By: Maricruz Cepeda
Head of the Intellectual Property Department
Dear Friends and Clients,
The Prejudicial Interpretation No. 144-IP-2019, issued by the Andean Court of Justice, by our initiative, establishes indispensable rectifications in matters of compulsory licensing of pharmaceutical patents for reasons of public interest.
Specifically, the Andean Court interprets articles 52, 65, 68, 69, 238, 239, and 243 of Decision 486 of the Andean Community Commission, describing compulsory licenses as a limitation to the industrial property right, which, as a particular character, should be granted by the competent authority on a case by case basis if the circumstances justify it.
The abovementioned constitutes a relevant precedent of direct and immediate application for the Member Countries - Bolivia, Colombia, Ecuador, and Perú.
CONCEPT OF COMPULSORY LICENSES
They consist of "(...) authorizations of use and exploitation of a patent of the invention to a third party without the intervention of the patent holder in such authorization (...)", which must necessarily be authorized by the competent national authority.
Compulsory licenses proceed under the following cases:
Lack of exploitation of the patent;
The existence of reasons of public interest, emergency, or national security;
In the presence of anti-competitive conduct, especially abuse of dominant position; or,
The holder of a patent requires another patent to exploit it.
The authority must verify the following:
That the compulsory license is considered under its unique terms, circumstances, and conditions.
It will be necessary to have tried to obtain authorization from the holder under reasonable conditions and a prudential time, except in cases of national emergency or other circumstances of extreme urgency or cases of non-commercial public use.
REASONS OF PUBLIC INTEREST, EMERGENCY, AND NATIONAL SECURITY
The granting of compulsory licenses for reasons of public interest does not exclude the owner of the patent from continuing to exploit it economically.
The public interest includes cases of "emergency and national security". Public interest may also involve non-commercial public use, the need for the population to have access to certain products (E.g. medicines, food), environmental protection, among others.
For compulsory licenses to proceed, the Court of Justice of the Andean Community has emphasized that the competent authority must necessarily explain and provide adequate and sufficient grounds for the reasons of public interest, emergency, or national security, and why there is a need to adopt such measure. Considering the particularities and circumstances of each case, the reasons of public interest, as well as the suitability of the measure, must be duly accredited. That is to say, to prove that in such a situation granting a license was the only way to appropriately addressed the situation.
SCOPE AND COMPENSATION OF THE COMPULSORY LICENSE
The authorization to exercise the rights linked to compulsory licenses must establish a term that under no circumstances may be established as indefinite. Although the legislation does not foresee a maximum time limit for the duration of the licenses, it is up to the authority to establish the time subject to the validity of the reasons that motivated their concession, and they may naturally be revoked if the circumstances that gave rise to them have disappeared.
Because of the limitation to the right of exclusivity of economic exploitation recognized in favor of the owners of patents of invention, when the competent authority grants a compulsory license, it must establish, in the absence of agreement between the parties, the conditions of a reasonable compensation taking into account the particularities of each case because it is intended to attend a situation of public interest.
OBLIGATIONS OF THE BENEFICIARY
The beneficiary's obligations include the following:
Not to grant sublicenses or transfer it.
Respect the revocation of the license if the circumstances that gave rise to it have disappeared.
Perform acts of exploitation of a patent within the terms and time in which the license was granted.
Pay the owner the compensation provided by the competent authority for the use of the patent.
Be limited to supplying the domestic market of the licensing Member Country.
Failure to comply with the obligations detailed above may result in the cancellation of the license, ex officio, or at the request of a third party.
OBJECTIONS OF COMPULSORY LICENSES
The challenge of compulsory licenses shall not suspend the effects of the same.
The effects of the compulsory license will remain until the appeal is solved.
The patent owners who have been unjustifiably affected by the grant or misuse of compulsory licenses are entitled to sue the infringer for damages.
The indemnification will be fixed according to the emerging damages (loss suffered directly as a consequence of the infringement of a right) and loss of profits (what the plaintiff would have received if the infringement had not been committed).
In the following link, you can download the complete Prejudicial Interpretation referred to, for your information: click here.