Compulsory Licensing and Healthcare Patents

May 12, 2020

Healthcare systems around the world are racing to secure lifesaving equipment and protective gear for their patients and staff. Governments are stepping in to protect supply chains and ensure the flow of these goods as borders close and exports trickle to a halt. There are already hints that the compulsory licensing of healthcare patents is going to become increasingly common as the COVID-19 pandemic develops. For affected patent holders, this doesn't mean they will lose their rights to their patents. However, it does mean they may have to accept that other companies, including competitors, will be granted the ability to produce their products.

Affected Patents

Legislators in Europe, Asia, Africa, and South America are currently focused on regulators, respirators, and masks. These devices are critical in the fight for life that millions are facing at this moment. However, these are not the only devices affected by the crisis. Indeed, the production of everything from MRI machines and bedpans to pharmaceuticals and surgical instruments has ground to a halt around the globe. Thus, all medical patent holders should be aware that legislatures could grant compulsory licenses on their patents for the duration of the crisis.   

The Potential for Abuse

The potential for abuse of compulsory licenses is significant and should not be ignored. Current IP laws in most countries require fair compensation and payment of royalties to patent owners. However, we've entered a world where governments are already indicating a willingness to bend and break the rules to suit their national interests. Should a national legislative body determine that patent holders royalty rates are too high, they could step in and place a cap on these rates, or simply refuse to prosecute entities that refuse to pay.

This could occur even in nations where patent rights are fiercely protected. In the United States, 28 USC section 1498(a) allows the government to utilize patented technology without the patent holder's authorization. Similarly, the Bayh-Dole Act allows the federal government to compel the granting of licenses for any product that was developed with the aid of federal grants or other funding. While current US law requires fair compensation be made to patent holders, the emerging political climate should put patent holders on alert. Indeed, the federal government may have no qualms passing executive orders or hastily cobbled together legislation that could strip holders of healthcare patents of protections should the number of infected people continue to rise.

What About TRIPS?

Article 31 of the original TRIPS agreement allows the production of generic copies of pharmaceuticals and other products so long as they are used within the domestic market. The agreement explicitly prohibits the export of these products. And, it's that provision that did not foresee problems such as the current pandemic. Presently, as production within one country is able to restart, another country that desperately needs certain products remains shut down. 

It was precisely this potential problem that caused WTO members to amend TRIPS. First proposed at the Doha Conference in 2001, and agreed upon in 2005, the final version of the amendment was adopted in 2017. This means that healthcare patent holders could find their devices produced in any country, and shipped to any other country, even against their objections.

We are closely monitoring legislative and legal actions surrounding healthcare patents around the world. We encourage you to contact Global Patent Solutions at (877) 411-0037 for more information and to discuss your rights under these emerging conditions.      



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