Consultation – Implementation of paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health (excerpts)

Enclosed please find a consultation paper on the implementation of paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health in the Patent Regulations of 20 December 1996 No. 1162.

The TRIPS Agreement, which is part of the WTO Agreement, lays down that a compulsory licence, i.e. a licence issued by the public authorities to use a patented invention without the consent of the patent-holder, is to be issued mainly with a view to supplying the domestic market. The Decision by the WTO General Council of 30 August 2003 (the General Council Decision) makes exceptions to this limitation on exports for pharmaceutical products. The decision makes it possible for States that lack manufacturing capacity to import pharmaceutical products on the basis of a compulsory licence. The main purpose of the decision is to give developing countries access to key medicines.

The consultation paper proposes that the Patent Regulations should be amended in such a way as to allow companies in Norway to be granted compulsory licences to produce patent-protected medicines for export in accordance with the General Council Decision. The time limit for comments is 16 April 2004. Comments are to be sent to Justisdepartementet, Lovavdelingen, Boks 8005 Dep, 0030 Oslo. Comments could also be sent electronically to jd-arkiv-lovavd@jd.dep.no .

The recipients of this letter are requested to submit the consultation paper to bodies or individuals who are not on the list of addressees but who should be given an opportunity to express their views. The consultation paper and letter may be found in Norwegian at: http://odin.dep.no/jd/norsk/publ/hoeringsnotater/index-b-n-a.html .

Consultation – Implementation of paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health in Norwegian law

(Compulsory licence for the export of pharmaceutical products to developing countries)

1. Summary

This consultation paper describes the proposed amendments to the Patent Regulations of 20 December 1996 No. 1162, which will allow companies in Norway to be granted on request a compulsory licence to produce patent-protected pharmaceutical products with a view to exporting them in accordance with the WTO General Council Decision. The decision is enclosed with the consultation paper, and is also available on the Internet at http://www.wto.org/english/tratop_e/trips_e/implem_para6_e.htm

2. Background

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3. The General Council Decision

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4. Relationship to Norwegian law

The provisions concerning compulsory licences in sections 45 ff. of the Norwegian Act of 15 December 1967 No. 9 relating to patents implement the provisions of Article 31 of the TRIPS Agreement. The General Council Decision allows exceptions to be made from the provisions of Article 31(f), which impose limitations on exports, and defines more closely the provision concerning remuneration set out in Article 31(h). Implementing the General Council Decision will make it necessary to incorporate these special provisions into the Norwegian legislation on compulsory licences.

It will also be necessary to lay down provisions specifying the scope of application of the General Council Decision, i.e. under what circumstances compulsory licences may be granted under this arrangement.

Section 49 of the Patents Act was amended by the Act of 19 December 2003 No. 127. Section 49, new fifth paragraph, which has not yet entered into force [ed. note: entered into force on 1 February 2004], reads as follows:

"A compulsory licence shall be issued mainly with a view to supplying the domestic market. The King may by regulations prescribe rules that deviate from this."

According to the legislative history, the main purpose of section 49, fifth paragraph, second sentence, is to make it possible to issue regulations that will allow Norwegian companies to manufacture pharmaceutical products under a compulsory licence with a view to exporting them to developing countries. Proposition No. 86 (2002-2003) to the Odelsting, p. 80, second column, states that:

The authority stipulated in the fifth paragraph, second sentence, to prescribe rules that deviate from this condition has primarily been laid down in connection with the current negotiations in the Council for TRIPS on the use of compulsory licences to ensure the supply of medicines to developing countries. The condition that compulsory licences are to be granted mainly with a view to supplying the domestic market means that countries that lack domestic manufacturing capacity may have problems in utilising the right to grant compulsory licences. This applies especially to developing countries. Depending on the outcome of the negotiations in connection with the TRIPS Agreement, it may in the future be possible for Norwegian companies to manufacture pharmaceutical products under a compulsory licence for export to developing countries. The authority to make exceptions from the requirements in section 49, fifth paragraph, first sentence, allows for such a situation.

It is therefore proposed that the provisions for implementing the General Council Decision are prescribed by regulations pursuant to section 49, fifth paragraph, of the Patents Act, cf. the general authority to lay down provisions in section 69, first paragraph, of the Act. It is proposed that the new provisions should be introduced in a separate chapter before what is currently Chapter 15, Miscellaneous provisions, of the regulations. The numbering of the chapters and sections of the draft regulations has been amended in relation to the new provisions that will be included in accordance with the entry into force of the provisions relating to the EC directive on the legal protection of biotechnological inventions.

Economic and administrative consequences

The implementation of the General Council Decision in Norwegian law will make it possible for companies in Norway to manufacture pharmaceutical products under a compulsory licence for export to States that are unable to produce these products themselves. This will help to give developing countries better access to key medicines.

The pharmaceutical industry in Norway is relatively small, and there are probably not many companies with the capacity to take on the task of manufacturing pharmaceutical products under compulsory licence for another State. It is therefore not certain what the consequences will be of the implementation of the General Council Decision.

The amendment to the regulations will not have appreciable economic or administrative consequences for the courts or the Competition Authority, which are the bodies authorised to grant compulsory licences in Norway.

Comments on the individual provisions of the regulations

Section 107

The first paragraph lays down that a pharmaceutical company in Norway may under certain specified conditions be granted a compulsory licence to use an invention protected by a patent with a view to manufacturing pharmaceutical products for export to another State. Thus producers that apply for a compulsory licence have a legal right to such a licence if the conditions have been fulfilled. This ensures a greater predictability than if compulsory licences are granted on a discretionary basis, and reduces the risks inherent in starting negotiations on supplying products before a compulsory licence has been granted in Norway. If the importing State’s request to import the pharmaceutical product falls within the scope of the General Council Decision and the provisions of the TRIPS Agreement, the Norwegian authorities should not evaluate independently whether there are important public interests involved, cf. section 47 of the Patents Act. The question of whether there are important public interests indicating that a compulsory licence should be granted pursuant to section 47 of the Patents Act must be evaluated on the basis of the needs of the importing State.

A compulsory licence may only be granted if the pharmaceutical products in question are to be produced for export to an "eligible importing State". The State must have requested the producer to supply the pharmaceutical products, but a final agreement is not required.

The provision does not prevent the producer from exporting to more than one State as long as the conditions for a compulsory licence have been met in each case.

For the purpose of the regulations, an eligible importing State is any State that, at the time when the application for a compulsory licence is submitted, is designated by the UN as a least developed country, or that has insufficient manufacturing capacity. The State must also have made a notification to the Council for TRIPS in accordance with the Decision of the General Council of 30 August 2003, paragraphs 1(b) and 2(a) (the General Council Decision).

It is also proposed that States that are not Members of the WTO should be given the opportunity to conclude agreements on the import of pharmaceutical products manufactured under compulsory licence in Norway, cf. section 107, second paragraph, of the draft regulations. However, such States must be designated as least developed countries by the UN. The importing State must also have made a notification to the Ministry of Foreign Affairs concerning the information contained in the General Council Decision.

Section 108

The first paragraph sets out the remaining conditions for granting a compulsory licence for exports to an eligible importing State.

One condition for obtaining a compulsory licence is that the producer has first unsuccessfully tried to obtain a voluntary licence, cf. Article 31(b) of the TRIPS Agreement. This is not necessary in the case of a national emergency or other circumstances of extreme urgency or in cases of public non-commercial use. The provision set out in section 49, first paragraph, of the Patents Act (amended by Act of 19 December 2003 No. 127) is based on this, cf. Proposition No. 86 (2002-2003) to the Odelsting, p. 80, first column. The General Council Decision does not make an exception from this provision of the TRIPS Agreement.

Pharmaceutical products that are manufactured under this arrangement will probably normally be subject to non-commercial use under the auspices of the public authorities of the importing State. It is possible, however, that commercial health institutions in the importing State will also be given access to the products. It cannot be assumed, therefore, that it will never be necessary to first try to obtain a voluntary licence, and this must be evaluated on a case-to-case basis.

Thus, according to the first paragraph, item 1, of the draft of section 108, the producer must first have tried to obtain a licence on reasonable commercial terms and conditions by agreement, insofar as required pursuant to section 49, first paragraph, of the Patents Act. In considering what are "reasonable commercial terms and conditions", account must be taken of the economic value that the exploitation of the invention represents for the importing State, cf. section 108, second paragraph. If the right-holder demands a fee that cannot be regarded as reasonable, the condition for a compulsory licence pursuant to the first paragraph, item 1, is fulfilled.

A compulsory licence may only be granted if the pharmaceutical product in question is covered by paragraph 1(a) of the General Council Decision, see first paragraph, item 2, of the draft of section 108.

Another condition is that the product must be produced only for export to the eligible importing State in order to satisfy the State’s current need for the product, as described in the notification mentioned in section 107, see first paragraph, item 3, of the draft of section 108. A compulsory licence must be limited to such cases. The provision is based on paragraph 2(a) and (b) of the General Council Decision.

The fact that it is the importing State’s "current" need that are to be met means that the quantity specified in the notification is not necessarily the quantity to be taken into account. It is the situation at the time when the request for a compulsory licence is submitted that is applicable. The importing State’s own assessment on this point is to be used (see above), but the compulsory licence must be for a quantity that is within the limits of the notification pursuant to the General Council Decision. The notification by the importing State will therefore provide an upper limit for the rights that may be granted.

Another condition is that if the invention is not protected by a patent in the eligible importing State, the said State must grant or be intending to grant a compulsory licence pursuant to Article 31 of the TRIPS Agreement and the General Council Decision. This condition is specified in section 108, first paragraph, item 4 of the draft amendments, which is based on paragraph 2(a) of the General Council Decision.

The question arises whether the pharmaceutical products should have to satisfy certain standards of quality, e.g. whether it would be necessary for the product to have received regulatory approval in Norway or another EEA country. The draft regulations do not contain such a requirement. Thus it is the quality requirements in the importing State that will determine which pharmaceutical products may be manufactured in Norway for export under a compulsory licence. However, the pharmaceutical product must be manufactured in accordance with Norwegian statutory requirements concerning the manufacturing process.

The second paragraph sets out that when assessing what are reasonable commercial terms and conditions pursuant to section 49, first paragraph, of the Patents Act, and when determining the remuneration to the right-holder pursuant to section 50, second paragraph, of the Act, account is to be taken of the economic value to the importing State of the use of the invention. The provision is based on paragraph 3 of the General Council Decision, which defines more closely the provision of Article 31(h) of the TRIPS Agreement, which states that the remuneration is to take account of "the economic value of the authorization".

The fact that market conditions in the importing State are to be taken into consideration often means that the remuneration is fixed at a relatively low level.

According to the third paragraph of section 108, the labelling must show that the product has been manufactured under compulsory licence in Norway for export in accordance with the General Council Decision. In the decision to grant a compulsory licence the court or the Competition Authority may stipulate more detailed requirements concerning the packaging. This provision is based on paragraph 2(b)(ii) of the General Council Decision. It is intended to make it easier to prevent the product from being re-imported to Norway or sold in a State other than the eligible importing State, which would be in conflict with the General Council Decision.

Section 109

The provision obliges the recipient of a compulsory licence to post certain information on its website. This information consists of the quantities being manufactured, the name of the importing State and distinguishing features of the packaging, see paragraph 2(b)(iii) of the General Council Decision.

Regulations amending the PATENT regulations (Implementation of paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health)

Laid down … pursuant to sections 49 and 69 of the Act of 15 December 1967 No. 9 relating to patents. Submitted by …

The following amendments shall be made to the Regulations of 20 December 1996 No. 1162 relating to the Patents Act:

New Chapter 17 shall read as follows:

Chapter 17 Compulsory licences for the export of pharmaceutical products

Section 107

When the requirements set out in section 108 have been complied with, a producer of pharmaceutical products in Norway shall be granted on application a compulsory licence to manufacture pharmaceutical products for export to an eligible importing State that has requested the producer to supply the products. For the purpose of these regulations, an eligible importing State is one that:

at the time in question has been designated by the UN as a least developed country or that has insufficient manufacturing capacity, and

has made a notification to the Council for TRIPS in accordance with the Decision of the General Council of 30 August 2003, paragraphs 1(b) and 2(a) (the General Council Decision).

Least developed countries that are not parties to the WTO Agreement are considered to be eligible importing States if they have made a notification to the Norwegian Ministry of Foreign Affairs concerning the information contained in the General Council Decision.

Section 108

A compulsory licence may only be granted pursuant to section 107 if

the producer has tried to obtain a licence by agreement insofar as this is required pursuant to section 49, first paragraph, of the Patents Act,

the product is covered by paragraph 1(a) of the General Council Decision,

the product is only to be produced for export to the eligible importing State in order to cover the said State’s current need for the product, as described in the notification mentioned in section 107, and

the invention is not protected by a patent in the eligible importing State or the eligible importing State has granted or intends to grant a compulsory licence pursuant to Article 31 of the Agreement of 15 April 1994 on Trade-Related Aspects of Intellectual Property Rights (the TRIPS Agreement) and the General Council Decision.

When assessing what are reasonable commercial terms and conditions pursuant to section 49, first paragraph, of the Patents Act, and when determining the remuneration pursuant to section 50, second paragraph, of the Patents Act, account shall be taken of the economic value to the importing State of the use of the invention.

It shall be clear from the packaging that the pharmaceutical product has been produced under compulsory licence in Norway for export in accordance with the General Council Decision. More detailed requirements concerning the design of the packaging may be imposed in the decision to grant a compulsory licence.

Section 109

The holder of a compulsory licence shall post information on its website in accordance with paragraph 2(b)(iii) of the General Council Decision.