Webinar
Intellectual property: Crown use and compulsory licensing for new inventions
Intellectual property: Crown use and compulsory licensing for new inventions
The search for a vaccine for COVID 19 is a painful reminder that necessity can be the mother of invention. How do patent rights fit into this dynamic? When should private rights give way to the public good?
In this webinar, we look at compulsory licensing and in particular Crown Use, and how those provisions might apply to new inventions.
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Webinar transcript
(Please note this is auto-generated and un-edited)
0:33
Hi, everybody. My name is Nick Breaks and I'm a partner in the IEP team here at Shakespeare Ma today. Welcome to our webinar today and thank you very much for taking time out to join us.
0:45
Before we start, just a few points on how this work is a Q and A icon at the bottom. So please use that to ask any questions that you have and we'll come back to you afterwards and directly. So my topic today is on compulsory licensing and crown use. Before we dive into the detail. Just a few words by way of introduction.
1:07
The idea for this webinar started when Kobe nine team exploded into our world, roundabout late February, early March.
1:16
And many people running businesses of course were concerned that probably their immediate concerns were controlling costs, stuff going on furlough.
1:26
What to do about IP, probably wasn't the top of most people or executives worry list. However, learning to live with the virus, most certainly was on top of governments. And frankly, everyone's concern.
1:40
That gave rise to comment in the press about IP patents in particular. And whether they were going to be a help or hindrance in this process. For professionals like myself. And presumably many of you listening in to this webinar, this is quite a familiar theme that we've heard or used to about whether patents are a help or a hindrance.
2:03
And, of course, it's a, it's a bargain with the state, Isn't it that you would disclose your invention in return for which you get a time limited monopoly And this is supposed to further the interests of mankind.
2:14
So those are the questions that covert 19 has raised, I think, you know, patterns can be a bit misunderstood and the the concern would be that there would be a lifesaving vaccine and somehow, patents would get in the way of vaccines being made available to the world's population.
2:36
This was the problem. But, of course, that's only a problem if a patent is able to or enforces patents in such a way as to deny product, to the market.
2:50
Or, he's not able to provide enough product to the market. So, how is the public interest to be protected?
2:59
So here are some of the points I was just talking about there, but, you know, how is the public interest to be protected and what is the access that's going to be given to the stock saving vaccine?
3:09
So the topics for today are compulsory licenses, crown yeas, and injunctions. So let's start with compulsory licenses.
3:20
Now there's a group of sections in the Patents Act talks are set out there set out in detail how this is going to work. Now, compulsory licenses really frankly have been little used over the years, and in fact competition law has proved a more effective way of policing. Those companies with many patents which might be regarded as abusing a dominant position.
3:45
Now if we put ourselves in the in the scenario of thinking, you know, how would a compulsory license help access to vaccines? There's a fundamental problem in that you can't apply there's a provision in the Patents Act which says that you can't apply for compulsory license until the expiry of three years from grant. Well, let's just assume that someone's filing a patent for a vaccine today is going to take what a minimum of something like 18 months to get the patents granted. And then another three years till you get a compulsory license. So I'm not sure necessarily a compulsory license is going to be the way forward but let's just finish looking at compulsory licensing as a topic. You make an application.
4:27
Someone who might want a compulsory license makes an application to the controller and he may set the terms of the license principally as to royalty rates.
4:38
Here are the grounds for a compulsory license that a controller might wish to consider.
4:44
Fundamentally, it's demand for products not being met on reasonable terms.
4:50
So, for example, the proprietor may refuse the license and the result of him doing so hinders.
4:58
Unimportant technical advance of considerable economic significance, not some wording from the act or the manufacture of products, which do not infringe is unfairly prejudice. That's another ground or example of demand not being met on reasonable terms.
5:15
Not if a license is to be given. A very restricted.
5:18
They're not exclusive or non assignable have to provide adequate remuneration to the patentee. And they are limited in time.
5:28
So the criteria for the controller to think about when he is considering those reasons, or the nature of the invention, you might pause and think, Well, the next invention, in this particular case, might be for a vaccine. So, rather, critical.
5:41
And whether the patent is making full use of it, hopefully, invention that is, what is the ability of the applicant to work? The invention.
5:51
The applicant for the compulsory license, that is not for the pattern. What is the ability of the applicant for compulsory license to work the invention to public advantage? How's that going to help the public? if he's given a compulsory license? So, let's just move on to Crown Yeas and it's this one, I think I think is going to be the most opposite for the covert situation.
6:11
For those of you following the numbers, you'll see that's the next group of sections in the Patents Act.
6:15
Now, Crown Use is really effectively a compulsory license, albeit that section 55 of the Act makes clear that Crown use is not technically an infringement of a patent. I think that, some, it makes good sense. If you go back and, you know, the history of patents, patents were a form of patronage given by the Crown and clearly they wouldn't want to set up a situation where the crown itself could be an infringer.
6:41
So the Crown use powers in the Act are really very broad and frankly, seemingly without limit.
6:47
And if that wasn't enough, there are even wider powers' provided for if there's an emergency in a subsequent section.
6:56
So very broad range of powers for the crown to authorize crown use.
7:02
Now, certainly, I've always thought of Crown is up until six months ago or even 3 or 4 months ago as being something that wouldn't most likely involve either military products or intelligence material.
7:17
But it's really come to the fore here, as I say, in with a pandemic. And one of the grounds for one of the authorized acts that you can authorize for crown yeast is sales of infringing products, where the invention is a specified trunk or medicine.Â
7:34
So, if you apply that to the situation, situation we've got here, you could well imagine that there might be.
7:40
You'd authorized sales off by drug manufacturers to the National Health Service, PP. Personal protective equipment is clearly not a drug or medicine. but I don't actually think that would create any practical problem because at the very wide terms of crown use provided for in the act. So who does Crown use help? Well, the crown, obviously, but in practical terms, that's likely to be a government department or a person authorized in writing by a government department.
8:14
So the way this would work is the government department, say, the Ministry of Health, would authorize a particular manufacturer to make product X That would be a Crown Yeas.
8:28
Perhaps surprisingly, the patent T need not be told in advance of these arrangements. But he must be told at some point and informed of the extent of use.
8:40
So, Authority can in fact also be granted retrospectively. So A would be infringer, if you like, could start making product and subsequently be authorized by the crown or a Government Minister, and acts committed before that authorization, was given, would still be covered by that authorization.
9:02
What about compensation for the patentee?
9:04
Cool terms can be agreed between the parties or, if not determined by the Court on a reference. So, with faculty is able to get appropriate, what would essentially be royalty payments by that method?
9:19
And under this references, Section 58 reference, it is, His award may considerably be enhanced by a provision that was added by, I think it was the 1988 Copyright Designs and Patents Act that provided in addition for payment for loss of profit, or not being awarded a contract for manufacturing goods. In question.
9:39
Probably the biggest open question on this is, who pays the compensation to the patentee? Is it to be the contractor? You know, in other words, the person authorized by the government or is it to be the government? In? Other words, the taxpayer.
9:53
There's no provision on that in the act, and I suspect it was just going to depend on the facts and circumstances in each in each case. So just some practical considerations: If you'd like to read some more about this, there has, in fact, been a very recent case on this: not to do with pharmaceuticals, pharmaceuticals, but to do with that telecommunications.
10:12
I become against Vodafone and you've got the reference, that decision of his Deputy Judge Douglas Campbell QC.
10:19
There were some quite tricky points in this case. I just picking up a few of them, what amounts to an authorization question. So in this particular case, broadly speaking, what was happening was that Vodafone was accused of infringing IP Commerce Patent. And Water Vodafone, we're doing, we're responding to a police request to provide information.
10:45
And the authorization was essentially a a police notice given to Vodafone to do these things and provide this information.
10:54
And it was held that this amounted to authorization So it wasn't authorization, by the crown that is. So it wasn't a nice letter headed from the Ministry of Justice, or something authorizing Vodafone to do these things. It was, in fact, a police instruction given to Vodafone, but that was held still to be the appropriate inappropriate authorization.
11:18
Next, slightly tricky question was, do the patent or patents need to buy identified in this authorization? The implication being that if they're not covered, then there could potentially be infringement under them. And mister Douglas Campbell decided that no, they didn't, it not need to be identified because I could be a very great number of patents and it put a rather big burden on the people being authorized to identify all possible patents that might be infringed.
11:51
What about the question of, is infringement necessary? In other words, would there be a possible workaround? So authorization could only be given if infringement was absolutely necessary. And it was decided, again, it wasn't necessary that they could only be the route to the solution by using an infringement, So it wasn't necessary.
12:15
And finally, well, not quite fondly on whom should the risk for, should the risk for getting into these things wrong, fall on the person being authorized all the government? And as I understand the decision, it was the risks to fall on the government on that.
12:31
Mister Douglas Campbell made the observation that if there was any difficulty with that point about risk, or that could always be addressed in by way of appropriate indemnities in the contractual arrangements Agreed.
12:43
OK, moving on to the third and final limb of my talk, Let's just say a few words about injunctions.
12:50
So, most importantly, you gotta remember, the injunctions are always the discretionary remedy, and, of course, they're not the only remedy available to patent eve. Injunction, he was also going to want some form of financial compensation.
13:05
And it's only really an injunction that is going to bring about a situation whereby people wanting to get on the market are not able to do so, because they have injuncted from doing so. So, in other words, we're only gonna have a problem with vaccines not being available if the court is prepared to grant an injection in any particular circumstance. So, the question arises, Dennis, can public interest be a factor?
13:34
Well, certainly a Canon, there's a decision of mister Justice newberger on that a couple of years ago. But this discretion is to be exercised with caution.
13:43
And as has been observed on several occasions, they're already checks and balances that have been considered by Parliament And the set out in the statute based exceptions, IE, compulsory licensing or crown you start just talked about.
13:59
Just on the subject of injunctions, I thought I'd mention this recent case that evolve against abbott's. So I evolve and abbott against Edward Life sciences. This is all about heart valves so decision of mister colon birth, early this year.
14:14
I did in this case, mister Justice Burst was not persuaded not to grant an injunction.
14:21
In other words, he did got an injunction, even though there was evidence from clinicians saying that they would prefer to use they would be infringing products, and he decided the clinical clinical preference clinicians' preference was not sufficient to avoid an injunction.
14:40
It has to be, you know, it would need to be if something more extreme than that.
14:47
So in conclusion, I really can't see a situation whereby lifesaving drugs or vaccine.
14:56
Are going to be denied to the public because of a monopoly, right. Involving patents being enforced at a cost of human life. I can't see a judge in this country or indeed any other, making an award along those lines.
15:09
If there really wasn't an emergency, almost certainly crowned use would be invoked say in practical terms, you gotta get mechanical or one of his colleagues authorizing manufacturers of whether it be drugs, vaccines, personal equipment, personal protective equipment. So I of engine latest.
15:32
To alleviate any situation, an emergency that arises, as I say, the big question on crown users who actually pays.
15:40
So in conclusion I thought we'd just finish with a quote here from Colin version that heart, heartfelt patent case, which I thought was quite opposite. I'd just like to draw your attention to the date 12th of March 2020. So this was just before lockdown started, and I think it was rather prophetic. Collins said this. So he says, Another factor must be the nature of the competitive product. I doubt a generic version of lifesaving of a lifesaving drug would usually engage the public interest in this way at all. I say, usually, because, one can think of a special cases such as a novel pandemic disease. But, if that happened, and the government could invoke cronies.
16:21
So, I hope that was helpful. That brings us to the end of this webinar. I hope you found it useful in the current circumstances. If there's something that you'd like further information on, I'd like to discuss further, to, please get in touch, and we'll get back to you.
16:35
In the meantime, we've launched a free Helpline, giving you access to a senior team of experts for free legal advice over 20 minute phone call details on the screen, if you'd like to book a session. And finally: please do visit our small on demand pages to access recordings of other webinars and small talks, angina conversations on LinkedIn and Twitter.
16:55
Thank you for joining.
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