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Assessing the Potential Impact of Intellectual Property Standards in EU and US Bilateral Trade Agreements on Compulsory Licensing for Essential Medicines in West African States

Document Cited authorities 22 Cited in Related
Vincent
Published date01 June 2015
Date01 June 2015
Pages226-249
AuthorThaddeus Manu
DOI10.3366/ajicl.2015.0119
INTRODUCTION

Empirical evidence shows that compulsory licensing1

The term ‘non-voluntary’ or ‘compulsory licensing’ refers to the practice by a government to authorise itself or third parties to use the subject matter of a patent without the authorisation of the right holder for reasons of public policy. See J. Reichman and C. Hasenzahl, ‘Non-Voluntary Licensing of Patented Inventions: Historical Perspective, Legal Framework under TRIPS, and an Overview of the Practice in Canada and the United States of America’, UNCTAD-ICTSD Project on IPRs and Sustainable Development Series, Issue Paper 5 (2003): 10.

as a government instrument offers a proven mechanism for obtaining affordable medicines.2

J. Reichman, ‘Comment: Compulsory Licensing of Patented Pharmaceutical Inventions: Evaluating the Options’, 37 Journal of Law, Medicine and Ethics 2 (2009): 250, claiming that a threat of compulsory licensing can rein in the prices of selected essential medicines. See M. Kremer, ‘Pharmaceuticals and the Developing World’, 16 The Journal of Economic Perspectives 4 (2009): 77, calling for the use of compulsory licensing of patents as a threat to lower prices in LDCs. See also M. Z. Abbas and S. Riaz, ‘Evolution of the Concept of Compulsory Licensing: A Critical Analysis of Key Developments Before and After TRIPS’, 4 The Academic Research International Journal 2 (2013): 494 explaining that compulsory licensing is an effective cost-cutting and access-assuring tool at the hands of developing countries and LDCs to obtain affordable medicines.

 As a result, this safeguard instrument has attracted a renewed interest and now figures more prominently among solutions being pursued by countries such as India.3

The Application for a Compulsory Licensing No. 1 of 2011 before the Controller General of Patents and the Order: Mumbai-India (Decision on 9 March 2012), available at http://www.ipindia.nic.in/iponew/compulsory_license_12032012.pdf (accessed 12 February 2014). See also The IPAB's Decision (Order No. 45 of 2013) for further facts of the case (M.P. Nos 74 to 76 of 2012 & 108 of 2012 in OA/35/2012/PT/MUM, 14 September 2012, available at http://www.ipab.tn.nic.in/045–2013.htm (accessed 7 January 2015).

 In contrast to this, some scholars discount the validity of compulsory licensing,4

R. Epstein and S. Kieff, ‘Questioning the Frequency and Wisdom of Compulsory Licensing for Pharmaceutical Patents’, 78 The University of Chicago Law Review 2 (2011): 92, claiming that efforts to justify compulsory licensing for pharmaceutical patents are simply not tenable because defenders fail, first, to understand the power of the background presumption against it.

 even though the right to use compulsory licensing is enshrined in Article 31 of the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS).5

The TRIPS Agreement, 15 April 1994. Annex 1 C Legal Instrument – Result of the Uruguay Round vol. 31, 13 I.L.M (1994) for further analysis of TRIPS, see C. May and S. Sell, Intellectual Property Rights: A Critical History, Lynne Rienner (2006), pp. 5–8, for a discussion of the global governance and history of TRIPS.

 It also forms a significant part of the Doha Declaration on TRIPS and Public Health (Doha Declaration),6

The Doha WTO Ministerial Declaration on the TRIPS Agreement and Public Health, WT/MIN(01)/DEC/2 20 November 2001, 41 I.L.M. 755, (2002). For further analysis of the Doha Declaration see C. Correa, ‘Implications of the Doha Declaration on the TRIPS Agreement and Public Health’, World Health Organization, Essential Drugs and Medicine Policy: WHO/EDM/PAR/2002.3, (2002, p. 50, Annex 1.

 which specifically seeks to address the legal complexity set out in Article 31(f) of TRIPS.7

Article 31(f) reads: ‘any such use shall be authorized predominantly for the supply of the domestic market of the Member authorizing such use…’.

Contrary to most expectations, there is limited evidence to show that West African states in general have attempted to execute successful compulsory licences, despite the fact that the entire continent was the purported beneficiary of the Doha Paragraph 6 solution and that TRIPS allowed national laws greater freedom to activate the modalities for granting compulsory licensing.8

The Preamble of Article 31 of TRIPS reads: ‘Where the law of a Member allows for other use of the subject matter of a patent without the authorization of the right holder…’.

In fact, most West African countries have not been proactive in amending their national legal provisions, regardless of the fact that member states are free to determine the appropriate method of implementing the provisions of TRIPS within their own legal system and practice.9

Article 1 of TRIPS.

To reveal why this dearth exists, Abbott alleges that the bilateralism that is often pursued by key developed countries in defending their commercial interests cannot be overlooked.10

F. Abbott, ‘The WTO Medicines Decision: World Pharmaceutical Trade and the Protection of Public Health’, 99 The American Journal of International Law 2 (2005): 350, noting that BTAs are used to limit the grounds on which compulsory licences may be granted.

He goes on to say that the increasing trade relations between countries influence the operational significance of this trend. As such, the subject of IP has become integrated into the broader trade policy of key trading partners, mainly the US and the EU. Perhaps the most illustrative pattern of this phenomenon is the inclusion of a higher IP standard in bilateral trade agreements (hereinafter referred to as BTAs) and this appears to offer a wider scope for the US and the EU to defend their trade interests. This has prevented several least developed countries (hereinafter referred to as LDCs) from implementing compulsory licences in order to obtain quality affordable medicines for public health protection.11

P. Roffe and C. Spennemann, ‘The Impact of FTAs on Public Health Policies and TRIPS Flexibilities’, 1 International Journal of Intellectual Property Management 1–2 (2006): 86, worrying about the recent shift from the multilateral level to regional and bilateral arena where a number of post-TRIPS BTAs have been signed to strengthen the position of large pharmaceutical companies at the expense of risking the flexibilities recognised in TRIPS, as confirmed by the Doha Declaration.

This unfolds against the backdrop of a common apprehension that compulsory licensing runs counter to the commercial alignment of the US and the EU. Accordingly, countries risk losing foreign direct investments (hereafter referred to as FDIs)12

S. Lall and R. Narula, ‘Foreign Direct Investment and Its Role in Economic Development: Do We Need a New Agenda?’, 16 The European Journal of Development Research 3 (2004): 457, mentioning that with weak local capabilities, industrialisation has to be more dependent on FDI. See also ‘Foreign Direct Investment for Development: Maximising Benefits, Minimising Costs’, Organisation for Economic Co-Operation and Development (2002), p. 9, discussing the actual influence of FDI on economic growth by claiming that FDI raises total factor productivity in the recipient country.

and market access if they implement this safeguard instrument with a view to obtaining quality affordable medicines.13

R. Bird and D. Cahoy, ‘The Impact of Compulsory Licensing on Foreign Direct Investment: A Collective Bargaining Approach’, 45 American Business Law Journal 2 (2008): 309, explaining that industries that find the security of IPRs lacking in a given country may avoid engaging in FDI with that country citing the Case of Pfizer with respect to Viagra in Egypt. See also K. Lybecker and E. Fowler, ‘Compulsory Licensing in Canada and Thailand: Comparing Regimes to Ensure Legitimate Use of the WTO Rules’, 37 Journal of Law, Medicine and Ethics 2 (2009): 233, asserting that the impact on innovative pharmaceutical companies’ decisions to launch new products in Thailand was felt more immediately after the issuance of compulsory licensing.

 Significantly, while this may be true to some extent, the question of whether compulsory licences result in a palpable reduction of FDIs given the pragmatic nature of most pharmaceutical companies is still contentious in academic discussion.14

C. P. Braga and C. Fink, ‘The Relationship Between Intellectual Property Rights and Foreign Direct Investment’, 9 Duke Journal of Comparative and International Law 1 (1998): 172, explaining that the net effect of higher levels of IP protection on FDI is theoretically ambiguous.

 Nonetheless, Abbott and Reichman believe that this is a doubtful proposition.15

F. Abbott and J. Reichman ‘The Doha Round's Public Health Legacy: Strategies for the Production and Diffusion of Patented Medicines Under the Amended TRIPS Provisions’, 10 Journal of International Economic Law 4 (2007): 938.

 This feeds into the criticism that LDCs are misled about the relationship between higher IP protection and the flow of FDI.16

P. Yu, ‘Toward a Nonzero-sum Approach to Resolving Global Intellectual Property Disputes: What We Can Learn from Mediators, Business Strategists, and International Relations Theorists’, 70 University of Cincinnati Law Review 2 (2002): 635, reviewing and presenting an argument that ignores the claim that IPRs attract FDI, increase taxes, creates jobs and facilitates technology transfer.

Maskus rejects this notion and suggests that several LDCs with little to offer in the way of comparable economic opportunities attract virtually no FDIs despite strict patent laws that sometimes afford more protection than that of the US.17

K. Maskus, ‘The Role of Intellectual Property Rights in Encouraging Foreign Direct Investment and Technology Transfer’, 9 Duke Journal of Comparative and International Law 1 (1998): 129–30, providing empirical facts in the discussion of the role of IP in encouraging FDIs.

Be that as it may, LDCs do not need to look far to dismantle this misconception....

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