Guest author Olga Gurgula is a Senior Lecturer in Intellectual Property Law at Brunel Law School, Brunel University London
A recent international health emergency, the COVID-19 pandemic, has turned a spotlight on the gaps in the legal tools to address such crises by the EU authorities. Aiming to tackle these problems, the EU has launched a comprehensive reform of its pharmaceutical sector with the revision of current pharmaceutical regulations and the introduction of new and more effective legal tools for managing emergencies and crises at the EU level.[1] Among them, the European Commission has proposed to implement a new regime for compulsory licensing in the EU.[2] It is believed that this proposal may help to improve the effectiveness of compulsory licensing in the EU, as it removes certain hurdles for using this mechanism in Europe.
The Commission’s proposal brings no changes to the national compulsory licensing systems and does not aim at addressing purely national crises. Instead, the instrument of compulsory licensing proposed by the Commission will be used in a cross-border emergency or crisis within the EU which falls outside of the scope of national compulsory licensing schemes. The new regime of compulsory licensing will be centralised at EU level. It will equally apply to national patents, European patents and European patents with unitary effect. The procedure can be initiated by filing a single application, using a single procedure under unitary procedural rules and conditions. The European Commission will be the body that grants the EU-wide compulsory licence; it will be assisted by an advisory body. The remuneration will not exceed 4 % of the total gross revenue generated by the licensee.
The new EU-wide compulsory licensing scheme seems to be a hybrid between compulsory licensing and government use envisaged in Article 31 TRIPS. The former requires negotiations, while the latter allows WTO members to waive this requirement. While the new regime relates to emergencies (and thus there is no need to engage in negotiations), the Commission, however, grants a patent holder the ‘right to be heard’, providing a possibility to essentially negotiate with the Commission by suggesting a voluntary agreement (see Recital 21 and Article 7(3)). While this is a useful provision as it embeds the possibility of pressurising a pharmaceutical company into a voluntary agreement, it is important that the process of negotiations does not delay the grant of a compulsory licence. Moreover, this provision may potentially be abused by a pharmaceutical company by stalling the process of granting a compulsory licence. Therefore, it may be useful to set an explicit and limited timeframe for such negotiations.
The Commission’s proposal contains some novel and useful elements that may improve the effectiveness of compulsory licensing at the EU. This includes the possibility to issue a compulsory licence in relation to patent applications and SPCs, the indication of a generic name of a compulsory licensed medicine where the identification of all intellectual property rights or rights-holders requires time, as well as the suspension of regulatory data and market protection. However, one of the key novel provisions relates to access to knowledge.
One of the problems that a compulsory licensee may encounter is the need to access the knowledge and know-how to manufacture a medicine. While compulsory licensing of patents may be useful in improving access to certain medicines (for example, compulsory licences issued at the beginning of the COVID-19 pandemic in relation to small-molecule medicines such as Remdesivir and Lopinavir/Ritonavir), this mechanism may not be effective in relation to complex biologics, such as vaccines. This is because their manufacturing technology may be protected not only by patents, but also by trade secrets. Unlike small-molecule drugs, the manufacturing processes of which are easier for other manufacturers to reverse engineer or to develop an alternative one without the need to know a specific manufacturing process developed by the patent owner, the knowledge on how to produce a complex biological therapy, such as a vaccine, may be critical. Therefore, without such knowledge, a compulsory licence of patents would be insufficient, and there is no obligation for patent owners to provide any additional information under a compulsory licence beyond what is included in a patent specification. Therefore, even if some countries would have attempted to initiate an involuntary technology transfer of a COVID-19 vaccine, they would not be able to do this because currently there is no equivalent mechanism in IP laws for compulsory licensing of trade secrets similar to the mechanism of compulsory licensing developed for patents.[3]
The European Commission seems to appreciate this challenge and implicitly addresses this problem by proposing that it may also require additional information from the patent owner to fulfill the purpose of the compulsory licence. In particular, the Commission explains in its proposal that the rights-holder and the licensee should cooperate in good faith. The Commission may act as an enabler of such cooperation and can take additional measures in line with Union law to ensure that the compulsory licence meets its objective and ensure that the necessary crisis-relevant goods can be made available in the Union. Such additional measures may include requesting further information which is deemed indispensable to achieve the objective of the compulsory licence (Recital 32). This, therefore, may mean that if the information in the patents and patent applications that cover a compulsorily licenced therapy would not be sufficient for production (for example, its manufacturing process is not disclosed in the patents and patent applications, and is instead protected by trade secrets), the Commission potentially will have the authority to request the disclosure of such information to the licensee so that it could produce the product under the licence ‘to achieve the objective of the compulsory licence’.
This is a useful step that may help to overcome the problem with access to trade secrets. However, it is advisable to make it more explicit to avoid any divergent interpretation of this provision. In particular, it would be useful to clearly state that to protect public health during an emergency, the Commission has the right to request the disclosure of trade secrets, other confidential information and know-how that protect a medicine under the compulsory licence to achieve the objectives of such compulsory licence. In addition, such a compulsory licence would need to balance the interests of the IP-holding company in protecting their proprietary technology with the public interest e.g. in increased production of a required medicine during a crisis. Therefore, to preserve the fairness of this mechanism, a compulsory licence must, on the one hand, ensure full access to a medical technology necessary for production; while, on the other hand, it must guarantee that the licensee will protect the transferred trade secrets to avoid their public disclosure, which would deprive the secrets of their value, thus harming the IP-owner’s interests.[4]
The power of the Commission to request additional information is strengthened by its right to impose financial sanctions on the rights-holder in case of failure to provide such information (Recital 34, Articles 15 and 16.). This is a novel and powerful tool that will help to facilitate the disclosure of the required information by the patent owner to the licensee, enabling the latter to produce a compulsorily licenced medicine.
The proposal of the European Commission on the new EU-wide compulsory licensing regime shows that it has drawn conclusions from the COVID-19 pandemic and the ineffectiveness of its legal mechanisms. While the proposal is focused on the use of compulsory licensing at the pan-European level, the approach taken by the Commission may also serve as a useful example for national compulsory licensing regimes in European and non-European countries making their mechanisms more flexible and effective. Such an approach may help to make the EU (and potentially other jurisdictions) better prepared for future national and global emergencies.
For a more detailed discussion on the Commission’s proposal, see Olga Gurgula, ‘On the European Commission’s proposal to create a new EU-wide compulsory licensing regime’ (26 August 2023) available at SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4552851
[1] https://health.ec.europa.eu/medicinal-products/pharmaceutical-strategy-europe/reform-eu-pharmaceutical-legislation_en
[2] https://single-market-economy.ec.europa.eu/publications/com2023224-proposal-regulation-compulsory-licensing-crisis-management_en
[3] See Olga Gurgula and John Hull, ‘Compulsory licensing of trade secrets: ensuring access to COVID-19 vaccines via involuntary technology transfer’ (2021) 16 Journal of Intellectual Property Law & Practice 1242.
[4] Ibid.
