IP 2.8 COMPULSORY LICENSE (PATENT AND DESIGNS)
Section 11 PDA. Compulsory licence is also supported under the Agreement on Trade-Related Aspects of Intellectual Property Rights 1994 (TRIPS).
Check out this situation: Chima has found a cure to Ebola through the use of his anti-viral machine (AVM) after taking the anti-vitral drug (AVD). This is impressive and he was granted a patent protection for it. Imagine he decides to only sell his inventions to Indian, Chinese and American hospitals that order it from abroad for #80million per AVM-AVD? Or he pegs it at 50million Naira and decides to sell it only to Nigerians/hospitals that can afford it. Meanwhile, the actual cost of production is roughly 1million. Nobody can complain because the patent protection says only him can manufacture and sell the AVM-AVD. This is where Compulsory licenses can come in because although the law seeks to reward the brilliant application of one’s thinking faculty… It however seeks to encourage growth and dispel the vices of monopoly.
If a person gets a patent in respect of an invention, he must work it locally (i.e. make it available in Nigeria), else an interested person (applicant) may (after applying to the patentee for a license and getting rejected) apply to the court for a compulsory license. The applicant must satisfy the court that:
- He applied to the patentee for a contractual licence but he has been unable to obtain such on reasonable terms and within a reasonable time.
- He is willing and able to work the invention satisfactorily to remedy the deficiency (i.e. scarcity/unavailability of the invention here).
He may then apply to court for a licence without the assent of the patentee on the grounds provided in the First Schedule to the Act. The court would listen to both sides, and if it decides to grant the compulsory licence, it shall fix the terms.
At what time in the life of a patent, would a compulsory licence be granted?: by Paragraph 1 of Schedule 1 to the Patent and Designs Act, at any time after the expiration of a period of four years after filing the application for patent or 3 years after its grant whichever period last expires. Except the Minister (in the interest of the economy or public health) decides to grant before the above periods lapse (this he should do through an order in the Federal Gazette) Paragraph 13.
Who has authority to grant a compulsory licence?
The schedule provides that “a person may apply to the court for the grant of a compulsory licence on certain grounds ….” Also under part two, the government may authorise one in public interest.
On what grounds and under what circumstances would a compulsory licence be granted?
Paragraph 1 A person may apply on one of the following grounds:
- That the patented invention is capable of being worked in Nigeria but is not being worked.
- Though being worked, the existing degree for working is not reasonably sufficient to meet the demand for the product.
- The working of the product in Nigeria is being prevented by importation of the patented article.
- Unreasonable refusal of the patentee to grant licence prejudiced the development of commercial activities in Nigeria.
An improvement patent needs the prior consent of the patentee of such invention for it to be worked, a compulsory licence may be granted where the invention constitutes substantial improvement and serves industrial purposes.
The compulsory licence may not be granted where the Patentee can show that the working is prevented by forces beyond his control or that his action is justified.
Provision for remuneration when licence granted: Paragraph 8 provides that, the court in drawing up the agreement would also determine the royalty payable to the patentee.
Under what circumstances, would a compulsory licence be withdrawn from the applicant/grantee? Paragraph 9 provides that the compulsory licence may be withdrawn where:
- The licensee fails to comply with the terms of the contract.
- The conditions which justified the grant of the licence has ceased to exist.
Such cancellation or withdrawal shall not have effect until the registrar registers such.
When the court grants an applicant a compulsory licence, Paragraph 6 provides that he shall be allowed to do an act which may otherwise have amounted to an infringement. He cannot sub-licence.
In conclusion, writers have criticised this provision for being ambiguous and unnecessary. An outright cancellation of the patent/protection in question has been suggested rather than granting compulsory licenses.
The second arm of the non-voluntary exploitation provides that the government is allowed to authorise a third party to produce a patented product or utilise a patented process where it is in public interest to do so. The person so authorised need not be an agency of government.
This was granted by the government to the defendant to produce patented drugs in Welcome Foundation Ltd V. Lodeka Pharmacy Ltd. The court also upheld the non-voluntary grant by government in a similar case of Poulenc V Lodeka Pharmacy Ltd. In Pfizer Corporation V. Ministry of Health, the House of Lords affirmed the authority of the government to authorise the production of the plaintiff’s patented drug in the interest of the public.
The law should provide compensation for such patentees with compulsorily acquired licenses.