WTO permanently implements expanded compulsory licensing scheme for pharmaceuticals

ScreenShot010by Richard Carden

Following on the heels of its decision to extend the transition period for least-developed countries (“LDC’s”) to implement intellectual property laws consistent with the TRIPS (Trade Related Aspects of Intellectual Property) agreement, the WTO General Council has agreed to permanently implement a 2003 waiver of Article 31(f) of the TRIPS agreement. This decision expands access to generic pharamaceuticals by eliminating the restriction contained in Article 31(f) that use of compulsory licenses on pharmaceutical patents must be “predominantly for the supply of the domestic market of the Member authorizing such use.” The revision still requires ratification by WTO Member States, however, upon ratification, the revision will essentially allow any WTO member state to grant compulsory licenses on pharmaceutical patents in order to produce pharmaceuticals for other nations, specifically for export to LDC’s.

The decision results in the addition of Article 31bis to the TRIPS agreement. Article 31bis provides a compulsory licensing scheme where a Member country notifies the WTO if its intention to avail itself of the provisions of Articles 31 and 31bis (both exporting and importing Members must provide notification). The revision further includes an Annex to the TRIPS agreement which (1) defines many of the terms used in Article 31bis, (2) provides specifics regarding the content of the notifications, and (3) provides a method for assessing manufacturing capacity in an LDC. While Article 31bis and the Annex purport to require the importing Member to provide safeguards against re-exportation and to provide access for patent holders to legal process, the provisions are sufficiently vague that they will be difficult to police in any significant way. Further ambiguity results from the failure of the WTO to explicitly define the conditions under which compulsory licenses are appropriate. Instead, the WTO relies on “good faith” implementation by Member states.

A number of WTO members had indicated after the 2001 Doha Ministerial Conference (which resulted in the Doha Declaration, paragraph 6 of which provided for a parallel compulsory licensing scheme covering both exporting and importing Member States) and the subsequent August 2003 waiver of Article 31(f) that they would not take advantage of these provisions as importers under any circumstances. Several other members indicated that they would only avail themselves of the compulsory licensing scheme to import in “emergencies or extremely urgent situations.”

The General Council decision comes shortly after the WTO TRIPS Council decided to extend the time LDC’s have to implement IP laws in accordance with WTO standards from 2006 to 2013. LDC’s presently also have until 2016 to implement patent protection for pharmaceuticals.

Richard Carden is an intellectual property litigator at MBHB with litigation experience in cases involving diverse technologies, including medical devices, diagnostic equipment, pharmaceuticals, injection-molding systems, and automotive refrigerants.  His background includes a BSE in chemical engineering from Tulane University, an MS in chemical engineering from the University of Pennsylvania, and JD from Washington University in St. Louis.