Covid-19 Vaccine and Patent Laws: International and Indian Position

The article focuses on the Patent laws and Covid- 19 in India and Abroad. It further discusses the concept of compulsory licensing and the fact that people, countries and companies should appreciate the existence of compulsory licensing, making healthcare affordable to the general public.
Estimated Reading Time: 10 minutes

The SARS-Cov-2 virus causing the disease Covid-19 has taken a form of global pandemic today. Among the cases with an outcome, 11% have died, making the death toll go up to four lakhs (as of June 6th).[i] These numbers will only go up and so will the importance of a vaccine to the disease. For a pandemic of this magnitude, the vaccines, if not made readily available to the general public with a minimum of costs, can claim even more lives. Therefore, there is a possibility for human selfishness to claim lives instead of the virus itself. Patent law, which provides for the protection of innovations and the innovator’s exclusive right, can make the person exercise monopoly on his innovation which makes the price surge due to lack of competitors. Initiatives such as ‘Open Covid-19 Pledge’ and ‘Open Patent Pool’, which longs to prevent such exploitation, have been going on.[ii] Patent laws during these trying times can be a deciding factor between life and death of millions of people. Now that we have understood the problem with the law and the global importance of a vaccine, it’s important for us to understand the patent law and how it works when it comes to medicines and drugs.

Compulsory Licensing for Covid-19 vaccines

The concept of compulsory license can be seen across countries when it comes to medicines and drugs. Compulsory licensing, in simple terms, is the process of providing a third person with license to produce, without any consent by the patented owner. Such licenses in India, are non-assignable and non-exclusive.[iii] TRIPS (The Agreement on Trade-Related Aspects of Intellectual Property Rights) Agreement and Public Health (Doha Declaration) – recognizing state’s steps to provide affordable healthcare, despite the existence of patent protection – affirms that TRIPS should be interpreted and implemented to favor WTO members, public health and promote accessibility.[iv] TRIPS has taken restrictive approach to compulsory licensing but, thanks to the Doha Declaration, nations can apply such concept in their legal system with no restrictions.

The Belgian Code of Economic Law provides for compulsory licensing when it comes to diagnosis methods, which includes devices used for diagnosis, therefore, leading to growth of tests without any violation of patent laws.[v] The Dutch Patent Act also provides for compulsory licensing based on public interest.[vi] Although, compulsory license based on this provision has never been granted, there is a possibility for such grant during the pandemic. The meaning of ‘public interest’ in the German Patent Act covers technical, environmental, economic and medical aspects. The German Federal Supreme Court had held that HIV drugs fell under the category of medicinal public interest[vii] but in case of medicine with side effects such license was denied.[viii] ‘Half-successful’ medicines are not usually patented since they do not absolutely fulfill the criteria of invention/innovation, absolute novelty and industrial application i.e. commercialization of drug.

Position in India

The 1970 Act which prevented food and medicine from being patented[ix] was amended by the 1999 Amendment Act to comply with TRIPS requirement. The special provision for compulsory license was not incorporated until the very last minute by the Joint Committee (2001). The provision of TRIPS agreement which deals with Compulsory Licensing doesn’t mention grounds for grant of such license. The Doha Declaration brings clarity stating that each member has the right to grant such license and determine the grounds for such grants.[x]

In India, compulsory licenses are provided to third party for production when public requirement of the patented good has not been met, the invention is not reasonably affordable by the public in India and the patented invention is not worked in India but such can only be done after 3 years of grant of patent to the inventor. No person shall be estopped from alleging that any of the above criteria has not been met so as to claim compulsory license. The controller, who grants such patents, also has to consider the nature of the invention; time elapsed since the invention and potential of the applicant to make use of the license for public.[xi] Therefore, companies can claim compulsory license based on this provision, after certain time. This increases competition and ensures effectiveness from the patent owner but such provisions are not helpful when it comes to potential corona-vaccine. Additionally, there is a time barrier. The Indian Patent Act, 1970 also deals with power of the state during health emergencies as in the present. In cases of national emergency, extreme urgency and for public non-commercial use, the Central Government can provide compulsory license on any patent in force.  After the notification by the Central Government, applications are reviewed by the Controller. For a grant, circumstances mentioned above must be fulfilled and such circumstances can arise during public-health crisis as mentioned by the act. General procedure for grant of compulsory license, as mentioned in Section-87 is not followed during such times which prevent excessive time consumption.[xii] Further, there are certain requirement and limitation in the license such as; use of the patent to full extent with only reasonable profit.[xiii] Therefore, companies can obtain compulsory license of the patent and produce vaccines. Since, such licenses are provided to companies with economic potential, the production and distribution will increase, ultimately increasing competition and decreasing the price of the vaccine.

The 1970 Patent Act was brought in with the aim to increase domestic pharmaceutical ventures, protection for innovators and availability to all. Even then, it has been observed that availability of medicines doesn’t necessarily lead to investment in medicines needed by the poor.[xiv] The 2002 Patent (Amendment) Act, significantly differs from the 1999 draft of the act, when it comes to compulsory licensing. The 2002 act fails to provide such clauses of compulsory licensing as guiding principle to the act. If such provisions were applied in the beginning of the act, similar criteria would have been used to review application of new patents but such criteria and flexibility can only be seen in cases of already granted patents and its compulsory license.[xv] In the case Bayer Corporation v. Union of India[xvi], a drug named “Nexavar” was made subject to compulsory licensing as it fulfilled all the criteria put forward by Section-84. The medicine was available to 2% of the patients and cost Rs. 2.8 lakhs per month for 120 tablets. In addition, the medicine was shown not to be worked in India. In this case, Bayer argued that the applicant companies for compulsory license were also providing the medicine at unaffordable monthly prices of Rs. 30,000/- and Rs. 8,800/-. The court agreed with the Bombay High Court decision and Nacto Pharma was provided with the compulsory license as it opted to provide the drug at Rs. 8,800. Here again, a problem arises. For a nation with low per capita income, genuinely expensive medicines are not affordable. Therefore, pharmaceutical companies are at disadvantage. This can also lead to less pharmaceutical companies, less foreign investment and again, lack of competition, leading to high prices.

Role of States

In the U.S., the government can claim patent rights over the innovation of a federally supported research.[xvii] Similar right is provided to the Australian Government based on the concept of ‘crown use’, after the government has provided the patent holder with compensation.[xviii] The same provision can be seen in England as well, since a long time ago.[xix] In the present, government department and authorized person can use the innovation without any consent of the patent holder, if they are working for the service of the crown.[xx]  Further, when it come to medicines, its production and supplies, the work is said to be ‘service of the crown’.[xxi] During public emergencies, for sufficient supply and services, the crown can use such power.[xxii] The crown-use provisions are based on the principle that patents are crown grants itself, therefore, the crown should not be punished for working in public interest.[xxiii] The recent case of IPCom GmbH & Co KG v Vodafone Group Plc is a practical example.[xxiv] In Germany, the German Infection Protection Act,[xxv] the recent Act on the Protection of the Population in Case of an Epidemic Situation of National Significance and the German Patent Act[xxvi] provides the government with similar rights. The new act also provided limitation to patents which are generally granted. Various instances can be seen where states have taken such steps in cases of public health emergencies in the past.[xxvii] The TRIPS agreement itself provides for use of patents by governments for non-commercial-public use, after remuneration,[xxviii] which shall not amount to infringement.[xxix] Therefore, countries governments have the power under their own national legislation to use a patent for the need of the public. Rather than sorting to the concept of compulsory licensing, countries with capacity of production and distribution, without the help of private sector, can take matters to their own hands.

Conclusion

Medicines and patents add fire to the ongoing debate on the ethics of IP laws. TRIPS agreement failed to provide exceptions to patents in cases of basic needs. This has been a concern in many developing countries where such exceptions are of utmost necessity. Patent protection can cause many people to not afford even basic health services to keep aside Covid-19. The U.S. in 2002 predicted that its pharmaceutical companies lose $1.7 Billion to India’s “insufficient” IP protection.[xxx]  The “patent clause” in the U.S. Constitution which states that inventors have the exclusive rights to their discoveries, has been implemented in a strict sense. Today during Covid-19 we can observe the failing health system of the U.S. thanks to such Patent Laws.[xxxi] We can see that leading countries like the U.S., who have a high potential for developing a vaccine seek only to commercialize their product at the cost of human lives but recently, AbbVie, a U.S. based company has recently dropped its patent right on its anti-viral drug, kaletra, which is currently used to treat Covid-19. This happened only after the Israeli Government provided a compulsory license. Countries like South-Africa and Brazil have previously made provisions to make medicines available for HIV/AIDS or Covid-19, which were said to be against the TRIPS agreement. Further, Brazil has maintained a strong compulsory licensing regime. Unfortunately, Brazil is one of the most adversely affected countries by the current pandemic, with tests being done in very fewer amounts. Law, leadership, and science together is the way forward to beat this pandemic i.e. Covid-19. Further, the treatment of only the rich disregarding the spread in the lower class communities doesn’t stop a pandemic. An effective IP regime is the one that strikes a balance between consumer’s interests and maintains incentives for innovation.[xxxii] The absolute right doesn’t exist in practice anywhere. Therefore, people, countries, and companies should appreciate the existence of compulsory licensing, making healthcare affordable to the general public at least during Covid-19. Countries before such pandemic i.e. Covid-19 maintained their IP legislation such that they can derive financial benefits from it but now, it is time for countries to realize the importance of medicines not only being limited to the Covid-19 vaccine but also focusing on other life-saving drugs and medicines by working within the intersection of law and ethics.


[i] Worldometer, ‘Covid-19 Coronavirus Pandemic’ <https://www.worldometers.info/coronavirus/> accessed 6 June, 2020

[ii] The Conversation, ‘Whoever Invents a Coronavirus Vaccine Will Control the Patent – and, importantly, who gets to use it’ <https://theconversation.com/whoever-invents-a-coronavirus-vaccine-will-control-the-patent-and-importantly-who-gets-to-use-it-138121 > accessed 6 June, 2020

[iii] Patents Act 1970, s (90)

[iv] World Trade Organizaion, ‘Declaration on the TRIPS Agreement and Public Health (Doha Declaration) ‘ (Ministerial Conference – Fourth Session, WTO Doc WT/ MIN(01)/DEC/2 2001) para 4

[v] Belgian Code of Economic Laws,  art XI (38)                   

[vi] Dutch Patent Act, art (57)

[vii] Raltegravir [2017] FSC Docket Number X ZB 2/17 –  GRUR 2017, 101

[viii] Alirocumab, [2019] FSC docket number X ZB 2/19 = GRUR 2019, 1038

[ix] Patent Act 1970 s (5) (before amendment)

[x] Sudip Chaudhuri, ‘TRIPS Agreement and Amendment of Patents Act in India’ (2002) 37 Economic and Political Weekly 3354 <https://www.jstor.org/stable/4412467> accessed 6 June, 2020

[xi] Patent Act 1970, s (84)

[xii] Patents Act 1970, s (92)

[xiii] Patent Act 1970, s (90)

[xiv] World Health Organisation (2001) ‘Globalisation, TRIPs and Access to Pharmaceuticals’ (WHO Policy Perspectives on Medicines No. 3.

[xv] Philippe Cullet, ‘Amended Patents Act and Access to Medicine after Doha’  (2002) 37 Economic and Political Weekly 2278 <https://www.jstor.org/stable/4412233> accessed 6 June, 2020

[xvi]  Bayer Corporation v. Union of India 2014 (60) PTC 277 (Bom).

[xvii] Bayah Dole Act 1980, s (200)

[xviii] Australian Law Reform Commission, ‘Genes And Ingenuity: Gene Patenting And Human Health (ALRC Report 99)‘ (2010) para 26.12 <https://www.alrc.gov.au/publication/genes-and-ingenuity-gene-patenting-and-human-health-alrc-report-99/26-crown-use-and-acquisition/crown-use/> accessed 6 June, 2020; Patent Act 1990 s (163, 163A)

[xix] Feather v The Queen [1865] 6 B & S 257; Pfizer Corporation v Ministry of Health [1965] AC 512, 533; Patents, Designs, and Trade Marks Act 1883,  s (27).

[xx] Patents Act 1977, s 55 (1) (a)

[xxi] Patents Act 1977, s 56 (1) (b)

[xxii] Patents Act 1977, s 59

[xxiii] Advisory Council on Intellectual Property, Review of Crown Use Provisions in Patents and Designs Legislation (2003); General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125, 133–134.

[xxiv] IPCom GmbH & Co KG v Vodafone Group Plc [2020] EWHC 132 (Pat).

[xxv] German Infection Protection Act, s 5 (2) (v)

[xxvi] German Patent Act, s (13)

[xxvii] Consumer Project on Technology, ‘Ciprofloxacin: The Dispute over Compulsory Licenses’ (2004) <www.cptech. org/ip/health/cl/cipro> accessed 6 June, 2020.

[xxviii]  Patents (World Trade Organisation Amendments) Act 1994,  s 15(c); Patents Act 1990,  s 165(2)

[xxix] Agreement on Trade-Related Aspects of Intellectual Property Rights 1995, Annex 1C of the Marrakesh Agreement Establishing the World Trade Organization and Art 31 (b); World Trade Organization, ‘Review of Legislation in the Fields of Patents, Layout-Designs (Topographies) of Integrated Circuits, Protection of Undisclosed Information and Control of Anti-competitive Practices in Contractual Licenses’ (1997).

[xxx] cf Philippe (n 15).

[xxxi] The U.S. Constitution 1787, art (1) s (8) clause (8).

[xxxii] Carlos M. Correa, ‘Public Health and Patent Legislation in Developing Countries’ (2001) 3 Tul. J. Tech. & Intell. Prop. 1, 3

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