Balancing Access and Protection: Exploring Compulsory Licensing Provisions in the TRIPS Agreement and their Application in India
Compulsory licensing provisions of Article 30 and 31 of Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) allows a government to supersede patent rights of companies in certain circumstances, such as for public health emergencies, national security, or in cases of anti-competitive behavior. These two articles stand as pivotal provisions allowing countries to allow for compulsory licensing addressing critical needs, particularly in the realm of pharmaceuticals. This mechanism allows national government to override patent rights granted to corporations under specific circumstances. These provisions have been used by developing countries to make essential pharmaceutical drugs available to their large and diverse population on the ground of affordability. Therefore, this paper argues that Article 31 of the TRIPS should be interpreted in a strict manner where the government is required to demonstrate circumstances surrounding issuance of the compulsory license, in order to comply with criteria(s) laid out in Article 30 of the TRIPS. Such a requirement would prevent exploitation of compulsory licensing as a tool for circumventing patent rights. Such a line of interpretation is important as it would not only strike a right balance access to life-saving medicines which is a major concern for developing countries like India but also protect Intellectual Property (IP) rights of companies in particular pharmaceutical companies.
Origin of Compulsory Licensing under TRIPS
The extent of patent protection for pharmaceuticals has always been a thorny issue between developed and developing countries. There is always a tussle between providing affordable medicines and patent protection. TRIPS agreement was developed as a part of Uruguay Round of trade agreements to strike out a balance between the two competing interests.[i] The TRIPS agreement allows national governments to issue compulsory licensing for public health reasons which includes cases of epidemics, emergencies or other circumstances of extreme urgency. Articles 30 and 31 spell out the exception to IP rights to address the accessibility of medicine concern of developing countries. These exceptions are often termed as “TRIPS flexibilities”.[ii] The main conditions and requirements for issuing compulsory licenses are outlined in Article 31 and the duration of the license. It is however, important to note that these exceptions provide flexibility to countries to balance IP rights with public interests. The specific implementation and interpretation of these provisions can vary from country to country where the exceptions may be implemented within the legal framework of the country in questions taking into account their national interests and obligations under TRIPS.
However due to broad and open-ended provisions in the TRIPS, World Trade Organization (WTO) issued a Declaration on TRIPS and Public Health in Doha, Qatar in 2001 which is popularly known as Doha Declaration.[iii] The Declaration in paragraphs 1 through 3 discussed about need to provide intellectual property protection for medicines and recognizing needs of the public.[iv] Paragraphs 4 and 5 contained provisions that deal with implementation of TRIPS flexibilities. The reason for the Doha Declaration was that the developing countries were going through overwhelming public health epidemics and the high cost of medicines can afflict their population badly. In that declaration it was affirmed by the WTO that each country can determine the circumstances for granting compulsory licenses, but such circumstances should constitute national health emergency.
When TRIPS cases are brought to the dispute resolution process of the WTO, panels have generally expressed support for the provisions relating to public health. It is also challenging to give substantial meaning to non-binding statements, especially when conflicting interests are explicitly outlined in the agreement. Over time, the effectiveness of such provisions tends to fluctuate. This poses difficulties for making long-term investments necessary for promoting innovation, as they require a legal environment that is more stable and predictable.
India’s Tryst with Compulsory Licensing
India has at times used the compulsory licensing provisions for providing affordable medicines to its citizens.[v] For instance, the utilization of TRIPS flexibilities by India is starkly seen in the case of Bayer v Natco where the government allowed Natco to use Bayer’s patent as it deemed fit for public purposes, without patentee’s permission under section 84 of the Patent Act, 1970 by issuance ofa compulsory license. The then Intellectual Property Appellate Board (IPAB) in this case also decided against the patentee and said that the life-saving drug needs to be reasonably affordable therefore compulsory license needs to be granted and approved.
Although, interpretation of Patent law by the judiciary through the lens of affordability of essential medicines in patent infringement may curb exorbitant prices on life-saving medicines, however, may not serve as a public health emergency situation and also right of a patentee.
Striking a Proportionate Balance: Interpreting Article 30 and 31 of the TRIPS Agreement
The consideration of affordability should not be the sole sufficient ground to grant compulsory licensing. This due to the nature of IP rights including patents which are designed to incentivize innovation by providing inventors and creators with exclusive rights to their inventions for a limited period. If affordability were the only criterion for granting compulsory licenses, it could discourage innovators from investing time and resources into developing new pharmaceutical drugs as they might not be able to recoup their investment through fair returns. Since, Article 31 of TRIPS explicitly provides conditions that are to be considered as national emergencies or any other circumstances of extreme urgency for compulsory licensing. Insufficient or excessive protection can harm the functioning of the market. Insufficient protection weakens the incentives to take advantage of innovation opportunities, while excessive protection restricts the freedom of other market participants to operate and compete fairly. As such, TRIPS recognizes that the protection of IP rights is not an end in itself but a means to promote technological innovation in a mutually advantageous manner. Using affordability as a sole ground might go against the basic tenets of TRIPS.
To qualify as “limited” under Article 30 of the TRIPS Agreement, an exception does not necessarily have to be narrow in its impact. It is considered limited if its scope is reasonably proportionate to its intended objective. The exception should serve a legitimate purpose, be sufficient to achieve that purpose, and not go beyond what is necessary and appropriate to achieve it.
Therefore, interpretation of Article 30 and 31 of TRIPS can be objective so that the developing countries can utilize patent rights judiciously while recognizing scope of TRIPS in the compulsory licensing. Hence, Article 30 and 31 of TRIPS which deals with public health emergency and compulsory license needs to be interpreted to strike a right balance between affordable essential lifesaving medicines and the patent rights.
[i] Marrakesh Agreement Establishing the World Trade Organization, THE LEGAL TEXTS: THE RESULTS OF THE URUGUAY ROUND OF MULTILATERAL TRADE NEGOTIATIONS 320 (1999), 1869 U.N.T.S. 299, 33 I.L.M. 1197 (1994)
[ii] Agreement on Trade Related Aspects of Intellectual Property Rights, Apr. 15, 1994.
[iii] Ministerial Conference, Fourth Session, Doha, 9 – 14 Nov. 2001, WT/MIN(01)/DEC/2, 20 Nov. 2001.
[iv] Ibid.