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Compulsory licenses in a pandemic

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Published Date: April 14, 2020

In an attempt to thwart the spread of the novel coronavirus (Covid-19), the South African government published an urgent call for proposals (CFP) for the design, development, production, and procurement of ventilators. We have recently provided in our previous article, several tips which those that will respond to the clarion call can take into consideration when responding to the CFP.

Item 5 of the CFP states that “Respondents must indicate the status of the intellectual property applied and any restrictions for access to or use of intellectual property that is required for the project.”

The restriction for access to intellectual property can in certain circumstances be interpreted as the abuse of monopoly rights by those that hold intellectual property rights to the detriment of the public. In this regard, and provided that a good case can be made, the respondents can in their response to the CFP indicate that they believe that the owners of certain patents which relate to ventilators have been abusing their patent rights in South Africa, and can simultaneously approach the relevant patent holders for voluntary licenses, and failing which, or also simultaneously, can apply for a compulsory license against the patent holder.

In order to succeed with an application for a compulsory licenses, the respondents to the CFP would need to make a case that proves at least one of the following:

(a) that the patented invention is not being worked in the Republic on a commercial scale or to an adequate extent, after the expiry of a period of four years subsequent to the date of the application for the patent or three years subsequent to the date on which that patent was sealed, whichever period last expires, and there is in the opinion of the Commissioner of Patents no satisfactory reason for such non-working;

(b) that the demand for the patented article in the Republic is not being met to an adequate extent and on reasonable terms;

(c) that by reason of the refusal of the patentee to grant a licence or licences upon reasonable terms, the trade or industry or agriculture of the Republic or the trade of any person or class of persons trading in the Republic, or the establishment of any new trade or industry in the Republic, is being prejudiced, and it is in the public interest that a licence or licences should be granted; or

(d) that the demand in the Republic for the patented article is being met by importation and the price charged by the patentee, his licensee or agent for the patented article is excessive in relation to the price charged therefor in countries where the patented article is manufactured by or under licence from the patentee or his predecessor or successor in title.

Under the unfavourable prevailing health conditions in which we find ourselves, if the respondents to the CFP have identified patent holders who have patents that are related to ventilators which may be useful in the fight against the novel coronavirus, and such patents have not been worked in South Africa as mentioned in (a); or, as it is currently, that the demand of ventilators is high and the demand is not been met by the patent holders as mentioned in (b); or a voluntary license on reasonable terms is refused to the detriment of healthcare as mentioned in (c); or the price of the ventilators charged by the holders of the patents or respective licensees is excessive in relation to the price charged in countries where such ventilators are manufactured as is mentioned in (d), then a submission underpinned by a possible compulsory license application against the patent holder could be made to the government.

Patent right holders who are concerned about compulsory license applications against them in cases where patents rights may be suspected to have been abused, should be able to avoid a successful compulsory license applications by: working their patents during this period; issuing voluntary licenses to companies that can manufacture the ventilators; ensuring that the ventilators which are the subject of their patents are in adequate supply to meet the demand of the country; and/or by maintaining the prices of the ventilators to standard international prices.

These are indeed extraordinary times we live in, and the strategic use of existing intellectual property rights to combat the novel coronavirus (either by a forced hand or voluntarily), may come in handy in assisting the government in its efforts to flatten the curve.

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