INTELLECTUAL PROPERTY RIGHTS AND PHARMACEUTICALS: A THAI PERSPECTIVE ON PRICES AND TECHNOLOGICAL CAPABILITY *

Jakkrit Kuanpoth **

I. INTRODUCTION

The justifications in favour of pharmaceutical patenting in developing countries are that it induces foreign direct investment (FDI); it stimulates local inventive activities; it encourages transfer of new technologies into the country. The note is aimed at examining whether intellectual property (IP) rules on pharmaceuticals generate benefits to developing countries by looking at the situation in Thailand. Prior to the discussion, it may be appropriate to note that the study intends to provide policy arguments rather than theoretical socio-legal analysis. It has also to be pointed out that strict empirical considerations are not the yardstick for analysis. However, basic socio-economic, political and legal considerations provide the basis for the discussion on costs and benefits of pharmaceutical patents in Thailand. The article begins with an examination of IP protection in Thailand and the new trends of IP protection under bilateral trade agreements. The second part provides a summary of the development and basic structure of the pharmaceutical industry. It then goes on to examine the impact of IP protection on prices, FDI, technology transfer, and research and development (R&D) capacity. The Thai pharmaceutical industry is presented as an illustrative example.

INTELLECTUAL PROPERTY PROTECTION IN THAILAND

Currently there are seven legislations protecting IP rights in Thailand, including the Patent Act B.E. 2522, the Copyright Act B.E. 2537, the Trademarks Act B.E. 2534, the Plant Variety Protection Act B.E. 2542, the Protection of Layout-Designs of Integrated Circuits Act B.E. 2543, the Trade Secret Act B.E. 2545, and the Protection of Geographical Indications Act B.E. 2546.

Unlike Western countries, Thailand has not had a long period of legal development in the IP field. Rights over inventive ideas were recognised when the Patent Act B.E. 2522 was adopted and entered into force in 1979.^] In 1992 and 1999, Thailand, under pressure from the United States, decided to revise its patent law in order to avoid trade sanctions. The amendments significantly increased the level of patent protection, including an expansion of the scope of patentable subject matters, an extension of the term of patent rights, the protection of petty patents or utility models, laying down conditions for the application of compulsory licensing, amending the exclusive rights and their limitations, abolishment of the pharmaceutical price review committee, etc.

The Thai patent law has an aim of providing a temporary monopoly for inventors in order to foster the development of a required technological base, and to assist the acquisition of foreign technologies. In addition, it was envisaged that the sound IP systems would create a favourable climate for foreign investment. The Patent Act B.E. 2522, as amended in 1992 and 1999, provides patent protection for inventions in almost all fields of technology for up to 20 years from the date of filing of the application in Thailand. The duration of patents is six years for a petty patent and 10 years for a design patent. The term of a petty patent may be renewed twice, two years each. Patent protection in Thailand can be obtained either as a product or a process patent. The holder of a product patent has an exclusive right to make, use, sell, stock for sale, offer for sale and import the patented product. Patent law has a very strong form of monopoly rights. The patent holder may file a criminal or a civil lawsuit, or both, against those who commit an infringement of his or her patent rights. An intentional infringer subjects him- or herself to imprisonment up to two years and a fine up to 400,000 baht or both.²

Since 2003, Thailand has negotiated a free trade agreement (FTA) with the United States. In the bilateral trade negotiations, the United States has demanded for greater trade commitments from Thailand, including demands for the enlargement of access for US exports and preferential treatment for US IP right holders.³ The United States intends to achieve higher level of IP protection, beyond the minimum standards under WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).⁴ The tightening of domestic IP legislation in foreign countries through bilateral trade negotiations, together with the use of trade leverage under US trade laws, no doubt would help the United States to produce the establishment of an acceptable framework within the multilateral trade negotiations. This strategy was successfully employed by the United States during the Uruguay Round that led to the adoption of the TRIPS Agreement.⁵

The inclusion of IP chapter in FTAs resulted from heavy lobbying of certain industries. The US IP policy was under great influence of several interest groups such as International Intellectual Property Alliance, the Biotechnology Industry Organisation, and the Business Software Alliance. The Advisory Committee on Intellectual Property Rights for Trade Policy Matters (IFAC-3), which plays the most important in advising and influencing the US trade policy, comprises large multinational companies like Eli Lilly, Merck, Pfizer, Anheuser-Busch, Procter & Gamble, etc.

When the United States Trade Representatives (USTR) submitted the draft IP text to Thailand in the sixth round of FTA negotiations in January 2006, the following new IP rules as related to pharmaceuticals were proposed ⁶ : first, the US draft proposal requires that an effective and adequate protection must be given to inventions in all technological fields. The products currently excluded from patentability under Thai law (e.g. plants, animals, biological processes, genes, gene sequences, methods of medical treatment, business methods and computer programs) must be protected in the forms of both product and process patents. Thailand must also protect second uses (i.e. new use of products already known or existed in the market). For example, Thailand must allow the claim to a new use of an old drug or the claim to a new therapeutic application of the known drug. ⁷

Footnotes

This report is funded by ICTSD-UNCTAD Project on IPRs and Sustainable Development and IDRC with the support of the DFID and Rockefeller Foundation. Readers are encouraged to quote and reproduce this material for educational and non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of ICTSD or UNCTAD.

Senior Lecturer, Faculty of Law, University of Wollongong, Australia.

1. J. Kuanpoth, "Major Issues in the Thai Patent System", Thai Bar Law Journal, Vol.50, No.1, 1994, pp.55-84. Also available at: www.thailawforum.com/articles/jakpat1.html

2. J. Kuanpoth, "Thailand" in C. Heath (ed.), Intellectual Property Protection in Asia (Kluwer Publisher International, London, 2002), pp.337-362.

3. P. Roffe, Bilateral Agreements and a TRIPS-Plus World: The Chile-USA Free Trade Agreement (Quaker International, Ottawa, 2004); D. Vivas-Eugui, "Regional and Bilateral Agreements and a TRIPS-Plus World: The Free Trade Area of the Americas (FTAA)", TRIPS Issues Papers 1, QUNO/QIAP/ICTSD, Geneva, 2003.

4. P. Drahos, "Developing Countries and International Intellectual Property Standard-Setting" (2002) 5 Journal of World Intellectual Property 765.

5. In the 1980s, the USTR requested consultations with some developing countries in Asia and Latin America on IP issues before and during the Uruguay Round. The United States successfully used unilateral trade sanctions against Thailand to the tune of $165 million in 1989 to force the Thai Government to amend and expand the coverage of patent law even before the TRIPS negotiations were concluded.

6. The US draft proposal submitted to Thai negotiators was leaked and posted on: www.bilaterals.org/article.php3?id article=3677

7. See J. Savina, "The Patentability of the Second Therapeutic Application-- Why must the Law be Changed?", Patent World, August 1995, pp.32-35.