COVID-19 As impact on Patent Rights

COVID-19 As impact on Patent Rights

The Agreement of Trade Related Intellectual Property Rights which became effective on January 1, 1995 (the “TRIPS Agreement”) declared pharmaceutical products as an invention which can be protected by a patent. When an inventor registers his pharmaceutical products as a patent, no third party shall have the right to manufacture, supply or sell such pharmaceutical product without the consent of the legal owner.

Nevertheless, a growing number of governments issued legislations authorizing the use of compulsory licenses for pharmaceutical and medical products as a response to the COVID-19 pandemic; which enables third parties to use a registered and protected patent without the owner’s consent under the umbrella of public health interest.

Already, Canada, Chile and Ecuador have taken steps to ignore the patent owners’ rights by issuing compulsory licenses for COVID-19 medicines, vaccines and other medical tools as follows:

  • Canada: the Canadian Government had issued the COVID-19 Emergency Response Act which contains a section that enables the Minister of Health to apply for an authorization for the Government or any specified person to make, construct, use and sell a patented invention, to the extent necessary to respond to a public health emergency. In such event, the Government may grant such license to a public agency or a generic drug maker, allowing it to copy a patented medicine without the consent of the company that legally owns the patent.
  • Chile: On March 17, 2020, the parliament of Chile unanimously issued a resolution which provides that the global Coronavirus pandemic justifies the use of compulsory licensing to ease access to vaccines, drugs, medical supplies and other technologies which are useful for the prevention and treatment of people whom are diagnosed with Coronavirus in Chile. This compulsory license suspends the rights of the patent owner and allows third parties to produce, supply and sell such products.
  • Ecuador: On March 20, 2020, the Education, Culture, Science and Technology Commission of the National Assembly in Ecuador adopted a resolution requesting the Minister of Health to issue compulsory licenses over patents related to medicines and vaccines overcoming and treating the Coronavirus.

Many large corporations had offered the manufacturing of medical supplies, such as General Motors whom are offering to manufacture ventilators and other much needed medical equipment, and companies of cosmetics products such as Louis Vuitton and L’Oréal are offering to produce hand sanitizers.

As well, AbbVie whom is a well-known drug manufacturer had suspended the enforcement of its patent rights on the drug Kaletra (Aluvia) which is being tested to treat COVID-19. This matter will allow third parties to reproduce generic versions of this drug without being accused of patent infringement and this would allow countries to purchase generic versions of Kaletra, if it is found effective in treating COVID-19.

It is worth noting that compulsory licensing also played a role in the year of 2001 facing the AIDS crisis and the unaffordable prices for HIV medicines, where countries pushed the World Trade Organization to adopt a resolution allowing the use of compulsory licensing to lower costs. However, Canada and a number of other developed countries did not allow the use compulsory licensing to import lower-priced drugs.

In this content, it is worth showing the position of the Lebanese Law as well as the Qatari Law in regards of compulsory licensing taking into consideration that Lebanon is not a member of the TRIPS Agreement while Qatar is a member.

As per Lebanon, according to the Patent Law no. 240 of the year 2000, two types of compulsory license exist:

(1) By a court decision:

based on a request from any interested person provided that (a) the owner of the patent three years after the patent’s registration has not exploited the patent, or has stopped its exploitation for three consecutive years without a reason; and (b) the applicant for the compulsory license provides an evidence that he tried to obtain the license from the owner without success, however, this last condition may be waives in the events of national emergencies, extreme necessity, or in cases of general use for non-commercial purposes. The consideration of royalty fees will be determined by the court.,

(2) By a decision of the Council of Ministers:

For the requirements of protecting public health and food security and securing the public interest in areas of vital importance in economic, social and technological development, and upon the request of the competent minister, the Council of Ministers may decide to include the patents granted in Lebanon to the system of administrative compulsory licensing, if the products obtained under those patents are offered to the public in a quantity or quality that does not meet the needs of the market or are abnormally highly priced. In such event, each interested person may submit a request to the Minister of Economy to be granted such compulsory license with a consideration of royalty fees to be paid to the patent owner.

In the events of national defense, the Lebanese Government has the right to be granted the ownership of the relevant patents whether partially of full, with consideration of a compensation to be settled to the patent owner.

It is worth noting that as per the practice, the consideration of royalty fees or compensation which are usually assessed by the court or Government, are never adequately fair.

As per the State of Qatar, according to the Patent Law no. 30 for the year 2006, after the lapse of three (3) years from the registration of a patent, any interested person may submit a request to issue a compulsory license of such patent in the following events: (a) there is no serious exploitation of such patent throughout such period; (b) if the exploitation of such patent has been suspended by the patent holder for two (2) consecutive years without an acceptable reason; or (c) if the patent owner had refused to grant a license for the exploitation of such patent which will lead to the impeding the establishment or development of industrial and commercial activities in Qatar.

Based on the above, the State of Qatar did not issue any provisions related to the compulsory licensing by the Government in any events.

After reviewing the article 31 of the TRIPS Agreement, we note that the TRIPS Agreement granted the States members a flexibility on the compulsory license where it provides clearly that each State member has the right to issue compulsory licenses subject to meet specific conditions (such as to be for the protection of a legitimate interest). Moreover, the declaration of TRIPS agreement and public health adopted on November 14, 2001 read as follows:

"(i) Each Member has the right to grant compulsory licenses and the freedom to determine the grounds upon which such licenses are granted.

(ii) Each Member has the right to determine what constitutes a national emergency or other circumstances of extreme urgency, it being understood that public health crises, including those relating to HIV/AIDS, tuberculosis, malaria and other epidemics, can represent a national emergency or other circumstances of extreme urgency.

Despite the provisions of the Lebanese Patent Law and despite the State of Qatar being a member of the TRIPS Agreement, and thus benefiting from the flexibility of the TRIPS Agreement and its declaration , none of these two (2) countries had ever resorted to issue any compulsory license throughout the years for any reason or event.

Based on all of the above,

We note that the practice over the years showed that compulsory licensed medicines often do not result in lower prices. Instead they limit investment, limit clinical trials and researches, and discourage new medicines from entering the market.

Furthermore, compulsory licensing may help prevent drug shortage; however, patents provide exclusive rights to its owners to manufacture and sell their products; and without patents, inventors and innovators can neither be fairly compensated for their costs of research to continue such matter, nor be encouraged or motivated for further research to develop new and improved products, and would obliterate the incentive to invent and create new drugs. By issuing compulsory licensing, Governments are ignoring the intellectual property rights of the patent owners and are causing huge losses to such owners especially for multinational pharmaceutical companies which have a team of specialists whom have been devotedly working over many decades to issue the right drugs and vaccinations for each epidemic.

We note that developed countries are very much concerned about protection of intellectual property rights because their progress and economic growth, depends on investment in research and development.  Their patent system provides incentives to speed up their technological progress, enhance their productivity, and improve their world trade position by strengthening their economy.

A limited exclusive right must be given to the patent owner to enable them to use their invention and to recover the cost of their invention and to have an incentive for further inventive research. Anything that interferes with the exclusive right of the patentee would certainly discourage investment in the field of research; and such imposing of compulsory licensing is definitely violating the private property right protection which is a consecrated right by law.

Moreover, compulsory licensing may danger safety concerns, as the consumers of counterfeit products are at risk because of the lower quality of unapproved generics may contain many dangerous consequences. Furthermore, there are many diseases which are unique to the third world countries.  If patent protection is ensured in these countries, it would provide an incentive to multinationals to invest in the research to investigate these diseases which would otherwise remain incurable.

In conclusion, we refer once again to the TRIPS Agreement, which is one of the most comprehensive international treaties on intellectual property rights (the “IP Rights”); the TRIPS Agreement had provided the legal process for the protection of IP Rights which is particularly very important in the pharmaceutical sector to enable such sector to recover its investment, research and development costs and to provide more incentive for further innovations and researches in order to save the world population. Therefore, patents are considered the lifeblood of the pharmaceutical industry, and without patents, which protect ownership, the incentive for high-value, long-term investments will definitely diminish.

It is highly important to protect the owners’ rights and prevent any obligatory license  whether a member of the TRIPS Agreement or not, as it will be a destruction to its pharmaceutical industry as well as to its economy, and thus amendments to the national patent law in order to limit any interference from the government and avoid any abuse of power from their ends. As well, and due to the fact that a convention is higher than a national law, and facing such flexibility from the TRIPS Agreement and its declaration of November 2001, it is very important to issue an amendment of the TRIPS Agreement to put an end to any interference from any government.

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