The entire world has been grappling with the COVID-19 pandemic for some time now, and efforts are on to find a treatment protocol and vaccine. Several drugs and treatment therapies are being tried and tested to find a cure for this pandemic. In the middle of this fervent R&D activity, some questions come to mind — what about IP protection? How would companies commercialise a cure — if and when it is finally found? How would the cure be available to the public en-masse at affordable prices? Enter patent law and the aspect of Licencing.

A patent grant gives unto the patentee, all the rights, title and interest in the invention, thereby creating a negative right in rem –  a right to restrict a third party from making, using, offering for sale, selling or importing the invention (as claimed in the patent). Applying this to the current scenario, if any patented drug (post regulatory scrutiny – clinical trials, etc.) is found to be effective in the treatment of patients, no other entity apart from the patentee will be able to manufacture and sell the drug, unless specifically authorised by the patentee. A patented invention is an asset that can be commercialised by the patent owner, and rightly so, given that the patent owner expends significant time, cost and efforts in making the innovation. In that regard, a patent can be classified as an incentive to innovate. That said, innovators have often been accused of pricing their patented drugs in a manner that makes them unaffordable to the lesser privileged sections of the society. Innovation vs commercial gain vs universal access to affordable healthcare has been and continues to be a topic of a lot of debate. In India, patent rights may be revoked in exceptional circumstances, with the objective of maintaining a fine balance between the monopoly rights enjoyed by a patentee and the responsibility of the Government to provide accessible and affordable public health[1]. Hence, the Indian Patents Act enshrines within it, provisions in the form of restrictive obligations that are cast on patentees to cater to times when public health needs to take precedence over commercial rights and profits arising therefrom, especially when a situation such as the current Covid-19 pandemic presents itself. We discuss these below:

1. Compulsory Licencing: This an involuntary contract between an unwilling seller (patentee) and a willing buyer (licensee), which is enforced by the State i.e. when the Government allows a third party to manufacture and sell a patented product without the consent of the patentee. Compulsory Licencing is provided for in the Patent laws of various developed (UK, USA, Australia, France, etc.) and developing (Malaysia, Thailand, Brazil, Ecuador, etc.) countries and Compulsory Licences have in fact been issued by many developed and developing countries even in recent times. The Indian Patents Act also provides for Compulsory Licencing.

A Compulsory Licence can be obtained by any interested person by filing an application to the Controller of Patents, after expiry of three years from the date of grant of the patent[2], on the grounds that:

a. Reasonable requirements of the public with respect to the patented invention have not been satisfied, or

b. The patented invention is not available to the public at a reasonably affordable price, or

c. The patented invention is not worked in the territory of India[3].

Compulsory Licencing is a practice that has had its fair share of critiques by innovator companies all over the world who feel that the loss of exclusivity leads to a situation where they are unable to recover their significant investments on R&D. Of course, patients and activist groups have assailed the same.

India’s tryst with Compulsory Licencing has not been without problems. In India, the only Compulsory Licence for manufacture and sale of the drug Nexavar (a drug used for the treatment of Liver and Kidney cancer) was granted to Natco Pharma. The Compulsory Licence was granted on the ground that reasonable requirement of the public for was not met due to non-availability of the drug in India at affordable prices (Bayer was selling it at INR 2,80,428/- as opposed to NATCO’s application to sell it for INR 8,800/- for a month’s dose), and non-working of the invention in the territory of India. The grant was challenged by Bayer — the patent holder, all the way till the Supreme Court of India to no avail[4].

A Compulsory Licence would not be in the interest of a patentee, given that the same may be issued on terms and conditions that may not be commercially acceptable/ viable for the patentee. The scope of judicial review is limited in this regard. Patentee loses.

2. Compulsory Licences in national emergency/ extreme urgency: The Central Government can issue Compulsory Licences in cases of either a “national emergency” or “extreme urgency” or in cases of “public non-commercial use” by following the provisions of the Patents Act[5]. In such cases, the Central Government is not required to follow the elaborate procedure laid down for grant of a Compulsory Licence[6]. This enables the Central Government to grant Compulsory Licence for the working of a patent to any applicant to work the patent i.e. manufacture and sell the product and ensure that the said product is available to the public at the lowest prices possible, while allowing the patentee to derive reasonable advantage from its patent rights.

Apart from the above, the Patents Act also empowers the Central Government to use any invention for purposes of the Government[7] and allows the Central Government to authorise any third party to use the invention for the purposes of the Government. The Central Government can pay remuneration to the patentee for use of its patents. Patent laws in India also allow the Central Government, if it deems necessary for a public purpose, to acquire a patent[8].

The Central Government can invoke its powers of eminent domain and acquire patent rights granted to a private entity/ individual i.e. what it giveth, it can taketh away for the good of all. In such a scenario, the patentee would be left with no alternative, but to accept whatever price/ royalty that is given for the patent – this is of course subject to judicial review, but would not compare to what a patentee would get in case of a private licence. Again, the patentee loses.

3. Generic manufacture without a licence: A rather aggressive and risky act, but should a generic manufacturer proceed to manufacture a patented drug sans any licence from the patentee, the end result would be but naturally an enforcement/ infringement action on part of the patentee, whereby the patentee would most likely approach the court, seeking a permanent injunction against the alleged infringer. In such a scenario, the validity of the patent and working thereof can come under review, a patentee’s worse nightmare, for if proven against the patentee, it would lose all right and title to the patent and the invention would enter the public domain, thereby rendering all efforts, costs and time that was spent by the patentee of no economic benefit.

Thus, all of the above scenarios, as discussed, essentially have consequences that are not in the best interests of the patentee. Therefore, the most suitable option remains that the patentee, looks at voluntary licencing at reasonable terms. This way, a patentee would safeguard its patent from the above, whilst establishing its bonafides to the world at large. Actions such as challenges, requests for Compulsory Licences or acquisition of the patent would resultantly be difficult to sustain. In addition, this not only ensures that the patentee can negotiate a better deal, but also guarantees that the drug is available to the public at affordable prices.

The Remdesivir and Sovaldi stories: ‘Remdesivir’, a direct acting antiviral drug that inhibits viral RNA synthesis is currently in the news. The drug is currently being evaluated as a possible treatment protocol for the SARS-Cov2 virus. The USFDA has issued an Emergency Use Authorization (EUA)[9] for emergency use of the drug for the treatment of hospitalised COVID-19 patients.

Remdesivir is a classic case of drug repurposing (the investigation of existing drugs for new therapeutic purposes). The drug was initially developed as a cure for Filovirus infections and has been patented by Gilead Lifesciences in many countries, including India[10]. Recent news reports suggest that Gilead has entered into non-exclusive voluntary licencing agreements with multiple generic drug makers to allow them to manufacture the drug for distribution in 127 countries[11]. A similar situation had arisen with Gilead Lifesciences in India in 2014 with its drug Sovaldi, used in the treatment of Hepatitis C virus infection. The drug was prohibitively expensive and hence out of the reach of patients in India and other developing countries.   Gilead had at that time also chosen to enter into voluntary licencing agreements with various generic pharma companies in India, thereby significantly reducing the cost of the drug and making it accessible to patients in India and other developing countries.

Faced with a scenario where Gilead could have possibly had to accept Compulsory Licence terms that may not have been preferential, or a scenario where its patent could have been subject of a potential challenge or one where its patent could have been acquired by the Central Government, Gilead granted multiple non-exclusive licences to companies, thereby allowing them to manufacture its patented drug. By taking the Voluntary Licencing path, Gilead has been successful in diluting most (if not all) reasons that may give the Central Government an occasion to push Gilead to licence its drugs since it has made a voluntary attempt to make the drug freely available. Moreover, it has also deftly thwarted any potential allegations of profiteering or price gouging/ misuse of its patent monopoly, given that these licences are royalty free until the World Health Organisation declares the end of the public health emergency of COVID-19, or until a pharmaceutical product other than Remdesivir or a vaccine is approved to treat or prevent COVID-19, whichever is earlier. Gilead has therefore protected its patent from validity challenges, acquisitions and Compulsory Licence decisions. Reports suggest that the highest number of Voluntary Licences on patents till date have been issued by pharmaceutical companies for drugs used in the treatment of the global pandemic caused by Human Immunodeficiency Virus (HIV).

Research is underway on many other patented drugs being repurposed for their use in the current pandemic. Desperate times call for desperate measures, it would be interesting to see if the Government will have to resort to using its powers, under the Patents Act, 1970, to effectively balance its responsibility of protecting public health with a patentee’s exclusivity rights.

[1] Section 83 (b), (e) and (g) of the Patents Act, 1970. 

[2] Section 84 of the Patents Act.

[3] As per the requirements laid down in Section 83 of the Patents Act, 1970

[4] SLP 30145 of 2014, Supreme Court of India.

[5] Section 92 of the Patents Act, 1970

[6] Section 92(3) of the Patents Act, 1970

[7] Section 100 of the Patents Act, 1970

[8] Section 102 of the Patents Act, 1970

[9] http://www.fda.gov/media/137564/download

[10] Indian Patent No. 332280 titled COMPOUNDS FOR TREATING FILOVIRIDAE INFECTIONS, granted on 18/02/2020.

[11] http://www.gilead.com/purpose/advancing-global-health/covid-19/voluntary-licensing-agreements-for-remdesivir