Article 31 (f) prevents the granting of a compulsory licence exclusively or mainly to export to a country in need of certain medicines88.
88 It is interesting to note, however, that some developed countries provide for compulsory licences or governmental use for export without the limitation imposed by Article 31 (f). Such is the case of Article 168 of the Australian Patent Act and Article 55 (2) of the Patent Act of New Zealand, which permit exports under an agreement with a foreign country to supply products required for the defence of that country. Article 48B(d) (i) of the UK Patent Act provides for a compulsory licence in respect of a patent whose proprietor is not a WTO proprietor when the owner’s failure to licence the patent on reasonable grounds means that a market for the export a patented product made in the UK is not being supplied.
The option based on the amendment of Article 31 (f) of the TRIPS Agreement would require three steps: (a) a political decision to open the Agreement to renegotiation and an approval of the agreed modification; (b) a change in the national law of the potential exporting country in order to delete the “predominantly” requirement already incorporated in many laws, and to specify as a ground for a compulsory licence the need to address a paragraph 6 situation, and (c) the granting in the exporting country of a compulsory licence upon request of an interested party.
The first step may encounter political resistance by those countries that are reluctant to amend any part of the Agreement, because of the risk of stimulating the renegotiation of other provisions. The second step is likely to require action by national parliaments. Legislative processes are generally complex and lengthy. In addition, though domestic producers may benefit from new export opportunities, an amendment to the national compulsory licence system may be perceived as benefiting mainly the population in a foreign country, and may fail to gain sufficient political support. Finally, if the law were amended, the government would still need to exercise its power to grant a particular compulsory licence, provided that requests were made for that purpose.
Where there was a request for a compulsory licence, it would be necessary to undertake a prior negotiation on commercially reasonable terms with the patent holder, and to determine the level of royalty compensation to be paid upon issuance of a compulsory licence. Moreover, the granting authority may have to make a determination of the level of “capacity” of the importing country and of the public health need, if these conditions were required under the Article 31 (f) amendment and/or under the national law. Compulsory licence procedures, in addition, may be costly and burdensome, and may be subject to industry’s opposition and give rise to political pressures at the bilateral level.
A possible solution based on an amendment to Article 31 (f) may also provide for double compensation to be paid to the patent holder (in both the importing and exporting countries), thus increasing the cost and possibly reducing access to the products in need.
The three-step process required for the compulsory licence option may mean that a practical solution may be years away, and does not constitute an “expeditious” solution.