Ethical and Legal Issues
Patents and the Supply of Therapeutic Products William L. Hayhurst
Introduction Grants of exclusive rights to inventors are not a modern phenomenon. In some early civilizationssuchgrants were at the pleasure of the ruler. In 1474 the senate of the Republic of Venice introduced what is believed to be the first law that provided a systematic procedure for obtaining patents for inventions. That system disappeared with the decline of the Venetian Republic. During the 17th and 18th centuries the English developed a system which has survived in its fundamentals, and that system has been adopted, with variations, by the great majority of countries. The justification for the system is the encouragement that it provides to invest in research and development and to publish one’s accomplishments rather than try to preserve secrecy. There have been those who, with the best of motives, have protested against the grant of exclusive rights in developments that benefit humanity. In some countries these arguments have led to exclusion of some fields of endeavour from the patent system, or have caused limits to be placed on the scope of patent rights. This paper outlines some important variations that have emerged in relation to therapeutic products and their production, A few countries are mentioned, but only to indicate some of the variations, rather than to provide the detail that would be needed for full understanding of any particular country’s laws.
practical utility and be new and unobvious in the sense that something about it lay out of the path of expected development. Such subject matter is compendiously called an “invention.” An invention may be a process, a product or an apparatus. Many countries do not grant patents for some inventions. Most refuse to grant patents for methods of medical treatment. Early in this century the dominance of the German chemical industry caused some countries, Britain among them, to restrict the scope of available protection for chemically related inventions. Canada followed Britain’s lead, but only for patents relating to foods and medicines produced by chemical processes: patents could be obtained in Canada for specific chemical processes of producing foods and medicines, but such patents could be avoided by finding another process of production. This restriction on available protection was dropped in Canada in 1987, so that patents are now available, as they now are in Britain and many other countries, for new and unobvious foods and medicines, however produced. The United States is at the forefront in making patent protection available for a wide spectrum of inventions, even for methods of medical treatment and for non-human living things.
How exclusive is a patent right?
What is patentable?
Term
A characteristic of all modern patent systems is that the subject matter that one seeks to patent must have some
Assuming that a patent has been obtained, it will expire in most developed countries 20 years from the filing of the
Volume 20: 3, Fall 1992 application for the patent. An exception is the United States, which grants patents for 17 years from the grant of the U.S. patent. Some countries (India, China and Brazil, for example) grant patents for shorter terms. In other countries (such as Australia and New Zealand) the term of a patent may be extended if, during the normal term, the patentee has not been able to exploit the invention sufficiently to be adequately remunerated. In France and the United States, extensions of term are possible, but only for medically related inventions.
The grant A patent, issued by the government, grants to the owner of the patent the right, during its term, to exclude others from making, using or selling the patented invention. In all countries, however, the validity of the grant may be challenged in a court or in a patent office tribunal on a variety of grounds, principal ones being lack of novelty, obviousness, failure of the patent specification to make a sufficient public disclosure of the invention, lack of clarity as to what the patent is supposed to cover and claiming of more than was actually invented. Such challenges are usually mounted by a competitor of the patentee, usually when the competitor has been threatened with a suit for infringement of the patent. Occasionally the challenge may be launched by the government. Sometimes it is possible to avoid infringement of a valid patent by studying it and finding a way around it.
Compulsory licensitzg of patetzt rights A patent owner who attempts to enforce a patent may be faced with a challenge that the patentee has misbehaved. This is a common challenge in the United States, where an alleged infringer may argue, for example, that the patentee misled the Patent Office when applying for the patent, or that the patentee has licensed others to use the patent on conditions that give control to the patentee over more than the patent covers. A US. court may refuse to enforce the patent, thereby effectively licensing the alleged infringer. Under laws, other than patent laws, designed to regulate competition, it may be possible in theU.S. to force a patentee to license, or agree to license, all comers. Such compulsory licensing, arising from court orders but not provided for in patent legislation, is primarily a U.S. phenomenon. The patent laws of many countries enable the government to use patented inventions. Section 19 of the Canadian Patent Act, applicable to all Canadian patents, is an example, though in fact this section has not been invoked by the Canadian government with respect to any medical invention. Governments are generally obliged to compensate patent owners for using patented inventions. The patent statutes of a large number of countries, but not of the United States, include provisions for compelling
patentees to grant licenses to competitors where the patentees have failed to benefit the country to a desired extent. The Canadian patent law is fairly typical. Pursuant to sections 65 to 71 of the Canadian Patent Act, once a Canadian patent for any subject matter has been in effect for three years, anyone who wishes to do so may apply to the Commissioner of Patents for a license to enable the applicant to manufacture the patented invention in Canada, subject to paying to the patentee a royalty settled by the Commissioner. In order to obtain such a license, the applicant must show that the owner of the patent has “abused” the patent right in one of the ways set out in the Patent Act. These include failure of the owner of the patent to arrange for manufacture in Canada on a sufficiently large scale, failure to meet Canadian demand on reasonable terms or failure to grant a license on reasonable terms and to the prejudice of trade or industry in Canada. Very few applications for license have been made under these provisions. Where such applications have been made the principal alleged “abuse” has been that the owner of the patent has supplied the Canadian market with imports rather than with products manufactured domestically. In addition, special provisions are made in some countries to facilitate compulsory licensing of patents relating to medicines. What constitutes a “medicine” under these provisions may be controversial. Under sections 3 7 and 3 8 of the French patent legislation the responsible minister of the government may decree that licenses are available in the interests of public health where a patented medicine is not available in sufficient quantities or quality or where the price is abnormally high. In connection with RousselUclaf‘s mifepristone it has been reported that such a decree cannot be made for a medicine that has not been approved by the government for distribution.’ Some countries make licenses available for patents relating to medicines regardless of whether the patentee has marketed the invention or has in any way abused its patent rights. Canadian provisions to this effect are found in section 39 of the Patent Act, and it is under section 39 that the vast majority of compulsory license applications have been made in Canada. Use of section 39 increased substantially after 1939 when the section was amended to permit the licensees to supply the Canadian market by importing medicines from countries where there is no effective patent protection. Application for a license is made to the Canadian Commissioner of Patents, who must grant a license unless the Commissioner sees good reason not to do so. Applications for licenses under section 3 9 have almost always been successful. In 1987 these Canadian provisions were amended to delay market entry by the licensees. The provisions are complex and no attempt will be made to summarize them. Under these relatively new provisions a compulsory licensee may not have the right to produce the medicine in Canada, for consumption in Canada, for seven years fol-
Law, Medicine 8 Health Care lowing the first government approval of the medicine for marketing in Canada, nor may the licensee have the right to import the medicine, for consumption in Canada, for up to ten years following such approval. These delays d o not apply where the licensee manufactures in Canada for export, or imports into Canada for export. However, if the medicine was invented and developed in Canada the license may not be exercisable at all. If owners of patents wish to maintain such restrictions on exercise of compulsory licenses, the patentees are required to provide substantial amounts of data to a Patented Medicine Prices Review Board and to adhere to price ceilings that may be set by the Board. Under the Canadian provisions for compelling the licensing of patents relating to medlcines the royalty awarded to the patentee has rarely exceeded 4 percent of the net selling price of the medcine in final dosage form. Thls is niggardly compared to amounts awarded in other countries. Of course, those who apply for compulsory licenses do so only in respect to inventions that are commercially successful. The royalties that they pay may contribute nothing to unsuccessful research, nor to research, development and marketing costs for inventions having a restricted demand. However, the licenses are non-exclusive.
The future The Canadian government has announced its intention to cancel the provisions in section 39 of the Canadian Patent Act relating to compulsory licensing of medicines. This would not affect a multitude of licenses that have already been granted, but it seems that no application has been filed for a license under the Canadian patent for mifepristone and that such a license is, therefore, not
likely to be available in Canada without the consent of Roussel-Uclaf. China is an example of a country where a particular process for producing a pharmaceutical product may be patented, but anyone is free to produce the same product by another, unpatented process. The Chinese press has announced that Chinese scientists have devised a new process for producing mifepristone, which has been approved for use in China. At the time of writing, negotiations are continuing under the General Agreement on Tariffs and Trade that may lead to an “intellectual property” agreement. The current draft text of an agreement provides that where, for protection of health, it is necessary within a country to prevent “commercial exploitation” of an invention, the latter may be excluded from patentability in that country. This proposed provision reflects the philosophy in some countries that medical inventions should be in the public domain locally though they may have been funded under the incentive of the patent system elsewhere. Countries where research is funded by private enterprise would of course prefer that the G A I T negotiations lead to more universal patent protection, in the hope of obtaining more widespread contributions to the costs borne by those enterprises, and in the hope of obtaining some control over sources of supply. Experience has shown that there is substantial opposition to wider patent protection when public health is said to be involved.
References I . Reed Boland, “Recent Developments in Abortion Law,” Law, Medicine and Health Cave, 1y3-4, 1991 at page 2 7 1 .
Patents and the Supply of Therapeutic Products William L. Hayhurst
Introduction Grants of exclusive rights to inventors are not a modern phenomenon. In some early civilizationssuchgrants were at the pleasure of the ruler. In 1474 the senate of the Republic of Venice introduced what is believed to be the first law that provided a systematic procedure for obtaining patents for inventions. That system disappeared with the decline of the Venetian Republic. During the 17th and 18th centuries the English developed a system which has survived in its fundamentals, and that system has been adopted, with variations, by the great majority of countries. The justification for the system is the encouragement that it provides to invest in research and development and to publish one’s accomplishments rather than try to preserve secrecy. There have been those who, with the best of motives, have protested against the grant of exclusive rights in developments that benefit humanity. In some countries these arguments have led to exclusion of some fields of endeavour from the patent system, or have caused limits to be placed on the scope of patent rights. This paper outlines some important variations that have emerged in relation to therapeutic products and their production, A few countries are mentioned, but only to indicate some of the variations, rather than to provide the detail that would be needed for full understanding of any particular country’s laws.
practical utility and be new and unobvious in the sense that something about it lay out of the path of expected development. Such subject matter is compendiously called an “invention.” An invention may be a process, a product or an apparatus. Many countries do not grant patents for some inventions. Most refuse to grant patents for methods of medical treatment. Early in this century the dominance of the German chemical industry caused some countries, Britain among them, to restrict the scope of available protection for chemically related inventions. Canada followed Britain’s lead, but only for patents relating to foods and medicines produced by chemical processes: patents could be obtained in Canada for specific chemical processes of producing foods and medicines, but such patents could be avoided by finding another process of production. This restriction on available protection was dropped in Canada in 1987, so that patents are now available, as they now are in Britain and many other countries, for new and unobvious foods and medicines, however produced. The United States is at the forefront in making patent protection available for a wide spectrum of inventions, even for methods of medical treatment and for non-human living things.
How exclusive is a patent right?
What is patentable?
Term
A characteristic of all modern patent systems is that the subject matter that one seeks to patent must have some
Assuming that a patent has been obtained, it will expire in most developed countries 20 years from the filing of the
Volume 20: 3, Fall 1992 application for the patent. An exception is the United States, which grants patents for 17 years from the grant of the U.S. patent. Some countries (India, China and Brazil, for example) grant patents for shorter terms. In other countries (such as Australia and New Zealand) the term of a patent may be extended if, during the normal term, the patentee has not been able to exploit the invention sufficiently to be adequately remunerated. In France and the United States, extensions of term are possible, but only for medically related inventions.
The grant A patent, issued by the government, grants to the owner of the patent the right, during its term, to exclude others from making, using or selling the patented invention. In all countries, however, the validity of the grant may be challenged in a court or in a patent office tribunal on a variety of grounds, principal ones being lack of novelty, obviousness, failure of the patent specification to make a sufficient public disclosure of the invention, lack of clarity as to what the patent is supposed to cover and claiming of more than was actually invented. Such challenges are usually mounted by a competitor of the patentee, usually when the competitor has been threatened with a suit for infringement of the patent. Occasionally the challenge may be launched by the government. Sometimes it is possible to avoid infringement of a valid patent by studying it and finding a way around it.
Compulsory licensitzg of patetzt rights A patent owner who attempts to enforce a patent may be faced with a challenge that the patentee has misbehaved. This is a common challenge in the United States, where an alleged infringer may argue, for example, that the patentee misled the Patent Office when applying for the patent, or that the patentee has licensed others to use the patent on conditions that give control to the patentee over more than the patent covers. A US. court may refuse to enforce the patent, thereby effectively licensing the alleged infringer. Under laws, other than patent laws, designed to regulate competition, it may be possible in theU.S. to force a patentee to license, or agree to license, all comers. Such compulsory licensing, arising from court orders but not provided for in patent legislation, is primarily a U.S. phenomenon. The patent laws of many countries enable the government to use patented inventions. Section 19 of the Canadian Patent Act, applicable to all Canadian patents, is an example, though in fact this section has not been invoked by the Canadian government with respect to any medical invention. Governments are generally obliged to compensate patent owners for using patented inventions. The patent statutes of a large number of countries, but not of the United States, include provisions for compelling
patentees to grant licenses to competitors where the patentees have failed to benefit the country to a desired extent. The Canadian patent law is fairly typical. Pursuant to sections 65 to 71 of the Canadian Patent Act, once a Canadian patent for any subject matter has been in effect for three years, anyone who wishes to do so may apply to the Commissioner of Patents for a license to enable the applicant to manufacture the patented invention in Canada, subject to paying to the patentee a royalty settled by the Commissioner. In order to obtain such a license, the applicant must show that the owner of the patent has “abused” the patent right in one of the ways set out in the Patent Act. These include failure of the owner of the patent to arrange for manufacture in Canada on a sufficiently large scale, failure to meet Canadian demand on reasonable terms or failure to grant a license on reasonable terms and to the prejudice of trade or industry in Canada. Very few applications for license have been made under these provisions. Where such applications have been made the principal alleged “abuse” has been that the owner of the patent has supplied the Canadian market with imports rather than with products manufactured domestically. In addition, special provisions are made in some countries to facilitate compulsory licensing of patents relating to medicines. What constitutes a “medicine” under these provisions may be controversial. Under sections 3 7 and 3 8 of the French patent legislation the responsible minister of the government may decree that licenses are available in the interests of public health where a patented medicine is not available in sufficient quantities or quality or where the price is abnormally high. In connection with RousselUclaf‘s mifepristone it has been reported that such a decree cannot be made for a medicine that has not been approved by the government for distribution.’ Some countries make licenses available for patents relating to medicines regardless of whether the patentee has marketed the invention or has in any way abused its patent rights. Canadian provisions to this effect are found in section 39 of the Patent Act, and it is under section 39 that the vast majority of compulsory license applications have been made in Canada. Use of section 39 increased substantially after 1939 when the section was amended to permit the licensees to supply the Canadian market by importing medicines from countries where there is no effective patent protection. Application for a license is made to the Canadian Commissioner of Patents, who must grant a license unless the Commissioner sees good reason not to do so. Applications for licenses under section 3 9 have almost always been successful. In 1987 these Canadian provisions were amended to delay market entry by the licensees. The provisions are complex and no attempt will be made to summarize them. Under these relatively new provisions a compulsory licensee may not have the right to produce the medicine in Canada, for consumption in Canada, for seven years fol-
Law, Medicine 8 Health Care lowing the first government approval of the medicine for marketing in Canada, nor may the licensee have the right to import the medicine, for consumption in Canada, for up to ten years following such approval. These delays d o not apply where the licensee manufactures in Canada for export, or imports into Canada for export. However, if the medicine was invented and developed in Canada the license may not be exercisable at all. If owners of patents wish to maintain such restrictions on exercise of compulsory licenses, the patentees are required to provide substantial amounts of data to a Patented Medicine Prices Review Board and to adhere to price ceilings that may be set by the Board. Under the Canadian provisions for compelling the licensing of patents relating to medlcines the royalty awarded to the patentee has rarely exceeded 4 percent of the net selling price of the medcine in final dosage form. Thls is niggardly compared to amounts awarded in other countries. Of course, those who apply for compulsory licenses do so only in respect to inventions that are commercially successful. The royalties that they pay may contribute nothing to unsuccessful research, nor to research, development and marketing costs for inventions having a restricted demand. However, the licenses are non-exclusive.
The future The Canadian government has announced its intention to cancel the provisions in section 39 of the Canadian Patent Act relating to compulsory licensing of medicines. This would not affect a multitude of licenses that have already been granted, but it seems that no application has been filed for a license under the Canadian patent for mifepristone and that such a license is, therefore, not
likely to be available in Canada without the consent of Roussel-Uclaf. China is an example of a country where a particular process for producing a pharmaceutical product may be patented, but anyone is free to produce the same product by another, unpatented process. The Chinese press has announced that Chinese scientists have devised a new process for producing mifepristone, which has been approved for use in China. At the time of writing, negotiations are continuing under the General Agreement on Tariffs and Trade that may lead to an “intellectual property” agreement. The current draft text of an agreement provides that where, for protection of health, it is necessary within a country to prevent “commercial exploitation” of an invention, the latter may be excluded from patentability in that country. This proposed provision reflects the philosophy in some countries that medical inventions should be in the public domain locally though they may have been funded under the incentive of the patent system elsewhere. Countries where research is funded by private enterprise would of course prefer that the G A I T negotiations lead to more universal patent protection, in the hope of obtaining more widespread contributions to the costs borne by those enterprises, and in the hope of obtaining some control over sources of supply. Experience has shown that there is substantial opposition to wider patent protection when public health is said to be involved.
References I . Reed Boland, “Recent Developments in Abortion Law,” Law, Medicine and Health Cave, 1y3-4, 1991 at page 2 7 1 .
