Thailand Law Journal 2012 Fall Issue 1 Volume 15

Expedite Trials

The court finally stated that if the main issue for the grant of the interim injunction was the same as to one to be tried in the suit, it might be a better option to expedite the trial in itself, so as to save either party from irreparable damage and loss, or prejudice .

Considerations for Market Development

The significance of the case of Franz Xaver Huemer v. New Yash Engineers rested on the importance of those patents which were registered in India by foreigners, but ‘not used’ – hence, as stated in the judgment, likely to ‘affect our market and economy’ .

There have been identified cases, where the patent-holder may attempt to interfere with the possibly legitimate activity undertaken by its competitors. In Manioka Thevar, the court observed, the objections raised by the defendant are instrumental in determining the existence of a ‘serious controversy’. The controversy may rest on the premise that the invention claimed by the plaintiff is not a new one, or a new manufacture. Or, it may rest on the contention that the invention does not involve any new inventive skill with respect to the prior art. The court’s interest in not grant granting an interim injunction is to keep from restraining the defendant in the pursuit of his normal business activity.

‘Age’ of the Drug

In paragraph 63 of the judgment in Hoffman v. Cipla, the court identified the six-year test as one which ‘baffled’ them and further identified that the premise might have crept in through the case of Manika Thevar v. Star Plough Works . The court categorically stated that the principle was not a rigid formula of mathematical application, but more in the nature of a rule of caution and prudence. In Manioka Thevar, it was stated that the age of the patent was an important concern. It has been established that patents less than six years old are regarded as being recent patents. Further in Boots Pure Drug Co. (India) Ltd. v. May and Baker Ltd there is need to prove actual use of the patent for more than six years in India .      

“Suppression” of the Patent

The core of the judgment in Franz Huemer v. New Yash dealt with the aspect of “suppression” of a patent: the court observed that after establishing the issue of Balance of Convenience, with respect to the industry, specifically, connoted factors like the size of the infringer’s business in comparison with the size of the right-holder, the public interest in the product and the court specifically presented a life saving drug as an apt example for the application of this condition, loss of employment and other facets which might weaken the patent-holder’s right in being granted an injunction. However, the court identified that where there was only  a short period before the expiry of the patent itself, and both parties possessing equal size and being competing players in the market might serve to tilt the balance in favour of the patent holder .

Essential Nature of Certain Drugs

The ‘essential’ nature of drugs has been extended beyond those which are life-threatening. Indeed according the Yale campaign on Access to Medicines , it is said that even lifestyle drugs such as those which reduce balding etc., should not be saved from being placed under a compulsory access provision.

The drug Erlocip is an inhibitor which destroyed certain cancer cells while it caused little harm to human cells. Administered in tablet form, Roche further submitted that Tarceva was approved by the FDA in 2004 and by the European Union in 2005 .
Of the three requests which have been made for compulsory licenses under the CAMR (Canada’s Access to Medicines Regime), a request was made from Biolyse Pharma Corporation, for a patent on oseltamivir phosphate, a product sold by Roche under the brand name Tamiflu.   Fearing an anthrax attack, in order to provide for the augmentation of a stockpile, the patent on ciproflaxing was overridden .

Developed Country Usage of Compulsory Licenses

The case of ciproflaxin, the drug which counters the anthrax attack, is  drug which was a candidate for a compulsory license from a developed country. The essential nature of the disease is that it is capable of quick and deadly transmission. This is an example of a drug which caused the United States to follow the same route which developing countries have traditionally undertaken in order to reduce prices while procuring the drug from the manufacturer. Despite the United States traditionally having been involved in countering those countries which attempted to use compulsory licensing for their own health crises, resorted to the same method when itself faced with a national health crisis. The article by Jason Ferrone goes on the contrast the degree of the declared national emergency and the potency of the health crisis which might have justified the grant of the compulsory license and compares the same with the experiences in Brazil and Thailand. His conclusion is that by having resorted to compulsory licensing as a mode of addressing a health crises, the same action when taken by other developing countries, stands automatically validated owing to the stance of the United States .

Further dwelling on developed country mechanisms, Patrick Mark further identifies the differences between the U.S. Patent law regime and the South African Patent law regime as regards licensing specifically. While the United States uses a “Reasonable Royalty Scheme” which is a form of licensing which focuses on the damages to compensate the infringement of a patent as determined by the jury, or the court, and containing provisions to increase the rate up to three times. Section 22C of the Medicine Act of South Africa, however gives the Minister of Health and the Pricing Committee the right to determine royalty rates for the identified compulsory license use .

Sublicensing- Protected by article 28.2 of the trips agreement?

Voluntary licensing arrangements have been identified as a cost-containment strategy. The two identified factors which are crucial in determining the effectiveness of a voluntary licensing agreement are the capacity of the license and the terms of the licence. It was further identified that owing to the minimal bargaining power illustrated in developing countries, voluntary licensing need not be relatable to price reductions .      

Sublicensing agreements are contracts which permit other companies to manufacture and market generic versions of Tamiflu. As identified by the Congressional Research Service, Roche would have been entitled to three to five per cent royalties in case of a grant of a compulsory license. However, Roche would have little ability to control the sale price of the drug and it follows that if the price charged for a generic version is cheaper, there would be entailed smaller royalty payments. The choice made by Roche was to engage in sub-licensing agreements which it voluntarily enters into with third-parties of its choosing . Roche had mentioned that sublicenses would only be issued to those third parties which could realistically produce substantial amounts of the medicine for emergency pandemic use, in accordance with the appropriate quality specifications, safety and regulatory guidelines . Article 28.2 of the TRIPS Agreement, states as follows: “Patent owners shall also have the right to assign, or transfer by succession, the patent and to conclude licensing contracts.” It would be relevant to consider the interplay between this Article and Article 8.2 and further Article 40.2 of the TRIPS agreement while gauging the prejudicial nature of such agreements signed by the patent holder, with respect to demonstrating positive misuse, despite not being able to establish abuse of a dominant position. 

In return, the companies pay license fees, and they are subject to certain conditions. The conditions could dealt with the clause to restrict possible sale to augment government stockpiles, to prevent re-exports of the drug and so on. An advantage is that the generic companies gain the expertise of Roche in order to ensure the quality of the product. With specific respect to Tamiflu, sublicensing was to further allow for coordination of obtaining the active ingredient in the antiviral drug – shikimic acid .