The TRIPs Agreement does not restrict the possibility that a compulsory license be executed by means of the importation of the patented product163. This may, in fact, be the only viable means to execute a compulsory license in cases where the size of the local market does not justify local manufacturing, or where there is a need to promptly address an emergency situation. In a post-TRIPs scenario, however, in which most countries in the world will grant patent protection for pharmaceuticals, it will become increasingly difficult for a compulsory licensee to get independent sources of supply for a patented pharmaceutical. The patent holder may (for instance, through contractual prohibitions to export imposed on its licensees and distributors), effectively block the possibility of obtaining such products through imports. This will, in practice, significantly diminish the effectiveness of compulsory licenses as a tool to facilitate access to drugs.
163 The importation of the product was a key element in the Canadian compulsory system mentioned above, as revised in 1969 (McFertridge, 1998, p. 83). If the compulsory licensee imported legitimate products (sold in a foreign country by the patent holder or with his consent), its acts could be covered under an exception for parallel imports.
The compulsory licensee may import from a compulsory licensee in another country. In this case, the imported product would have been legitimately commercialized in the exporting country. Such importation may be deemed as legal parallel importation, since the patent owner would have obtained remuneration in the exporting country and exhausted his/her rights there164. If this interpretation were held, there would be in fact no need to get a compulsory license to import.
164 The admissibility of this interpretation may, however, be challenged in the WTO on the basis that a compulsory license does not imply the “consent” of the patent owner, as required in some jurisdictions, to consider that his/her rights have been exhausted.
A further question would be, however, whether a compulsory licensee would be authorized to export. The TRIPs Agreement stipulates that a compulsory license must be “predominantly” for the supply of the domestic market (Article 31.f). Hence, exports are possible, though they should probably not constitute the main activity of the licensee with regard to the licensed product. The Article 31.f limitation, however, may not apply when a compulsory license has been granted to remedy anticompetitive conduct (Article 31.k). This exception corresponds to the practice followed in the United States in cases of compulsory licenses granted under antitrust legislation165.
165 See e.g., “U.S. vs. Western Elec. Co. Inc.”, Civ. No. 17-49, 1956 Trade Cases (CCH) 168, 246, Sx (E) (3) (D.N.J. 1956); “U.S. vs. International Bus. March. Corp”, Civ. No. 72-344, 1956 Trade Cases (CCH) 68, 245, SxI (q) (4) (S.D.N.Y. 1956); “U.S. vs. Imperial Chem. Indus. Ltd.”, 100 F. Supp. 504 (S.D.N.Y. 1952) (Final judgement).
Whatever the approach taken, it is clear that successful compulsory licensing requires that adequate alternative sources of supply be secured, either through local manufacturing (which may not be feasible for small countries) or importation.