to WTO members is far too broad and
subjective, and will allow countries to claim circumstances requiring issuance of complusory-
licenses without adequate need or an unbiased analysis of the situation.

“The response to the Doha-Declaration in the developed world was not positive. “The United
States had agreed not to use the amendment as an importing member, because it saw the need to
protect investments from unauthorized usage”61 – this is the correct approach to protect long-term
goals of innovation. “The broad text of the TRIPS-Agreement was intended to grant each nation
the authority to promote public-health, but the new loosely defined language lacks objective
guidelines, and thereby creates an atmosphere for further patent abuses worldwide.”

a. Concepts and History

“Before debating the issues of compulsory licensing, this paper first focuses on the conceptual
clarification and its origin to understand the background. Licensing agreement for IP can be
voluntary or compulsory depending upon the willingness of the licensor. “While voluntary

58
Id at para. 5(b)
59
Brent Savoie, Thailand’s Test: Compulsory Licensing in an Era of Epidemiological Transition, 48 VA. J. INT’L L. 211,
219 (2007)
60
supra note 33, at para. 6
61
Gianna Julian-Arnold, International Compulsory Licensing: The Rationales and The Reality, PTC Research
Foundation of the Franklin Pierce Law Center, IDEA: J.L. & TECH. (1993)
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18
licensing is more common a form to authorize use, make copyrighted or patented right for
commercial purpose, there are times when licensors don’t agree to authorize use to potential
licensee.” When the aforesaid occurs, the government may get involved and implement a licensing
relationship under certain conditions without the approval of the licensor.”

“As a stipulation, compulsory licensing can be traced back to the UK Statute of Monopolies in
1624,which ruled out monopolies associated with patent and additionally declared that grants
should not be ‘mischievous to the state’ or upset trade. However, compulsory licensing only
became an official proposal in the 19th century62. Countries in Europe popularized compulsory
licensing under its anti-patent movements in the 1850’s.”

“The UK recognized compulsory licensing in terms of non-working and set rules to prevent patents
from non-working. “Thereafter,the Paris Convention in 1883 stipulated the ‘working
requirements’ for patents to ‘prevent the abuses which might result from the exercise of the
exclusive rights conferred by the patent and added compulsory licensing as the means of exploiting
patents in its Hague 1925 revision.””

“Since then, compulsory licensing had gradually become part of legal obligation for the developed
countries. Since the 1990s particularly, after singing the TRIPS-Agreement in 1995,“Compulsory
licensing stipulation has become an obligation for nations to deal with non-working issue, consider
public interest, and handle non-commercial use and unfair competition. Further to this it was the
Doha-Declaration which paid detailed attention to patented drugs that could cure widespread fatal
diseases.””

“Compulsory licensing tends to be imposed by governments for their own or third parties use in
national interest and also to aid the wider utilization of a patented invention. Wide discussions and
practice tend to focus on compulsory licensing of patents for pharmaceuticals to combat national
emergency. However, compulsory licensing may also be issued by a government for non-
commercial public use or as a remedy to anti-competitive practices63.”

62
Johns Adrian, Piracy : The Intellectual Property Wars from Gutenberg to Gates (The University of Chicago Press,
USA 2009)
63
Love J P, 'Not true that public-health emergencies necessary for compulsory licensing of patents'
(http://wwww.cptech.org/ip/health/cl/recommendedstatepracti 2011) <> accessed 20 October 2014
Page
19
“Since 1995, it has been mandatory for WTO members to include compulsory licensing as part of
their patent law stipulations. Thus, TRIPS member’s patent laws must stipulate the conditions in
which patent can be authorized for use without the owner’s consent. The purpose of such
mandatory stipulation is to ensure balancing of public interest and wide utilization with owner’s
benefits.”
“A compulsory license may be granted by a national judicial review body when they the request
has met the following conditions in the law based on the TRIPS-Agreement (Article 31):
Emergency and extreme urgency; anti-competitive practice; public non-commercial use; or
dependent patents.”

“These conditions to grant a compulsory licensing are not detailed, requiring case-by-case
assessment. TRIPS does indicate that a prior request to the patent holder was first attempted on
reasonable commercial terms but failed (this does not apply when a nation faces national
emergency, e.g. disease pandemic or national disaster and the patent can help immensely to
alleviate the national situation).”

“In addition, compulsory licensing grant should also consider “working requirements”,
compensation based on the economic value of the license, non-exclusive and non-assignable deal
with termination clauses included. As for working requirements, “the patent must have been
granted for a period of time(TRIPS not having that, but the patent law survey by the author shows
that most countries fail to stipulate non-working if the patent holder fails to fulfill the work
requirements within three years upon grant or four years upon application.)”

“While many countries have included compulsory licensing clauses in their patent laws –
examination of legislation in 193 countries finds that more than 90% of them include the relevant
stipulations – it nevertheless seems difficult to implement a compulsory license – or, at least, the
right to do is still very much underused. In Canada, for example, there were only 86 applications
for compulsory licensing between 1935 and 1989(of which 17 were granted) while since the 1990s,
Canada has virtually stopped using the provision.64”

64
Reichman and Heizenzahl, 'Non voluntary licensing of patented invention' [2003] UNCTAD -ICTSD Project on IP
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20
 III. CHAPTER- III

A. “THE DOHA-DECLARATION ON TRIPS-AGREEMENT

“Thereafter the Doha-Declaration came into the picture which was the outcome of the
consciousness by the developing countries of the actual consequences of an over-reaching trade
agreement on their policy making power, especially with respect to one of the primary
responsibilities of the nation, viz., protecting public-health over trade interests.”“It was also a
reaction to the aggressive tactics used by pharmaceutical companies, and the industrially and
technologically developed countries outcome of which was that the Doha-Declaration elevated the
right to public-health over extension of patent monopoly.”

“The major achievement of the Doha-Declaration is that it stressed the need for the TRIPS-
Agreement to be part of the wider national and international action to address the public-health
problems afflicting the developing and least developed countries65. In pursuing that objective, it
came to the agreement that the TRIPS-Agreement ‘does not and should not prevent members from
taking measures to protect public-health’ and it ‘can and should be interpreted and implemented
in a manner supportive of WTO members’ right to protect public-health and in particular, to
promote access to medical-drugss for all’66.”

It also reaffirmed the right of the WTO Members to use the TRIPS flexibilities to the fullest extent
possible for the purpose of protecting public-health and promoting access to medical-drugss. “

“The TRIPS flexibilities were recognized to include : (i) the mandate to read each provision of the
TRIPS-Agreement in the light of the objects and purpose of the Agreement, as expressed in its
objectives and principles, (ii) the right to grant complusory-licenses, with freedom to determine
the grounds upon which such licenses are granted67,(I(iii) the right to determine what constitutes a
national emergency or other circumstances of extreme urgency, which has to be understood to
represent public-health crisis, including those relating to HIV/AIDS, tuberculosis, malaria and
other epidemics, and (iv) freedom to adopt its own exhaustion regime. Apart from these

65
The Doha-Declaration on TRIPS 2001 (1 & 2)
66
The Doha-Declaration on TRIPS 2001 (4)
67
WTO, WIPO and WHO (2013) Promoting Access to Medical Technologies and Innovation(171)
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21
flexibilities specifically listed out in the Declaration, the flexibility in identifying the standards of
patentability, freedom to refuse data exclusivity and to determine scope and extent of limitations
and exceptions, other than compulsory licensing to be followed by each country etc., also form
part of TRIPS flexibilities mentioned under paragraph 5 of the Doha-Declaration provides an
inclusive definition. However, it is left for the TRIPS Council to find an expeditious solution to
the problem of WTO members with no or insufficient manufacturing capabilities in
pharmaceutical sector, in making an effective use of compulsory licensing for ensuring access to
medical-drugss.”

“The WTO General Council, later on, came up with the paragraph 6 solution in 2003, which finally
culminated in the Protocol to amend TRIPS-Agreement in 2005.As an action, the European
Commission announced the Doha-Declaration’s legal effect in the European Union in 200668. In
consequence, complusory-licenses could be issued in developed countries to manufacture patented
drugs on conditions for export to least developed countries to treat epidemic diseases.”

“Though the Doha-Declaration almost succeeded in safeguarding the freedom of the member
countries to interpret TRIPS in such a way as not to conflict with their public-health interests, it
had a weak spot.”“It did not consider the possibility of agreements outside the TRIPS to defeat the
objectives of the Declaration.”“Therefore, no steps were taken in the Doha-Declaration to stop
WTO members from entering into agreements, which may run contrary to the objectives of Doha
outside the TRIPS forum.”“The Free Trade Agreements (FTAs) make use of that flaw in the Doha-
Declaration and more often go TRIPS plus with respect to all freedoms guaranteed under both the
TRIPS-Agreement and the Doha-Declaration69.”

“For example, in the Thai-US FTA, there are provisions which allow patent term extension, five
years data exclusivity, patent registration linkage etc 70. The leaked EU-Ukraine FTA 71 reveals
much sweeping responsibilities are imposed on Ukraine. Thus, the IP owning countries and

68
Regulation of European Parliament (EC) 816/2006 compulsory licensing of patents relating to the manufacture of
pharmaceutical products for export to countries with public-health problems [2006] OJ L
69
Drahos Peter, 'Four lessons for developing countries from the trade negotiations over access to medical-drugs' [2007]
LLR , 11-39
70
Kessomboon N and Paothong P, 'Impact on access to medical-drugs from TRIP-plus: A case study of Thai-US FTA.'
(www.tm.mahidol.ac. 2010) <> accessed 20 October 2014
71
Association Agreement between the European Union and its Member States, of the one part, and Ukraine, of the
other part.' (www.euractiv.com/sites/UkarineAssociationAgreement/English.pdf 2012) <> accessed 20 October 2014
Page
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pharmaceutical industries successfully make use of the for a of bilateral and regional trade
agreements, where the other countries or the public have no space to voice their concerns, to
promote their trade interests above the Doha objectives.”

B. THE ROLE OF TRIPS AND IPRS

Doha-Declaration on TRIPS and Public-health: Paragraphs 2 and 3

2. “We stress the need for the WTO Agreement on Trade-Related Aspects of
Intellectual Property Rights (TRIPS-Agreement) to be part of the wider national
and international action to address these problems.”
3. “We recognize that intellectual property protection is important for the
development of new medical-drugss. We also recognize the concerns about its
effects on prices.”

Paragraphs 2 and 3 of the Doha-Declaration express the Members´ view with regard to the role of
TRIPS and IPRs in the context of public-health.

Paragraph 2 stresses “the need for” the TRIPS-Agreement “to be part of the wider national and
international action to address these problems”. This statement, read in conjunction with paragraph
4, seems to indicate that the extent, to which the Agreement is part of the problem or of the solution
to public-health needs, crucially depends “on the way in which the Agreement is implemented and
interpreted.”“This paragraph suggests that intellectual property rights are one but not the only
factor that affects public-health and, in particular, access to drugs72.”

The first sentence of paragraph 3 alludes to the “important” role of intellectual property protection
“for the development of new medical-drugss”. Unlike other preambular paragraphs, this one
specifically refers to “medical-drugss” 73 . This statement – welcomed by the pharmaceutical

72
Some analyses, particularly by the pharmaceutical industry, have stressed that access to drugs is fundamentally
determined by non-IPR factors, such as health infrastructure and medical services. See, e.g., IIPI. See also the US
submission to the Council of TRIPS (IP/C/W/340, 14 March 2002).
73
The crucial role of patents in inciting research in drug development has been the subject of extensive academic
work, See, e.g. Kettler, 2002.
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23
industry – is balanced by the second sentence, “which recognizes one of the troubling effects of
patent protection: its impact on prices”.

The patent system is designed to enable patent holders to set prices higher than those that would
be obtained in a competitive market. “The Doha-Declaration” recognizes that the high prices of
medical-drugss caused by patent protection are part of the grave problems that afflict developing
countries and “LDCs” and is a "concern" that needs to be addressed. The consensus achieved on
“patent” protection's impact on drug prices may be considered one of the major political
achievements of the developing countries in the Doha Ministerial Declaration.

b. Scope and changes brought byDoha-Declaration

The Doha-Declaration includes the provisions of thepreamble (paragraphs 1 to 4), “a provision

aimed at confirming the interpretation of certain rules of the TRIPS-Agreement (paragraph 5)”,
and two operative provisions requiring action by the Council for TRIPS in relation to countries
with no or insufficient manufacturing capacity in pharmaceuticals (paragraph 6), and for the
extension of the transitional period for LDCs in relation to the protection of pharmaceutical
products (paragraph 7).

The problems addressed by the Doha-Declaration are defined in paragraph 1 in broad terms.
Members recognize the “gravity” of the public-health problems afflicting many developing and
LDCs, especially those resulting from HIV/AIDS, tuberculosis, malaria and other epidemics.

Doha-Declaration on TRIPS and Public-health: Paragraph 1 1.

1. “We recognize the gravity of the public-health problems afflicting many

developing and least-developed countries, especially those resulting from
HIV/AIDS, tuberculosis, malaria and other epidemics.”

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24
“While some developed countries attempted to limit the scope of the Declaration 74 to the
HIV/AIDS crisis, the adopted text reflects the concerns of developing countries and LDCs about
the implications of the TRIPS-Agreement with regard to public-health in general, without
limitation to certain diseases. The reference to some specific “epidemics”75 does not imply that the
Declaration is limited to them. It covers any “public-health problem”, including those that may be
derived from diseases that affect the population in developing as well as developed countries, such
as asthma or cancer.”

Further, “though access to medical-drugss was the main preoccupation that led to the Doha-
Declaration, the Declaration covers not only medical-drugss, but any product, method or
technology for health care.” Thus, the Declaration applies to pharmaceutical products, processes
and uses, surgical, therapeutic and diagnostic methods 76 , diagnostic kits as well as medical
equipment.

Finally, “while patents have been the focus of the debate on this issue, the “Declaration” applies
to all areas of intellectual property covered by the “TRIPS-Agreement”, including protection of
test data submitted for the marketing approval of pharmaceuticals.77”

74
The disagreement on the scope of the declaration was reflected in the partly bracketed title of the draft
declaration (“access to medical-drugs”) (“public-health”). Throughout the negotiations, the USA, supported by
Switzerland, proposed a text that referred to “health crisis”, “pandemics” and “infectious disease” only. See
’tHoen, 2001, p.13.
75
“Epidemic” is a disease prevalent among a community at a special time; one of the draft texts of the Declaration
alluded instead to “pandemics”, that is, a disease prevalent over the whole of the country or over the whole world
(The Concise Oxford Dictionary, p. 324 and 738).
76
It should be noted that WTO Members can exclude these methods from patentability (see Article 27.3 (a) of the
TRIPS-Agreement).
77
See para. 7 of the Declaration.
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 i. Public-health Measures

“Doha-Declaration” on “TRIPS” and Public-health: “Paragraph” 4

4. “We agree that the TRIPS-Agreement does not and should not prevent members
from taking measures to protect public-health. Accordingly, while reiterating our
commitment to the TRIPS-Agreement, we affirm that the Agreement can and
should be interpreted and implemented in a manner supportive of WTO
members' right to protect public-health and, in particular, to promote access to
medical-drugss for all.”
“In this connection, we reaffirm the right of WTO members to use, to the full,
the provisions in the TRIPS-Agreement, which provide flexibility for this
purpose.”

“Paragraph” 4 of the “Doha-Declaration” was one of the most controversial provisions of the
document and the subject of intense negotiations during the preparations for and at the Ministerial
Conference in Doha. “Developing countries”’ negotiating target was, as mentioned above, to
obtain recognition that nothing in the TRIPS-Agreement shall be interpreted as preventing
Members from adopting measures necessary to protect public-health.

“Developing countries” were essentially seeking a declaration recognizing their right to implement
certain pro-competitive measures, notably complusory-licenses and parallel imports, as needed to
enhance access to health care. “They were frustrated by the opposition and pressure exerted on
some countries by the pharmaceutical industry and governments 78”. Moreover, some felt that the
final proviso in Article 8.1 establishing that any measures adopted, inter alia, to protect public-
health should be consistent with the provisions of the “TRIPS-Agreement”, 79 provided less

78
Drahos, 2002.
79
TRIPS Article 8.1: "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."
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protection for public-health than under the corresponding exceptions of Article XX (b) of GATT80
and the Sanitary and Phyto-sanitary Measures and Technical Barriers to Trade agreements.

Developed countries did not view the TRIPS-Agreement as representing a barrier to the
achievement of public-health objectives, and they were not prepared to undermine any of the
obligations under the Agreement81. According to the EU, “the TRIPS-Agreement cannot be held
responsible for the health crisis in developing countries, while it must not stand in the way for
action to combat the crisis”. The EU was, consequently, “ready to contribute constructively to any
debate concerning the interpretation of its provisions”82

The text, drafted by the chair of the WTO General Council, which provided the basis for the
negotiations in Doha, offered two options for paragraph 4:

 Option 1

“Nothing in the TRIPS-Agreement shall prevent Members from taking measures to protect public-
health. Accordingly, while reiterating our commitment to the “TRIPS-Agreement”, we affirm that
the Agreement shall be interpreted and implemented in a manner supportive of “WTO” Members'
right to protect public-health and, in particular, to ensure access to medical-drugss for all.

In this connection, we reaffirm the right of “WTO Members” to use, to the full, the provisions in
the TRIPS-Agreement which provide flexibility for this purpose.”

 Option 2

We affirm a Member's ability to use, to the full, the provisions in the “TRIPS-Agreement” which
provide flexibility to address public-health crises such as HIV/AIDS and other pandemics, and to
that end, that a Member is able to take measures necessary to address these public-health crises, in
particular to secure affordable access to medical-drugss. Further, we agree that this Declaration

80
GATT Article XX: “Subject to the requirement that such measures are not applied in a manner which would
constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions
prevail, or a disguised restriction on international trade, nothing in this Agreement shall be construed to prevent
the adoption or enforcement by any contracting party of measures:

... (b)necessary to protect human, animal or plant life or health;”

81
The statement by the US delegation at the special session of the Council for TRIPS of 21 June 2001, IP/C/M/31.
82
IP/C/W/280.
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does not add to or diminish the rights and obligations of Members provided in the “TRIPS-
Agreement”. With a view to facilitating the use of this flexibility by providing greater certainty,
we agree on the following clarifications.83 The wording of the first part of “paragraph”4 reflects
the delicate compromise reached in Doha.

It reaffirms Members’ rights to take measures “to protect public-health”, in a much less elaborated
way than article XX (b) of GATT and the respective provisions in the SPS and TBT agreements84.

A possible interpretation for paragraph 4 is that the “TRIPS-Agreement” does not raise conflicts
with public-health. Paragraph 4 would constitute a statement of fact (“the TRIPS-Agreement does
not prevent”) rather than a rebalancing of the Agreement in the sense that public-health overrides
commercial interests. Thus, for the European Commission, “the issue is not whether or not
intellectual property overrides public-health or vice versa. “Intellectual property and public-health
can and should be mutually supportive because without effective medical-drugss, public-health
policies would be hampered”85.

In the view of the European Commission, the statement contained in paragraph 4 “is important in
order to give meaning to the obvious principle that a Member’s right (or indeed duty) to pursue
public-health objectives and policies is unaffected by the TRIPS-Agreement”86 .

In order to give meaning to “paragraph” 4, however, it is possible to interpret that the intention of
the Members was to indicate that in cases where there is conflict between IPRs and “public-health”,
the former should not be an obstacle to the realization of the latter87. A possible reading of this

83
During the negotiating process, the European Commission proposed the following compromise text for
paragraph 4:"Nothing in the TRIPS-Agreement prevents Members from pursuing and achieving public-health
objectives. Accordingly, the TRIPS-Agreement shall be interpreted and implemented in a manner supportive of
WTO Members' ability to enhance access to affordable medical-drugs for all in the context of public-health
objectives".
84
The “necessity” test, central to those provisions, is not mentioned in the Doha-Declaration. On the application of
such test in GATT/WTO jurisprudence, see e.g., Correa (2000b).
85
European Commission, 2001, p. 2.
86
Ibid
87
The Brazilian delegation pointed out at the Doha Ministerial Conference that “in the area of intellectual
property, different readings of the TRIPS-Agreement have given rise to tensions. To a certain extent, it is natural
that conflicts of interests should reflect themselves in divergent interpretations of common rules. But the
commercial exploitation of knowledge must not be valued more highly than human life. There are circumstances in
which the conflict of interests will require that the State exercise its supreme political responsibility… Brazil
promotes and upholds intellectual property rights…However, if circumstances so require it, Brazil, like many other
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“paragraph” is that such a conflict may arise, and this is precisely why “the TRIPS-Agreement
does not and should not prevent Members from taking measures to protect public-health”.

“As mentioned, a basic issue underlying the discussions leading to the Doha-Declaration was the
extent to which the final proviso of article 8.1 would mean that intellectual property can override
public-health. One possible interpretation of this proviso is that, unlike Article XX (b) of the
“GATT”, under the “TRIPS-Agreement”“Public-health” and other reasons enumerated in Article
8.1 permit Members to adopt measures (e.g. commercialization and price controls), but not to
derogate obligations relating to the availability or enforcement of IPRs. However, in the light of
paragraph 4 of the Doha-Declaration, it may be argued that Article 8.1 would not prevent
derogation from certain obligations under the TRIPS-Agreement if necessary to address public-
health needs.”

The realization of public-health becomes, with the “Doha-Declaration”, a clearly stated purpose
of the Agreement. In affirming that the “TRIPS-Agreement”, “can and should be interpreted and
implemented in a manner supportive of WTO Members' right to protect public-health and, in
particular, to promote access to medical-drugss for all”, “paragraph” 4 gives guidance to panels
and the Appellate Body for the interpretation of the Agreement’s provisions in cases involving
public-health issues. In doing so, Members have developed a specific rule of interpretation that
gives content to the general interpretive provisions of the Vienna Convention on the Law of the
Treaties (hereinafter “the Vienna Convention”) on which GATT/WTO jurisprudence has been
built up88. Therefore, in cases of ambiguity, or where more than one interpretation was possible,
panels and the Appellate Body should opt for the interpretation that is effectively “supportive of
WTO Members' right to protect public-health”.

countries, will not hesitate to make full use of the flexibility afforded by the TRIPS-Agreement to legitimately
safeguard the health of its citizens.” See also, e.g. ‘t Hoen (2001), p. 11; Raja, p. 2002, 14, and the Joint Statement
of 14 November 2001, by MSF, Oxfam, TWN, CPT, Consumers International, HAI and The Third World Network
Third World Economics, No. 268, 1-15 November 2001.
88
As stated by a panel, the TRIPS-Agreement has a “relatively self-contained, sui generis status within the WTO”,
but it is “an integral part of the WTO system, which itself builds upon the experience of over nearly half a century
under the GATT 1947”. See USA- India – Patent Protection for Agricultural and Chemical Products, WT/DS50/R,
adopted on 16 January 1998, para. 7.19.
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It also should be noted that paragraph 4 makes a specific reference to the issue of “access to
medical-drugss for all”, indicating that in the interpretation of the Agreement’s obligations, special
attention should be given to the achievement of this goal.

Finally, “paragraph 4” alludes to the implementation of the Agreement, and not only to its
interpretation. Implementation takes place at the national level, but is influenced by actions taken
by other governments, either in the context of bilateral dealings or in the multilateral framework.
The important message of the “Doha-Declaration” in this regard is that the Agreement can be
implemented89 in a manner supportive of WTO Members' right to protect public-health.

As a result, other Members should restrain from any action that hinders the exercise of such rights
by Members, especially developing countries and LDCs. According to this paragraph, however,
Members not only can implement the “TRIPS-Agreement” “in a manner supportive of WTO
Members' right to protect public-health”, but they should also implement it in that way.

This means that all Member countries, including developed countries, are bound to contribute to
the solution of the public-health problems addressed by the Doha-Declaration90. One possible way
of doing so would be, for instance, by adopting measures to allow the export of medical-drugss
needed in a country with no or insufficient manufacturing capacity, an issue which “paragraph 6”
of the “Doha-Declaration” requires Members to address.

ii. Flexibility in TRIPS

The second part of “paragraph 4”of the “Doha-Declaration” reflects one of the main concerns of
developing countries in the process leading to the Doha Ministerial.

The concept of “flexibility”91 as applied to the obligations imposed by the “TRIPS-Agreement”

has been central to several analyses of the “TRIPS-Agreement”92 and to the position of developing

89
Since implementation is in the last instance an obligation imposed on Member States , the logical reading of the
second sentence of paragraph 4 is that the Agreement should be interpreted and can be implemented in a manner
supportive of WTO Members' right to protect public-health.
90
Paragraph 17 of the general Doha Ministerial Declaration, as quoted above.
91
“Flexible” means “easily led, manageable, adaptable, versatile, supple, complacent” (Concise Oxford Dictionary,
p. 373).
92
Correa (2000a); Reichman (1997).
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countries at the Council for TRIPS in the special sessions on “TRIPS”and health93. Spelling out
some of the available flexibility was the main objective of the “Doha-Declaration”.

The “Doha-Declaration” stresses the flexibility “for this purpose”, that is, for the purpose of
adopting measures to protect public-health. As indicated by the coverage of paragraph 5, Members,
only specified, in a non-exhaustive manner, some of the aspects of the Agreement that provide for
such flexibility (“…we recognize that these flexibilities include…”)94.

The confirmation that the “TRIPS-Agreement” has left room for flexibility at the national level
has important political and legal implications. It indicates that the pressures to impede the use of
available flexibilities run counter to the spirit and purpose of the “TRIPS-Agreement”, especially
in the light of the recognized “gravity of the problems” faced in the area of public-health by
developing countries and LDCs. In legal terms, such confirmation means that panels and the
Appellate Body must interpret the Agreement and the laws and regulations adopted to implement
it in light of the public-health needs of individual Members States.

iii. Interpretation

“Doha-Declaration” on TRIPS and Public-health: Sub-paragraph 5 (a)

5. Accordingly and in the light of paragraph 4 above, while maintaining

our commitments in the “TRIPS-Agreement”, we recognize that these
flexibilities include:
(a) In applying the customary rules of interpretation of public
international law, each provision of the “TRIPS-Agreement”
shall be read in the light of the object and purpose of the
Agreement as expressed, in particular, in its objectives and
principles.

93
The European Commission also held, in its submission of 12 June 2001, that “In the view of the EC and their
Member States, the Agreement’s objectives, principles and purpose (set out in Articles 7 and 8), special
transitional arrangements and other provisions give these countries a sufficiently wide margin of discretion in
implementing it. This margin enables them to set up an intellectual property regime that meets their policy needs
and is capable of responding to public-health concerns” (IP/C/W/280).
94
Note that both the developing countries’ and the EC submissions to the special session of 20 June 2001,
mentioned other aspects where members enjoy flexibility, such as the “Bolar provision” and the protection of data
submitted for the marketing approval of pharmaceuticals (Article 39.3 of the Agreement). See IP/C/W/296 and
IP/C/W/280.
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The objective of developing countries in proposing sub-paragraph 5(a) of the “Doha-Declaration”
was to stress the importance of “TRIPS” Articles 7 and 8 in the interpretation of the Agreement,
particularly in the light of Article 31 of the Vienna Convention95. They attained their objective
without ignoring, however, that other provisions of the Agreement also contribute to the
determination of its object and purpose.

That “TRIPS-Agreement”purposes are elaborated in its Articles 7 and 8, but also in other
provisions of the Agreement has, in fact, already been recognized in TRIPS/WTO jurisprudence.
In the Canada-Patent protection of pharmaceutical products case96, the WTO dispute settlement
panel argued, in connection with Article 30 of the “TRIPS-Agreement”, that “the goals and the
limitations stated in Articles 7 and 8” as well as those of “other provisions of the TRIPS-Agreement
which indicate its object and purposes …must obviously be borne in mind” when examining the
conditions set forth by said Article. The panel thus determined that Articles 7 and 8 express the
“object and purpose” of the “TRIPS-Agreement”, but that these are not the only provisions
establishing the Agreement's objectives.

It is also relevant to note that the EC and their Member States emphasized the key role of Articles
7 and 8 in the interpretation of the “TRIPS-Agreement”, in its submission to the Council for TRIPS
of 12 June 200197 . It stated that “Although Articles 7 and 8 were not drafted as general exception
clauses, they are important for interpreting other provisions of the Agreement, including where
measures are taken by Members to meet health objectives”. In fact, the “Doha-Declaration” goes
beyond merely confirming the relevance of Articles 7 and 8 for the interpretation of the “TRIPS-
Agreement”. “It provides an understanding about the purpose of the TRIPS-Agreement in relation
to public-health issues, which should guide any future rulings by panels and the Appellate Body
dealing with such issues.”

95
It is unclear why this interpretive rule has been considered as one of the “flexibilities” in paragraph 5. In fact,
such rule, properly applied, should ensure that due deference to national law is given in appropriate cases; that is,
that the flexibility left to Member States is respected by the DSB.
96
WT/DS114/R, 17 March 2000 (hereinafter the “EC-Canada case”).
97
IP/C/W/280.
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 iv. Emergency

“Doha-Declaration on TRIPS and Public-health: Sub-paragraph 5 (c)”

5. Accordingly and in the light of paragraph 4 above, while maintaining our

commitments in the “TRIPS-Agreement”, we recognize that these flexibilities
include:

(c) Each member has the right to determine what constitutes a national
emergency or other circumstances of extreme urgency, it being
understood that public-health crises, including those relating to
HIV/AIDS, tuberculosis, malaria and other epidemics, can represent a
national emergency or other circumstances of extreme urgency.

“Paragraph” 5 (c) of the “Doha-Declaration” states what is an unquestionable right of Members

States: the right to determine “what constitutes a national emergency or other circumstances of
extreme urgency”. Such determination may be relevant for the granting of complusory-licenses,
the establishment of exceptions under Article 30, or the adoption of other measures permitted
under Article 8.1 of the Agreement98.

“Paragraph” 5 (c) also includes a presumption: “it being understood that public-health crises,
including those relating to HIV/AIDS, tuberculosis, malaria and other epidemics, can represent a
national emergency or other circumstances of extreme urgency”.

This provision is important for three reasons. First, it clarifies that “public-health crises” can
represent “a national emergency or other circumstances of extreme urgency”, thereby allowing for

98
In May 2002, the Minister of Justice, Legal and Parliamentary Affairs of Zimbabwe issued a Declaration of Period
of Emergency (HIV/AIDS) (Notice, 2002). In view of the rapid spread of HIV/AIDS among the population of
Zimbabwe, the Minister declared “an emergency for a period of six months, with effect from the date of
promulgation of this notice, for the purpose of enabling the State or a person authorised by the Minister under
section 34 of the Act (a) to make or use any patented drug, including any anti-retroviral drug, used in the
treatment of persons suffering from HIV/AIDS or HIV/AIDS related conditions; (b) to import any generic drug used
in the treatment of persons suffering from HIV/AIDS or HIV/AIDS-related conditions”. A Declaration of Sanitary
Emergency until 31 December 2002 was also issued by the Executive Power of Argentina (Decree 486, 12 March,
2002), but it does not make explicit reference to patent law provisions.
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the granting of complusory-licenses when provided for under national law 99 and, pursuant to
TRIPS Article 31 (b), without the obligation for prior negotiation with the patent owner.

Second, the reference to “HIV/AIDS, tuberculosis, malaria and other epidemics” indicates that an
“emergency” may be not only a short-term problem, but a long-lasting situation, as is the case with
the epidemics specifically mentioned for illustrative purposes. This recognition may be deemed an
important achievement for developing countries in the “Doha-Declaration”, since it implies that
specific measures to deal with an emergency may be adopted and maintained as long as the
underlying situation persists, without temporal constraints.

Third, if a Member complains about the qualification of a specific situation by another Member
as a “national emergency or other circumstances of extreme urgency”, the language of paragraph
5 (c) places the burden on the complaining Member to prove that such emergency or urgency does
not exist. This represents an important difference with respect to earlier GATT/WTO jurisprudence
outside of the “TRIPS” context that, under the “necessity test”, put the burden of proof on the
Member invoking an exception to its obligations100.

v. Exhaustion

“Doha-Declaration on TRIPS and Public-health: Sub-paragraph 5 (d)”

5. Accordingly and in the light of paragraph 4 above, while maintaining our

commitments in the TRIPS-Agreement, we recognize that these flexibilities include:

(d) The effect of the provisions in the “TRIPS-Agreement” that are relevant
to the exhaustion of intellectual property rights is to leave each member free
to establish its own regime for such exhaustion without challenge, subject to
the MFN and national treatment provisions of Articles 3 and 4.

99
A survey covering the patent laws of 70 developing countries indicates that only 13 have provided for national
emergency or health emergency as specific grounds for the granting of compulsory licences. See Thorpe
(forthcoming 2002).
100
Correa, 2000b.
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The authorization of parallel imports under an international principle of exhaustion has also been
regarded by developing countries as a key component of a patent system sensitive to public-health
needs. This was one of the key issues raised by pharmaceutical companies against South Africa in
the already mentioned case101.

Developing countries were keen to clarify in the “Doha-Declaration” the Members’ right to adopt
an international principle of exhaustion of rights102, in accordance with article 6 of the Agreement.
Paragraph 5 (d) provides the sought-after clarification. It specifically states that “the effect of the
provisions in the “TRIPS-Agreement”… is to leave each Member free to establish its own regime
for such exhaustion without challenge”.

Though this paragraph does not add substantively to the “TRIPS-Agreement”, it certainly reassures
Members wishing to apply an international exhaustion principle that it would be legitimate and
fully consistent with the Agreement to do so.

It is necessary to stress that in order to take advantage of this and other flexibilities allowed by
the “TRIPS-Agreement” – and confirmed by the “Doha-Declaration” – national laws must
incorporate the appropriate rules in the form of complusory-licenses, exceptions and other relevant
provisions.

Such flexibilities do not automatically translate themselves into national regimes, and do not
protect governments (or private parties) from legal actions based on national laws and regulations
that fail to make use of the “TRIPS-Agreement's flexibilities”. For example, specific legal
provisions allowing for parallel imports would be normally necessary in order to benefit from the
principle of international exhaustion of rights103.

101
Bond, 1999.
102
This principle permits the import of a patented product into a country without the authorization of the title
holder or his licensees, to the extent that the product has been put on the market elsewhere in a legitimate
manner. Velásquez and Boulet, 1999.
103
Though in some countries this principle may result from jurisprudential elaboration, it may take a long time to
test what the legal solution is. The ensuing uncertainty is likely to discourage or effectively prevent the use of such
a mechanism as a means to obtain medical-drugs
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A survey of patent laws in developing countries shows that many of such countries have not or
only partially used the flexibilities allowed by the “TRIPS-Agreement” 104 . The effective
implementation of the “Doha-Declaration” in those countries, therefore, would call for an
amendment to national laws so as to incorporate the exceptions and safeguards necessary to protect
public-health.

vi. Members with insufficient or no manufacturing capacities

“Doha-Declaration on TRIPS and Public-health: Paragraph 6”

6. We recognize that WTO members with insufficient or no manufacturing

capacities in the pharmaceutical sector could face difficulties in making effective
use of compulsory licensing under the TRIPS-Agreement. We instruct the Council
for TRIPS to find an expeditious solution to this problem and to report to the
General Council before the end of 2002.

“In paragraph 6 the Doha-Declaration instructs the Council for TRIPS to address a delicate issue:
how can Members lacking or with insufficient manufacturing capacities make effective use of
compulsory licensing.”“The Declaration requests the Council for TRIPS “to find an expeditious
solution to this problem and to report to the General Council before the end of 2002”. As discussed
below, in order to be effective such a solution should be economically viable, and not only legally
acceptable.”

“A major limitation in compulsory licensing rules under Article 31 (f) of the TRIPS-Agreement is
the requirement that a product made under a compulsory license be supplied predominantly to the
licensee's domestic market105, unless the license were issued to remedy anti-competitive practices
(Article 31 (k) of the Agreement). This means, in practical terms, those Members with large

104
Thorpe, 2002.
105
TRIPS Article 31: “Where the law of a Member allows for other use of the subject matter of a patent without
the authorization of the right holder, including use by the government or third parties authorized by the
government, the following provisions shall be respected:
… (f) any such use shall be authorized predominantly for the supply of the domestic market of the Member
authorizing such use”.
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markets, like India, the UK or the USA, typically could easily grant complusory-licenses for the
supply of patented medical-drugss to meet public-health needs (for instance, those arising from
the threat of bioterrorism).”“However, for Member countries with small markets, like the African
countries where the AIDS crisis is most severe, it might be extremely difficult to establish
economically viable production if the manufactured product has to be “predominantly” sold in the
local market”.

“The basic problem underlying paragraph 6 is that many developing countries lack or have an
insufficient capacity to manufacture medical-drugss on their own. As indicated in Annex 2106,
manufacturing capacities in pharmaceuticals are distributed very unevenly in the world. Not many
countries have the capacity to produce both active ingredients and formulations, and very few
countries maintain significant research and development capabilities.”

“Given that only a few developing countries have substantial manufacturing capacity in
pharmaceuticals, once the TRIPS-Agreement becomes fully operative (after 2005), many countries
may face difficulties in acquiring medical-drugss at affordable prices. Today, for example, some
countries, such as India, do not provide patent protections for pharmaceutical products, and
produce generic versions at a fraction of the price of the patented product. A Member country
where the price of patented products is high has the option of issuing a compulsory license to
permit import from such countries.”

“The problem is that, as countries fully comply with the TRIPS-Agreement by 2005 at the latest,
they will no longer be able to produce and export cheap generic copies of patented medical-drugss.
Consequently, the sources of affordable new medical-drugss will dry up and countries without
sufficient manufacturing capacity and market demand will not be able to grant a compulsory
license either for the local production or for the importation of such medical-drugss: they will
become entirely dependent on the expensive patented versions107”.

“This problem had been raised by developing countries during the special sessions on TRIPS and
health at the Council for TRIPS, and by the EC and their Member States in its submission of 12
June 2001.” Developing countries argued that “nothing in the TRIPS-Agreement prevents

106
WHO, 2000, p. 32.
107
Oxfam, 2002.
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Members from granting complusory-licenses for foreign suppliers to provide medical-drugss in
the domestic market… In this respect, the reading of Article 31 (f) should confirm that nothing in
the TRIPS-Agreement will prevent Members from granting complusory-licenses to supply foreign
markets”108.

The EC and their Member States noted the problems posed by the limitation imposed by Article
31 (f). A Member is free to grant a compulsory license for the importation of goods which are
under patent in its own territory, as long as the imported goods have been produced in a country
where they are not patented, or where the term of protection has expired. However, when a patent
exists in the potential supplier country, the patent owner may block exports to the country in need
of the medical-drugss 109 . Moreover, since Article 31 (f) requires that a compulsory licensee
predominantly supply the domestic market, that provision would prevent the granting of a
compulsory license exclusively or mainly to export to a country in need of certain medical-drugss.

vii. Extension of Transitional period for LDCs

The Doha-Declaration permits LDCs to opt for an extension of the transitional period provided for
under Article 66.1 of the TRIPS-Agreement. Paragraph 7 establishes the grounds for an extension
of the transitional period for LDCs110 in relation to pharmaceutical patents only. It contains a “duly
motivated request” – in the terms of Article 66.1 of the TRIPS-Agreement111 – on the basis of
which the Council for TRIPS must give effect to that extension. LDCs do not need to individually
follow the procedure provided for under Article 66.1 to enjoy this period. The Declaration,
however, explicitly preserves the right of LDCs to request extensions for other matters (not related

108
IP/C/W/296.
109
IP/C/W/280.
110
Though this paragraph does not amend Article 66.1 of the Agreement, it does innovate with regard to the
procedure applicable for the extension of the transitional period for LDCs.

111
TRIPS Article 66.1. “In view of the special needs and requirements of least-developed country Members, their
economic, financial and administrative constraints, and their need for flexibility to create a viable technological
base, such Members shall not be required to apply the provisions of this Agreement, other than Articles 3, 4 and 5,
for a period of 10 years from the date of application as defined under paragraph 1 of Article 65. The Council for
TRIPS shall, upon duly motivated request by a least-developed country Member, accord extensions of this period”.

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to pharmaceutical patents) in accordance with Article 66.1's procedure112, without diminishing
their right to request further extensions for pharmaceutical patents after 2016.

This extension applies to “pharmaceutical products”. “However, the protection conferred to a

patented process encompasses, according to Article 28.1 (b) of the “TRIPS-Agreement”, the
protection of the products directly obtained with such process.” Hence, the extension of the
transitional period should also be deemed to apply to process patents113. Likewise, extension would
apply to cases involving a second indication of a pharmaceutical product, since claims are
generally drafted in these cases as product claims on the basis of the “Swiss-claims”
formulation114.

viii. Special treatment under TRIPS

“The non-discrimination clause contained in Article 27.1 of the “TRIPS-Agreement””115 has often
been mentioned as preventing any differentiation under patent law in the treatment of various
products or sectors. This interpretation would suggest that any solution under paragraph 6 would
likely violate Article 27.1's non-discrimination clause.”

However, as stated by the panel in the EC-Canada case116Article 27.1 prohibits “discrimination,”
as opposed to “differentiation”. The panel held that:

112
In fact, it would have seem more logical to extend the transitional period for all fields of technology since,
unless individual extensions are accorded, LDCs would be required anyway to bear the costs of granting patents in
other sectors
113
This is also the interpretation of the European Commission, who held that “all least developed Members benefit
from the extension of the transition period from 1.1. 2006 to 1.1.2016 (and probably beyond) with regard to
product and process patent protection and its enforcement” (European Commission, 2001, p. 4). Also note that
the USA delegation, while submitting their proposal for paragraph 7 at the Doha Ministerial Conference did not
refer to product patent protection only: “We recommend granting the least-developed countries a 10- year
extension to 2016, to come into full compliance with pharmaceutical-related patent obligations under TRIPS”
(emphasis added). See also Vandoren, 2002, p. 10.
114
Correa (2000c)
115
TRIPS Article 27.1 “Subject to paragraph 4 of Article 65, paragraph 8 of Article 70 and paragraph 3 of this Article,
patents shall be available and patent rights enjoyable without discrimination as to the place of invention, the field
of technology and whether products are imported or locally produced”
116
WT/DS114/R, 17 March 2000.
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“Article 27 prohibits only discrimination as the place of invention, the field of technology, and
whether products are imported or produced locally. Article 27 does not prohibit bona fide
exceptions to deal with problems that may exist only in certain product areas. Moreover, to the
extent the prohibition of discrimination does limit the ability to target certain products in dealing
with certain of the important national policies referred to in Articles 7 and 8.1, that fact may well
constitute a deliberate limitation rather than frustration of purpose” (para 7.92)117.

“It is implicit within the “Doha-Declaration” that differentiation in patent rules may be necessary
to protect public-health. The singling out of public-health, and in particular pharmaceuticals
(paragraphs 6 and 7), as an issue needing special attention in “TRIPS” implementation constitutes
recognition that public-health-related patents deserve to be treated differently from other patents.”

ix. Legal status of Doha-Declaration

“The Doha-Declaration is a strong political statement that can make it easier for developing
countries to adopt measures necessary to ensure access to health care without the fear of being
dragged into a legal battle118. The Declaration is also a Ministerial decision119 with legal effects
on the Member States and on the WTO bodies, particularly the Dispute Settlement Body and the
Council for TRIPS120. It states the purpose of the TRIPS-Agreement in the area of public-health,
interprets the TRIPS-Agreement with regard to some important aspects, instructs the Council for
TRIPS to take action, and decides on the implementation of the transitional provisions for LDCs.”

A “declaration” has no specific legal status in the framework of WTO law121; “it is not strictly an
authoritative interpretation in terms of Article IX.2 of the Marrakesh Agreement Establishing the

117
The USA also held in the same case, based on the panel report on Section 337, that “differential treatment was
not necessarily treatment that was inconsistent with TRIPS requirements” (para. 5.36 (b)(3)(ii), WT/DS114/R).
118
Weisbrot, 2002, p. 16; Raja, 2001, p. 14.
119
Article IX.1 of the WTO Agreement.
120
It should be noted that the Ministerial Conference rejected proposed language (“Desiring to clarify the
provisions of the TRIPS-Agreement, while preserving the rights and obligations of Members under the
Agreement”) that would have suggested that the Declaration would only clarify provisions of the TRIPS-
Agreement.
121
The WTO adopted several “declarations” prior to the document examined here: “Declaration on the
Contribution of The World Trade Organization to Achieving Greater Coherence In Global Economic Policymaking”;
“Declaration on the Relationship of the World Trade Organization with the International Monetary Fund”;
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40
WTO. However, given the content and mode of approval of the Doha-Declaration, it can be argued
that it has the same effects as an authoritative interpretation. In particular, in providing an agreed
understanding on certain aspects of the TRIPS-Agreement in paragraph 5, Members have created
a binding precedent for future panels and Appellate Body reports. According to the European
Commission”,

“In the case of disputes (e.g. in the context of WTO dispute settlement procedures) Members can
avail themselves of the comfort provided by this Declaration. Panelists are likely to take account
of the provisions of the TRIPS-Agreement themselves as well as of this complementary
Declaration, which, although it was not meant to affect Members’ rights and obligations, expresses
the Members’ views and intentions. Hence, the Declaration is part of the context of the TRIPS-
Agreement, which, according to the rules of treaty interpretation, has to be taken into account when
interpreting the Agreement”122.

Moreover, the “Doha-Declaration” can be regarded as a “subsequent agreement” between the

parties regarding the interpretation of a treaty or the application of its provisions, under Article
31.3 (a) of the Vienna Convention on the Law of the Treaties.

“Any WTO Member could bring a complaint under the DSU on issues covered by the Doha-
Declaration”123, and it would be theoretically possible for a panel or the Appellate Body to find an
inconsistency between the Doha-Declaration and the TRIPS-Agreementitself. “This is unlikely,
however, since in adopting the Declaration, Members have exercised their exclusive competence
to interpret a WTO agreement124, and it would be extremely difficult to challenge the adopted
interpretation.”

“Declaration on the Dispute Settlement Pursuant to the Agreement on Implementation of Article VI of the General
Agreement on Tariffs and Trade 1994 or Part V of the Agreement on Subsidies and Countervailing Measures”.
122
European Commission, 2001, p. 2. Se also Vandoren (2002), who notes that “the Declaration provides comfort
to Members in the case of disputes…A Member whose legislation is being challenged by another Member because
of alleged incompatibility with the TRIPS-Agreement can refer to the contents of this Declaration in support of the
measures under dispute, where relevant…and panelists are likely to take account of this complementary
Declaration as well as the provisions of the TRIPS-Agreement in their decisions” (p. 8).
123
Gillespie-White, 2001.
124
Panels and the Appellate Body can only “clarify” the provisions of the WTO agreements; they “cannot add or
diminish the rights and obligations provided in the covered agreements” (article 3.2 of the Dispute Settlement
Understanding).
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It should be stressed, however, as mentioned above, “that the Doha-Declaration is not self-
executing and both developed and developing countries should adopt the legal amendments
necessary to implement it. Developing countries, in particular, should ensure that they are using to
the full extent possible the flexibilities allowed by the TRIPS-Agreement to protect public-health
and facilitate access to health care by all.”

c. The TRIPS-Agreement

“The relatively modest use of compulsory licensing by developing Members to date is explained
by a variety of factors. Recognizing the multidimensional nature of the problem, the restriction
imposed by Article 31(f) that the licensee must “predominantly” supply the local market operates
as a significant restriction on the capacity of developing Members to make and acquire medical-
drugss and other public-health related products. Prospective importing Members are limited as to
the sources of products, and prospective exporting Members are limited in their capacity to
establish economies of scale.”

i. A multi-dimensional problem set

“Article 31 of the TRIPS-Agreement permits all WTO Members to grant complusory-

licenses regarding, inter alia, pharmaceutical products and processes. The terms of Article
31 are in general permissive and flexible. As confirmed by paragraphs 5(b) and (c) of the
Doha-Declaration, Article 31 does not limit the grounds upon which licenses may be
granted, and it permits each Member to determine in its own discretion what constitutes a
national emergency or circumstances of extreme urgency (thereby establishing an
exception from pre-grant negotiation).”“There is substantial flexibility in terms of the
administrative processes that may be adopted to implement a compulsory licensing
regime.”

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 To date, “developing countries have made limited use of compulsory licensing as a tool to
address public-health issues”125. This stems from a number of causes: “(1) the TRIPS-
Agreement has only recently begun to increase the incidence of patent protection: (2) use
has been opposed by developed country WTO Members and interested industry groups
within them, and a strong political commitment to act in the face of this opposition is
required; (3) some developing countries have expressed concern regarding a potential
backlash from foreign direct investors (4) developing country enterprises may find it easier
to reach accommodation with foreign patent holders than to challenge them through the
compulsory licensing process for various economic and administrative reasons and, as
noted earlier; (5) effectively implementing compulsory licensing requires that certain
preconditions relating to administrative, financial and technical capacity be met, and these
conditions are often not met in developing countries.”

“Addressing the limited use by developing countries of the compulsory licensing tool will
require that substantial attention be paid to putting into place appropriate legal
infrastructure. In this regard, developing countries will need to seek advice and assistance
from sources such as UNCTAD, WHO and non-governmental organizations (NGOs)
attentive to their interests.”
“Addressing the problem of limited use will also require access to and coordination of
financial and technical resources. The solution to the limited use of compulsory licensing
by developing countries requires addressing a number of important elements.”

ii. Article 31(f) of the TRIPS-Agreement

“Recognizing the multi-dimensional nature of the problem, the TRIPS-Agreement

nevertheless establishes certain obstacles to effectively addressing access to medical-

125
Frederick M. Abbott, The TRIPS-Agreement, Access to Medical-drugs and the WTO Doha Ministerial Conference,
Quaker United Nations Office – Geneva, Occasional Paper 7, September 8, 2001, published in 5 J. WORLD
INTELLECTUAL PROP. 15 (2002), available as Occasional Paper at http://www.quno.org..
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43
drugss through compulsory licensing.” The most widely noted of these potential obstacles
is Article 31(f), which provides:

“(f) any such use shall be authorized predominantly for the supply of the domestic market
of the Member authorizing such use;”

Article 31(f) establishes a limitation: “the terms of the compulsory license should include
the condition that the licensee uses the patented invention predominantly to supply the
domestic market of the Member granting the license.”

The word “predominantly” would generally appear to refer to the major part or majority,
and would generally suggest that more than fifty percent of the production by a compulsory
licensee should be intended for supply of the domestic market of the Member granting the
license.
It might be suggested that “predominantly” also refers to a situation in which the domestic
market of the Member granting the compulsory license takes the greatest share of supply
as among those Members receiving supplies. To illustrate: the granting Member may
receive forty percent (40%) of the supply, while three other Members each individually
receive twenty percent (20%). In that context, supply of the domestic market of the granting
Member would predominate over the supply of any other individual WTO Member. The
difficulty with this interpretation is that it potentially reduces the term “predominantly” to
a nullity, for example, if there were 80 Members receiving supplies under compulsory
license, perhaps only two percent (2%) might need to be supplied to the market of the
Member granting the license to maintain its predominance.
The limitation imposed by Article 31(f) creates two inter-linked problems:
1. “By restricting the availability of export drugs made under compulsory license, it limits
countries that are not in a position to support manufacturing under compulsory license (or
where patent protection is not in force) in the availability of supply of generic import
drugs”, and;

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 2. “By requiring compulsory licensees to supply a predominant part of their production to
the domestic market, it limits the flexibility of countries to authorize the export of
compulsory-licensed drugs and thereby to exploit economies of scale.”

Article 31(f) creates difficulties on the demand and supply side of the generic drug pipeline.
“The demand side problem is self-evident. If a developing Member lacks manufacturing
capacity for a particular drug, and there are no Members that are able to supply it by export
under compulsory license (or exception), there may be no affordable supply of the drug.”

“The supply side problem is identified because there are WTO Members, including
developing Members, with the capacity to address the drug import needs of a wide range
of developing Members under compulsory license, but that may be inhibited from
undertaking this role because of the Article 31(f) limitation.”

 Implementation by importation
“Neither Article 31 in general, nor Article 31(f) in particular, state or imply that a
compulsory licensee must produce the invention within the territory of the Member
granting the license. Under Article 31, “a compulsory licensee may import products in
the implementation of its license.”126 The ability of a compulsory licensee to satisfy a
domestic market by importation depends upon the availability of off-patent products in
exporting countries, or upon some legal mechanism under which the potential rights of
patent holders in exporting countries will not be infringed. When pharmaceutical patent
protection is not implemented or enforced in a WTO Member (such as an LDC subject
to an extended transition period), that Member will not be required to issue a
compulsory license to satisfy its import requirements in a TRIPS-consistent manner.”

 Legal mechanisms for non-infringement in the country of export

If no patent has been granted in the country of export, or if a patent in that country has
expired, there will be no infringement by a party exporting in fulfilment of the

126
Imports into country A might be exported to country B. A compulsory licensee that imported to implement the
license, but exported a predominant part of the imports, would be acting inconsistently with Article 31(f).
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 compulsory license in the country of import. The patent holder in the country of export
may consent to the exportation, perhaps because that patent holder is different than the
patent holder in the country of import127. There would be no infringement in either
country if the importer also acted under compulsory license. The producer in the
country of export may itself be implementing a compulsory license, and would be
entitled to export a non-predominant part of its production. In this case, there would be
no infringement in either country. “Both the exporter and the importer will have to act
under the compulsory license and, there would be no patent protection in the importing
country”. If the producer in the country of export is implementing a compulsory license
issued as a remedy for anticompetitive conduct, the restriction regarding predominant
part established by Article 31(f) does not apply, pursuant to Article 31(k).

 Potential infringement in the country of export

“If (a) the drug is under patent in the country of export (b) the patent holder does not
consent to the export (c) no compulsory license has been issued, or has been issued but
cannot be used for export because of a “predominant part” problem, then the importing
country that has issued the compulsory license may not be able to satisfy its
requirements without a potential infringement of patent holder’s rights in the country
of export.”

“From the standpoint of TRIPS-Agreement obligation, the issuance of a compulsory

license in the country of import does not constitute non-compliance with TRIPS
obligations, even if prospective imported products are under patent in a country of
export.46 If exports originate in another Member in a manner inconsistent with the
exporting country’s obligations under Article 28 of the TRIPS-Agreement, it is the
obligation of the exporting country to take steps in regard to its obligations.”

127
The patent holder may be the same in both Members, and in theory it might consent to export to the Member
that has issued the compulsory license regarding its own patent. It is difficult to foresee the circumstances in which
this might occur.
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 IV. CHPATER IV

A. CONTROVERSIES SURROUNDING THE STIPULATIONS AND ACTION OF COMPULSORY

LICENSING

“Licensing in IP laws is not a daunting task for policy makers, but the challenge lies in having
provisions that leave little room for controversy or varied interpretation, and practicing compulsory
licensing in a way that it balances all the stakeholder’s interest. The reality is that, compulsory
licensing stipulations being specified, the long term task is to balance the interest between the
authorizer (the government) and the compulsory license ( e.g. government, organization, or firm)
on one side, and the IP owner ( who becomes the unwilling licensor) on the other. The difficulty
also lies in the unpredictably of compulsory licensing given it concerns with the future production
and sales of a patented product, its remuneration to the holder and innovative activities.”

“The example of Thailand demonstrates how compulsory licensing is more easily said than done.
In late 2006 and early 2007, the Thai government authorized three compulsory pharmaceutical
licenses- Plavix for heart disease, Kaletra and Efavirenz; both drugs against AIDS 128 . Under
compulsory licensing, the economically manufactured drugs could only supply local market and
be distributed to the poor. For example, under the compulsory licensing of a five year contract for
Efavirenz, the drug would be manufactured within Thailand with 50% cost reduction and in return
the patent owner would receive 1% of sales in Thailand.”

“The action of the Thai government caused a storm of controversy because of the conflict of
interests between the Thai government, the users of the drugs and their supporters (developing
country governments and health activist), and the three drug companies and their supporters
(developed country governments). The Thai government argued that the purpose of the
complusory-licenses was to bring down the market process and thus allow sufferers access to the
drugs and that their action was intended to contribute to social well-being in Thailand 500,000
people are HIV positive129. Without this move, the drugs provided by these companies were too

128
Thailand backs patent drug copies' (news.bbc.co.uk 2007) <http://news.bbc.co.uk/2/hi/asia-pacific/6310515.stm>
accessed 20 October 2014
129
(www.unicef.org ) <http://www.unicef.org/thailand/hiv_aids.html> accessed 20 October 2014
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47
expensive and their price structures undermined the Thai government’s commitment to effective
health care for its citizens130. The controversy has developed into a heated debate between the
developed and developing country camps. The US Trade Representative elevated to the Special
301 Priority Watch List due to its weakened respect for patents131. The US demanded Thailand
cancel the compulsory license unless they could clarify their scope in using them. The Thai and
government and the developing country counterparts argued that issuance of complusory-licenses
conformed to TRIPS stipulations. The WHO endorsement at the annual meeting of the 193
member states in May 2007 appeared to have temporarily halted the debate. The WHO showed its
official stance on this issue, promising a commitment to the technical and policy support for using
compulsory licensing to access medical-drugss. However, “this may only be a temporary ceasefire,
as the conflicts of interests remain unaltered.”132”

“In addition to the broad debate between the two camps of developed and developing countries,
controversies also lie in some stipulating and operational issues associated with compulsory
licensing. Firstly, TRIPS Article 31 9F says that “any such use shall be authorized predominantly
for the supply of the domestic market of the Member authorizing such us’ could potentially create
grey markets in two different ways.” One is the grey market created across borders where countries
with expensive patented products import from a country with less expensive products. Nations
may have bilateral agreements on preventing the existence of such markets, but they still cannot
prevent individual consumers from bringing such products into the country. Both grey markets
consequently affect the global sales of the patented products. Although in 2003, “the WTO decided
to allow generic produce under compulsory licensing to be exported in all member states, 33
countries decided not to be part of the import and other 11 nations decided to only use the system
under national emergency or extreme urgency”.133”

130
Ashayagachat A, 'Thailand firms on compulsory licensing' [2007] Bangkok Post
131
Lybecker Christina M and Fowler Elizabeth, 'Compulsory licensing in Canada and Thailand: Comparing regimes
to ensure legitimate use of the WTO rules' [2009] JLME , 222-239.
132
(www.who.int 2007) <www.who.int/mediacentre/events/2007> accessed 20 October 2014
133
The 33 countries are Australia,Austria,Belgium,Canada, Czech Republic, Cyprus, Denmark, Estonia, Finland,
France,Germany, Greece, Hungary, Iceland, Italy, Japan, Latvia, Lithuania, Luxembourg, Malta, Netherlands, New
Zealand, Norway, Poland, Portugal, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, UK and the US; Hong
Kong, China, Israel, Korea, Kuwait, Macao China, Mexico, Qatar, Singapore, Chinese Taipei, Turkey and UAE would
only use the system under national emergency or extreme urgency.
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“Secondly, ‘national emergency’ and ‘public non-commercial use’ are terms that leave a large
room for interpretation. Basically, ‘public non-commercial use’ is a superfluous, open-ended term
with no internationally standardized definition. Any country can exercise its power to declare a
non-commercial government use of a patent that is not necessarily a national emergency or
urgency, but in national interest. The situation in Thailand being the case in point which shows
mis-use can often hurt bilateral relations between the patent owner’s country and the compulsory
licensing issuing state.”

“Thirdly, ‘adequate remuneration’ and economic value’ are unclear terms. “The WTO
interpretation is that adequacy is decided based on the nation concerned and the patent owner has
the right to appeal” 134 . However, it is widely known that patent value tends to be seriously
considered and evaluated when mergers and acquisition take place. Would compulsory licensing
authority seriously assess the economic value and provide that patent owner with a payment that
is deemed fair and adequate? Due to the enforced nature of the license, it can be difficult to agree
on a royalty rate, although according to the stipulation, it should be negotiable. In practice,
probably the owner has little bargaining power.”

“Fourthly, states have the flexibility to issue complusory-licenses that often involve the interest of
other countries. As discussed earlier, the nature of global business has made compulsory licensing
not a business of one nation only. This is usually the case when the patent is not originally from
the compulsory licensing issuing nation but from the country of the patent holder and any other
countries that have granted or show interest in the patented product. These countries may feel that
their economic gain might be undermined under the licensing conditions.”

“Fifthly, would such compulsory licensing act as a positive influence on innovative motivations?
The best test would be empirical evidence. However, this is an area with little research being done.
A study of 70 firms subject to compulsory licensing 135 shows a “significant increase of R&D
expenditure in comparison to firms under no influence of compulsory licensing”. This is probably
due to the fact that firms under compulsory licensing obligations feel the intense pressure to
continue innovating so that they can be ahead of their competitors. However, this evidence is only

134
WTO, 'Compulsory licensing of pharmaceuticals and TRIPS' (www.wto.org 2006) <> accessed 20 October 2014
135
Scherer F M, Competition Policy and Intellectual Property Rights in the Knowledge-based Economy (University of
Calgary Press, 1998)
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based on 70 firms and the future research may examine the positive and negative impact of
compulsory licensing on innovative activities.”

“Finally, “the royalty free practice of compulsory licensing has given rise to controversies as to
the fairness to the unwilling licensor. On the one hand, the royalty free grant of compulsory
licensing certainly help to widen the utilization of patented inventions so that compulsory licensee
can produce or manufacture inexpensively; on the other hand, in the author’s view, the patent
owner deserves the right to be paid for its effort to invent something new.” This, as a result, may
be beneficial to society in order to enjoy related products on the market with the acceleration of
the commercialization patented inventions. Nonetheless, patent owners deserve certain payment
for their inventive work.”

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 V. CHAPTER V

A. THE INDIAN SCENARIO

“Even though the Indian Patent Act, 1970 provided for complusory-licenses for all patents and in
addition automatic grant of licenses as a matter of right in case of non-working of the granted
patent, during the 35 years of its operation no effective complusory-licenses were granted by the
Indian Patent Office. This was partly due to the fact that as a result of the highly diluted patent
system operative for the pharmaceutical sector, applications for patents were not being filed by the
innovators in the Indian Patent Office during that period. In addition, since there was no provision
for applying for product patents, generic producers were free to manufacture and market patented
drugs as long they were produced through processes not patented in India. With India’s strength
in the area of chemical technology, Indian companies are producing through indigenously
developed processes even the most sophisticated chemical molecules; in other words, Indian
companies have the capacity to manufacture even the most complex synthetic molecules. Although
India’s technology strengths in the fermentation area, including biotechnology products are still
found wanting and are inferior to those in China and China is a larger global supplier in the area
of fine chemicals and intermediates; there is no doubt that in the area of APIs and drug
formulations, the Indian industry is well ahead of most other countries and is a major supplier in
the global market.”

B. INVOKING PROVISIONS UNDER INDIAN PATENT ACT, 2005

“Two recent cases related to patents filed by R&D based global MNCs in India during the post
TRIPS era are illustrative of the nature of possible trends and direction in which the TRIPS-
Agreement will be interpreted and implemented in India in coming days. Many of the flexibilities
in the TRIPS-Agreement would be exploited to overcome problems of exclusivity through patents
standing in the way of making drugs more accessible and affordable.”

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 C. THE GLEEVEC CASE136

“Novartis sought patent protection for the beta crystalline form of “imatinibmesylate” in 1998.
The application was processed in 2005 once the law allowed for product patents. Being aggrieved
by the decision of the IPAB it then appealed directly to the Supreme Court through a Special Leave
Petition, due to urgency, as the patent if granted on appeal would expire by 2018.”

“In terms of efficacy, it was stated that the beta crystalline form had more beneficial flow
properties, better thermodynamic stability, lower “hygroscopicity” and increased
bioavailability.On the basis of the documents presented, the Court concluded that the prior patents
and literature count as prior art against the beta crystalline form of “imatinibmesylate”, and it
therefore did not meet the requirements of an “invention” as laid down in the Indian Patents
Act137”.The Court then turned to the argument of efficacy in order to pass the test of s 3 (d). The
Court held that:

“the test of efficacy would depend upon the function, utility or the purpose of the product under
consideration...in the case of a medical-drugs that claims to cure a disease, the test of efficacy can
only be ‘therapeutic efficacy’… “With regard to the genesis of section 3(d), and more particularly
the circumstances in which section 3(d) was amended to make it even more constrictive than
before, we have no doubt that the ‘therapeutic efficacy’ of a medical-drugs must be judged strictly
and narrowly”138. The Court then held that the claimed flow properties, thermodynamic stability
and “hygroscopicity”, whereon “Norvartis” relied on to overcome s 3 (d), had nothing to do with
therapeutic efficacy. With regard to Novartis’s claims of increased bioavailability, on the facts, the
Court found that the increase in bioavailability of the beta crystalline form was not in comparison
to the known and previously marketed “mesylate” salt form of the drug which was soluble. The
Court therefore rejected the Novartis patent application.”” The Court held that the purpose behind
s 3(d) is specific i.e. “The amended portion of s 3(d) clearly sets up a second tier of qualifying
standards for chemical substances/pharmaceutical products in order to leave the door open for true

136
( 2012) <www.swissinfo.ch.../Novartis_awaits_cancer_drug_ruling_in_India> accessed 20 October 2014
137
Novartis AG v. Union of India AIR 2013 SC 1311
138
Ibid at 22,Para 180
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and genuine inventions but, at the same time, to check any attempt at repetitive patenting or
extension of the patent term on spurious grounds..”139

“It was stated that the primary purpose of s 3(d) as evidenced from the legislative history, was to
prevent “evergreening”. “Evergreening is a term used to label practices that have developed in
certain jurisdictions wherein a trifling change is made to an existing product, and claimed as a new
invention. The coverage/protection afforded by the alleged new invention is then used to extend
the patentee’s exclusive rights over the product, preventing competition”140.”

“Incremental innovation occurs when medical-drugss are improved by possibly increasing

treatment options, dosage options, discovering new uses or improving properties on existing
medical-drugss.Whilst incremental innovation has been disregarded as trivial by critics, most
innovation is incremental by nature as progression of technology, especially in the pharmaceutical
sector, occurs in steps. What should be borne in mind is that there is a difference between
incremental innovations that confer real advantages and those that offer no therapeutic
improvements. It is important to differentiate between the two and avoid patents being used as
strategic instruments in competitive practices. The question to be asked is, “When does an
incrementally improved invention of a first patented invention become eligible for a separate
patent?” In this regard, each invention will have to be examined on its merits based on the usual
patenting criteria of novelty and inventiveness, and should be able to withstand the scrutiny
thereafter. As was seen in the Novartis case, the Supreme Court of India held that novelty was not
proven on the facts, and the drug would have failed the patentability test on this basis alone.”

“The goal of any patent regime is to promote innovation by rewarding the inventor for disclosing
his invention to the public through the award of exclusive rights for a period of time, thereby
disseminating knowledge and improving the welfare of society. The importance of striking a
balance between research and development and access to healthcare for the public is once again
highlighted.”

139
Ibid at 22, Para 103
140
Ibid at 22, Para 100
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 D. THE NEXAVAR CASE141

“The decision of the Controller General of Patents to grant compulsory license to an Indian
company for the manufacture and marketing of the anti-cancer drug Nexavar of the German MNC
Bayer has aroused considerable interest in many countries and among international agencies.”

“The compulsory license granted by the Controller General of Patents in India for the anti-cancer
drug, Nexavar is only applicable for the Indian domestic market as stipulated in TRIPS under the
original provisions. The rationale for the grant of compulsory license for Nexavar was the inability
of the patent holder to meet the demand and the extraordinarily high price of the Bayer brand
compared to that offered by NatcoPharma. The order also stipulated that Natco will sell the drug
at the price of Rs 8880 for a month’s supply and that the company will pay a royalty at 6% of net
sales. The matter is further complicated by the fact that Cipla has offered the same drug at a price
of Rs 6840 for a month’s treatment which is considerably lower than that of Natco. In addition,
Bayer has sued Cipla of patent infringement in the production of Nexavar and a decision on that
appeal is pending. The major R&D based MNCs fear that this case could only be a precedent that
could affect several other drugs not only in India but in many other countries.”

141
Compulsory license for Bayer cancer drug Nexavir' (www.thepharmaletter.com 2012) <> accessed at 20 October
2014
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 VI. CHAPTER VI

A. APPROACHES OF VARIOUS COUNTRIES TOWARDS COMPULSORY LICENSING (CL)

“However, despite the drawbacks in the provision and criticisms from the developed countries and
pharmaceutical companies, various countries such as Brazil, Canada, South Africa, and India have
incorporated the Compulsory Licensing provision in their domestic legislation to have access to
affordable generic medical-drugss. The various country based approaches are briefly outlined
below.”

a. South Africa s Approach

“South Africa made a new precedent signifying that when issues relating to health are concerned,
the rights and interests of the public will supersede the rights of the private owners. South Africa
became the subject of world attention shortly after it enacted the Medical-drugss and Related
Substances Control Amendment Act of 1997142 to curtail the AIDS epidemic which became a
serious health concern byauthorising the use of compulsory licensing of generic medical-drugss
and the purchase of more affordable medical-drugss through parallel imports.”

“The legislation was severely criticisedby the United States, its drug industry and the European
Community supporting its pharmaceutical companies. They contended that the Act was in
violation of the TRIPS-Agreement and that the legislation be declared unconstitutional 37.”

“The final outcome was that, these companies had to withdraw their lawsuit in 2001 and cut the
prices of their patented AIDS drugs for SouthAfrica. South Africa, in turn, agreed to abide by the
TRIPS guidelines.143 The landmark judgment in this case proves that the basic rights related to
the public-health in a developing country cannot be ignored or undermined if there is a concerted
and strong political backing there.”

142
Frank Wooldridge, Analysis: "Affordable Medical-drugs-TRIPS and US Policies", IntellectualProperty
Quarterly No. 1 (2000) pg 103.

143
Ibid
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 b. Brazil’s Approach

“Brazil is one country which has prioritised the needs of its AIDS infected people above the patents
required by the pharmaceutical industry. In 1999, as per the national drug policy, the Brazilian
Government regulated some aspects of patent law, allowing the authorities to issue complusory-
licenses under the stipulated conditions. The aim of the legislation was clear: the Brazilian
government was seeking to increase its bargaining power in negotiations with the suppliers of
patented drugs which was quite predictably being strongly opposed by the US government.”

“In January 2001, the US decided to challenge the Brazilian legislation on patents at the WTO for
violating the TRIPS-Agreement. But in June 2001, the US government diluted its stance and the
two countries mutually agreed to consult before invoking any domestic CL provisions. 144This
clearly goes to show that if the domestic legislation is strong and the political leadership is sincere
in backing its own people, a developing country can be able to withstand a high degree of political
pressure by a developed country.”

c. United States’ Approach

“Ironically, it is the US who led the world in issuing complusory-licenses to restore competition
when violations of the antitrust laws have been found, or in the negotiated settlement of antitrust
cases before full adjudication has occurred. By the late 1950s, complusory-licenses had been
issued in roughly 100 antitrust cases covering estimated 40,000-50,000 patents.145 However, in
September 2001, in the wake of the terrorist attacks of September I11 and the subsequent anthrax
scares, the US government threatened to issue compulsory license order against Bayer AG
Corporation's antibiotic Cipro unless the company lowered its selling prices to make the medical-

144
Press release, office of USTR, June 25 2001, available at www'A.ustr.gov releases/2001 '06/01-46.htm

145
Scherer,F.M&Watal, J. "Post -TRIPS Options for Access to patented medical-drugs in
DevelopingCountries",Vol5(913),JIEL, December 2002

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56
drugs available to the victims of the anthrax attacks . 146 The US position was at stake, as many
countries noted the inconsistency and apparent double standards, which the US posed for drug
patents.147 This clearly shows that the US is not an exception and has invoked the provisions of
CL moments of crisis.”

B. DIVERGING VIEWS OF THE DEVELOPED AND DEVELOPING COUNTRIES

“There have always been many conflicting views held by the developed and the developing
countries as regards the protection of Intellectual Property Rights and the provisions of the TRIPS-
Agreement.”

“The issue often raised is, whether it is justifiable to have a set of universally imposed minimum
standards for patent protection that neglects the economic development and public-health needs
and requirements of each country. Or, is it really necessary to have an IPR regime based on 'a one-
size fits all' basis especially when knowledge needs to be disseminated to protect public-health?”

a. Arguments supporting stronger Intellectual Property Protection for Generic Medical-

drugss by the Developed Countries and their Pharmaceutical Industry

“Headed by the United States, the industrialised countries, which economically rely heavily on
information and knowledge-based technology, have traditionally argued for tighter and more
restrictive IPR protection laws in opposition to increasing demands by developing countries.
Arguing about the need for increased protection of the interestsof their own markets and
economies, the developed countries have always posited that organised piracy in developing

146
Bryan C.Mercurio, "TRIPS, Patents, and Access to Lifec-Saving Drugs in the Developing World", Vol.
8:2, Marquette Intellectual Property Law Review, 2004, pg. 223

147
Ibid., pg. 224

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countries consistently undermined the incentive structure that trademark, patent, and copyright
laws were designed to promote in the first place. 148”

“The western pharmaceutical companies have consistently viewed the generic producers of
pharmaceuticals in developing countries as pirates who unfairly profit from their research149. To
protect their interest, the companies backed by the US, lobbied for stronger intellectual property
during the Uruguay round of trade negotiations, which they successfully negotiated.”

i. “Investment in Research and Development

“Industrialized nations assert that pharmaceutical corporations need patent protection for
pharmaceutical products in order to recover R & D costs, which will in turn lead to the
development of new innovations preventing the developing countries from "free riding" on the
invention at their expense150 Development of a new medical-drugs is time-consuming and involves
efficient R & D, high commercial risks and significant financial investment. It is argued that the
returns on this investment will be minimal if it is not protected.”

“This argument is substantiated by the fact that it is easily copied and sold at a lower price which
is often the case in various developing countries with weak patent laws. For instance,
GlaxoSmithKline has demanded new tax credits and has proposed a system of 'transparent
exclusivity' for patents, where the development of a drug for a developing world disease is
rewarded by an extension of patent protection for a developed world medical-drugs.151”

148
Ibid
149
Nadia Natasha Seeratan, "The Negative impact of Intellectual Property Patent Rights on Development Countries:
An examination of the Indian Pharmaceutical Industry" The Scholar: St. Mary's Law Review on
Minority Issues, 3 Scholar 339, 2001
150
Claude E.Barfield& Mark A.Ciroombridge, "Parallel Trade in the Phaimaceutical Industry: Implications for Innovation,
Consumer Welfare, and lleahth Policy",l10 Fordham I.P., Media &Fnt.L.J. 185,187(1997)
151
SudipChaudhuri, "R &D for Development of New Drugs for Neglected Diseases, How can India
Contribute?” March31,2005,pg10,availableat wwwv.wAho.int/intellectualproperty/studies/ s.U o20chadhuri.pdf
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58
 ii. Increase in FDI and transfer of Technology

“The developed country contended that stronger patent protection will increase the economic
growth and development of the developing country by an increase in foreign direct investment
and technology transfer which would benefit their innovative activities domestically and the
availability of advanced technologies from abroad.152On the contrary, weak patent laws will create
a trade barrier against the importation thereby slowing the economic growth and development.”

iii. Assured Quality of Pharmaceutical products

“It is now an oft-stated argument that there can be no compromise on the quality of medical-drugss
supplied. Strong patent protection will presumably ensure and check that the quality and safety of
medical-drugss produced meets the international standards, thereby, reducing the risk of inferior
or counterfeit drugs which are produced in bulk by the manufacturers in countries having weak
laws to meet the needs of the people and make huge profits.”

“It has also been asserted that if a country protects patents, pharmaceutical companies would be
willing to sell essential medical-drugss to the developing countries at a reduced price. This has
been supported by the fact that pharmaceutical companies have dropped the price of certain AIDS
drugs by fifty to seventy-five percent for developing countries. Thus, the argument for a stronger
patent protection is justifiable to improve the economy of the countries in general and protect the
interest of the pharmaceutical companies in particular for their innovation and investment.”

iv. Other Factors areto be considered affecting access

“It is unjustifiable to shoulder the burden entirely on the patent protection. Responding to the AIDS
Crisis in Africa, the pharmaceutical industry asserts that price is not the only factor in access to
drugs, Harvey Bale, Director-General of the International federation of Pharmaceutical
Manufacturers' Association, believes that the real barriers to access to drugs are: "a combination

152
Ha-Joon Chang, "Intellectual Property Rights and Economic Development; Historical Lessons and
Emerging Issues", 2 Journal of.Human Development, 2001, pg 301
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59
of poverty, lack of access to sufficient international aid, absence of trained medical personnel in
many regions of the developing countries, lack of diagnostic equipment." 153”

He argues that patent is not a monopoly right and is often competed with off-patent products giving
rise to generic versions of patented drugs which may be of sub-standard quality or even
hazardous 154 . It may do more harm than gain. Further, the national tax system, which is
responsible, for tariffs and other forms of indirect taxation also affect the drug prices..”

b. Arguments of the Developing Countries against stronger Intellectual Property Rights

Protection for Generic Medical-drugss

i. “History Repeats Itself; Colonisation v Sovereignty

“On the contrary, the developing countries maintain that knowledge and informationare "the
common heritage of mankind" and therefore should be made available at low cost. 155 It is
contended that imposition of strong intellectual property protection will give the liberty to the
developed countries to exercise an element of foreign economic control.”

“This, in a way, not only reproduces the history of colonisation but also diminishes the developing
country's sovereign rights to determine and make its own laws. Presently, the majority of
shareholders of the pharmaceutical companies, their owners and managers are all from the
developed countries. This, the developing countries contend, will always propel them to imposing
their own terms and conditions during trade transactions and, thereby suppressing and deterring
indigenous development needs.”

153
Frank Wooldridge, Analysis: "Affordable Medical-drugs-TRIPS and US Policies", IntellectualProperty
Quarterly No. 1 (2000) pg 103.
154
Michael Spececr, "India's Plaguc: Cheaper Drugs May Ielp Millions Who IhaveAIDS-- But h ow Many Will They
Hurt9 ", The New Yorker, 17th December 2001,http:/I/ww.michaelspecer.comnfy/2001/2001-12-17-india.html
155
Tara KalagherGiunta&Lily H.Shang, "Ownership of Informiation in a Global Economy, 2/27, GeorgeWashington Journal Of
International Law and Economies, 1993-1994 at 327

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 ii. Research and Development

“Patents and profits go together and this is more so when the major pharmaceutical companies
argue that strong patent protection will give them the incentive to invest in R & D of new drugs to
treat infectious diseases found predominantly in the developingcountries. However, developing
countries argue that this argument fails to acknowledge that, in fact, of the money invested towards
R & D, only ten percent is used to develop drugs that account for ninety percent of the world's
diseases in developing countries, while ninety percent of R & D is actually spent on providing
treatments for the affluent, such as cure for baldness, diet drugs, impotency drugs such as Viagra.”

“It is well understood that the western pharmaceutical companies will produce drugs which are
hugely profitable and reap the fruits for their efforts. Treatment and research for diseases such as
tuberculosis, malaria and AIDS has not been the primary focus for these pharmaceutical
companies.”

“They have been reluctant to invest huge capital as they might not get enough returns as the profit
margin in generic drugs sold cheaply obviously would be a lot less. Higher prices, on the other
hand, increase the developing countries' inability to buy generic medical-drugss at exorbitant
prices. Profit has always been one of the key reasons why the prices of the various generic drugs
are kept high in the poor countries.”

C. RE-EVALUATING INTERNATIONAL INTELLECTUAL PROPERTY AND THE RIGHT TO

HEALTH RELATIONSHIP

“International intellectual property laws and policies significantly influence individuals’ right to
access affordable medical-drugss but these laws and policies are seldom evaluated with attention
to their impact on the right to health or the norms of international human rights laws. In other
words, international intellectual property laws and policies are sometimes formulated without
careful consideration of their consequences, whether the means adopted will achieve those
proposed policy goals, and whether intended economic interests outweigh human rights burden.”

“The human rights approach is one possible solution to resolve conflicts between intellectual
property rights and public-health, and has the capacity to bolster developing countries’ public-
health responses when facing developed countries’ challenges. Because the human rights approach
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is capable of defining the right to “decent minimum health care”156 and to add clarity to the scope
of public-health protection, it can provide specific and explicit grounds “that both require more
exceptions to intellectual property rights (e.g. compulsory license) when individual lives are at
stake, and limit exceptions when only some vague notion of public-health or public good is at
stake.”157”

“Furthermore, since the trade and human rights (the right to health) debate is essentially one about
coherence between international regimes, the human rights paradigm can in some sense be a
practical approach to ensure that trade rules are developed and applied in ways that promote a fair
and equitable trading system and to further establish a just international and social order158.”

“But the development of an international intellectual property rights regime is likely to push the
protection and the fulfillment of the right to health out of its independent arena and to make health
care merely a component of international trade policy. The ignorance is partly caused by the fact
that international trade law, which mostly involves transactions between private actors and inter-
linkages of private actors across state boundaries, was for a long time considered part of the
“private” rather than the “public” sphere.159”

“It is argued by many of those who negotiate international trade law rules that each of the two
legal systems (international trade and international human rights) should take into account only its
own rules and regulations. 160 Thus, right-to-health issues are rarely discussed within WTO

156
Office of the U.S. Trade Representative, 2007 Special 301 Report 27 (2007).

89 157
Melissa McClellan, “Tools for Success”: The TRIPS-Agreement and the Human Right to Essential Medical-drugs, 12 Wash. &
Lee J. Civil Rts. & Soc. Just. 153, 161 (2005).

90 158
Caroline Dommen, Human Rights and Trade: Two Practical Suggestions for Promoting Coordination and
Coherence, in Frederick M. Abbott, Christine Breining-Kaufmann & Thomas Cottier eds., International Trade and
Human Rights: Foundations and ConceptualIssues 199 (Ann Arbor: University of Michigan Press 2006).

159
James Harrison, The Human Rights Impact of the World Trade Organisation 34 (Oxford: Hart Publishing 2007).

160
R Howse, Human Rights in the WTO: Whose Rights, What Humanity? Comments on Petersman, 13 European Journal
of International Law 651, 656 fn 7 (2002).

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bodies.161 For example, the “Doha-Declaration” argued that, while reiterating the commitment to
the TRIPS, the state only needs to “affirm that the Agreement can and should be interpreted and
implemented in a manner supportive of WTO Members' right to protect public-health and, in
particular, to promote access to medical-drugss for all”162 without explicitly referring to human
rights163.”

“In addition, “some are not convinced that there are tensions between intellectual property
protection and the right to health, and propose that it is in the very nature of the existing
international intellectual property regime to enhance human rights protection”. In their proposal,
if every country can respect and protect intellectual property rights of other countries, inventors
and creators would have the maximum incentive to create, mutually benefiting the world.
Consequently, protecting intellectual property in international trading system maximizes the
overall social interest and further promotes trade liberalization164, which most economists view as
a means to wealth maximization165.”

“If individuals’ wealth can be maximized, they can then freely spend their own resources to
purchase health care. For example, “the WTO Consultative Board believes that “the exposure of
governments and citizens to an international institutional framework dedicated to openness will
have its effects on much more than commerce” and the WTO will only bring benefits to the
promotion of human rights”.166”

161
., E-U Petersmann, The Human Rights Approach Advocated by the UN High Commissioner for Human Rights and by
theInternational LabourOrganisation: Is it Relevant for WTO Law and Policy, 7 Journal of Economic Law 605, 611 (2004).
162
Article 4 of the Doha-Declaration.

163
James Harrison, The Human Rights Impact of the World Trade Organisation 36 (2007).

164
Amrita Narlikar, The World Trade Organization: A Very Short Introduction 28-29 (New York: Oxford University Press 2005).

165
Id. at 2
166
WTO, Report by the Consultative Board to the Director-General SupachaiPanitchpakdi, The Future of the WTO:
AddressingInstitutional Challenges in the New Millennium 10 (Geneva: World Trade Organization, 2004

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“Therefore, international intellectual property law does not restrict the fulfillment of the right to
health and can help to promote individuals’ opportunities to pursue their own conceptions of the
good about health167.”

“However, increasingly criticisms are made that treating the international intellectual property law
system as an epitome of trade openness regardless of its impact on human rights is “an over-
simplification that fails to take into accounts the multi-dimensional rationales.”168”

“First, the state’s obligation to respect, to protect, and to fulfill the right to health should not be
totally excluded from the international trade regime. Since all WTO members have ratified at least
one international human rights instrument with the vast majority having ratified many more,169
these states are obliged to respect, to protect, and to fulfill the right to health170 largely as written
in existing international human rights laws171 if the workings of the international trade regime are
to have any legitimacy and ethical force172. States must not only respect the right to health when
executing WTO intellectual property provisions through national legislation but also evaluate
human rights burdens when drafting and implementing domestic patent laws.”

“Furthermore, based on the fact that people and organizations worldwide rank health as one of the
greatest goods,173 many states have gradually recognized an individual’s right to health as a basic
socio-economic right in national constitutions.174“Even if some countries, such as the U.S., do not

167
SamnangChea&HachSok, Cambodia's Membership In the WTO and the Implications for Public-health, 4 Yale J. Health Pol'y, L.
& Ethics 363, 371 (2004).
168
Id at 43.

169
Office of the Commissioner for Human Rights (OHCHR), Liberalisation of Trade and Services and Human Rights – Report of the
HighCommissioner (25 June 2002) E/CN.4/Sub.2/2002/9 (Report on GATS), at para. 5.
170
LawerenceGostin, The Human Right to Health: A Right to the “Attainable Standard of Health”, 31 Hastings Center Report 29, 29
(2001).
97 171
Many international human rights documents and organizations have proposed that individuals have the right to maintain the “highest
attainable standard” of physical and mental health.

See e.g., Universal Declaration of Human Rights art.

25.1(1948).International Covenant on Economic, Social, and Cultural
Rights art.12 (1966).World Health Organization Constitution Preamble
(1946).
98 172
K. Roth, Defending Economic, Social, and Cultural Rights: Practices and Issues Faced by International Human Rights Organisation,
26 Human Rights Quarterly 63, 64 (2004).
173
Harvard Law School Human Rights Program, Economic and Social Rights and the Right to Health: An Interdisciplinary
DiscussionHeld at Harvard Law School 17
174
Article 21 of the Indian Constitution

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recognize the right to health in their constitutions”,175 they have developed related but subordinate
laws to substantially protect significant aspects of the right to health. In other words, since most
states across the globe have recognized the right to health for every citizen and have explicitly
supported and accepted international human rights law, they should also be obliged to apply
existing norms of the right to health as a primary basis for analysis of international intellectual
property law rules because of the far more universal acceptance of the values contained therein.

Second, “trade liberalization in which international intellectual property laws intend to achieve,
does not necessarily enhance the right to health protection in all situations. The hypothesis - trade
liberalization can promote the right to health - is that trade promotes economic growth and reduces
poverty, so that citizens can have more resources to pursue their own good ends (including
health)”.176

However, it is difficult to justify trade liberalization on economic grounds alone because “the
correlation between trade openness, poverty reduction, and development is a complex one.”177
Empirical studies have shown that the average price of brand name drugs in South Africa is about
230% as much as generic drugs.178 The price of drugs in India also went up to 200%-750% after
the implementation of intellectual property laws. 179 Therefore, even if trade liberalization
(accompanying with intellectual property protection) can help individuals to earn more money, it
does not necessarily mean that they can afford more expensive drugs. In addition to intellectual
property protection, more mechanisms need to be established to guarantee individuals’ access to
affordable medical-drugss.”

In addition,“poverty reduction does not reveal exact levels of health in vulnerable populations and
thus is only crude signifier of the right to health. For example, AmartyaSen argued that even though
poverty can be sensibly identified in terms of capability deprivation, there are factors other than

175
Kenneth R. Wing, The Right to Health Care in the United States, 2 Annals Health L. 161, 163 (1993).

176
James Harrison, The Human Rights Impact of the World Trade Organisation 42 (2007)

177
Id. at 43

178
Hazel Tau et. al. v. GlaxoSmithKline and BoehringerIngelheimet. al., Competition Commission of South Africa (Sept. 2002), availableat
http://www.tac.org.za/Documents/DrugCompaniesCC/HazelTauAndOthersVGlaxoSmithKlineAndOthersStatementOfComplaint.doc (last visited on Jan
21, 2010)
179
S Chaudhuri and PK Goldberg and P Jia, The Effects of Extending Intellectual Property Rights Protection to Developing
Countries: ACase Study of the Indian Pharmaceutical Market, NBER Working Paper No. 10159, 31 (2003)

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low income that cause capability deprivation”180 . “Without basic capabilities (meaning decent
minimal health, which is what the right to health guarantees,) individuals can hardly develop their
own conceptions of the good181 regarding how to use their external resources (income) to pursue
the good ends of their life (including health care decisions).”

“Therefore, an overall net gain in income through global trade policies is not, and should not be,
equivalent to the right to health compliance because the latter puts more emphasis on ensuring an
individual’s life, health, and dignity.182 In other words, in addition to economic efficiency, it is
important to bring an added dimension (the right to health) and to measure the justice of the world
trading system in considering and evaluating the impact of international trade regulations.”

“Third, the human rights approach “can provide an institutional space for the development of
norms about [international intellectual property] policy which are different from, and contrary to,
those circulating within the trade regime.”183 The elaboration of international human rights law
relating to international intellectual property policy “may provide an impetus for the use of
domestic human rights enforcement mechanisms to influence governments' [international
intellectual property] policy positions.”184 The human rights approach then can not only offer a
variety of policy technologies which may be used to achieve desirable international intellectual
property policy outcomes but also make available a variety of strategies that can be used to exert
considerable political pressure185.”

“I propose that an enforceable and monitor-able human rights impact assessment should be
established in order to evaluate restrictions on human rights to health under the international
intellectual property regime. “Generally speaking, human rights impact assessment, which focuses
on careful gathering of relevant information, provided through perspectives of various disciplines,
can provide society with credible arguments based upon “hard evidence” to justify or to condemn

180
AmartyaSen, Development as Freedom 87-88 (1999).

181
John Rawls, Political Liberalism 315-16 (New York: Columbia University Press 1996) (1993
182
James Harrison, The Human Rights Impact of the World Trade Organisation 45 (2007).

183
Andrew T.F. Lang, Re-Thinking Trade and Human Rights, 15 Tul. J. Int’l & Comp. L. 335, 396 (2007).

184
Id
185
Id
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international intellectual property strategies” 186 .Within a well-defined framework for human
rights.”

186
Lawrence Gostin& Jonathan Mann, Toward the Development of a Human Rights Impact Assessment for the Formulation and
Evaluation of Public-health Policies, in Jonathan Mann et al. eds., Health and Human Rights, 55 (New York: Routledge 1999).

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 VII. CHAPTER VII

A. PROPOSING SOLUTIONS: ARTICLE 31 BASED SOLUTIONS

“To resolve the global conflicts of interest, it is argued that some fundamental issues must be
determined, although perfect solutions can never be found given the difficulties of balancing
interests. This argument is proposed on the basis of the reality that nations all have an intention to
harmonize and integrate with the rest of the world. This means that both WIPO and WTO shall
play a critical role in conflict resolutions.””

a. Article 31

“The problems created by Article 31(f) may be ameliorated somewhat by creating streamlined
parallel compulsory licensing arrangements and regional patent arrangements. Creative legal
structures such as pharmaceutical production export zones (PPEZs) might be contemplated. When
complusory-licenses are granted to remedy anticompetitive practices, the limitation imposed by
Article 31(f) does not apply. Each of these solutions is problematic for operational or interpretative
reasons. As a practical matter, it is difficult to interpret Article 31(f) in a manner that addresses the
concerns of developing Members.”

“As noted above, Article 31(f) limits the grant of complusory-licenses for export to cases in which
export supply does not represent the predominant part of the licensed activity. In this section,
several possible means for addressing supply requirements of importing countries within the
express text of article 31(f) are examined. There are a number of “creative” alternatives, though
each presents difficulties either in the sense of (a) operational challenges, or (b) pressing the
boundaries of interpretation. The overall conclusion is that the text of Article 31(f) presents serious
obstacles to compulsory licensing to satisfy the requirements of export markets.””

b. Parallel compulsory licensing

“A country of export might choose to recognize the grant of a compulsory license issued by
an importing country. In principle, this could be accomplished through the parallel grant of a
compulsory license in the country of export. This procedure has three potential drawbacks.

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First, the granting mechanisms foreseen by Article 31 are procedurally cumbersome, although
the use of national emergency/extreme urgency determinations to avoid pre-grant negotiations
with the patent holder might accelerate the process. Second, the exporting country faces the
limitation imposed by Article 31(f) regarding predominance of the domestic market. Third,
establishing this type of arrangement presupposes implementing legislation in the country of
export to adapt its compulsory licensing rules.
Administrative burdens of parallel compulsory licensing might be mitigated in countries of
export by the establishment of streamlined procedures.” For example:

1. “A request for issuance of a parallel compulsory license might be triggered by a request

from a country that had previously issued a compulsory license.”

2. “If the license request is based on a national emergency in the importing country, that
might result in the prompt issuance of the parallel license to fulfill import
requirementswithout negotiations with the patent holder, with compensation in the
exporting country presumptively based on established guidelines.”

(a) “Article 31(b) of the TRIPS-Agreement provides that a Member may grant a
compulsory license absent prior negotiation with patent holders “in the case of national
emergency or other circumstances. There is nothing in the express text that limits an
emergency to the territory of the Member that is issuing the compulsory license.”
3. “If the license request is not based on a national emergency in the importing country, the
request might initiate a time period during which negotiations on a commercial license
would be undertaken with the local patent holder. If such negotiations are unsuccessful
within a set period, a license might issue based on the grounds for grant in the requesting
country.”

(a) “Noted in a prior report, the concept of “comity” provides a basis for one WTO Member
to recognize the grounds of grant of a compulsory license in another Member as the basis

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 for its own grant of a parallel license187. The determination of the first Member would not
be “binding” on the second Member, but would rather provide the basis for voluntary
recognition.”

(b) “As an alternative to comity, a WTO Member requested to supply exports might be
considered an agent acting on behalf of the requesting (importing) Member. The separate
legal identity of the exporting Member might be ignored. The compulsory license issued
in the importing Member might be deemed satisfied within its domestic market.”

(c) “Article1 31(a) of the TRIPS-Agreement requires that each authorization be considered
on its own merits, but this does not imply that parallel authorizations could not be based
on the same set of underlying facts.”

4. “The patent holder would hold administrative rights under Article 31 in each Member.
There are, in short, legal and administrative mechanisms that might be used to reduce the
expense and delays generally associated with compulsory licensing procedures, yet
remaining within the interpretative parameters of Article 31. These administrative
solutions would not, however, eliminate the problem that a country of export would be
required to supply a predominant part of the compulsory license production to its domestic
market (unless the agency concept is adopted and the distinct legal identity of the exporting
country is ignored).”

c. Regional market arrangements

“One important potential solution to the Article 31(f) problem is the creation of integrated
regional patent regimes that would allow for the grant of regional complusory-licenses. The
European Union is a regional organization Member of the WTO and would presumably be
entitled to consider its member states to constitute a single domestic market from the

187
Frederick M. Abbott, The TRIPS-Agreement, Access to Medical-drugs and the WTO Doha Ministerial Conference,
Quaker United Nations Office – Geneva, Occasional Paper 7, September 8, 2001, published in 5 J. WORLD
INTELLECTUAL PROP. 15 (2002), available as Occasional Paper at http://www.quno.org..
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 standpoint of Article 31(f). Although neither the European Patent Convention (in force, though
not a Union legal instrument) nor the Community Patent Convention (not in force), provide
for the grant of a Union-wide compulsory license, it is difficult to see an objection as a matter
of legal principle to such a mechanism188.”

“The WTO legal instruments foresee and allow the formation of customs unions and free trade
areas (GATT Article XXIV), and regional services arrangements (GATS Article V). The
WTO legal instruments do not generally impose restrictions on the capacity of such
arrangements to jointly adopt and implement regional legislation. 189 It would not appear
necessary for such an arrangement to be a Member of the WTO (as is the European Union) in
order to be considered a single domestic market in the sense of Article 31(f) of the TRIPS-
Agreement. The EU, it should be recalled, was traditionally considered a Contracting Party to
the GATT 1947 even though not formally a party to the agreement.”

“The TRIPS-Agreement might be constructively interpreted to contemplate that a group of

countries establishing a common patent regime would be entitled to issue a common
compulsory license with effect in all states of the arrangement, with the further understanding
that supply of the group market under such arrangement constituted domestic supply within
the meaning of TRIPS Article 31(f).”

d. The legal fiction of the pharmaceutical production export zone (PPEZ)

“A country issuing a compulsory license may request that a country with export capacity
recognize and give effect to its license by authorizing the supply from its territory of drugs
that will fulfil the terms of the license. The physical location of manufacture may be the
exporting country, but there is the possibility of establishing a legal fiction that would avoid

188
The individual EU member states may be resistant to recognizing a right of one member state to grant a license
that is effective for all EU markets. That is, however, a political issue.
189
Article 4(d) of the TRIPS-Agreement requires that intellectual property rights related privileges be granted on a
most favored nation (MFN) basis. The creation of a regional patent arrangement should generally comply with
MFN requirements; that is, be non-discriminatory. Allowing for the grant of region-wide complusory-licenses
would not appear to be discriminatory vis-à-vis Members not party to the arrangement, but the MFN requirement
is noted here for the sake of completeness.
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 legal issues otherwise associated with potential infringement of patent rights in the country of
export.

“One such legal fiction would be to permit the creation of analogues to “foreign trade zones”
within the territory of exporting countries in which acts may be undertaken without
implicating the otherwise applicable local rights of patent holders.”

“Under existing GATT rules, foreign trade zones have been tolerated as areas within the
territory of a Member that are considered outside the customs territory of the Member for tariff
assessment purposes,190 with the consequence that goods may be imported into and worked
upon in the zone without being subject to the payment of customs duties. “In the United States,
for example, the foreign trade zone (FTZ) concept is used quite extensively”. 191 Imported
goods may be brought into an FTZ, worked into a product in a different tariff classification,
and exported with no tariff consequences, or imported into the U.S. at the lowest applicable
tariff rate. “The FTZ is within the physical geographic boundaries of the United States. From
the standpoint of non-application of tariffs, the FTZ is a legal fiction”.192”

“A potential country of export that wished to recognize and give effect to a compulsory license
granted by another Member could designate a particular manufacturing site a “pharmaceutical
production export zone” (PPEZ) and authorize a manufacturer to produce there without
incurring domestic legal consequences from the patent holder. The designated manufacturer
could be prohibited from importing the products into the country where production is
undertaken, or to other countries that had not issued corresponding complusory-licenses.”

190
From a GATT 1994 standpoint, the legal fiction of the FTZ is presumably justified on the basis that goods in the
FTZ are part of “traffic in transit” within the meaning of GATT Article V:1. However, to the extent that goods are
worked within the FTZ, this pushes the limits of the “in transit” concept. FTZs may also in some cases provide
exemption from certain tax obligations, but that aspect is not considered here.
191
19 USC § 81a, et seq. , and US International Trade Administration, Foreign Trade Zones (June 2000),
http://ia.ita.doc.gov/ftzpage/tic.html, visited January 9, 2002.
192
Although at early stages a U.S. manufacturer needed to be located within a particular geographic area in order
to qualify for FTZ treatment, in later stages the law provides for subzones that may be established for individual
company manufacturing sites where specifically approved.
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“The acceptance of a legal fiction such as the PPEZ would provide a relatively uncomplicated
solution to the obstacle potentially raised by Article 31(f) of the TRIPS-Agreement. Since the
PPEZ plant would not legally be within the country of export, no local compulsory license
would be needed to authorize production. The supply would be for the domestic market of the
Member granting the compulsory license. Moreover, no reliance on Article 30 would be
required in the country of export since there would be no exception to the rights of the patent
holder that are not recognized in the PPEZ.”
“The rights of the patent holder to remuneration and administrative protections would remain
in the country that had granted the compulsory license.”
“To make this system genuinely effective, it might be necessary to allow production facilities
in countries of export to serve dual purposes; that is, to produce at some times for general
purposes, and sometimes for PPEZ purposes. If it is necessary to construct special facilities
solely to serve as PPEZ facilities, the expense might be an obstacle to use of the legal fiction.”
“In addition, the legal fiction would depend on a determination that PPEZ exports are not
considered subsidized by virtue of non-recognition of patent holder rights within the zone.
Although a claim of subsidization would not arise from an importing Member that authorized
the compulsory license, such a claim might arise from a third Member that objected to
potential interference with its export trade.”
“A key issue regarding the concept of the PPEZ is whether the legal fiction may be established
without reliance on Article 30 (discussed in the Section VIII), or the adoption of a waiver. The
principal grounds for suggesting that neither an Article 30 exception nor a waiver may be
required is that FTZs are in use by WTO Members to authorize importing, working and
exporting goods without payment of tariffs, and this common practice is accepted among
Members. By operating FTZs, WTO Members provide preferential tariff treatment to certain
manufactured goods, namely those destined for export markets. This acts as a subsidy of
exports (reducing the cost of exports by the extent of the waived customs duties). It may also
result in differential treatment of imports and exports of like products, and constitute
derogation from MFN tariff obligations. WTO Members may at least implicitly have removed

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 certain duty drawback or remission schemes (including thosemanifested in FTZs) from
challenge as export subsidies by reference in Annexes to the Subsidies Agreement.193”

“If this is so, it may be more the result of recognition of the need to tolerate a widely used
practice than a neutral policy determination that such schemes do not constitute export
subsidies. Members might, by the same token, decide that PPEZs should be tolerated even if
to do so requires the acceptance of a legal fiction.”

e. Anticompetitive practices remediation

“Article 31(k) of the TRIPS-Agreement 194 exempts complusory-licenses issued to remedy

anticompetitive practices from the Article 31(f) requirement. A WTO Member that determined
the existence of anticompetitive conduct on the part of a patent-holding pharmaceutical
company might well grant one or more licenses regarding that company’s patents that could
be used to supply the markets of any number of developing Members. Whether the grant of a
parallel compulsory license would be required in importing Members would depend on the
presence or absence of local patent protection, and the rule of international exhaustion
followed in the importing Member.”

“Since major research-based pharmaceutical companies have recently been found by OECD
country authorities to have engaged in systematic anticompetitive conduct, there is reason for
developing countries to explore joint investigation into the business practices of these
companies.”

193
The Agreement on Subsidies and Countervailing Measures appears to assume that a duty drawback or
remission scheme that does not provide for remissions or drawbacks of charges in excess of those paid on inputs
consumed (including incorporated) in the exported product will not be considered to have benefited from a
subsidy. See Subsidies Agreement, Annex 1(i) and Annex II. For a recent analysis of export subsidization in the tax
treatment context, see United States – Tax Treatment For "Foreign Sales Corporations", AB-1999-9,
WT/DS108/AB/R, 24 Feb. 2000, and; United States Tax Legislation (DISC), Report of the Panel presented to the
Council of Representatives on 12 November 1976, (L/4422 - 23S/98).
194
Article 31(k) reads in part: “Members are not obliged to apply the conditions set forth in subparagraphs (b) and
(f) where such use is permitted to remedy a practice determined after judicial or administrative process to be anti-
competitive.”
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f. Article 31(f) conclusion

“There are approaches to interpretation of Article 31(f) that may provide flexibility in the
authorization of compulsory licensing for export. These include establishing expedited
mechanisms for the parallel grant of complusory-licenses, creating regional patent systems
allowing for joint compulsory licensing, the creation of pharmaceutical production export
zones (PPEZs), and using complusory-licenses to remedy anticompetitive conduct.”
“
“The use of compulsory licensing in the export context as a remedy for anticompetitive
conduct requires no interpretative clarification. However, a threshold finding of
anticompetitive conduct is required under Article 31(k). It might be difficult to establish such
conduct in all cases in which compulsory licensing for export would be sought. Moreover, it
seems doubtful that as a policy matter developedMembers of the WTO would
wish to point to competition law proceedings as the only viable option for granting necessary
licenses. Some other potential approaches raise serious operational issues (e.g., parallel and
regional licensing), suggesting that they may not become meaningful alternatives for some
time. Other potential approaches (e.g., PPEZs) involve strained interpretations of the WTO
agreements that, even though perhaps customarily accepted in other contexts, may
nevertheless be subject to successful challenge in dispute settlement unless formally approved
by interpretation, waiver or amendment. The restrictions imposed by Article 31(f) will limit
the available supply of generic drugs for developing countries, a condition that will be
increasingly problematic, as developing countries are required to implement pharmaceutical
patent protection in 2005. Interpreting the express text of Article 31(f) in a way that relaxes
its restrictions presents serious difficulties. Alternative approaches should be considered.””

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 B. OTHER SOLUTIONS

“Firstly, compulsory licensing as a legal stipulation requires detailed clarification, particularly

regarding the conditions to grant compulsory licensing. The TRIPS-Agreement stipulates that a
voluntary license must be negotiated first with the patent holder on ‘reasonable’ commercial terms,
who will receive ‘adequate’ remuneration decided by the relevant authorities in the ‘country
concerned’ with the ‘economic value’ of the patent taken into account. What is considered
reasonable, adequate can be understood differently in the country concerned from other
stakeholders(e.g. the patent owner’s country of origin). This is how conflict of interest evolves.
For example, national organizations responsible for issuing compulsory licensing should allow
potential compulsory licensing parties to negotiate a term of compensation rather impose a royalty
or royalty free deal. This means that the WTO should regulate the national government proposes
a range of royalty payments so that licensors and licensees have a base licensing fee to work on
when they start their negotiations.”

“Another point is that according to TRIPS, licensors should be informed ‘as soon as practicable’
about any compulsory licensing procedures that affect them could be replaced by a specific
duration, such as up to three months unless it is national emergency. The WTO also needs to clarify
what constitutes ‘national emergency’ and what is considered ‘public non-commercial use’?
Coming back to the compulsory licensing case in Thailand, both stakeholders used TRIPS as their
argument tool: the Thai government emphasized that TRIPS allows countries to interpret and
implement the compulsory licensing stipulations in support of their national interests and to
promote access to medical-drugs. The drug companies argued that compulsory licensing should
be authorized only if licensees fail to obtain consent from the owner or under extreme national
emergency. Given that TRIPS is a broad framework that allows countries to freely stipulate the
details of their own policy, both sides of the arguments appear to have some strengths. However,
when the compulsory licensing involves parties from different countries, which was exactly the
case in Thailand, the complexity of the problem increases. Despite the WHO stance, the
implication is that the WTO needs to specify, when, and how.”

“Secondly, balancing the interests of all stakeholders when considering compulsory licensing is
important.Looking back, the Thailand compulsory licensing case has not only caused controversy,
but also both increased the pressure to find acceptable resolutions to such matters and encouraged

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other countries towards the wider application of compulsory licensing. Another important matter
to consider from the government’s perspective was the need to attract and main good relationships
with business interests. At least some negotiations with the relevant companies could have taken
place, which would have led to more amicable long term relationships, encouraged multinationals
to continue to invest in Thailand and hopefully led to some compromises about drug prices and
arrangements for further international cooperation.”

“Thirdly, the developing nations must realize the need to create a favorable paradigm and take
initiatives to protect their interests. They need to create an environment favorable for restricting
the scope of patent rights in the larger interests of public-health and for issuing complusory-
licenses and adopt measures to replace the paradigm of strict patent regimes. “This involves
providing for effective domestic legislations incorporating the required compulsory licensing
provisions and creating smooth administrative procedures to avoid red tapism to develop a strong
pharmaceutical industry aa result of their past policies e.g. India has developed a strong industry
and is one of the main suppliers of drugs to under-privileged countries.”195”

“Fourthly, the need for affordable healthcare guaranteed through government programmes. In
India, health insurance it at its infancy and its modus operandi leaves much to be desired. Unless
some scheme to cover not only hospital expenses but also other costs including professional
charges and drug costs is in place, the proposals and implementation of strategies to reduce the
drug cost alone will have only a marginal impact on the overall health cost for the country’s
population. Drugs constitute just one component of healthcare costs and access to more affordable
drugs will alleviate the overall problem only to a limited extent. Policies need to address not only
the high prices of drugs but also of all other components of healthcare as well.”

“Fifthly, another important step would be to set up an international system to coordinate the
granting of complusory-licenses in cross-border situations in a relatively ‘standard’ or ‘consistent’
manner and monitor activities to ensure fairness to both licensors and licensees. Such a system
would also allow the parties to file any complaints with a designated body, so that disputes could
be resolved quickly. While such international efforts may, on the other hand, serve to encourage

195
Mathur H, 'Compulsory licensing under section 9sA : Issue and concerns' [2008] JIPR

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voluntary licensing, it could also on the other hand, reduce international conflicts through effective
international coordination.””

“Without some form of international monitoring, the compulsory licensing system will be difficult
to implement at a wider international level. The difficulties lie in the discrepancies among different
national laws and the vague and imprecise international stipulations as to how compulsory
licensing should be understood, utilized to balance the interests of all stakeholders when cross-
border activities are involved.

C. THE ISSUE OF REMUNERATION

“Patent holders are entitled to adequate remuneration in the circumstances of the case when subject
to compulsory license. When complusory-licenses are issued both in the country of export and
import, the patent holder will ordinarily be compensated within the importing Member. When no
license is required for importation, the patent holder will be compensated in the exporting Member.
There is no basis for suggesting that patent holders are entitled to double-compensation when
products are exported and imported under compulsory license.”

“Article 30 does not address remuneration. In circumstances in which exceptions are authorized
to export to developing Members, it is unlikely that any remunerative adjustments in favor of
patent holders would be made.””

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a. Compulsory licensing

Article 31(h) of theTRIPS-Agreement provides:

“The right holder shall be paid adequate remuneration in the circumstances of each case, taking
into account the economic value of the authorization;”
“Attached as Annex 1 to this report is a general analysis of the remuneration requirement of
Article 31(h) authored by the writer of this report.” Some of the key points made in regard to
the remuneration requirement are:

1. The level of remuneration depends on the particular circumstances of the case and may
take into account various factors, including (but not limited to) the economic value of the
authorization;

2. “Adequate” refers to a sufficient amount meeting minimum standards;

3. Commercial market royalty rates are one possible benchmark for remuneration, but may
be difficult to ascertain or be unreflective of the value of the license for a variety of reasons.
Detailed analysis of underlying costs is an alternative, as are government-established
guidelines. Factors such as government subsidization of research and development (R &
D) and tax treatment are relevant. Royalties may be based on wholesale selling prices, net
of tax liabilities.

4. Public welfare interests may be taken into account in establishing remuneration. For
example, distinction might be drawn between licenses issued to further industrial policy
objectives and licenses issued to supply needed medical-drugss;

5. Article 31(k) expressly recognizes that “The need to correct anti-competitive practices
may be taken into account in determining the amount of remuneration in such cases.” If a
compulsory license is issued to remedy a situation in which the patent holder has unfairly
benefited, the remuneration may be correspondingly diminished.

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“If a developing WTO Member issues a compulsory license that is satisfied by importation of
products not protected by patent in the export market, the level of royalty will be entirely
dependent on the importing country’s remuneration determination.”
“
“If a developing Member issues a compulsory license that is satisfied by the issuance of a
parallel compulsory license in an exporting Member, there will be remuneration obligations
arising in both the exporting and importing Members. In such circumstances, compensation in
the importing Member should generally be adequate to satisfy the interests of the patent holder
since the importing Member is the primary locus of exploitation of the patent. In any case,
cooperation in determining the level of remuneration between authorities in the importing and
exporting Members would be foreseen. The patent holder is not entitled to a double-benefit
because there are licenses granted in the importing and exporting markets. Rather, a single
adequate return based on the production and sale of the subject pharmaceutical would be
foreseen.”

In circumstances such as the grant of a regional compulsory license, it may be reasonable to

determine the level of remuneration based on the regional market.

“If a pharmaceutical production export zone (PPEZ) is established in the exporting country,
there should be no remuneration obligation arising in the territory of export since that territory
will not form part of the area in which the patent holder exercises rights. Remuneration would
be calculated based on factors in the country of import that grants the compulsory license.”

As noted above, “a compulsory license granted in a country of export to remedy

anticompetitive practices may be adjusted to take into account the remedial nature of the
license.””

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 b. Exceptions

“
“Article 30 is silent on the issue of compensation or remuneration. It provides that Members
may provide “limited exceptions” to patent holder rights that do not unreasonably conflict with
normal exploitation or unreasonably prejudice the patent holder, taking into account third
party interests.”
“WTO Members have taken into account economic effects on patent holders in the
establishment of some exceptions. For example, “a number of governments that have
established regulatory review exceptions have also adopted patent term extensions”.196 In the
Canada-Generics proceeding, a number of these Members argued that patent holders would
be treated unfairly if subject to effective shortening of the patent term based on their own
regulatory review obligations, if second comers to the regulatory review process would be
able to enter the market immediately upon expiration of the patent term. Extending the patent
term based on the patent holder’s regulatory review was said to redress the economic effects
of the exception.”

“The panel in the Canada-Generics case rejected the argument that a regulatory review
exception would fail to meet the requirements of not conflicting with normal exploitation of
the patent (or prejudicing legitimate interests) if it did not include a compensatory patent term
extension. The panel found that the patent holder did not have a normal expectation ofrelief
from the effects of regulatory review. A regulatory review exception could be granted under
Article 30 without a compensatory patent term extension adjustment.

“Article 30 neither compels nor prohibits WTO Members from establishing some form of
compensatory adjustment in the establishment of exceptions. An exception without any
compensatory adjustment will reflect a governmental determination that the patent holder is
not inhibited in the normal exploitation of the patent or unfairly prejudiced. Whether an
adjustment is incorporated with an exception might influence a DSU panel in rendering a
determination whether the rights of the patent holder are unreasonably prejudiced.”

196
This economic issue was argued in extenso in the Canada-Generics case
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“Unlike the compulsory license in which remuneration ordinarily flows from the licensee to
the patent holder, a compensatory adjustment in the Article 30 exception context might
ordinarily be in the form of government policies in countries of export that benefit
pharmaceutical patent holders without direct involvement by enterprises exploiting the
exception. For example, a WTO Member that provides R & D tax incentives to pharmaceutical
enterprises may well consider that it is adequately compensating those enterprises for use that
might be made of patents by other enterprises in the context of supplying developing countries.
Similarly, a WTO Member that permits private enterprises to make use of publicly funded R
& D without compensation might well consider that exceptions to patent rights based on the
authorization of exports would offset any economic diminution resulting from exploitation of
the exception.

“There is nothing in the text of Article 30 that would preclude the General Council or
Ministerial Conference from rendering an interpretation regarding the balancing of economic
interests in the authorization of compulsory licensing for making and export of
pharmaceuticals. For example, a formal interpretation may be adopted to provide that WTO
Members authorizing production and export within certain parameters would be deemed to be
within the scope of a permissible Article 30 exception without compensatory adjustment in
respect to patent holders. This would in effect establish a “safe harbor” for Members choosing
to establish an exception.”
“Entitlement to the safe harbor might be based on an evaluation of the factors justifying the
grant of the exception as enumerated above. As a general rule, exceptions granted to satisfy
the import requirements of low-income countries with unmet health needs would not be
expected to require compensatory adjustments in countries of export.”

“In some circumstances in which an Article 30 exception is used, a compulsory license will
be issued in the country of import. This will provide remuneration to the patent holder based
on exploitation of the invention in the relevant consumer market. Under such circumstances,
there would be no apparent basis for contemplating a compensatory adjustment in the country
of export.””
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 D. ALTERNATIVES TO COMPULSORY LICENSING

a. Anticipating Volatility

“Some pharmaceutical firms are beginning to lower drug prices for poorer nations, hoping to
smooth access to faster-growing emerging markets, and make up for sluggish growth in the United
States, Japan and Europe197.Taking alternative measures to increase access to medical-drugss may
be a proactive step pharmaceutical companies can take to avoid the harsh consequences of
compulsory licensing. For example, GlaxoSmithKline and Sanofi-Aventis have both promised to
cut prices in some developing countries, selling at half or a quarter of the price they are receiving
in the developed world.198 These price-cuts provide a better way for markets to work, and yet still
supply those in need with the most cutting edge medications.”

Similarly, “China is facing new challenges in the area of pharmaceutical patent protection. In
2009, China’s State Intellectual Property Office issued more than 580,000 patents – up forty-one
percent from a year earlier.”199“This large increase in innovation resulted in substantial revisions
to China’s national patent laws.” 200 Because of the perception of weak international patent
protection, “China’s new laws have been criticized as being overly protectionist, granting more
patents to national companies and discriminating against foreign companies wishing to invest in
China’s growing economy.” 201 Additionally, United States companies like Pfizer, who have
significant research and development investments in China, may be negatively impacted by the

197
Ben Hirschler, “Silent Pandemic” Will Force Drug Price Rethink, (Jan. 20, 2010) http://www.
reuters.com/article/idUSTRE60J36O20100120 (explaining that “Drugs for diseases which were previously
dominant only in the rich, well-fed world, such as diabetes, heart disease and cancer, are increasingly in demand in
poorer nations in Asia and Africa, whose populations are now living longer”). Worth noting is the author’s warning
of the compulsory licensing systems’ effect on competition, suggesting that when countries:
[d]iscount[] prices for poorer countries, a move already made by some big drug firms…pharmaceutical bosses will
also be under pressure to join patent pools to promote downward price pressure on drugs for major chronic
diseases by increasing the number of producers, and may face legal challenges to force them to allow in more
generic competition.
198
Id.
199
Loretta Chao, China Issued a Record Number of Patents in 2009, WALL ST. J., Feb. 4, 2010, available at
http://online.wsj.com/article/SB100014240527/.
200
Id.
201
Id.
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new regulations, which force patent holders to license their patents to other producers if patents
aren’t “fully exploited” or if patent owners are deemed to be using the patents in an anti-
competitive manner.202“It is unclear how China will determine whether a patent is being misused,
or how much patent owners will be paid if they are forced to license their patent under a
compulsory license. This recent example from China shows how changes in national patent law
might be in conflict with the TRIPS Article 31 requirements,and provides an example of the need
for a more protective and predictable system worldwide.”203”

b. Patent Linkage

“Patent linkage is another option that large pharmaceutical companies like Bayer have utilized.
Patent linkage occurs where a country’s food and drug regulatory arm is petitioned to agree to an
order delaying the introduction of a generic version of a patented drug until the expiration of the
original drug’s patent.204”

“While linkage strategies will create better protection for patent holders, the practice is generally
seen by public-health activists as a hostile attempt to prevent generic medical-drugss from reaching
those who need them most.205”

“A more effective method might be for pharmaceutical companies to work with generic drug
manufacturers within developing countries to prevent the need for compulsory licensing while
remaining profitable.206”

202
Id.
203
Id.
204
PriyankaGolikeri, While Bayer Pushes Patent, EU Parliamentary Group Opposes, DNA INDIA, (Feb. , 2012)
http://www. dnaindia.com/money/report_while-bayer-pushes-patent-eu-parliamentarygroup-opposes_1348342
(explaining that a European parliamentary group is planning to call on the EU and European Commission, the
executive arm of the EU, to not push for provisions such as patent linkage in developing countries).
205
The Pharma Letter, Bayer’s Patent Linkage Appeal to be Heard by India’s Supreme Court, (Mar. 2010)
http://www.thepharmaletter.com/file/28478/bayers-patent-linkage-appeal-to-be-heard-byindias-supreme-
court.html.
206
William O. Duperon, Global Competition Versus Regional Interests: FDI and Pharmaceuticals in India, 5 J. INT’L L.
& TECH. (2010) (noting that by working to promote legitimate generic drugs (as opposed to forced compulsory
licensing), the “progression of the pharmaceutical industry into generic markets may present the possibility of
patent protection and affordable drugs coexisting”).
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If pharmaceutical companies take the lead on creating legitimate generic medical-drugss, these
drugs will more likely reach those who need them, thus preventing the threat of a compulsory
license, and allowing patent holders to retain control.”

c. Patent Pools

“The WHO’s Intergovernmental Working Group on Public-health, Innovation and Intellectual

Property (IGWG) created a Global Strategy and Plan of Action in order to foster innovation and
to improve access to medical-drugss in developing countries. One of the suggestions arose under
this framework was patent pools. Thus, members of the WHO are required to”“examine the
feasibility of voluntary patent pools of upstream and downstream technologies to promote
innovation of and access to health products and medical devices”207 .”

“They are further required to promote incentive schemes for research and development for diseases
that are affecting developing countries, by using prizes, for example208.I will first examine the
meaning of patent pools. What are patent pools? The goal of patent pools, is to create an
arrangement regarding licensing of patents, in order to create access to technology that is essential
for the production of certain products, pharmaceuticals – in our case.”

“The aim of patent pools, is to create a hoard of patents in one place, which allows parallel purchase
of several licenses of patented products, and thus, making the process of purchasing essential
technologies (for instance technologies that are required for the development of new
pharmaceuticals) much more effective, both in terms of costs, and in terms of the actual ability to
get the required license, given the fact that normally, the patentee holds exclusive rights, and can
refuse granting license209.”

207
World Health Organization, Working to Overcome the global impact of neglected tropical diseases, Geneva, p.iii
(2010).
208
Europa Press Release, “Europe 2020: Commission proposes new economic strategy in Europe”, 3 March 2010.
Available at
http://europa.eu/rapid/pressReleasesAction.do?reference=IP/10/225&format=HTML&aged=1&language=EN&guiL
angua (last accessed February 2015).
209
Commission on Intellectual Property Rights, Innovation and Public-health (CIPIH), Public-health, innovation and
intellectual property rights, WHO, Geneva (2006). p.52
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“In the field of communication technologies, there is evidence for successful use of patent pools,
especially in the context of combining several technologies under a single product. In our case,
medical-drugss patent pools, is a concept that began to evolve only in recent years, and there are
only two large patent pools which are designed to share patents related to pharmaceuticals and
medical treatments: the Medical-drugs Patent Pool and the Pool for Open Innovation against
Neglected Tropical Diseases (POINT).”

 The Medical-drugss Patent Pool

The Medical-drugs Patent Pool, was established in 2010, under UNITAID, to support the
production of pharmaceuticals for treating AIDS/HIV, Malaria and Tuberculosis, for developing
countries.210

“The main goal of patent pools is to increase the right to access to medical-drugss in developing
countries, both by increasing the production of generic medical-drugss for these countries, and by
encouraging research and development which will bring production of new medical-drugs in that
field.211 The idea that stands in the basis of patent pools is that patents can be a real obstacle to the
production of affordable medical-drugss, since where there is a patent there is a need to obtain a
license in order to allow generic manufacturers to produce a parallel version of the medical-drugs,
at a cheaper cost. The problem is that the patent holders are not always willing to grant the license,
and sometimes there is even a need to obtain several licenses from multiple patent holders - a task
that is even harder, and sometimes even impossible.”

“The Patent Pool acts as a “one-stop shop” for licenses 212 . In that way, required licenses for
generic pharmaceuticals manufacturers are under a single pool, and thus, it is much easier to obtain
them. The result is that generic medical-drugss manufacturers can produce medical-drugss, in a
faster and cheaper way, and thus to increase the right to access medical-drugss for citizens form

210
International Centre for Trade and Sustainable Development (ICTSD), “UNITAID Launches Patent Pool for
HIV/AIDS Drugs”, 9 June 2010, available at http://ictsd.org/i/news/bridgesweekly/77693/ (last accessed February
2015).
211
UNITAID, “The Medical-drugs Patent Pool Initiative”, UNITAID Factsheet (2010), available at http://www.unitaid
.eu/images/NewWeb/documents/Publications_July2010/pp_facts_en_jul10.pdf (last accessed February 2015).
212
G. Van Overwalle, Gene patents and collaborative licensing models: patent pools, clearinghouses, open source
models and liability regimes (Cambridge University Press, 2009).
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developing countries. There are two major contributors to this patent pool. The NIH, contributed
patents for one molecule, and Gilead donated patents to five molecules.”

“The agreement with Gilead covered 100-112 states, representing between 82.7 to 87.6 percent of
people living with AIDS/HIV in countries with low to middle income. The geographical effect of
this agreement was greater than any prior voluntary license agreement with pharmaceutical
companies213. Obviously, there is a clear need for more patent holders, to share their patents, in
order to really encourage R&D in the pharmaceutical field, and to allow the production of such
medical-drugss. Therefore, while understanding that the patent pool can really increase access to
medical-drugs for people from developing countries, the UNITAID's decided in December 2011,
to continue their support to the Medical-drugss Patent Pool for four more years.214”

 The Pool for Open Innovation against Neglected Tropical Diseases (POINT)

Apart from the Medical Patent Pool, the Pool for Open Innovation against Neglected Tropical
Diseases (hereafter: “POINT”) also exists. POINT was founded in 2009, by GlaxoSmithKline
(GSK). POINT was assimilated within WipoRe:search framework. The main goal of POINT is to
get patents that are needed for R&D for 16 neglected tropical diseases, and thus, there were more
than 2,300 patents available in POINT215.

“There are two ways to participate in this patent pool: as a contributor or as a user. The assumption
is that donors contribute patents, out of a will to improve and promote the rights to health and
access to medical-drugss of the poor people around the world through development of new
pharmaceuticals, especially for tropical diseases. POINT is accessible to anyone with a serious
commitment to research and development of medical-drugss for neglected diseases, for example,
academic researchers, pharmaceutical companies and financial factors. It appears than, that the
patent pools, can promote the right of access to medical-drugss for developing countries.”

“However, it is difficult to assess precisely, if these patent pools can indeed make a real difference,
since the Medical-drugs Patent Pool exists relatively for a little time, and Point, has been

213
Ibid
214
Ibid
215
GSK, “Creating a pool of intellectual property to fight neglected tropical diseases”, available at http://www.gsk
.com/collaborations/patentpool.htm (last accessed February 2015).
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implemented as part of a broader framework of WIPO Re:serach. Also, the main use done in patent
pools so far is for production of generic medical-drugss, but not to for encouraging research and
development of new drugs, which is very necessary in this field. There is no doubt, that patent
pool can promote the rights to health and access to medical-drugss, but it isn’t clear at all, to what
extent can they do so, especially given the fact, that the success of patent pools is largely dependent
on donations of patent owners.”

d. Price regulation

“Another alternative for promoting the right of access to medical-drugss, especially for developing
countries is the option of different pricing of medical-drugss for different consumers. The Council
of the European Commissions, in its regulation No 953/2003.70 (hereafter: “The regulation”),
suggested that model, as a possible solution for increasing the right to access medical-drugssfor
developing countries216 .”

“Thus, the regulation recognizes the possibility of the European Commission to intervene in order
“to avoid trade diversion into the European Union of certain key medical-drugss”. 217 The
regulation’s goal was quite clear – it intended to create a legal instrument that will encourage
pharmaceutical companies to produce pharmaceuticals in an affordable price, for developing
countries218. Thus, article 7 to the preamble of the regulation reads as follow: “There is a need to
encourage the pharmaceutical producers to make pharmaceutical products available at heavily
reduced prices in significantly increased volumes by ensuring through this Regulation that these
products remain on those markets”.219”

216
K. Williams, “Pharmaceutical Price Regulation”, 23 South African Journal on Human Rights 1 (2007), available at
http://www.law.wits.ac.za/sajhr/Williams.pdf (last accessed February 2015)
217
Council Regulation (EC) 953/2003, To Avoid Trade Diversion into the European Union of Certain Key Medical-
drugs, 2003 O.J. (L 135) 5-11, available at http://trade.ec.europa.eu/antitradediversion_html/en.pdf (last accessed
February 2015)
218
K. Williams, “Pharmaceutical Price Regulation”, 23 South African Journal on Human Rights 1 (2007), available at
http://www.law.wits.ac.za/sajhr/Williams.pdf (last accessed June 2012)
219
Council Regulation (EC) 953/2003, To Avoid Trade Diversion into the European Union of Certain Key Medical-
drugs, 2003 O.J. (L 135) 5-11, available at http://trade.ec.europa.eu/antitradediversion_html/en.pdf (last accessed
February 2015)
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“Furthermore, while the regulation allows the exportation of pharmaceuticals from developed
countries to developing ones in significantly reduced prices, it also declares that these
pharmaceuticals must stay in these markets, and forbids their re-importation to the developed
countries markets220 . HIV/AIDS, Tuberculosis and Malaria, are the main three diseases that the
regulation is focusing on, that is because as discussed in earlier chapters, the essential medical-
drugss to treat these diseases are less profitable, and therefore, pharmaceuticals companies do not
invest a lot of money in developing new medical-drugss for them. The regulation further declares
that many poor countries “are in urgent need to access to affordable essential medical-drugss for
treatment of communicable diseases.

These countries are heavily dependent on imports of medical-drugss as local manufacturing is

scarce”. 221 Article 3 of the regulation determines two price calculations which benefit the
provisions. One requires that the price will be no more than 25 percent of the weighted average
ex-factory price. The other requires that the price will be no greater than 15 percent of the
manufacturer’s direct production costs222 .

Where a medical-drugs is standing in these threshold conditions, the regulation provides a

voluntary registration system. After registration, there is a prohibition on re-import of the medical-
drugss to the EU223. To guarantee that these medical-drugss will not be re-imported back to the
European market, they are being marked with a logo, and thus the relevant customs authorities,
prevent their reimportation224 .

In this way, it is guaranteed on one hand, that these medical-drugss will not be sold in loss prices
in the European market, and on the other, that essential medical-drugss will reach developing
countries and will promote the right to access medical-drugss of the citizens of these countries.
Even under this regulation, just as in the case of patent pools, the participation of pharmaceutical
industry is required. In other words, there is no mechanism for forcing pharmaceuticals companies
to cooperate, and therefore, where these companies are not willing to act altruistically, and do not

220
Ibid., cl. 5 of the preamble
221
Ibid., cl. 2 of the preamble
222
Ibid
223
Ibid
224
Ibid., art. 8.
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desire to promote the right to access to medical-drugss for citizens of developing countries, nothing
will happen.

Unfortunately, and as discusses through all of this thesis, the factual reality is that many
pharmaceutical companies do not want to have an erosion of profits, and that can be easily seen
when examining all TRIPS-plus provisions. This does not mean that all pharmaceuticals
companies will refuse to take a part in this or another suggested model in order to promote the
right to health. However, it does mean that in the absence of coercive mechanism, we can’t rely
on such initiatives, as welcome as they may be, to ensure the right to access medical-drugss
especially in developing countries, where people are unable to purchase life-saving medical-drugss
at market prices.”

“Furthermore, while the regulation can indeed ensure that certain medical-drugss, will be available
to citizens of developing countries in affordable prices, it doesn’t ensure or encourage research
and development of new life saving medical-drugss, for diseases like AIDS/HIV, Malaria and TB
- where research is acute in order to save millions of lives. It seems that prices differentiation alone
can’t serve as a complete solution to the acute problem of developing countries in access to
medical-drugss.”

e. Research grants

“Research grants, are another form designed to encourage research and development, as an
alternative to patents225. Thus, grants are given to research bodies, for research in specific areas,
such as neglected diseases. The US National Institutes of Health (NIH), which is the largest global
donor for basic research, provides more than 80 percent of its funding through competitive grants,
to universities and research institutes around the world226.”

225
R. Hanson, Patterns of Patronage: Why Grants Won Over Prizes in Science (University of California, Berkeley
1998).
226
National Institutes of Health (NIH), “NIH Budget”, available at http://www.nih.gov/about/budget.htm (last
access June 2012).
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“By eliminating or reducing the pre-investment in research and development by research bodies
themselves, the grants model, which provides pre-funding allocation, designed to stimulate
research and development that normally would not have been discussed. However, research grants
may create problems for both providers of the grant, and its recipients. In terms of grant recipients,
the temporary nature of the grant, and the fact it is given in piecemeal over a period of several
years, without certainty if the grant will be renewed by the end of that period, may incentivize only
short term projects that once their initial phase have been completed, they might not have enough
funding to progress to the development and production stage of the product. In terms of the grant
providers, from time they gave the money, they have no real control over how grant recipients will
use the money - both in terms of achieving the agreed goals of the study, for which the grant was
given, and the final stage - of making the final product affordable to public.”

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 VIII. CHAPTER VIII

A. CONCLUSION

“Although the TRIPS regime attempts to create a strict patent regime, it also contains provisions
like those regarding compulsory licensing, which gives some consideration to developing nation’s
concern about access to drugs to address their public-health needs. However, these concessions
offered by TRIPS regime limit the extent to which compulsory licensing can be utilized to access
drugs from the developed nations. But a careful analysis shows that there is still enough leeway
for developing nations.”

“The experience of implementing countries can be a learning opportunity for countries seeking to
implement the WTO decision in order to improve access to medical-drugss among those countries
with insufficient pharmaceutical manufacturing capacity. Any government that adopts the
compulsory licensing strategy must exercise caution in choosing the legal instruments best suited
to accomplish its goals, in order to endure both the political and economic pressures it is certain to
educe. “More objective laws are needed to govern the practice of issuing complusory-licenses so
that the delicate balance between the right of access to life-saving medical-drugss along with
humanitarian duty of countries to help improve the lives of others throughout the world and the
protection of incentives of pharmaceutical companies is maintained.”“The primary concern of a
rational drug policy for the developing nations should be to disseminate useful drugs widely and
cheaply and encourage research and development of products to address local illnesses. Within the
realm of patent policy, the best means of providing drugs widely and cheaply is to promote generic
production.”This can be effectively done if the TRIPS-Agreement is intelligently applied and
compulsory licensing provisions are enforced in a manner beneficial to the public-health interests.
The fact that TRIPS flexibilities can be used to benefit public-health has already been
demonstrated by some South-East Asian countries including India. By careful planning and policy
making, the developing world can work towards protecting the interests of the public, while still
complying with the TRIPS patent regime.”

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 IX. BIBLIOGRAPHY

A. STATUTES AND CONVENTIONS REFERRED

1. Indian Patents Act, 2005

2. Patent Act B.E 2522, 1999 (Thailand)
3. Patent Act, 2006 (Canada)
4. Arbitration Law, 2003 (Japan)

B. WTO COVERED AGREEMENTS

1. “Agreement on Trade Related Aspects of Intellectual Property Rights , 1994”

2. “Declaration on the TRIPS-Agreement and Public-health, 2001”

C. BOOKS

1. “Johns Adrian, Piracy: The Intellectual Property Wars from Gutenberg to Gates (The
University of Chicago Press, USA 2009).”
2. “Scherer F M, Competition Policy and Intellectual Property Rights in the Knowledge-
based Economy (University of Calgary Press, 1998)”
3. “Frederick M Abbott , Rudolf V Van Puymbroeck, Compulsory Licensing for Public-
health: A Guide and Model Documents for Implementation of the Doha-Declaration
Paragraph 6 Decision (The World Bank, 2005)”
4. “WolradPrinzzuWaldeck und Pyrmont Martin J. Adelman Robert Brauneis Josef Drexl
Ralph Nack, Patents and Technological Progress in a Globalized World (Springer, 2008).”
5. “Herbert Hovenkamp, Mark D. Janis, Mark A. Lemley, Christopher R. Leslie, IP and
Antitrust: An Analysis of Antitrust Principles Applied to Intellectual Property Law (2nd,
Aspen Law & Business, 2009)”
6. “Dr. Feroz Ali Khader, Compulsory Licensing : with a special focus on pharmaceuticals,
2014 Students edition.”
7. “Michael A. Epstein: Epstein on Intellectual Property, 5th edition, Wolters Kluwer (law and
business.”

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8. Hillary Pearson and Clifford Miller : Commercial exploitation Intellectual Property, The
sentry.

D. ARTICLES AND JOURNALS

1. “Brook K. Baker, Arthritic Flexibilities For Accessing Medical-drugss: Analysis Of WTO

Action Regarding Paragraph 6 Of The Doha-Declaration On The TRIPS-Agreement And
Public-health in Indiana International & Comparative Law Review, 14 Ind. Int'l.”
2. “Nabila Ansari, International Patent Rights in a Post-Doha World in International Trade
Law Journal, 11 Currents Int'l Trade L.J. 57, page 3, winter 2002.”
3. “AdiGillat, Compulsory Licensing to Regulated Licensing: Effects on the Conflict between
Innovation and Access in the Pharmaceutical Industry in Food and Drug Law Journal, The
Food and Drug Law Institute, 58 Food Drug L.J. 71, page 6, 2003.”
4. “Philippe Cullet, Patents and Health in Developing Countries in Law and development:
Facing Complexity in the 21st Century, Cavendish Publishing, London, 2003, page 82.”
5. “F. M. Scherer and JayashreeWatal, Health And The WTO *913 Post-Trips Options For
Access To Patented Medical-drugss In Developing Nations in Journal of International
Economic Law, by Oxford University Press, 5 J. Int'l Econ. L. 913, page 2, December,
2002.”
6. “Divya Murthy, The Future of Compulsory Licensing: Deciphering the Doha-Declaration
on the TRIPS-Agreement and Public-health in American University International Law
Review, Washington College of Law, American University, 17 Am. U. Int'l L. Rev. 1299,
page 4, 2002.”
7. “Haochen Sun, A Wider Access to Patented Drugs Under The TRIPS-Agreement in Boston
University International Law Journal, 21 B.U. Int'l L.J. 10, page 3, Spring, 2003.”

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