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The recent COVID-19 pandemic has led to a global health crisis of unprecedented proportions. As nations around the world are struggling to control the spread of the pandemic, it has become clear that access to sufficient and affordable medication and health care equipment would be crucial in overcoming the crisis. However, medications are often the subject of patents which enable a patent owner to restrict the exploitation, use, distribution and sale of medications. A very pertinent question arises: Should patent rights be strictly enforced in light of the pandemic?

Patent protection in Malaysia is governed by the Patents Act 1983 and a patent gives its owner (i.e. the patent holder) an exclusive right to exclude others from making, using, selling and importing an innovative invention for a period of time. In other words, a patent owner is granted a monopoly in respect of its invention and is entitled to dictate the manner in which its invention is used. This includes control of the prices of and the quantity in which an invention is sold.

However, the demand for medication and health care equipment has increased exponentially since the outbreak of the pandemic. Despite all efforts being made to face the COVID-19 crisis head on, the sudden surge in demand has left many without life-saving equipment as manufacturers around the world struggle to cope. This has led to certain actions being taken in the race against time to contain the virus and to save lives which could, unfortunately, lead to patent infringement.

A recent report demonstrates a potential case for patent infringement: A hospital in Brescia,  Northern Italy was forced to enlist the assistance of engineers to digitally design and produce a valve for its respirators using 3D printing technology because the hospital was unable to obtain replacement valves from their usual supply chain. However, this was done without the patent owner’s permission. As a result, there has been reports of a patent infringement lawsuit being threatened. Even though the patent owner ultimately denied having issued a threat, this shows that the actions of the engineers could arguably risk exposure to an infringement lawsuit despite being commendable in helping to save lives.

While it may seem heavy-handed to find that there has been infringing use even though the unauthorized use was to save lives, it cannot be denied that a patent owner is entitled to a monopoly for the invention.

But having said that, if patent rights are strictly enforced even in times of crisis, the resulting consequences could prove to be in dire need. For example, the strict enforcement of a patent in relation to a drug or vaccine against the COVID-19 virus could lead to the death of those who are not able to afford the same. Developers and manufacturers would be faced with countless limitations as they attempt to find alternatives to life-saving equipment and health care products for fear of a potential infringement lawsuit. Hospitals and clinics will also be faced with the shortages in medication or health care equipment as they struggle to cope with an overwhelming number of patients; and thus leading to a decrease in a hospital’s overall treatment capacity.

As such, it is clear that a balance needs to be struck between the rights of a patent owner and the need to save lives and manage a crisis. Profit-making ought not to be prioritised over societal interest in addressing a crisis such as the COVID-19 pandemic. This therefore begs the question of whether and when rights granted by patents should be “relaxed”?

Compulsory Licence

In Malaysia, a compulsory licence may be granted under the Patents Act 1983. Any person may  apply for the grant of a compulsory licence after the expiration of three years from the grant of a patent (or four years from the filing date of the patent application, whichever is the later) under any of the following circumstances:

(a) where there is no production of the patented product or application of the patented process in Malaysia without any legitimate reason;

(b) where there is no product produced in Malaysia under the patent for sale in any domestic market, or there are some but they are sold at unreasonably high prices or do not meet the public demand without any legitimate reason.

The person making the application must show that efforts have been made to obtain authorisation from the owner of the patent on reasonable commercial terms and conditions but such efforts have not been successful within a reasonable period of time. As a safeguard to the patent owner, the exploitation of the patented invention will be limited to the purpose for which it was authorized and shall be subject to the payment to the owner of the patent of an adequate remuneration for such exploitation.

Further, the Malaysian Government may decide, even without the agreement of the owner of the patent, that a Government agency or a third party may exploit a patented invention if:-

(a) there is a national emergency or where the public interest, in particular, national security, nutrition, health or the development of other vital sectors of the national economy as determined by the Government, so requires; or

(b) where a judicial or relevant authority has determined that the manner of exploitation by the owner of the patent or his licensee is anti-competitive.

Such actions would essentially enable a Government agency or a third party to manufacture and sell a patented invention at greater capacity and at a lower price to make it more accessible to the public.

An example of the effectiveness of a compulsory licence in reducing drug prices was when an Indian generic drug company Natco was granted such a licence for Sorafenib, an anti-cancer drug, after India’s Patent Office ruled that Bayer AG (Sorafenib’s patent holder) had not done enough to make the drug available to Indian citizens. As a result, local pharmaceutical company, Cipla, produced a generic version of Sorafenib that was 75% cheaper.

Not surprisingly, the possibility of the grant of compulsory licences and exploitation of a patented invention by the decision of the Government could be a cause for concern on the part of patent owners. A patent owner’s monopolistic rights would be compromised and such actions could lead to the loss of exclusivity and potential business opportunities. It may also lead to a patent owner being unable to recover costs which it may have invested in the research and development of an invention.

Thus, comes the next question: Does public interest outweigh private interest? In a bid to curb the pandemic, various countries have begun to invoke legislations equivalent to Malaysia’s compulsory licensing and emergency use provisions.

For instance, there has been reports of Israel issuing a Permit (a compulsory license) for the importation of generic versions of AbbVie’s patents associated with lopinavir / ritonavir (also known as Kaletra) with the view of attempting to treat COVID-19 in March 2020. The medicine is essentially used for the treatment of HIV patients but is now being tested as a potential ingredient for a cure for COVID-19. Following the announcement, the patent holder, AbbVie, dropped its patent rights over the medicine worldwide. In unprecedented times such as these, this is a positive step towards prioritising the public interest and will hopefully encourage pharmaceutical companies to come together to collaborate against the pandemic.

In contrast, there are also companies who are still fighting for their exclusivity and monopolistic rights. For instance, the Wuhan Institute of Virology in China recently filed an application for the registration of a national patent for the use of remdesivir, an experimental antiviral drug used to treat COVID-19 and first developed by a US company called Gilead. While the act of the Institute is completely within their right, is their decision to restrict access to patent potentially life-saving drugs an ethical one in the face of the current global health emergency?

One may argue that patent rights exist in the first place to encourage innovative inventions, and argue that the patent framework would not stand if it is not enforceable precisely when it is most needed. This could lead to a decrease in incentive on the part of pharmaceutical companies to create inventions to counter future health emergencies. This fear is apparent than real. Many large pharmaceutical companies and private research laboratories will continue to join the race in experiments and clinical trials of new invention of medication and health care products since the profit margin of a successful or break through medicine or health care product would normally reach hundreds of millions of dollars, if not billions.

Even though there has yet been a drug or vaccine for the COVID-19 virus, it would not be surprising if compulsory licensing and emergency provisions will be invoked when a drug or vaccine becomes available. Indeed, the invoking of compulsory licensing provisions is not unprecedented in Malaysia with a compulsory licence being granted as recently as 2017 for sofosbuvir, a ground-breaking medicine for hepatitis C.

Please feel free to contact us should you need clarification or our assistance.

 

Michael Soo Managing Partner and Head, IP [email protected] H/P No.: +6012-3032728	Wendy Lee Partner [email protected] H/P No.: +6012-9146558
Nikko Aik Associate [email protected] H/P No.: +6012-3143290

 

* This Alert is intended for general information of the clients of our Firm. It should not be regarded as legal professional advice. If you need advice based on specific facts, please feel free to contact us.