Author: Shambhavi Sinha*
| Jurisdiction: International |
Topics: Intellectual Property Investment Disputes BITs |
INTRODUCTION
The outbreak of COVID-19 as a pandemic has disrupted the entire healthcare sector, as well as the economy, of the world. Even the most brilliant minds of the world have not been able to come up with a viable solution to face this deadly virus. In such a scenario, the world is relying on the pharmaceutical sector to develop a vaccine against COVID-19. In a recession-like situation, the pharmaceutical companies which are investing time and money in developing a potential medicine to fight corona are witnessing a positive growth on their stock market.[1] This shows that people are extensively relying on the Research and Development departments (R&D) of these companies, not only for a potential cure against COVID-19, but also for some financial gains through investments. If any company successfully develops a vaccine for coronavirus, such an invention would amount to an intangible creation of the human mind and would thus be entitled to be patented. The increasing scope of patentability by the pharmaceutical industry is codified in the Trade Related Aspects of Intellectual Property Rights (TRIPS) agreement.[2] Inventors of a COVID-19 vaccine would most likely file an application in various countries for the grant to patent, which will give them time-bound monopoly rights to exploit the invention and to stop others from using their vaccine without their consent. However, on public policy grounds, countries can put restrictions on the use of exclusive patent rights granted to pharmaceutical companies. This principle has even been enshrined under the Doha Declaration on the TRIPS Agreement adopted by WTO Members in a special Ministerial Declaration at Doha in 2001.[3]
Due to the pandemic, now more than ever, there exists an urgent need to strike a balance between public health and private individual rights over intellectual properties.
COMPULSORY LICENSING
The TRIPS agreement does grant some flexibility in the form of compulsory licensing under Article 31.[4] A grant of compulsory licensing allows the use and sale of patented products by third parties to serve a larger public interest. Several countries have provisions of compulsory licensing in their national patents law.
In India, sections 84 and 92 of the Patents Act, 1970 lay down the provisions regarding compulsory licensing.[5] This can be granted to interested parties upon fulfilment of three conditions, namely: the unaffordable price of the invention leading to its non-availability to the public; if “the reasonable requirements of the public with respect to the patented invention” are not met; and if such an invention is not worked in the Indian Territory.[6] Usually such an application to grant compulsory licensing is entertained after the expiration of three years of the grant of patent.[7] However, the central government can grant it earlier in cases of national emergency, extreme urgency or cases of public non-commercial use.[8] Compulsory licensing in India was granted for the first time in the 2011 by the Controller General of Patents to a company called Natco Pharma over a compound called “Sorafenib Tosylate”.[9] The exclusive patent rights were initially with the inventor company, Bayer Corporation, which sold its product as Nexavar, commonly used to treat liver cancer.[10] Bayer Corporation’s appeal to challenge the grant of Compulsory licensing before the Intellectual Property Appellate Board, later at High Court of Bombay and ultimately at Indian Supreme Court were all dismissed.[11]
Similarly, in Germany, section 24 of German patent law and section 5(2)(5) of the German Act on the Protection and Control of Infectious Diseases in Humans contains provisions for the grant of compulsory licensing during a pandemic.[12] Similar provisions are found under Article L. 613-16 of its Intellectual Property Code (France),[13] Article 57 of the Dutch Patent Act[14] and Section 53 Patents Act 1977 (United Kingdom).[15]
POTENTIAL VACCINE IN PROGRESS
There are numerous coronavirus vaccine which are currently in the development stage and, as of July 2020, nine of them have entered the human trial stage.[16] Pfizer, AstraZeneca, Johnson & Johnson, Emergent BioSolutions Inc, Merck, Gilead and Moderna are the main pharmaceutical companies racing for a COVID vaccine.[17] Gilead, which is a U.S.-based company has already filed 133 coronavirus patents related to Remdesivir, a broad spectrum anti-viral drug which has demonstrated the potential for treating COVID-19.[18] Gilead has successfully patented Remdesvir in several countries which are worst hit by the pandemic, including the United States, India, China and Japan.[19] Indian health advocacy groups are already urging the government to revoke the patent due to the public interest.[20] On the other hand, UK based Pharma giant AstraZeneca, in association with Oxford University, has already begun the clinical trial of a drug ChAdOx1 nCoV-19, also called as AZD1222, and the University of Oxford has already filed a patent application in the U.K., specific details of which are not yet in public domain.[21] The drug AZD1222 has already shown early signs of efficacy and safety.[22] Therefore, there is a high chance the British pharma company AstraZeneca will file patent application in several countries, including India, which is churning out the highest number of daily corona cases in the world.[23] Once the patent in granted, health rights advocates will pressure the government to grant compulsory licensing to India-based pharmaceutical companies for massive production of drugs.
THE PROBLEM??
Patents held by multinational pharmaceutical companies have not always been given primacy over other basic rights in developing countries such as India and China. For instance, in 2012, Switzerland’s Roche Holding lost a patent-infringement case filed against the generic-drug maker Cipla against the cancer treatment drug Tarceva.[24] After a long battle in the court, the Indian Supreme Court finally ruled in favour of Roche in 2015 but refused to grant a permanent injunction on the drug manufactured by Cipla.[25] In 2013, the Indian Supreme Court refused patent protection for Swiss drugmaker Novartis for its cancer drug, Glivec.[26] These incidents have dealt major blows to Western pharmaceutical firms targeting developing countries to drive sales up for local makers of economical drugs. However, many a time, these actions of the state and the courts have amounted to the expropriation of the rights granted to investors under Bilateral Investment Treaties (BITs). These BITs contain an essential clause for the settlement of disputes that arise between a host state and a foreign investor by the medium of investment arbitration.[27] Many developing countries have signed BITs with foreign countries, including the United Kingdom, Germany, France, and Switzerland—homes to many of the world’s leading pharmaceutical companies.[28] If these developing countries grant compulsory licensing of patents for a COVID-19 vaccine developed by a foreign based pharmaceutical company, then such regulatory measures pertaining to intellectual property rights can be potentially challenged before an investment arbitration tribunal. There has been an increasing amount of debate on the overlapping rights of pharmaceutical companies as investors under BITs and the sovereign right of a nation to expropriate patent rights for the benefit of public.[29]
The treatment of IP rights under International Investment Agreements (IIAs) depends on the specific language used in the treaties as some IIAs mention IP rights in their definition of covered investment while others don’t. For instance, Article 1(a)(iv) of the India-Jordon BIT, states ‘investment means every kind of asset established or acquired by investors of one Contracting Party in accordance with the national laws of the Contracting Party in whose territory the investment is made and in particular, though not exclusively, includes: intellectual property rights, in accordance with the relevant laws of the respective Contracting Party[.]’[30] On the other hand, amongst the BITs that provide little or no scope for inclusion of IP investments are: UK-Antigua and Barbuda; UK-South Korea; UK-Papua New Guinea; UK-Yemen; UK-Thailand; and Netherlands-Egypt etc. [31] However, existing literature on this matter suggests that by the virtue of falling into the broad category of assets, intellectual property rights are likely to enjoy the protection of investments even in BITs which are silent on the coverage of IP rights.[32]
However, I don’t believe that IP rights should be treated as investments under BITs because they are significantly different from the other kinds of investments. While every investment in the host state is subjected to the territoriality requirement of the BITs, an investor can have same intellectual property rights registered in many countries. Moreover, member states of the Berne Copyright Convention provide that compulsory registration of copyrights in each and every jurisdiction is not even required.[33] In such a situation, it is inappropriate to consider the author of a particular book as an investor in any state of the Bern Union by virtue of automatic registration of their intellectual property right without any formal domestic process as the patent concerned. Therefore, there are various reasons which makes it infeasible for the intellectual property rights to be considered as an investment under BITs. Moreover, if a patent right over a COVID-19 vaccine is considered an investment under BITs, it will severely impact low-income countries as the high cost of such medicines will restrict its accessibility for the majority of the public. I do not mean to say that IPRs can never be considered as an investment but, rather, that it should be decided on case to case basis and public health should be given primacy over such rights.
Furthermore, even if intellectual property rights are considered under the ambit of investment, granting compulsory licensing of a COVID-19 vaccine should not amount to unlawful expropriation by host nations. Expropriation is a sovereign right of every nation to take control of property owned by nationals and foreign citizens in its territory for political, social, financial or other reasons. However, in order for an outright expropriation by the states to be lawful under international law, it should meet the following four criteria: property has to be (a) taken for a public purpose (b) on a non-discriminatory basis (c) in accordance with due process of law and (d) accompanied by compensation. Grant of compulsory licensing would meet all of the criteria for a lawful expropriation by the state.
CONCLUSION
Access to drugs is a fundamental component of the basic human right to have a heathy and safe life. Patented drugs are highly priced and therefore the low-income population has restricted access to them. The pandemic has also made us realise that there is an urgent need to analyze and strike a balance between the relationship of the human right to health and the individual/private monopoly on intellectual property rights. I strongly believe that the trade regime should not in any way provide support to the big pharmaceutical companies whose only motive is to gain enormous profit even during a pandemic. Health rights advocates are already appealing to these companies to refrain from patenting any possible coronavirus vaccine, at least until the pandemic is over. While granting compulsory licensing to domestic drug makers is an economical way to manufacture cheaper drugs, one cannot ignore the possibility of local pharmaceutical companies in low-income countries not having the requisite capacity to undertake the manufacture such vaccines or potential cures. In such a situation, if any foreign investor wishes to invoke investment treaty obligations against the host nation, it would be nothing but problematic. I believe that public health concerns outweigh the full protection of intellectual property.
[1] GlobalData Healthcare, The impact of big pharma on Covid-19, Pharmaceutical Technology (Apr. 23, 2020), https://www.pharmaceutical-technology.com/comment/covid-19-pharmaceutical-companies-impact/.
[2] TRIPS and pharmaceutical patents: fact sheet, WTO, 1 (Sep. 2006), https://www.wto.org/english/tratop_e/trips_e/tripsfactsheet_pharma_2006_e.pdf.
[3] Murthy, Divya, The Future of Compulsory Licensing: Deciphering the Doha Declaration on the TRIPs Agreement and Public Health, 17 Am. U. Int’l L. Rev.1299, 1304 (2002).
[4] Agreement on Trade-Related Aspects of Intellectual Property Rights art. 31, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1C, 1869 U.N.T.S. 299, 33 I.L.M. 1197 [hereinafter TRIPS Agreement].
[5] The Patents Act §§ 84, 92, Act No. 39 of 1970, India Code, https://www.indiacode.nic.in/handle/123456789/1392?view_type=browse&sam_handle=123456789/1362.
[6] Id. § 84(1).
[7] Id.
[8] Id. § 92.
[9] Bayer Corporation v. Natco Pharma Limited, Decision of the Controller of Patents in Application for Compulsory Licence Under Section 84(1) of the Patents Act, 1970 in Respect of Patent No.215758, at 60, available at http://www.gnaipr.com/CaseLaws/Controller%20Order%20-%2012032012.pdf.
[10] Id. at 4-5.
[11] Bayer Corporation v. Natco Pharma Ltd., Order No. 45/2013 (Intellectual Property Appellate Board, Chennai), at 48, available at https://spicyip.com/wp-content/uploads/2018/02/Natco-v.-Bayer-INTELLECTUAL-PROPERTY-APPELLATE-BOARD-CHENNAI-–-4th-March-2013.pdf; Bayer Corporation v. Union of India, AIR 2014 Bom 178 (2014); Bayer Corporation v. Union of India & Ors., Special Leave to Appeal, (C) NO(S). 30145/2014 (Supreme Court).
[12] Patentgesetz [PatG] [Patent Act], Dec. 16, 1980, BGBI. 1981 I at 1, § 24, last amended by Gesetz [G], Oct. 8, 2017, BGBI. I at 3546, art. 4, translation athttp://www.gesetze-im-internet.de/englisch_patg/englisch_patg.pdf; Gesetz zur Verhütung und Bekämpfung von Infektionskrankheiten beim Menschen [IfSG] [Act on the Protection and Control of Infectious Diseases in Humans], July 20, 2000, BGBI. I at 1045, §5(2)(5), last amended by Gesetz [G], June 19, 2020, BGBI. I at 1385, art. 5.
[13] Code de la Propriété Intellectuelle [Intellectual Property Code], art. L613-16.
[14] Rijksoctrooiwet 1995 van 15 december 1994, art. 57, Stb. 2010, 339.
[15] The Patents Act, (1977) § 53.
[16] MoneyShow, 9 Pharmaceutical Companies Racing For A COVID-19 Vaccine, Forbes (June 16, 2020), https://www.forbes.com/sites/moneyshow/2020/06/16/9-pharmaceutical-companies-racing-for-a-covid-19-vaccine/#666b70cf76ad.
[17] Id.; Vaishali Basu Sharma, From Disruptive Covid Chaos, Comes an Opportunity for India’s Pharmaceutical Industry, The Wire (May 22, 2020), https://thewire.in/business/from-disruptive-covid-chaos-comes-an-opportunity-for-indias-pharmaceutical-industry.
[18] Sharma, supra note 15.
[19] Id.
[20] Groups ask India to rescind Gilead’s COVID-19 drug patent, Aljazeera (May 13,2020), https://www.aljazeera.com/ajimpact/groups-india-rescind-gilead-covid-19-drug-patent-200514163450703.html.
[21] Zachary Silbersher, Which patents cover the COVID-19 vaccine candidates for Moderna, AstraZeneca, J&J and Novovax?, Markman Advisors (July 21, 2020), https://www.markmanadvisors.com/blog/2020/7/21/which-patents-cover-the-covid-19-vaccine-candidates-for-moderna-astrazeneca-jampj-and-novovax.
[22] AstraZeneca reports good progress of Covid-19 vaccine in trials, Clinical Trials (July 31, 2020, 7:15 AM), https://www.clinicaltrialsarena.com/news/astrazeneca-covid-vaccine-progress/#:~:text=AstraZeneca%20has%20reported%20that%20it,in%20large%2Dscale%20clinical%20studies.&text=On%20a%20media%20call%2C%20AstraZeneca,vaccine%20development%20is%20progressing%20well.
[23] IANS, India churning out highest daily COVID cases in the world, National Herald (Aug. 27, 2020), https://www.nationalheraldindia.com/india/india-churning-out-highest-daily-covid-cases-in-the-world.
[24] Meenakshi Khurana, Roche’s Struggle Over its Patents in India – Two suits, Two oppositions, Khuarana and Khurana (July 27, 2010), https://www.khuranaandkhurana.com/2010/07/27/roches-struggle-over-its-patents-in-india-two-suits-two-oppositions/.
[25] Maitreyee Dixit, Roche v. Cipla- The Sense of An Ending, SpicyIP (June 19, 2017), https://spicyip.com/2017/06/roche-v-cipla-the-sense-of-an-ending.html.
[26] Kaustubh Kulkarni & Suchitra Mohanty, Novartis loses landmark India cancer drug patent case, Reuters (Apr. 1, 2013), https://www.reuters.com/article/us-india-novartis-patent/novartis-loses-landmark-india-cancer-drug-patent-case-idUSBRE93002I20130401.
[27] Lahra Liberti, Intellectual Property Rights in International Investment Agreements: An Overview 6 (OECD, Working Papers on International Investment, Paper No. 2010/01).
[28] E.g., Agreement concerning the encouragement and reciprocal protection of investments (with protocol), Ger.-Gabon, Sep. 15, 1998, 2470 U.N.T.S. 185; Agreement for the Promotion and Protection of Investments, U.K.-Yemen, Feb. 25, 1982, 1352 U.N.T.S. 147; Agreement on the reciprocal promotion and protection of investments, Fr.-Mozam., Nov. 15, 2002, 2419 U.N.T.S. 3; Agreement on the promotion and reciprocal protection of investments, Laos-Switz., Dec. 4, 1996, 2283 U.N.T.S. 5.
[29] Bertram Boie, The Protection of Intellectual Property Rights through Bilateral Investment Treaties: Is there a TRIPS-plus Dimension? (NCCR Trade Regul., Working Paper No 2010/19, 2010), https://www.wti.org/research/publications/275/the-protection-of-intellectual-property-rights-through-bilateral-investment-treaties-is-there-a-trips-plus-dimension/.
[30] Agreement for the Promotion and Protection of Investments, India-Jordan, art. 1(a)(iv), Dec. 1, 2006, available at https://jusmundi.com/en/document/pdf/Treaty/IIA-1921/en/en-india-jordan-bit-2006-india-jordan-bit-2006-thursday-30th-november-2006.
[31] Agreement for the Promotion and Protection of Investments, U.K.-Ant. & Barb., June 12, 1987, 1656 U.N.T.S. 95; Agreement for the Promotion and Protection of Investments, U.K.-S. Kor., Mar. 4, 1976, 1029 U.N.T.S. 61; Agreement for the Promotion and Protection of Investments, U.K.-Papua N. G., May 14, 1981, 1285 U.N.T.S. 157; Agreement for the Promotion and Protection of Investments, U.K.-Yemen, Feb. 25, 1982, 1352 U.N.T.S. 147; Agreement on Encouragement and Reciprocal Protection of Investments, Neth.-Egypt, Jan. 17, 1996, 2007 U.N.T.S. 269.
[32] Boris Kasolowsky & Stuti Gadodia, What Does The Future Hold For Foreign Pharmaceutical Companies In India? Investment Arbitration For Pharmaceutical Companies In The Indian Context, 6 Indian J. of Arb. L. 59, 65 (2017); Biswajit Dhar et. al., India’s Bilateral Investment Agreements: Time to Review, 47 Econ. and Pol. Wkly. 113, 117 (2012).
[33] Berne Convention for the Protection of Literary and Artistic Works, art. 5(2), Sept. 9, 1886, as revised at Paris on July 24, 197, 25 U.S.T. 1341, 1161 U.N.T.S. 3.
*Shambhavi Sinha is a penultimate year law student at Symbiosis Law School, Pune. She is a recipient of GEV Memorial Merit Scholarship,2019 and is interested in Commercial Laws.