Introduction
A public consultation by the European Commission (the “Commission”) is seeking to change the legislation framework on compulsory licensing of patents relating to the manufacture of pharmaceutical products in the EU in a health crisis. A compulsory licence, if issued by a government, authorises a third party to use a patented invention without the consent of the patent holder. The view is that in crises of health (such as the COVID-19 pandemic), environmental, nuclear or industrial emergencies, compulsory licensing is crucial for maximising access to medical technology and intellectual property (“IP”) as well as cross-border production and distribution of vaccines or other products.
The current framework
The consultation is set against a backdrop of dissatisfaction at the existing framework, which is fragmented and un-harmonised between EU member states. The WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) allows WTO member states to authorise compulsory licensing of pharmaceutical products and their export subject to certain conditions, as determined by each country.
However, In the event of an EU-wide crisis, the Commission views this lack of coordination between EU member states as causing uncertainty for rights holders and IP users because licence conditions will differ between them. The current system also frames compulsory licensing as a last resort to avoid stifling innovation, prompting heavy reliance on voluntary sharing of IP and knowledge from public-private bodies, which can either fail or be difficult to obtain. Therefore, the overall view is that a more robust system is required to bolster Europe’s resilience when managing EU-wide health emergencies.
The proposal
The Commission presented three options to reduce fragmentation and enhance efficiency of compulsory licensing during a crisis: (i) no change; (ii) non-legislative guidelines and recommendations for issuing compulsory licences; and/or (iii) legislative measures ie. an “EU-level compulsory licence”.
The desire for reform is clear, but the Commission did not fail to acknowledge the repercussions for IP patent rights holders, even if they are provided with adequate remuneration.
In feedback on the consultation received from Interpat, a research-based biopharmaceutical company, it strongly encourages the Commission not to pursue any EU-wide policy changes on compulsory licensing for reasons including dis-incentivising innovation, breakdown of trust in voluntary arrangements and failure to address systemic barriers to pharmaceuticals e.g. funding.
Mindful of these drawbacks, the consultation assured inventors, start-ups and IP rights holders of the intention for compulsory licensing to remain a last resort, applicable only in exceptional circumstances where compulsory licensing at EU-wide level is absolutely necessary due to a health emergency.
The Commission plans to adopt the new regime in Q1 of 2023, so notwithstanding the United Kingdom no longer being a member of the EU, as members of the WTO and through the application of TRIPS, pharmaceutical inventors, start-ups and patent rights holders should pay attention to the new regime, and the incentives and protections offered where compulsory licensing does arise.
If you have any questions in relation to this article, please contact Katie Carter or your usual Burges Salmon contact.
Article written by Katie Carter and Isabel Rawlings.