World Trade Organization - Agreement on Export of Patented Drugs under Compulsory License
Under TRIPs, a compulsory license is only to be permitted after consideration of the individual situation in which such a license is requested. Any such license shall be non-exclusive and assignable only with the business which enjoys its use and, except in cases of national emergency, the requester of the license must have made efforts to obtain a voluntary license on reasonable commercial terms.
Such licenses are also subject to a number of additional requirements including one that they are to be authorized predominantly for supply of the domestic market in the country authorizing the license.
The health crisis resulting from the spread of AIDS, malaria and tuberculosis in many of the world's poorest countries has led to a re-evaluation of the need for compulsory licensing in the pharmaceutical field. A Ministerial Declaration issued at the November 2001 meeting in Doha also pointed out that, in conditions where a health crisis exists, a number of options which are fully compatible with TRIPs remain open to countries to address the situation, including:
(a) applying the customary rules of interpretation of public international law, so that each provision of the TRIPs Agreement shall be read in the light of the object and purpose of the Agreement as expressed, in particular, in its objectives and principles;
(b) granting compulsory licenses and determining the grounds upon which such licenses are granted;
c) determining what constitutes a national emergency or other circumstances of extreme urgency, it being understood that public health crises, including those relating to HIV/AIDS, tuberculosis, malaria and other epidemics, can represent a national emergency or other circumstances of extreme urgency; and
(d) establishing its own regime for exhaustion of intellectual property rights (i.e. allowing parallel imports) without challenge, subject to the most favored nation and national treatment provisions of TRIPs.
Subsequently, on August 30, 2003, the member states agreed to a waiver of the requirement that compulsory licenses should be granted only for domestic use, this being the result of an increasing realization that some of the countries that were facing a health crisis had no practicable way of manufacturing the drugs needed themselves. This waiver was converted into a permanent amendment to TRIPS by the WTO General Council on December 6, 2005. The amendment takes the form of the addition of a new article to TRIPs and a separate Annex and Appendix to TRIPs. New Article 31 bis provides that the requirement that a compulsory license should be granted only for the predominant purpose of satisfying the domestic market "shall not apply" if the product in question is a pharmaceutical product "to the extent necessary" to address the public health problems noted in the 2001 declaration and that adequate remuneration for the production shall be paid to the patent owner in the exporting country. The Annex sets out the procedure to be followed requiring, inter alia, that the country wishing to import the product has advised the TRIPs Council and, if not a least developed nation, confirms that it is unable to produce the relevant product itself in sufficient quantities to deal with the problem. The grant of the license is further to be subject to additional conditions to avoid the possibility of abuse, for example, by requiring special packaging, labeling, coloring or shaping of products supplied under this arrangement "provided that such distinction is feasible and does not have a significant effect on price".
