Guest Columnist Intellectual Property Law Legal Articles

COVID-19: UNDERSTANDING PATENT RIGHTS AND PUBLIC EMERGENCY by Adeola Oyeola

covid patent
Covid-19 & Patent issues

INTRODUCTION

With the Corona Virus global pandemic now in full swing, the search for a cure/vaccine has become the focus. As a result, a few concerns ought to be addressed with respect to the rights of eventual inventors of medical/pharmaceutical solutions or vaccines (intellectual property holders). Inventors and medical discoverers are certainly motivated by clear guarantees of protection of the exclusive patent rights rooted in their inventions of drugs, modifications of previously existing drugs or novel medical testing equipment.

This article gives a neat background to this intellectual property issue. It further explains patent rights, patentable and non-patentable inventions and compulsory licenses, citing relevant provisions of international treaties and highlighting few examples of compulsory licences. It concludes with recommendations,

BACKGROUND

Several trials, effort, time, resources and expertise have gone into researches in countries such as the United States of America (USA)[1] and China[2]. This clearly reflects in some applications that have been made to obtain patent for Covid-19 treatment drugs. Concerns and fears of governments and the public are that owners of patent related to essential medical or pharmaceutical inventions may abuse their exclusive rights to such patents for the purpose of increasing profitability. Thus, proactive legal and policy steps are required to balance the rights of intellectual property holders and overall public interest or rights.

Apparently to resolve this issue, various international instruments and treaties, and the Nigerian Patent and Designs Act 1970 (PDA) have introduced the concept of compulsory licensing of patents i.e. to permit the exploitation of exclusive rights held by a patentee over an invention, without necessarily obtaining his consent for the purpose of wide utilization of the protected right.

The issuance of this licence is ordinarily to realise at least, one of three purposes:

  1. Massive production of patented products (e.g. patented drugs) to cure a disease:
  2. Anti-trust act to allow fair competition:
  3. Non-commercial use (e.g. by the government) in the interest of the general public.

Arguments have arisen on the fairness of such measure on patent owners. Patent owners have contended that it is disincentive to innovation and an unnecessary hindrance to the right of patent exclusivity. Considering this, an important question arises:

Are these arguments appropriate with respect to the use of essential inventions i.e. pharmaceutical products during extreme emergencies like the Covid-19 pandemic?

WHAT IS A PATENT?

A Patent is usually a grant made by the relevant government authorities within a country to protect new inventions or improvements thereon that are considered to have improved the way(s) the earlier inventions were made or used.[3]

In simple terms, a patent is an exclusive right granted for an invention – a product or process. It provides a new way of doing something, or that offers a new technical solution to a problem.

A patent is the grant to an inventor of a monopoly right to preclude another person from exploiting his invention without his consent for a fixed period. The monopoly is granted in return for the time and effort spent in making the invention. Patent owners may give permission or license to other parties to use their inventions on mutually agreed/contractual terms.

Patent protection confers upon the patentee the right to preclude any other person from doing any of the following acts; that is making, importing, selling or using the product, or stocking it for the purpose of sale or use.[4] In addition, patentees also have the exclusive right to assign the patent, or transfer the patent by succession, and to conclude licensing contracts.[5]

Patent rights are enforceable. The Federal High Court of Nigeria has the jurisdiction to entertain such matters.[6]

The Nigeria law of patents is governed by the Patents and Designs Act 1970 (PDA). Section 1(1)(a) provides that a patent may be granted for an invention that:

(a) is new:

(b) involves an inventive step:

(c) is capable of industrial application.

One of the rationales for grant of patent rights is to promote economic and technological development, being that patents apply to industrial application. Also, creative efforts are encouraged through Research and Development (R&D) with the grant of patent, which in turn enables the inventor derive benefits from his invention before it falls into public domain.

It also serves as an important source of technological information. A viable patent regime helps to facilitate the transfer of technology from technological advanced countries to less developed ones, in a way stimulates technology development indigenously.

Furthermore, a patent provides patent owners with protection for their inventions. Protection is granted for a limited period, generally 20 years.[7] Once a patent expires, protection ends, the invention enters public domain, meaning the owner no longer holds exclusive rights to the invention. At this point, it becomes available for commercial exploitation by others.

WHAT KINDS OF INVENTIONS CAN BE PROTECTED?

An invention must, in general, fulfil the above conditions to be protected by a patent. It must be of practical use; it must show an element of “newness” or “novelty”, meaning some new characteristic that is not part of the body of existing knowledge in the particular technical field. That body of existing knowledge is called “prior art”.

The invention must show an “inventive step” that could not be deduced by a person with average knowledge in the technical field and as such is applicable in any industry. Its subject matter must be accepted as “patentable” under law.

By section 1(4) (a-b) of the Patents and Designs Act, scientific theories, mathematical methods, plant or animal varieties, discoveries of natural substances, commercial methods are not generally patentable. It must not be against public policy or morality.

WHAT ROLE DO PATENTS PLAY IN EVERYDAY LIFE?[8]

Patented inventions have pervaded every aspect of human life. From electric lighting (patents held by Edison and Swan) and sewing machines (patents held by Howe and Singer), to magnetic resonance imaging (MRI) (patents held by Damadian) and the iPhone (patents held by Apple), the importance of patents surely cannot go unnoticed.

In return for patent protection, all patent owners are obliged to publicly disclose information on their inventions in order to enrich the total body of technical knowledge in the world. This ever-increasing body of public knowledge promotes further creativity and innovation. Patents therefore provide not only protection for their owners but also valuable information and inspiration for future generations of researchers and inventors.

COMPULSORY LICENSING OF PATENT

Licensing agreement for intellectual property (IP) can be voluntary or compulsory depending on the patent right holder/licensor’s disposition. While voluntary licensing is a more common form of authorisation and use of patented right for commercial purpose, there are occasions where licensors are unwilling to authorize the use (of their patents) to a potential licensee i.e. government or individual. Where this transpires, compulsory licences may be issued. This results from a court’s intervention, enforcing a licensing relationship under certain conditions without the licensor’s consent with/without compensation. Compulsory license can be said to be an authorization of the use of the patent rights by the government/court without prior consent granted. Compulsory licensing is one limitation to the rights of a patent holder.

Compulsory licensing when granted by the government/court, allows others to produce the patented product or process without the consent of the patent owner. It is usually associated with pharmaceuticals, but it could also apply to patents in any field.

In spite of the monopoly nature of the rights bestowed on a patent holder, compulsory licensing stands as a limitation to such monopoly rights. The concept of compulsory licenses is well provided for in the PDA and various international treaties and agreements such as The Paris Convention for the Protection of Industrial Property, Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), The Doha Declaration on The TRIPS Agreement and Public Health.

The Paris Convention for the Protection of Industrial Property confers each contracting state party to the convention the right to “grant compulsory licenses to prevent abuses which might result from the exercise of exclusive rights conferred by the patent…”. [9]

Also, TRIPS Agreement authorizes all member-states to the agreement to use compulsory licenses without the authorization of the right holder in appropriate circumstances[10] with respect to the stipulated conditions. Similarly, the DOHA Declaration states that “each member has the right to grant compulsory licenses and the freedom to determine the grounds upon which such licenses are granted.[11]and Nigeria is a signatory to the treaties.

In Nigeria, a combined interpretation of section 11 and the First Schedule to the PDA provides for the grant of a compulsory licence in respect of a patent in justified cases.  The PDA however, seems to create a dichotomy in the grant of this licence. Part 1 to the First Schedule provides for where a compulsory licence will be granted to a person who makes an application to Court and fulfils certain conditions. Part 2 of the First Schedule provides for the use of compulsory licences by government agencies.

Paragraph 1, Part 1 to the First Schedule provides that the proposed user would have sought the licence on reasonable commercial terms from the patent holder and his efforts to get a positive response from the holder within a reasonable time was futile. The proposed licensee then applies to the court to grant a license upon satisfying the stipulated conditions[12] when the license issued it is granted non-exclusive, does not permit the compulsory licensee to carry out importations or grant further licenses except in limited circumstances.[13]

In paragraph 15 of part 2 to the First Schedule to the PDA, where a Minister is satisfied that it is in the interest of the public to do so, he may authorize a person to make, purchase, exercise or vend a patented product for the service of the government agency in Nigeria. This authorization may be exercised before or after the grant of a patent to the person legally empowered to receive same.

During periods of emergencies, like the current public health emergency occasioned by the Covid-19 pandemic, the government is empowered through the compulsory licensing system to interfere with exclusive patent rights. The PDA provides that for any period of emergency, the powers exercisable in relation to a patented article or invention on the authority of a Minister shall include power to purchase, make, use, exercise and vend the article or invention for any purpose which appears to the Minister necessary or expedient –  for the maintenance of supplies and services essential to the life of the community; or for securing a sufficiency of supplies and services essential to the well-being of the community; or generally for ensuring that the whole resources of the community are available for use, and are used, in a manner best calculated to serve the interests of the community.[14]

In granting compulsory licensing, the PDA provides that emergency needs are to be considered in order to assess the lawfulness of a potentially infringing conduct (which under normal circumstances would amount to patent infringement). Similarly, Paragraph 4 of the Doha Declaration expressly permits members of the World Trade Organization (W.T.O) to take measures to protect the public health of its citizens.

The World Health Organisation (WHO) on 30January 2020 declared an outbreak of what is technically termed a Public Health Emergency of International Concern (PHEIC) and by 11 February 2020, WHO announced the novel coronavirus disease as Covid-19.[15] The WHO announced a large multi-country clinical trial to test drugs to treat Covid-19. The drugs to be tested include remdesivir, lopinavir and ritonavir in combination; lopinavir/ritonavir plus interferon-beta; and chloroquine and hydroxychloroquine.[16] All are known medicines originally developed for other indications. The WHO named the effort aptly the “Solidarity” clinical trial for COVID-19 treatment.

On 17th March 2020, the parliament of Chile unanimously adopted a resolution declaring that the global coronavirus outbreak justifies the use of compulsory licensing to facilitate access to vaccines, drugs, diagnostics, devices, supplies, and other technologies useful for the surveillance, prevention, detection, diagnosis and treatment of people infected by the coronavirus virus in Chile.[17] Also on 19 March 2020, Israel issued compulsory patent licences related to lopinavir/ ritonavir (brand name Kaletra), which is an HIV medicine currently being tested, including in combination with other products, for effectiveness in the treatment of Covid-19.[18]

Compulsory licensing have in time past, been employed by countries especially in instances of public health emergency. Consider, for instance, late 2006 and early 2007 when the Thai government authorized three compulsory pharmaceutical licences specifically; Plavix (owned by Sanofi, Aventis and Bristol, Meyers Squibb) for heart disease, Kaletra (Abbott), and Efavirenz (Merck), the last two drugs being to combat the Acquired Immunodeficiency Syndrome (AIDS).[19] On 18 April 2005, the Ministry of Health in Guinea issued compulsory licenses for the importation of drugs used in the treatment of AIDS from generic producers in developed countries.[20] In November 2005, Taiwan issued a compulsory license for patents needed to manufacture and sell generic versions of Tamiflu.[21] Obviously, the issue of public health emergency has in times past facilitated the use of compulsory licensing in different part of the world.

COMMENTS

It is submitted that the scope of surrender of patent rights should be expanded and encouraged in light of emergency situations such as the Covid-19 pandemic or for overall public interest. The patent holder by written declaration addressed to the Registrar, may surrender his rights.[22] Also, where it relates to a patent in which there is an already existing and registered contractual licence, surrender would be more appropriately considered if it is accompanied by the written consent of the licensee.

Since the surrender of a patent may relate to all or any of the claims made in respect of the patent, this path, if towed, can salvage the situation. In the process, it might become necessary to consider another option aside compulsory licencing – Patent right holders may surrender patent rights in fulfilment of their collective social responsibilities to the community. For instance, AbbVie already declared it would not enforce patent rights for its antiviral HIV drug Kaletra. Currently, the drug is undergoing clinical trials to determine its use against the coronavirus.[23]

CONCLUSION

A consequential effect of compulsory licencing is its disincentive to innovation and a restraint on patent exclusivity rights which can be resolved with the payment of appropriate compensation. The TRIPS agreement in Article 31 (h) provides that the right holder shall be paid adequate remuneration in the circumstances of each case, taking into account the economic value of the authorization. However, our principal legislation on Patents does not provide for payment of royalty or otherwise and further excludes any third party from liability for the infringement of any patent relating to the relevant article or invention.[24] Taking a cue from international treaties such as the TRIPS agreement, of which Nigeria is a party thereto, we can amend the relevant enactments in order to encourage payment of royalties.

Patent holder may also voluntarily license their rights and use the medium to negotiate other kinds of benefits from the government such as tax reductions and other incentives, in exchange for access to their exclusive rights. This would effectively resolve the issue of payment of royalty.

Compulsory licensing presents a stiff challenge to the R&D-based companies. Patent holders feel their patent security has been threatened with government issuance of compulsory licensing. In balancing between IP Rights and public good, pharmaceutical companies may also drastically lower prices in response as in this novel case.

 

Note

This article is written for general knowledge and for IP enthusiasts. For further information and guidance in filing for an IP right and/or drafting necessary agreements, kindly seek professional guide.

ABOUT THE AUTHOR

Adeola Oyeola

Adeola Oyeola is a graduate of the University of Lagos. Admitted to the Nigerian Bar in 2018, She has quickly formed a reputation in the Nigerian Intellectual Property Law (IPL) practice space.

Adeola is an Associate at the IPL practice segment of Aluko and Oyebode, improving her advisory experiences and credentials with national and multinational clientele.

 


Endnotes

[1] The United States Patent and Trademark Office (USPTO) https://www.uspto.gov/about-us/news-updates/uspto-announces-covid-19-prioritized-examination-pilot-program-small-and last accessed last 10th May 2020.

[2] Bloomberg Opinion https://www.bloomberg.com/opinion/articles/2020-02-05/coronavirus-china-drug-patent-grab-is-scary-for-pharma accessed last 10th May 2020.

[3] See F.O. Babafemi, Intellectual Property: The Law and Practice of Copyrights, Trade Marks, Patents and Industrial Designs in Nigeria (2006) 342.

[4] See S.6 of Patents Design Act (PDA) 1970

[5] See S.24 of PDA

[6] See S.26 of PDA

[7] See S.7 of PDA

[8] WIPO https://www.wipo.int/edocs/pubdocs/en/intproperty/450/wipo_pub_450.pdf accessed last 10th May 2020 

[9] Article 5(2) of the Paris Convention for the Protection of Industrial Property

[10] Article 31 of the TRIPS Agreement

[11] Paragraph 5(b) of the Doha Declaration

[12] Paragraph 5 First Schedule of PDA

[13] Paragraph 6 First Schedule of PDA

[14] Paragraph 20 (b) (c) (f) First Schedule of PDA

[15] WHO, “WHO Director-General’s opening remarks at the media briefing on COVID-19” available at: https://www.who.int/dg/speeches/detail/who-director-general-s-opening-remarks-at-the-media-briefing-on-covid-19—11-march-2020 lasted accessed on the 10th May 2020

[16] Medicine law and policy https://medicineslawandpolicy.org/2020/03/covid-19-and-the-come-back-of-compulsory-licensing/ last accessed 10th May 2020 

[17] https://medicineslawandpolicy.org/2020/03/covid-19-and-the-come-back-of-compulsory-licensing/

[18] https://www.law360.com/articles/1255079/israel-defies-abbvie-ip-to-import-generic-drugs-for-covid-19

[19] BBC NEWS | Asia-Pacific| Thailand takes on drug giants http://news.bbc.co.uk/2/hi/asia-pacific/6587379.stm accessed 9th May 2020

[20] See Nigeria Law Intellectual Property watch Inc. https://nlipw.com/10-examples-of-the-use-of-compulsory-licenses-in-africa-2/ accessed 10th May 2020

[21] https://www.keionline.org/book/kei-rn-2007-2-recent-examples-of-compulsory-licensing-of-patents

[22] See S.8 PDA

[23] <https://www.juve-patent.com/news-and-stories/legal-commentary/forced-cure-compulsory-licensing-in-the-coronavirus-era/> Abbvie is an American public traded biopharmaceutical company.

[24] See Para. 17 First Schedule PDA

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