Smith Kline & French Lab Ltd. v.

CA, Bureau of Patents, Trademarks and

Technology Transfer and Doctors Pharmaceuticals, Inc.
G.R. No. 121867, 24 JUL 1997

FACTS:

1. Petitioner Smith Kline & French is a corporation who owns a Phil. Letters Patent
for the patent of the drug Cimetidine. Respondent Doctors Pharma is a
domestic corporation engaged in the manufacturing and distributing
pharmaceutical products.
2. Respondent applied for compulsory licensing of its own brand of medicine from
the drug Cimetidine (for anti-ulcer) to market such product in the Philippines.
3. The petition for compulsory license was made in accordance with Sec. 34 of
RA 165, which provides for the compulsory licensing of a particular patent after
the expiration of two years from the grant of the Patent Office if the patented
invention relates to medicine or that which is necessary for public health or
safety.
4. Respondent alleged that the grant of Phil. Letters Patent 12207 was on 29 Nov
1978 – filed beyond the two-year protective period and that it had capability
to work the patented product or make use of its manufacture of medicine.
5. Petitioner opposed contending that that respondent had no cause of action and
lacked the capability to work the patented product and that it failed to
specifically divulge how the latter would use or improve the product and that
respondent was motivated by the pecuniary gain attendant to the grant of a
compulsory license. Petitioner also maintained that it was capable of satisfying
the demand of the market.
6. The BPTTT rendered a decision granting Doctor Pharma a non-exclusive and
non-transferable license to manufacture, use and sell petitioner’s patented
invention valid for the remaining lifetime of said Letters Patent 12207 and
subject to payment of royalties.
7. Petitioner appealed to the CA but the CA affirmed the decision of the BPTTT
that private respondent has shown and possesses such capability, having
personnel and machinery as well as permit to manufacture different drugs
containing the said patented ingredients.
8. The granting of the compulsory license was not just because by reason of Sec.
34 of RA 165. The Director of Patents also considered in determining that the
applicant has the capability to work or make use of the patented product in
the manufacture of a useful product.
9. Petitioner filed an MR but was denied. Hence, a petition for review on certiorari.
Petitioner alleges that: (1) the CA erred and violated international law pursuant
to the Paris Convention for the protection of industrial property and the GATT
treaty, Uruguay Round; (2) the BPTTT decision was an invalid exercise of police
power, absent a showing by evidence of the need to issue a compulsory license
over cimetidine in favor of private respondent.
ISSUE(S):

1. Whether petitoner’s contention on the protection of industrial property

pursuant to the Paris Convention is correct?
2. Whether the grant by BPTTT of a compulsory license to private respondent is
correct?

HELD:

1. NO. Petitioner’s contention is without merit.

2. The Philippines became a party of the Paris Convention on 1965 where it is
embodied on its articles, Art. 5 Sec. A:
a. Each country of the union shall have the right to take legislative
measures providing for the grant of compulsory licenses to prevent the
abuses which might result from the exercise of the exclusive rights
conferred by the patent, for example, failure to work.
3. It is clear that Art. 5 unequivocally and explicitly respects the right of member
states to adopt legislative measures to provide for the grant of compulsory
licenses to prevent abuses which might result from the exercise of the
exclusive rights conferred by the patent.
4. RA 165 was enacted prior to the Philippine’s adhesion to the Paris Convention.
Sec. 34 of RA 165 fits well within the provision of Art. 5 of the said Convention.
The legislative intent in the grant of compulsory license was not only to afford
others an opportunity to provide the public with the quantity of the patented
product, but also to prevent the growth of monopolies.
5. YES. The grant of compulsory license was for valid grounds.
6. Sec. 34 of RA 165 provides that:
a. Any person may apply to the Director for the grant of compulsory
licensing under a particular patent at any time after the expiration of
two years from the date of the patent, under any of the following
circumstances:… (e) if the patented invention or article relates to food
or medicine or manufactured products or substances which can be used
as food or medicine, or is necessary for public health or public safety.
b. In any of the cases, a compulsory license shall be granted to the
petitioner provided that he has proved his capability to work the
patented product or to make use of the patented product in the
manufacture of a useful product, or to employ the patented process.
7. Sec. 35 provides:
a. If the Director finds that a case for the grant is a license under Sec. 34
has been made out, he shall within 180 days from the date the petition
was filed, order the grant of an appropriate license.
8. The cited provisions of RA 165 are not in derogation of, but are consistent with,
the recognized right of treaty signatories under Art. 5, Sec. A of the Paris
Convention.
9. Petitioner’s contention that the grant was in violation of the GATT and Uruguay
Round which is referred to as the Uruguay Final Act is misplaced. The treaty
 was signed on 16 Dec 1994, whereas the decision of BPTTT to grant the license
was on 14 Feb 1994. The treaty has no retroactive effect.
10. Petitioner likewise cannot claim it was deprived of its property rights. RA 165
provides for a protective for two years to enjoy his exclusive rights but
subsequently such law also provides for just compensation in the form of
royalties.