[Ip-health] PIJIP Analysis of Thai Law on Government Use Licenses
Mike Palmedo
mike.palmedo@gmail.com
Wed Mar 14 12:56:31 2007
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[ Picked text/plain from multipart/alternative ]
http://www.wcl.american.edu/pijip/documents/ThailandCLLaw.2.doc
Thai Law on Government Use Licenses
Sean Flynn
Associate Director, Program on Information Justice and Intellectual Property
American University, Washington College of Law
December 18, 2006
This note provides a brief explanation of Thailand's authority to issue a
government-use compulsory license for Efavirenz under its own law. Section
51 of the Thai Patent Act makes clear that the Thailand Department of
Disease Control is well within its rights in granting a license for the
public purchase and use of generic efavirenz without further negotiation
with the patent holder. The patent holder is given a right to appeal the
terms of the license, including its royalty rate. The Department may,
however, use the license to begin purchase of generic versions of patented
medicines immediately, regardless of whether any dispute may exist or arise
as to the reasonableness of the royalty or other terms established in the
license.
Thailand's Compulsory License
On November 29, 2006, a public notice issued by the Director General of the
Department of Disease Control announced that it was authorizing the public
use of patents on efavirenz to serve its national treatment plan. The
notice invokes Article 51 of the Thai Patent Act as the legal basis for the
compulsory license. It explains:
By the virtue of provisions of Article 51 of the
Thai Patent Act B.E. 2522 (as amended by the Thai Patent Act no.2 B.E. 2535
and no.3 B.E. 2542), the Department of Disease Control, Ministry of Public
Health, thus use the patent right of a medicine called Stocrin(r) (or
efavirenz as a generic name) and endorse the Government Pharmaceutical
Organization of Thailand to exercise the rights contain within Para 1 of
Article 36 of the Thai Patent Act B.E. 2522 (as amended by the Thai Patent
Act no.2 B.E. 2535 and no.3 B.E. 2542) under these conditions:-
(1) The use of the above patent rights are effective
from today to the 31st December 2011.
(2) The use of the above patent rights will be
limited to the provision of Efavirenz to not more than 200,000 patients per
year, for those covered under the National Health Security System Act B.E.
2545, Social Security Act B.E. 2533, and the Civil Servants and government
employees medical benefits scheme..
(3) A royalty fee of 0.5 percent of the Government
Pharmaceutical Organization's total sale value of the imported or locally
produced Efavirenz will be paid to the patent holder.
The Department of Disease Control, Ministry of
Public Health will notify the patent owner and the Department of
Intellectual Property, Ministry of Commerce immediately.
Section 51 of the Thai Patent Act
Section 51 of Thailand's Patent Act defines the right of "any ministry,
bureau or department of the Government," "by themselves or through others,"
to exercise the rights in any patent "for public consumption."
Specifically, the section states:
In order to carry out any service for public
consumption or which is of vital importance to the defense of the country or
for the preservation or realization of natural resources or the environment
or to prevent or relieve a severe shortage of food, drugs or other
consumption items or for any other public service, any ministry, bureau or
department of the Government may, by themselves or through others, exercise
any right under Section 36 by paying a royalty to the patentee or his
exclusive licensee under paragraph 2 of Section 48 and shall notify the
patentee in writing without delay, notwithstanding the provisions of Section
46, 47 and 47bis. In the circumstances under the above paragraph, the
ministry or bureau or department shall submit its offer setting forth the
amount of remuneration and conditions for the exploitation to the
Director-General. The royalty rate shall be as agreed upon by the ministry
or bureau or department and the patentee or his licensee, and the provisions
of Section 50 shall apply mutatis mutandis.
Grounds
Section 51 broadly authorizes the government use of patents to "carry out
any service for public consumption" or to meet a list of specific public
needs, including "to prevent or relieve a severe shortage of . . . drugs or
other consumption items." The public notice contains adequate statements
invoking both of these authorized grounds.
The notice explains clearly that the license is being used to help carry out
a service for public consumption. Specifically, the notice explains that
the license will be used only "for public health services," and therefore is
"clearly aimed for non-commercial purposes and for public interests." This
alone is sufficient grounds to permit the license. There is no obligation
in Thai law (or U.S. law or the WTO TRIPS agreement) that the public use of
patented technology be limited to emergency situations of extreme public
need. The fact that the license will be used to support a public program is
sufficient grounds to justify the license.
The public notice also demonstrates that a second independent ground for the
license is met: namely "to prevent or relieve a severe shortage of . . .
drugs or other consumption items." The notice explains that the license is
needed to respond to a shortage of Efavirenz in public treatment programs
for people with AIDS:
More than 1 million Thais have been infected with HIV,
among this, more than 500,000 people are still alive. These infected
individuals will eventually need long-term uses of antiretroviral drugs to
maintain their productive lives.. However, budget for health services in
the national health security system allocated for HIV /AIDS patients in the
fiscal year 2006 (B.E. 2549) is only 2,796.2 million baht for the target
group of 82,000 patients.
. . . The Thai Government has launched a policy of
universal access to anti-retrovirals since 1st October 2003, and has a
budget specifically allocated for them. However, it is still difficult to
get accessed to some effective and safer anti-retrovirals. The high price
of these patented anti-retrovirals have hindered their accessibility under
the universal access policy.
Efavirenz is a highly effective and safe
anti-retroviral. It is also placed in the Thailand's National List of
Anti-retrovirals. However, the price of the patented Efavirenz is twice of
those generics produced by WHO certified GMP factories in India. With this
higher price, the budget allocated from the Thai Government can only cover
some patients with Efavirenz, whereas the rest has to use other non patented
more toxic anti-retrovirals
Although the license for efavirenz appears limited to use in the public
health system, it is notable that Section 51 does not restrict the use of
licenses issued under it so narrowly where the purpose is to address "a
severe shortage of . . . drugs or other consumption items." This ground is
independent from the ground that the license is intended to be used "to
carry out any service for public consumption." Section 51 could, therefore,
be used to authorize a compulsory license for use in the private sector if
the purpose is to address a shortage of needed medicines.
Licensing Authority
Under the Thai Patent Act, the Director General of the Department of
Commerce is authorized to grant most types of compulsory licenses. A public
use license under Section 51, however, may be issued by "any ministry,
bureau or department of the Government," "by themselves or through others."
Thus, it is clear that the Department of Disease Control was within its
authority to issue a public use license.
Notice
Section 51 does not require prior negotiation with the patent holder. It
rather requires that the licensing authority "shall notify the patentee in
writing without delay, notwithstanding the provisions of Section 46, 47 and
47bis."
The exemption from the requirements of Section 46, 47 and 47 bis make clear
that the government is not required to (1) wait until "the expiration of
three years from the grant of a patent or four years from the date of
application," Section 46, or (2) have "made an effort to obtain a license
from the patentee having proposed conditions and remuneration reasonably
sufficient under the circumstances," Section 46 (failure to work); Section
47/47 bis (patent necessary for subsequent invention).
Royalty
Section 51 states that the ministry issuing the patent "shall submit its
offer setting forth the amount of remuneration and conditions for the
exploitation to the Director-General." The royalty rate and terms shall
either be (1) "as agreed upon by the ministry or bureau or department and
the patentee or his licensee," or (2) set in terms of Section 50, which
"shall apply mutatis mutandis" (i.e. with necessary changes).
The reference to Section 50 makes clear that the authorizing ministry has
the right to set a royalty absent agreement with the patent holder, subject
to appeal. Section 50 discusses the right of the "Director General" to set
a royalty rate. But this provision applies when the Director General (of
the department of commerce) is the requesting authority. When another
ministry is requesting the license under the terms of Section 51, then the
command to apply section 51 "mutates mutandis" indicates that the references
to the Director General should be read as applying to the authorizing
ministry or department, in this case the Department of Disease Control.
Thus, the applicable language in section 50, with necessary changes made,
states:
` If no agreement has been reached by the parties
within the period prescribed by the [Department of Disease Control], the
[Department] shall fix the royalty and prescribe the conditions and
restriction as he deems appropriate subject to the following requirements:
(1) the scope and duration of the license shall not be more than necessary
under the circumstances; (2) the patentee shall be entitled to further
license others; (3) the licensee shall not be entitled to assign the license
to others, except with that part of the enterprise or goodwill particularly
of the part under the license; (4) the licensing shall be aimed
predominantly for the supply of the domestic market; (5) the remuneration
fixed shall be adequate for the circumstances of the case.
The Department of Disease Control fixed a royalty and prescribed conditions
of the license in its public notice and states the intent to "notify the
patent owner and the Department of Intellectual Property, Ministry of
Commerce immediately." Negotiation over the terms and royalty of the
license may follow this notice.
APPEAL OF TERMS
Should the patent holder and the government not reach agreement on the terms
and royalty of the license, the patent holder may file an appeal of such
terms without affecting the right of the Department to begin using the
license immediately (i.e. through the purchase of generic medications for
its treatment program).
Section 50 states in relevant part:
The decision of the [Department] made under the first
paragraph of the Section is appealable to the Board within sixty days from
the date on which such decision is received.
The decision made "under the first paragraph of the section" deals with the
setting of the terms of the license, including the applicable royalty. It
is not the ultimate decision to grant a license, which appears unreviewable
under Thai law. Thus, as under U.S. law, the patent holder has no right to
appeal the grounds for the decision to grant a government use license but
rather is limited to contesting the compensation due for the expropriation.
This also suggests that, as under U.S. law, a patent holder may not receive
an injunction prohibiting the government from using the patented invention
pending the outcome of an appeal of the royalty rate.