Patents are grants of statutorily prescribed exclusive rights in relation to an
invention for a specific period of time. Such grants are often described as a quid pro quo whereby the patentee receives the benefit of a monopoly in exchange for conferring new knowledge on the general public. The balance in such exchanges has however been altered with the introduction of the WTO’s Trade-related Aspects of Intellectual Property Rights Agreement (“the TRIPS agreement”), subsequently reflected locally in the Patents Act (Cap. 221, 2005 Rev. Ed. Sing.). With the advent of this agreement, a new creature in compulsory licensing arose. This article thus seeks to discuss the ramifications of this facet of intellectual property law and to dispel any prevalent misconceptions in this regard.

Compulsory licensing occurs when a government permits a third party to
produce a patented product or utilise a patented process without the consent of the patent owner. This has been made possible pursuant to article 31 of the TRIPS agreement and s. 55 of the Patents Act. In recent times, such power has een exercised in the case of pharmaeutical drugs. In 2004, Malaysia issued a compulsory licence to a Mumbai-based company for the supply of anti-retroviral medicines used in the treatment of AIDS. Recent concerns with regards to the bird flu pandemic also triggered the Canadian government’s decision to add Osteltamivir (more commonly known as Tamiflu) to a list of pharmaceutical products eligible for compulsory licensing for export in February this year. These cases are merely illustrative of the vast number of compulsory licenses that have been granted worldwide.

It is a common misunderstanding that such licensing can only be given in casesof emergency. In reality, the TRIPS agreement does not specifically list circumstances whereby compulsory licensing may be justified, and the 2001 Doha Declaration on TRIPS and Public Health confirms the freedom of member countries in determining the grounds for granting compulsory licences. Indeed, s. 55 of the Patents Act provides for the application of such grant should it be necessary to remedy an anti-competitive practice.

The underlying rationale for compulsory licensing is obvious – to strike a balance between corporate and public interests. However, though this sentiment is laudable, it remains to be seen if this would lead to adverse effects in the research and development sector and contravene the very purpose of patents themselves. While some may argue that studies are still largely inconclusive vis-à-vis the effect of patents on corporate research and development growth, the loss from compulsory licensing stems not from its negation of the patents’ positive effect per se, but from the entrenched expectations of would-be patentees. Where a company researches with the expectation that its inventions can be patented and its rights enforced, it will undoubtedly be disgruntled should such benefits be taken away with only the detriment left to bear. Although provisions are in place for reasonable compensation to be made to the company in question, such compensation must surely be far less than the company’s potential profits otherwise.

“Corporate wealth or public health?” – therein lies a conundrum that is not so easily answered. Thus, away from clear-cut situations of global or national emergency, it may be well advised that compulsory licences are granted in a careful and sparing manner.

Jeth Lee is a second year law student and the Juris Editor. He is also the Deputy Editor of the Singapore Law Review. – Juris Illuminae Vol. 3 Issue 2 (November/December 2006)