Patents Rights in Developing Countries: Exceptions
Intellectual Property Rights (IPRs) have never been more economically and politically important than they are today. Elements of IP law such as, but not limited to, trademarks, copyrights, patents, and utility models, are of prime importance in debates on IPRs in various sectors such as education, industrial policy, biotechnology, entertainment, media, etc. In the 21 century, economies function as “knowledge-based economies”, thus making the appropriate understanding IPRs of paramount priority in all spheres and economic development.
However, the impact of proliferation of IPRs has not been universal across the globe. Conflicting views still persist with regards to the impact of IPRs on development in various parts of the world. Some statutes such as the World Trade Organisation’s (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) have sought to bring the benefits of the creation of incentives for individuals to pursue knowledge generation to developing countries. Whereas, a differing outlook on IPRs suggests that some of its elements such as, but not limited to, a patenting regime, would have an adverse effect on developing countries, and would disrupt the sustainable development of products, for example, raising the price and limiting the availability of unique yet essential drugs, or perhaps limiting the availability of educational materials, that may have otherwise been proliferated for the greater good of the society.
Thus, developing countries are faced with a series of tough challenges, and even tougher questions in this regard:
- What are the major concerns surrounding IPRs in developing countries?
- Which countries classify as “developing” countries?
- Is sustainable development directly affected by issues in intellectual property?
- Are developing countries, particularly the least economically developed ones, in a good-enough position to negotiate on intellectual property rights on a global scale?
Such questions, and many more, are essential issues that ought to be tackled by policy makers so as to address intellectual property laws in a manner that best meets the needs and desires of people within developing countries, and works to protect their best interests.
The classification of countries as ‘developed’ and ‘developing’ is extremely complex, as the United Nations (UN) have themselves acknowledged that there is no specific established convention for the aforementioned terms. The UN, in 1999, as a part of their so called M49 standards, have outlined that the terms ‘developing’ and ‘developed’ are intended for ‘statistical convenience’ only, and does not necessarily express any judgment on part of the UN with regards to the progress achieved or stage reached by a particular country in its development process.
However, the World Bank, which is a UN institution, does provide an insight into which countries may classify as ‘developing’, as its main function is to provide loans and grants for capital and infrastructure projects in Lesser Economically Developed Countries (LEDCs), as opposed to More Economically Developed Countries (MEDCs).
As per the ‘World Development Indicators’ published by World Bank for the 2019 fiscal year (FY), the World Bank identifies ‘low-income’ economies as those countries which have a Gross National Income (GNI) per capita of USD 1,025 or less. The World Bank establishes 4 categories of countries, on a “by income” basis:
- Low Income Economies (GNI per capita lesser than or equal to USD 1,025) (31 countries identified for FY 2018)
- Lower – MIiddle Income Economies (GNI per capita from USD 1,026 to USD 3,995) (47 countries identified for FY 2018)
- Upper – Middle Income Economies (GNI per capita from USD 3,996 to USD 12, 375) (60 countries identified for FY 2018)
- High – Income Economies (GNI per capita of USD 12,376 or more) (80 countries identified for FY 2018)
Exceptions to Patent Rights under the TRIPS Agreement
Prior to the establishment of the TRIPS agreement in 1994, countries had free rein to adopt exceptions to their domestic patent laws, as they saw fit. However, the TRIPS agreement was envisaged with the outlook that it would introduce some substantive provisions on exceptions to patent rights that would have a global outlook.
The following sections of this article will analyse the history and nature of the aforementioned exceptions to patent rights. Such exceptions pertain to a wide range of policy issues that range from issues such as science & technology, public health, international trade, international travel, particularly those with applications in ‘developing’ countries.
Private & Non-commercial Use Exception:
- It has been a long-standing feature of patent rights that they apply exclusively to commercial activities, with little thought or consideration being given to non-commercial activities. It was constituted earlier that patent laws recognise a patentee’s right being limited with regards to acts that constitute non-industrial or non-commercial applications. However, the precise definition of the aforementioned terms, and their distinction has been separated for all countries.
Two different approaches have been considered for establishing a boundary between commercial and non-commercial acts with regards to patent rights:
- On one hand, the rights of the patent holder could only be limited to restricting unauthorised third parties from carrying out activities that may classify to be of a “commercial” or “industrial” nature, i.e., any activity that may be carried out for the purposes of deriving an income. In this manner, an implicit exception is placed to the patent holder’s rights for non-industrial and non-commercial purposes. Prior to the TRIPS agreement, developing countries, or those with poorly developed IP laws, followed this system of distinction.
- On the other hand, patent holders may be granted a set of broad rights over a large spectrum of activities by means of an explicit exception to the rights of the patent holder over non-commercial activities. This approach is most often adopted by developed countries, where explicit exceptions for “private and non-commercial” acts are provided.
- For example, under section 60(5)(a) of the UK Patents Act 1977, any act done for private and non-commercial purposes would not constitute an infringement of a patent holder’s rights.
- It is important to note that the aforementioned means of distinction have had a profound effect on the interpretation of IP laws in MEDCs, especially at the intersection of fields such as medicine and philanthropy.
Experimental/Scientific Use Exception:
- This has been one of the most widely contested and known exceptions to patent rights globally. Exceptions to patent rights in the field of science came about as an early conception that patent rights were not supposed to restrain non-commercial activities done by, inter alia, Non-Governmental Organisation (NGOs). It was a long-standing concern that patent rights ought not to hamper bona fide experiments and scientific developments.
- However, the long-standing question with regards to the scientific use exception pertains to extent to which this exception applies. The sole essence of this matter is the permissibility of experimental and scientific activities under the exception to non-commercial activities. In many cases, when a certain scientific activity, originally intended for a non-commercial purpose, grows and evolves, and crosses into the territory of commercial application, it would require a patent licence.
- For example, under section 60(5)(b) the UK Patents Act 1977, any act, which is done for experimental or scientific purposes, shall not be deemed to infringe a patent.
Prior Use Exception:
- This exception pertains to instances wherein an inventor makes an application for patent rights; however, it turns out that a third party had already (and independently) made an application for the same invention, in secret, i.e., the public was not in possession of the details of the patent for the invention as it was not published. In such instances, a roadblock arrives wherein two individuals have filed for the same patent, with a dilemma arising due to one of them being justifiably unaware of the other’s filing.
- In such cases, it was widely regarded as fair and just that the inventor be granted a patent. However, it is also equally widely considered that it would be unfair to permit such a patent holder to enforce his/her patent against the invention of the secret prior patent holder.
- Thus, in such cases, a “prior use exception” may be provided, which grants a permit to the prior (secret) patent holder to carry on with what he/she was doing earlier.
- However, the paramount issue with regards to this exception is the scope of what this exception ought to be. For example, if the prior paten holder is a small or medium sized enterprise (SME), factors such as the scope of the activity in question, could adversely affect patent holder and the effects of the same could be potentially very large.
Extemporaneous Preparation of a Medicine in a Pharmacy Exception (Pharmacy Exception):
- This is one of the areas of the TRIPS agreement which outlines exceptions to patent rights, whose profound effects can be seen in direct applications.
- During the last fifty to one hundred years, there has been a shift in attitudes pertaining to the patenting of inventions in the medical field. Previously, it was a self-evident idea that the promotion of patent monopolies for essential commodities such as food and medicines was harmful.
A number of differing stances have arisen on this issue, with suggestions coming from all across the spectrum:
- allowing all medical inventions unpatentable,
- allowing all medical inventions to be patentable, but providing for patent exceptions for patents filed for by pharmacists and doctors,
- allowing for only some medical inventions to be patentable, such as medicines, which have unique chemical compositions, but restricting the permissibility of patenting to medical processes and medical treatment methods,
- allowing for all medical inventions to be patentable.
- Europe, for example, has struck a policy balance on this matter, which excludes methods of medical treatment from the scope of patentability, but retains the permissibility of patentability for patent exceptions relating to pharmacists. This exception, described as “extemporaneous preparation of a medicine in a pharmacy” (the term “extemporaneous” originates from the Latin term ex tempore, meaning “in the spur of the moment). This aforementioned exception allows a pharmacist to create a generic version of a patented drug, in accordance with a doctor’s prescription allowing him/her to do so. Such a development has massively aided the proliferation of pharmaceutical industry in Europe.
- However, it is important to note that this only represents a European or MEDC outlook on the matter. In LEDCs and developing countries, no such distinction has been instituted which differentiates the medical and economic reasons for production of drugs. Such developments would prove key to facilitating the assignment of correct patent rights in the medical field.
- Yet, even in the MEDCs, a quantitative limit needs to be introduced that pharmacy could theoretically produce under the Pharmacy Exception.
- At present, the Pharmacy Exception is prevalent in mostly European Patent Legislation. For example, Section 60(5)(c) of the UK Patents Act 1977 allows for the “extemporaneous” preparation of medicine for an individual in a pharmacy, as long as it is in accordance with a prescription provided for by a doctor or a dental practitioner, and this, would not constitute a patent infringement. Such legislation is lacking amongst “developing countries”, and would likely need to witness great progress in order to ensure sustainable development with regards to IPRs.
In conclusion, the aforementioned sections of the article outline a few of the primary and important exceptions to patent rights under the TRIPS agreement instituted by the WTO. However, most of these exceptions are afforded to all countries that are signatories to the TRIPS agreement, and are not exclusive to developing countries. What is exclusive to developing countries is the lack of interpretation of these agreements into their domestic laws, which has been carried out to a great degree by MEDCs, particularly those Europe and North America. Thus, developing countries need to exercise a great deal of importance to such issues, and legislate on the same, so as to ensure better compliance with IPR standards on a global level.