E-drug: Check-List for fast tract compulsory licensing
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Check-List for fast tract compulsory licensing
With respect to authorizing the non-voluntary use of patents, this
note asks the question, what features should be included in any
national legislation for a developing country that wants to take
advantage of the full flexibility of the WTO TRIPS accord?
I have written about this for UNDP
http://www.cptech.org/ip/health/cl/recommendedstatepractice.html
and will not provide a lengthy discussion here, but rather hope to
discuss and hopefully reach some consensus on the features that
countries should included.
Here is a draft check list, which I am confident can be improved.
Suggestions are welcome.
James Love
Consumer Project on Technology
P.O. Box 19367, Washington, DC 20036
http://www.cptech.org, mailto:love@cptech.org
voice: 1.202.387.8030 fax 1.202.234.5176 mobile
1.202.361.3040
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CHECK LIST FOR FAST TRACT COMPULSORY LICENSING
1. In countries where the costs of litigation is an important barrier
to the use of compulsory licensing, the system should be upon an
administrative process, to the extent permitted under the national
legal system. This of course is allowed under Articles 31h, 31j,
31k, and 44.2 of the TRIPS.
2. The government should have at least as strong as rights to
authorize use for public purposes as does the US government under
28 USC 1498. That is, government should have the right to use
any patent, and to authorize any third party to use any patent, for
any government purpose, without a hearing, with a finding, without
a license, subject only to the payment of compensation.
3. In no cases of the government authorizing non-voluntary use
of a patent should the patent owner have the right to enjoin the
government or a private party from acting. This no-injunction policy
is permitted under Article 44.2 of the TRIPS.
4. Compensation should be determined by an administrative
process, and should be guided by royalty guidelines, which set out
recommended royalty rates, based upon net sales of the generic
product. The royalty guidelines should be a range of possible
royalties. CPT has recommended 0 to 8 percent, depending upon a
range of factors (see attachment below). The fact that the
government has to choose the rate satisfies the case by case
requirement in Article 31.a of the TRIPS.
5. Compensation decisions should be forward looking, including
revisions based upon appeals, to lower the risks by third parties
using non-voluntary authorizations.
6. The compensation system should permit the consolidation of
multiple patents on the same product, in such a way that the
generic company pays into a single fund, and the various patent
owners have to resolve, at their own expense, who gets what share
of the proceeds. Arbitration can settle intra-patent owner disputes.
7. For non-voluntary licenses that are for the commercial
market, and require prior negotiation, the procedure should have as
a guideline no more than six months to negotiate a voluntary
license. This period should not be binding on either party, however,
and with good cause, a generic company should be able to proceed
with a request before the period.
8. Where the government determines there is an urgent public
health crisis and the patents address a public health concern, the
government should have the right to waive requirements for prior
negotiation for even commercial uses, as is permitted under 31.b.
9. The government should have an Article 31.k administrative
proceedure that can be used when the product cannot be efficiently
produced for a single market, and exports are needed to achieve
economies of scale.
........ This note concerns only those uses authorized by Article 31
of the TRIPS. I'll shortly post a separate note on the checklist for
Article 30 exceptions to patent rights.
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Attachment on Royalty Guidelines
`(f) ROYALITY GUIDELINES. In order to provide guidance to patent
owners, investors and competitive suppliers of health care
inventions, regarding the range of royalties on licenses for patents
on medicines that would normally be considered reasonable, and
are also consistent with adequate access to medicines, the Minister
shall publish royalty guidelines. Such guidelines should include
recommendations for compensation as a percent of net sales of
products. The initial guidelines, which may be modified by the
Minister as needed, are as follows.
`(1) two to three percent for a product that does not represent a
significant advance in therapeutic benefits,
`(2) five percent for an innovative product that provides a
significant advance in therapeutic benefits;
`(3) for products that are particularly innovative, based upon
therapeutic evidence, or for which there was a significantly higher
than average investment in R&D, based upon economic evidence,
an additional royalty premium or up to three percent.
`(4) one percent or less for patents that represent minor
contributions to a product, such as a formulation patent,
`(5) in cases of multiple patents on the same product, the amounts
in (1) through (4) are the combined compensation for all patents,
allocated fairly among the various patent owners in accordance
with the relative significance and benefits of the inventions.
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Attachment on 28 USC 1498
US Code as of: 01/05/99
Sec. 1498. Patent and copyright cases
(a) Whenever an invention described in and covered by a patent of
the United States is used or manufactured by or for the United
States without license of the owner thereof or lawful right to use or
manufacture the same, the owner's remedy shall be by action
against the United States in the United States Court of Federal
Claims for the recovery of his reasonable and entire compensation
for such use and manufacture. . . .
For the purposes of this section, the use or manufacture of an
invention described in and covered by a patent of the United States
by a contractor, a subcontractor, or any person, firm, or corporation
for the Government and with the authorization or consent of the
Government, shall be construed as use or manufacture for the
United States.
[snip]
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