The Opinion
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The Opinion

Compulsory Licensing — The Modern Solution To A Traditional Problem

By Deeksha Anand



The race and gap between the developed and developing countries, due to patent legislations relating to biotechnology is not just present in theory but the approach of countries to tackle a pandemic/epidemic also throws a negative light on such legislations.

During the SARS outbreak in 2002, the primary concern of the research institutions which were involved in SARS research was not to control the virus by finding a vaccine/medicine but it was to preserve the genetic material from public access. This led to the industrialized nations following the practice of ‘defensive patenting’ by which they tried to pre-empt the obtaining of patent rights by commercial applicants.

Similarly, the Ebola outbreak in 2014 was yet another example which proved that the current global patenting paradigm created a vast difference in the way a pandemic attacked a developing and a developed nation.

The patenting of biotechnology enables the patent holders to set very high prices for the drugs, which makes their products impossible to obtain for the poor populations. This is clearly backed up by the fact that the majority of deaths due to the Ebola virus were in low income African countries. The wealthy nations, on the other hand, owing to their better access to experimental therapies as well as strong research and development sources, were able to develop vaccines to fight the virus for which a patent was also granted to them.

Evidently, the traditional systems of patenting have not been advantageous in dealing with global outbreaks, something which can be witnessed in the ongoing Covid-19 pandemic as well. It seems that the introduction of vaccinations and the subsequent grant of patent(s) to their producers is resulting in a shortage of these vaccinations in countries across the world.

In an attempt to deviate from these traditional systems, the World Health Organization (hereinafter referred to as WHO) proposed to develop a Covid-19 Technology Access Pool which failed since only the low income countries joined in solidarity. Later, India and South Africa proposed to suspend the patents linked to Covid till this pandemic was over, however, even then the high income countries did not concede.

Currently, India is not only on red alert with an upsurge in Covid cases, but it is also facing a shortage of vaccines. While the judiciary has intervened and has proposed the grant of Compulsory Licensing, the government is not in favor of adopting this method even though India had proposed to suspend all patents in October, thereby contradicting its own stance.

India’s Stance Towards Compulsory Licensing

The Patents Act 1970 was further amended/modified on several occasions. One such major amendment was regarding biotechnology and other various microbiological practices in 2002, which made these processes a subject matter of patents in India.

Section 47 of the 1970 Act includes the conditions for granting patents and states:

that any machine, apparatus, other article or process for which a patent has been granted may be imported or made by or on behalf of the government for merely of its own use.’

Here, the term ‘merely of its own use’ entails the interest of the public. Further, Sections 84 and Section 92 talk about Compulsory Licensing. According to Section 84, a compulsory license can be granted if:

(a) the reasonable requirements of the public have not been met; (b) the patented invention is not available at a reasonable price to the public; or (c) the patented invention is not being used in India. In fact, Section 84(6) also lays down certain cases in which the conditions necessary for grant of a compulsory license can be waived, one of which is national emergency.

India domestically produced Covaxin vaccine. This initiative is the result of a Public-Private Partnership, executed under a formal Memorandum of Understanding between the Indian Council for Medical Research (hereinafter referred to as ICMR) and the Bharat Biotech which includes a royalty clause for the ICMR on net sales and other clauses like prioritization of in-country supplies.

Owing to a shortage of Covaxin, the Supreme Court proposed the option of compulsory licensing as a tool to scale up the production of vaccinations, a step which has not been undertaken in any of the earlier pandemics. However, this opinion of the Supreme Court was met by the Centre with very strong opposition and they termed such a step to be counter-productive.

This stance of the Centre contradicting its own proposal to the WTO in October has sparked a global debate. The opponents of grant of compulsory licensing believe that manufacturing vaccines is a complicated process involving technical know-how and specifications. While this process is stated in a patent filing, the technical know-how is not disclosed and is considered to be a trade secret. Under intellectual property (hereinafter referred to as IP) law, trade secrets are barred from disclosure to the general public.

Moreover, Covid vaccines involve a large number of owners holding patents since they are developed on platforms on which a number of vaccines were developed. Thus, the Government would be required to give licenses to these hundreds of patent holders after identifying them for compulsory licensing to be successful. This is a complex and time taking process and in some cases, the Government might also be without jurisdiction to do so.

The proponents of compulsory licensing, on the other hand, believe that the grant of these licenses would not only benefit the public by scaling up the vaccine production, but also Bharat Biotech itself in many ways. First, having the smallest coverage globally, easing up of the IP Rights will allow Bharat Biotech to claim the first-mover’s advantage. Second, it will result in economies of scale, without the company investing in expansion.

Third, open license being such a lucrative calling will also open global markets for the made in India research and will give the Company the opportunity to deal with international governments and their respective Departments of Health. Fourth, with the distribution of these licenses to lower or middle income countries, Bharat Biotech can also go ahead with parallel education and equipment in Pharma, thereby making them interdependent on it, something which can be banked upon for years to come.

The Way Ahead

This process of Compulsory Licensing needs to be undertaken carefully while keeping in mind the interest of the patent owners and the public. It has to be ensured that Bharat Biotech gets its earned international share in the market. One option is the Government providing some monetary incentives to the Company through discussions, which later accounts for all the costs. It has to be seen that the company gets all its royalties from the license holders once this period ends and the first right of refusal must be given to the Company.

Additionally, a TRIPS waiver with respect to trade secrets also needs to be put in place. This is essential for creating an environment free of risk for all the license holders attempting to create derivatives of the vaccine.

These are alarming times when a country, especially India, needs to increase its production of vaccination and ensure that the population gets vaccinated as fast as possible. In the past, though backlash has been a general trend when any Government has chosen the way of Compulsory Licensing, currently it seems to be one of the very limited and innovative options to combat the virus. Thus, it needs to be done in a collaborative way, avoiding self-destructive socialism.



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