Introduction:

At the point when a business concludes whether to contend in this day and age commercial center, it should think about the degree to which its thoughts and plans will be shielded from misappropriation. This can be particularly obvious when an organization puts vigorously in fostering a cure, antibody, or treatment during a pandemic. Coronavirus isn't the main likely pandemic to undermine the global local area. The world has recently confronted dangers such as bioterrorism and irresistible sicknesses. For instance, the danger of Bacillus anthracis assaults in a result of 9/11 prompted worry over the accessibility of the medication Cipro. In November 2002, more than 8,000 individuals contracted Severe Acute Respiratory Syndrome (SARS). Since 1981, a bigger number of than 32 million individuals have passed on from AIDS worldwide. The 2009 H1N1 flu pandemic was assessed to be related with 151,700 to 575,400 passing’s overall during its first year. Notwithstanding its worldwide repercussions, patent insurance is regional, working just inside the purview giving the patent. While a few arrangements and worldwide congresses have been effective in making basic value and consistency among public patent laws, complete consistency is hard to accomplish because of various ways of thinking with respect to free undertaking, restraining infrastructure rights and innovative turns of events.

The present circumstances in regards to those spread about COVID-19 need to be brought the whole universe to a grinding end. However, a standout amongst those parts which appear to have a chance to be resistant to the COVID-19 effect will be the pharmaceutical division. Since the outbreak of the COVID-19 virus, pharmaceutical organizations around the universe have been forcefully locked in the Research & Development work (R&D) for a drug/vaccine which might aid in opposing COVID-19. When such a drug/vaccine is made in any pharmaceutical company, the said company will doubtlessly detract all the necessary steps to protect the same by filing for a grant of a patent for the said invention. Keeping in mind, the times that we are in, there may hail a circumstance where the principles behind the protection of intellectual property right would have to be balanced with the public welfare. One such mechanism for balancing the rights of the intellectual property holder and the general public is compulsory licensing.

What is Compulsory Licensing?

A compulsory license is the grant of permission by a government to a manufacturer seeking to use another party’s intellectual property without consent. Compulsory licenses have been imposed on pharmaceutical manufacturers by some countries on the asserted grounds of public health and safety, but they could potentially apply to any patented invention. A patent agreement imposes a business model to the proprietor to deliver and convey a protected item as they see fit and to hold different gatherings back from doing likewise. Obligatory authorizing arrangements engage the public authority to allow such rights to parties other than the patentee, without the assent of the patentee. Then again, the public authority might utilize the actual patent. All countries that are involved with the TRIPS Agreement need to accommodate mandatory authorizing. Grounds that have been proposed or declared to help the burden of a mandatory permit have included:

●       circumstances of national emergency or extreme urgency;

●       vital public health needs;

●       strong societal interest has arisen in access to the invention;

●       abuse of economic power by the patent owner, in such a manner as to violate antitrust laws; and

●       in conditions where numerous licenses held by various proprietors cover a specific innovation. For instance, mix treatments –, for example, triple antiretroviral drugs – might be dependent upon more than one patent. In such cases, on the off chance that one patent proprietor won't permit, the innovation may not be promoted, missing an obligatory permit.

The TRIPS Agreement:

Signed concurrently with the establishment of the World Trade Organization (WTO) in 1994, the Trade Related aspects of Intellectual Property Rights (TRIPS Agreement) sought to create a global intellectual property rights regime that would harmonize legal standards across WTO member states. Prior to the TRIPS Agreement, many countries excluded pharmaceutical products from patentability in order to ensure drug prices were affordable. India and Brazil, for example, had previously only allowed for process patents and not product patents. This permitted domestic generic pharmaceutical companies to reverse-engineer and produce bioequivalent drugs. Under a TRIPS-compliant patent regime, WTO member states are required to guarantee product patents and exclusive marketing rights to innovators. These expanded patent protections enable pharmaceutical companies to set high prices, which help companies recoup R&D costs but also often put medicines out of reach for the poor. The TRIPS Agreement, however, provides governments with some flexibility in managing patents for public goods such as pharmaceuticals. In particular, the Doha Declaration on the TRIPS Agreement and Public Health in November 2001 highlights and clarifies a key flexibility afforded to countries in Article 31 of the TRIPS agreement: the right to grant compulsory licenses. Compulsory licensing refers to the use of a patent without the authorization of the patent holder. Specifically, issuing a compulsory license for a pharmaceutical treatment allows a government to locally manufacture or import generic versions of the treatment without the patent holder’s consent.

Clause 5 of the Doha Declaration reaffirmed that “each [WTO] member has the right to grant compulsory licenses and the freedom to determine the grounds upon which such licenses are granted”. Additionally, in situations of “national emergencies” and “other circumstances of extreme urgency,” governments can issue compulsory licenses without normal requirements, such as negotiating with the patent holder. Clause 5(c) further clarified that: “public health crises, including those relating to HIV/AIDS, tuberculosis, malaria and other epidemics” can constitute “a national emergency or other circumstances of extreme urgency.” There can be no doubt that the COVID-19 pandemic is a public health crisis within the meaning of clause 5(c) that justifies the use of compulsory licenses. There are several countries that have successfully used compulsory licenses to provide their citizens with affordable medicines during past public health crises. Below is a snapshot of their experiences.

Compulsory Licensing in India:

The Indian Patent Act provides for compulsory licenses at the expiration of three years from the date of a patent grant, on any of the following grounds: reasonable requirements of the public with respect to the patented invention have not been satisfied, or patented invention is not available to the public at a reasonably affordable price; or patented invention is not worked in the territory of India. Further, India’s patent law states:

‘Compulsory license for export of patented pharmaceutical products in certain exceptional circumstances. A compulsory license shall be available for the manufacture and export of patented pharmaceutical products to any country having insufficient or no manufacturing capacity in the pharmaceutical sector for the concerned product to address public health problems, provided a compulsory license has been granted by such country or such country has, by notification or otherwise, allowed the importation of the patented pharmaceutical products from India.' The Indian Government can, according to the arrangements of the Indian Patent Act, renounce licenses to meet public interests and even issue mandatory licenses to address the issue of great importance. The Indian Government may likewise gain and utilize licensed creations to address the worries referred to in the proposition. Remembering the numerous issues relating to creation and obtainment of antibodies, live-saving COVID-Drugs and clinical types of gear, defenders contend that the waiver would support the creation of the equivalent.

Principles Governing Compulsory Licenses:

Compulsory licenses are permissions that are given to a third-party by the Controller General of Patents to make, use or sell a product or use a process that has been patented to make a certain product, without the need of the authorization of the owner of the patent. Under the Indian Patent Act, 1970, the provisions regarding compulsory licensing are specifically laid down under Chapter XVI of the Act. The various criteria which need to be fulfilled for a compulsory license to be granted are laid down under Sections 84 and 92 of the Act, such as the grounds for the grant of a compulsory license, factors to be considered by the Controller while deciding a grant of compulsory license, the general purpose of the grant of compulsory license, etc. A compulsory license can be granted on an application by any interested person, after the expiry of three years from the date of grant of the patent. The grounds on which a compulsory license may be granted are:

1.   The reasonable requirements of the public with respect to the patented invention have not been satisfied; or

2.    The patented invention is not available to the public at a reasonably affordable price; or

3.   The patented invention is not worked in the territory of India.

Importantly, under Section 92 of the Act, in cases of a national emergency, extreme urgency or cases of public non-commercial use, the Central Government may, at any time after the sealing of the patent, grant a compulsory license in respect of any patent in force to any person interested. Furthermore, in case of a public health crisis such as an epidemic, the procedure for grant of a compulsory license, as specified under Section 87 of the Act need not be followed. As Section 87 lays down the detailed procedure to be followed while applying for and granting a compulsory license, making it non-applicable to cases of epidemics would expedite the process of grant of a compulsory license and the access to the patented invention to the public would be fast-tracked. The Controller, while settling the terms and conditions of a license granted under this section, is required to endeavour to ensure availability of the products/articles made using the patented invention at an affordable lowest prices to the public, at the same time ensuring that the patentees are also deriving a reasonable advantage from their patent rights.

Judicial view on compulsory licensing:

The landmark judgment in India regarding compulsory licensing is the case of Bayer Corporation vs Union of India (“Bayer case”). The Bayer case arose in relation to Bayer Corporation’s (“Bayer”) 2010 patent over a compound called “Sorafenib Tosylate” which was sold as Nexavar and was used for the treatment of Liver Cancer. Natco Pharma (“Natco”) in 2010 approached Bayer for a grant of voluntary license for manufacturing and selling the patented drug in India under its brand name at a lesser price. However, the negotiations for the voluntary license failed, and thereafter in the year 2011, after the expiry of three years from the date of grant of Bayer’s patent, Natco filed an application to the Controller for grant of a compulsory license. The Controller after taking into consideration the various provisions of the Act, granted a compulsory license to Natco for manufacturing and selling the patented drug in India. The said order of the Controller was upheld by Intellectual Property Appellate Boards (“IPAB”).

Bayer aggrieved by the same filed a writ petition before Hon’ble High Court of Bombay, challenging IPAB’s order. The Hon’ble High Court upheld the IPAB’s decision and held that as Bayer was not selling the  drug  at an  affordable price, it had failed to meet the reasonable

requirement of the public in respect of the patented drug. The Hon’ble Court held that the onus was on the patentee to show that the patented invention/ drug was worked in India, by way of manufacture or otherwise. The Hon’ble Court further observed that the proceedings under Section 84 of the Act were in the public interest as the entire basis of the grant of the compulsory license is based on the objective that patented article is made available to the society in adequate numbers and at a reasonable price.

Scope of Compulsory Licensing:

The extent of the obligatory licenses in light of a legitimate concern for general society and for the fare of drug items is basically controlled in Article 40(e)(2) and following of the Patent Act, executing Article 30(c) and following of the TRIPs Agreement. The extent of the obligatory permit is restricted to the reason for which it has been conceded. The permit isn't transferrable, besides on move of the entire business that utilizes the permit. This additionally applies to sub-licenses. Also, the patentee is qualified for suitable compensation for the obligatory permit. In surveying the compensation, the conditions of the singular case and the monetary worth of the permit should be thought of. In the case of a compulsory licence for the export of pharmaceutical products, the remuneration is determined by taking into account:

●       the economic value of the licence in the importing country;

●       its level of development; and

●       the urgency in public health and humanitarian terms.

●       The compulsory licence will be granted only on a non-exclusive basis and, in the case of a compulsory licence in the interest of the public, the licence is primarily granted for supplying the domestic market.

●       Regarding the term of the compulsory licence, if the circumstances that led to its issuance no longer apply and are not expected to arise again, the compulsory licence may be revoked.

Limitations of Compulsory Licensing:

Compulsory licenses have been used by countries as an important public health safeguard. However, countries also need a temporary waiver of IP to more effectively address IP barriers in this pandemic. The current rules of compulsory licensing under the TRIPS Agreement were not designed to address some key challenges arising in a global pandemic, and some provisions also

contain limiting factors in the context of a pandemic or an emergency in general. Using compulsory licensing for access to medicines has also been inappropriately politicized, and countries are discouraged from the usage for fear of trade retaliation.

1.  Use of compulsory licenses may invite unwarranted pressure -

Historically developing countries have been systematically discouraged from using compulsory licensing for access to medicines due to pressures from their trading partners and pharmaceutical corporations. In the COVID-19 pandemic, pharmaceutical corporations continue to pressure countries over the use of compulsory licensing. However, to remove political and trade pressures completely, this needs to lead to an actual end to pressuring countries for issuing compulsory licenses to support access to generic medicines, vaccines and other medical products and not just be an exception because of COVID-19.

2.   Compulsory licenses require a case-by-case approach and are difficult to coordinate across jurisdictions -

The TRIPS Agreement sets up some procedural and substantive conditions for using compulsory license by governments, some of which may pose limitations in a global pandemic. To begin with, TRIPS provisions require the use of compulsory licensing to be based on a country-by-country basis and individual merits,j suggesting a case-by-case and product-by-product approach. Secondly, except in cases of emergency and other circumstances of urgency, public non-commercial use, or competition violations, prospective licensees must first attempt to secure a voluntary license on commercially reasonable terms, which can result in time delays. Finally, there must be opportunities to review the grounds for the license and the royalty rate, which have led to several legal disputes being filed against generic manufacturers that obtain a license or government agencies that issue a license. In the situation of a global pandemic, to effectively establish patent-free supply chains for products involving a large number of components and complex background patent landscapes, such as in the case of some vaccines, would create a monumental coordination crisis because of the possible need to initiate and win compulsory licensing proceedings in multiple jurisdictions.

3.    Compulsory licenses do not provide an effective remedy for emerging and evolving patent barriers -

Compulsory licensing only provides a remedy after patent barriers on individual medical products have been established, blocking production and supply. The IP landscape continues to

change as product development pipelines for drugs and other products are constantly evolving during the pandemic, making it inefficient to only take actions after a barrier has been established. The evolving IP landscape also suggests that new patents may remain unpublished due to the interval between application and publication, when preparation to ramp up production and supply is already required. To remove legal risk expeditiously, it is imperative to allow a quicker option in addition to compulsory licenses.

4.  Compulsory licenses must be used primarily to supply a domestic market -

Article 31(f) of the TRIPS Agreement requires the use of compulsory licensing to be predominantly for the supply of domestic market, unless the license is issued to remedy competition violations. This means that if countries want to export generic products produced under compulsory licensing, they may need to justify that the quantity for export is a limited percentage relative to domestic supply. In a pandemic where large-scale and rapid humanitarian assistance is required, Article 31(f) is inadequate and hugely problematic.

5.  Compulsory licenses for export are logistically and procedurally impractical -

The special compulsory license under Article 31 of TRIPS Agreement allowing production, export, and importation to countries with insufficient manufacturing capacity does not provide a practical option to facilitate exportation. To remedy the challenges facing countries with no or insufficient manufacturing capacity to effectively use a compulsory license under Article 31(f), Paragraph 6 of Doha Declaration mandated the TRIPS Council to work out an expeditious solution to ease the use of compulsory licenses for exportation and importation.

6.  Compulsory licenses cannot easily override non-patent IP barriers -

Overriding patents alone is often enough to allow alternative producers to expeditiously manufacture small molecule medicines. However, to expeditiously make and gain regulatory approval for complex medical products like vaccines and monoclonal antibodies in a pandemic, alternative producers also need immediate access to other IP-protected assets. For these products to be expeditiously made available in the shortest timeline, producers need to be able to access confidential information and trade-secret protected knowledge, data, manufacturing, quality control know-how, regulatory data, and even cell lines and other biologic resources. In the TRIPS Agreement, compulsory licensing is only provided for under Section 5 concerning patents. To overcome non-patent IP barriers, using compulsory licensing alone is insufficient. Rapid removal of other IP barriers requires additional legal tools, such as the proposed temporary TRIPS waiver.

Has the Pandemic Transformed Compulsory Licensing?

In response to the covid-19 pandemic, during the course of 2020, several countries took steps to facilitate compulsory licensing or to encourage the use of compulsory licences. However, more than one year into the pandemic, it seems that while compulsory licensing has made many headlines, only a few cases have been made public where covid-related treatments or vaccines were actually made broadly available through this tool. Ultimately, compulsory licensing has failed to get a lot of attention as an effective tool to secure access to essential treatments and vaccines related to covid-19. Rather, the pandemic has led to major advances in open innovation and innovative voluntary licensing schemes without state intervention. A large group of researchers and private companies pledged to share their intellectual property in the fight against covid-19 in the ‘Open Covid Pledge’. Unrelated to the Open Covid Pledge, various pharmaceutical and medtech companies are also reported to have pledged:

●       to grant voluntary licences to virtually anyone;

●       not to enforce their covid-related patents while the pandemic is raging; or

●       to grant royalty-free licences to patent pools with a view to sublicensing to generic manufacturers.

Conclusion:

It is too soon to tell whether or how these initiatives will have accelerated the research for effective covid-19 vaccines and cures. Nonetheless, the pandemic has already highlighted that extraordinary situations can lead to private initiatives that were previously unthinkable on this scale. As patent protection is one of the main economic incentives to innovate, especially in the pharmaceutical field, voluntary licences will definitively be preferred over compulsory licences being imposed against the will of the patentee. The TRIPS waiver and the existing provisions of compulsory licenses are not mutually exclusive. All countries have the right to determine the grounds to issue a compulsory license and in non-emergency contexts, a compulsory license can be a powerful and potentially sufficient tool. The patent office, ministry of health or competition authorities should be able to issue a compulsory license according to the TRIPS Agreement and the Paris Convention for the Protection of Industrial Property. But countries should do more to ensure that the IP barriers do not hinder access to COVID-19 related medical tools. Facing a