European Commission spin on "delicate issue of compulsory licensing"

James Love

Below is a press release from the European Commission on negotiations in Europe to implement the provisions for exports of medicines manufactured under a compulsory license. Here are a few things that caught my eye:

"The Commission's proposal implements the relevant decision taken by the World Trade Organisation (WTO) General Council in August 2003, which provided for the possibility of such compulsory licensing of medicines in order to lower their price and address public health issues in some of the poorest countries of the world."

Well, the EC has indeed pushed to limit the 2001 Doha Declaration to the "poorest countries" only, and of course, force the opt-out of the export provision for its own members, including its own poorest members.

"The delicate issue of compulsory licensing has been long discussed in the WTO and the adoption of this new Regulation is expected to play a key role in the relations between the EU and the developing countries during negotiations at the forthcoming WTO Ministerial Conference in Hong Kong."

I guess the EU negotiators think that negotiating a really restrictive implementation of the already bad decision will delight the WTO negotiators from developing countries. Of course, given the outcome of the negotiations, there must be some reason for hope at DG-Trade. After all, what else could be advertised as being part of the "development round." Looks like "para 6" of the 2001 Doha Declaration is turning out to be a long term strategy to avoid actually helping anyone, and as noted by Scott Forseth, is good for plenty of pats-on-own-backs, apparently for years and years (as Ellen 't Hoen points out, quite independent of evidence of effects).

No mention of why DG-Trade thinks it is good public policy to have a WTO rule in place that makes is impossible for one country Europe to export to another country in Europe, even in the case of a compulsory license being issued to address a public interest, abuse or national emergency, or that the EU recently amended the "opt-out" language in the agreement to cover all present and future members of the EU. Apparently this is not a topic not worthy of debate in Europe, and is better left to the trade negotiators who attend WTO meetings.

Given that compulsory licensing is such a "delicate issue," one wonders how a mandatory compulsory licensing program found its way into the European Union Directive on Biotechnology. I'm sure the European plant breeders are pleased that the benefits of that compulsory license were expressed targeted to help Europeans. I'm sure that Microsoft wished the European Commission would be more restrained in its compulsory licensing proceeding against them. All of which brings up another point. Exports under a compulsory license have always been permitted when issued to remedy anticompetitive practices -- such as the failures to license technology that are at the root of the European Biotechnology Directive and the Microsoft case.

Read Article 31.k of the TRIPS, which says “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.” These are the paragraphs which address negotiations on reasonable commerical terms, and limits of exports. And, you can also read Article 40 of the TRIPS, which reads in part:

Members agree that some licensing practices or conditions pertaining to intellectual property rights which restrain competition may have adverse effects on trade and may impede the transfer and dissemination of technology. . . Nothing in this Agreement shall prevent Members from specifying in their legislation licensing practices or conditions that may in particular cases constitute an abuse of intellectual property rights having an adverse effect on competition in the relevant market. As provided above, a Member may adopt, consistently with the other provisions of this Agreement, appropriate measures to prevent or control such practices. . .

But of course, that’s for the non-poorest countries to use, when efficiency, competition and economies of scale are important.

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http://www.ipr-helpdesk.org/controlador/noticia?seccion=noticia&tipoListado=all&id=0000005803&len=en 2005/12/09. IP European Union. Closer to the adoption of a Regulation to enable copies of patented medicines to be exported in developing countries The European Parliament recently voted on the Commission's proposal for a Regulation that would enable European companies to fabricate copies of patented medicines to be exported to developing countries without the authorisation of the patent holder. The Commission's proposal implements the relevant decision taken by the World Trade Organisation (WTO) General Council in August 2003, which provided for the possibility of such compulsory licensing of medicines in order to lower their price and address public health issues in some of the poorest countries of the world. The delicate issue of compulsory licensing has been long discussed in the WTO and the adoption of this new Regulation is expected to play a key role in the relations between the EU and the developing countries during negotiations at the forthcoming WTO Ministerial Conference in Hong Kong. Related Links: Related press release from the European Commission IPR-Helpdesk related news item: 2004/11/02 "European Union. The Commission proposes a Regulation to enable the export of pharmaceutical products to poor countries"

Not True that Public Health Emergencies Necessary for Compulsory Licensing of Patents

James Love

In the controveries over compulsory licensing of patents on medicines, news editors, reporters, students, academic researchers and others repeat the untrue assertion that the WTO TRIPS agreement provides for the compulsory licensings of patents only in cases of public health emergencies. This is not true. The TRIPS is quite flexiable in terms of compulsory licensing of patents, and indeed, one observes compulsory licensing in a wide range of situations, including for example compulsory licenses on tow truck patents in the US, mandatory compulsory licenses of patents on seeds in Europe (for plant breeders), on satellite technologies, and a countless other things.

The most accessible discussion of the TRIPS rules on compulsory licensing of patents for health care inventions is the WTO's recent FAQ on this topic.

Why do news reporters and editors so frequently misstate the nature of international law on this topic? In part because they tend to follow earlier reports on the same topic, dating back to Merril Goozner's April 28, 1999 headline story in the Chicago Tribune titled Third World Battles for AIDS Drugs, which had this quote:

While the World Trade Organization jealously guards intellectual property rights among its member nations, its global rules of trade do allow for what is known as "compulsory licensing" if it is done to combat a national emergency.

Merrill’s widely emulated quote was technically correct, but misleading. The WTO rules on national emergencies only address procedural issues, such as the ability to waive prior negotiation (on reasonable commerical terms) with patent owners before a compulsory license is issued. In fact, this is just one of three cases where such prior negotiation can be waived under the TRIPS -- the other two are for non-commerical public use or when the compulsory license is a remedy to anticompetitive practices. And, when there is prior negotiation with patent owners for a voluntary license, governments are free to override the exclusive rights and authorize others to use the patent for any other reason -- with a few conditions, including the normal obligation that the patent owner receive adequate remuneration.

Much of the confusion and missreporting about the TRIPS rules concerns the subtle ideology that surrounds patents rights. People are conditioned to think that patents are something to be "respected" or "honored," and that only extraordinary circumstances would justify "breaking" the patent monopoly. There is also a certain amount of prejudice associated with the perceived need for the poor to respect the property rights and privleges of the rich. When developing countries threaten to issue a compulsory license to a patent, it strikes at this larger issue. Meanwhile, the US government often uses compulsory licenses to remedy antitrust cases (such as the compulsory license on Microsoft Windows protocols), or for government procurement, without much fanfare.

In Europe, it is quite common for national patent laws to have strong compulsory licensing provisions, including areas where the compulsory licensing authority is stronger for certain areas of public interest. For example, the French patent law has strong language on compulsory licensing of patents on medicines, as well as for in-vitro diagnostic patents, which was motivated by disputes over the Myriad patents on breast cancer screening technologies. The European Commission also adapted a directive on biotechnology that requires mandatory compulsory licensing of patents on genetically modified seeds, when a plant breeder seeks to make improvements on the patented invention.

More recently, the US government has become alarmed that it may lose access to the Blackberry wireless service for reading email, and is searching for ways to effectively obtain a compulsory license on that technology, and eBay, is attempting to obtain a compulsory license on patents involving business method patents.

Compulsory licensing of patents is an important way for all governments to protect the public interest and to control anticompetitive practices. They are of course important for public health emergencies, but they are important for lots of other things too.