Major issues in the Thai
patent system
Jakkrit
Kuanpoth
V.
LEGAL MECHANISMS TO CONTROL ABUSE PATENTS
Thailand's
patent policy is the same as those of many other countries, as it requires
local working of patents. Although no provision explicitly states that
the patented invention must be put to effective use within the country,
the patentee has to do so within a specified time in order to preserve
his exclusive rights. The Patent Act contains provisions to ensure local
working of patents. Under the Act, there are three measures relating to
local working requirements : compulsory licensing, revecation, and the
monitoring of the prices of patented medicine. This section is intended
to examine the implication of these legal mechanisms.
A. Compulsory licensing
A compulsory licensing system under the Thai law is a remedy for an abuse
of monopoly rights. Non-working of the patent within the national economy
is regarded as an abuse, The law considers a patent not being worked in
two particular circumstances.
First,
the Thai patent law explicitly states that the failure to work arises
when a patented product has not been produced or the patented process
has not been applied for manufacture in Thailand. It means from this provision
that the law does not regard importation as equivalent to "working" of
a patent. The patentee must utilise the patented invention in the country
himself or through another person by authorisation.
Secondly,
a compulsory license can also be granted when the demand on the Thai market
is not fulfilled. This refers to the situations when the patentee refuses
to sell the products protected by the patent, in the Thai market, in sufficient
quantity, or when such products are sold at an excessive price. It follows
from this provision that a patentee has an obligation not only to work
the invention within the country, but also to work it at a level, or a
substantial amount, sufficient to fulfil the Thai demand for the patented
articles.
In
the above cases, anybody can apply for a compulsory license from the Department
of Intellectual Property Rights to work the invention, but he has to pay
a royalty to the patentee, when a compulsory license is granted to him.65 The person seeking a compulsory license must submit an application to
the Director General claiming that a request for authorisation to use
the invention on reasonable terms and an appropriate amount of royalty
had been made by him to the patentee, but no agreement was concluded with
the patentee within a reasonable period of time.66
In
addition, the applicant has to show that, within the specified time, the
patented product has not been produced, or the patented process has not
been applied, in the country without any legitimate reason, or no product
produced under the patent is sold in any domestic market, or that such
a product is sold but at an unreasonably high price, or does not meet
the public demand without any legitimate reason.67
It
can be seen from the above that the law requires the applicant for a compulsory
license to show that there has been an abuse of the patent rights. The
law also requires that applicant to prove that the patentee does not fulfil
his obligation without any legitimate reason. This implies that the burden
of proof of non-working without any legitimate reason rests with the applicant
rather than the patent holder. This provision constitutes a reversal of
a patent principle. As generally recognised, an obligation to work the
invention in the granting country is placed on the patent holder. If there
is no working, he should have a duty to present evidence to justify his
inaction.68 This reversal makes the Thai
compulsory licensing system impractical, as the applicant has almost no
chance of determining whether the patentee has a legitimate reason or
not is not working the invention.
The
Thai law does not provide a clear definition of the term "legitimate reason"
for not working a patent. This may cause a problem in the granting procedure
of the compulsory license. The solution to this problem seems to depend
largely on the free will of the authorities concerned with its application.
The notion of "force majeur", which is generally accepted in international
legal transactions, may be introduced in order to give more adequate and
procise means of protecting the public interest.69 For instance, in order to preserve his exclusive rights, a holder of a
pharmaceutical patent may justify his failure to work on the ground that
he has been waiting for an official approval from the relevant authority
to allow him to sell the newly patented drug.
The
old s.46 contains a three-year period from the date of grant for a patentee
to work his invention in the national economy. In order to be in line
with the international position, the term has been amended by the Patent
Act B.E. 2535. The new provision, by using (but not identical) the contents
of Art.5A(4) of the Paris Convention, provides that any interested person
may apply for a compulsory license after the expiration of three years
from the date the patent is issued, or four years from the filing date,
whichever period expires last.
However,
in practice the period of time to obtain a compulsory licence by a third
party is likely to be much longer than the time stipulated, as the necessarily
prior examination with respect to the requirements of patentability may
take a long time,70 especially in a country
like Thailand which lacks staffs any a systematic arrangement. Since the
compulsory licensing is not possible during this period including another
three year from the date of the grant of the patent, it is possible that
the compulsory licensing procedure may be able to commence only after
six or seven years from the time of filing the patent.71
The
procedure involved in obtaining a compulsory license in Thailand seems
to be cumbersome. The relatively complex procedural rule helps to explain
the non-utilisation of the method in compelling diffusion of patented
technology. An examination at the Department of Intellectual Property
Rights in 1992 shows that no application for a license has been filed
and no compulsory licensing has been granted since the Patent Act entered
into force.
Apart
from this, there are two other possible reasons why the use of this system
is so minimal. One is the lack of necessary know-how essential for the
commercial working of the patented invention. The other reason may be
the long period which a third party has to wait to apply for a compulsory
license. In view of the dynamism of modern technology, the three more
years from the filing date) is too long. After this period, the technology
relating to the patented invention, particularly those in rapidly evolving
sectors, might have been considerably improved upon, and may become obsolete
and irrelevant.
The
number of applications and compulsory licenses that have been issued,
however, does not indicate whether the working of the system is successful
or not. The economic and social objectives for imposing the compulsory
license are ; (I) to compel the patentee to work his invention ; (ii)
to enhance free trade within the territory ; and (iii) to eliminate the
abuse of monopoly powers by the right holder. Because of the threat posed
by this provision, the patentee may decide to grant a voluntary license
to another person to work the patented invention in order to avoid compulsory
licensing. If patentees are pressurised to fulfil their obligations, there
can be no doubt that the system of compelling effective working of patents
has achieved its goal.
Even
though compulsory licensing in most countries has been rarely used,72.
This system may be particularly useful in curtailing the abuse of patents,
particularly drug patents. Compulsory licensing will enable the production
of medicines when they are needed in the country. Canada's success in
using compulsory licensing to guarantee the availability of essential
drugs in the country is a good example.
The
need to enhance the diffusion of pharmaceutical technology in Canada necessitated
the introduction of compulsory licensing. This was even so in view of
the domination of Canadian pharmaceutical industry by US companies. In
order to promote manufacture of pharmaceuticals under their generic names
and to pursue a policy of lowering drug prices, Canada went ahead, in
spite of pressure by the US, to pass a legislation authorising compulsory
licensing of pharmaceuticals. The statistics of the use of compulsory
licensing in Canada are very impressive. Between 1935 and 1970, 192 applications
were filed; 17 were refused ; 72 were abandoned ; and 79 were granted.73 The Canadian law amendment in 1969, which authorised the grant of compulsory
licenses for medicines, was the main catalyst of the sharp increase in
the number of the application and grant of the license.74
B. Revocation of
patents
The
Patent Act provides for forfeiture of patents under certain conditions.
When patent protection is revoked, the exclusive rights on the patented
invention pass on to the Government.
Under
the old s.55, the Board of Patents could cancel a patent if it was found
that the patented invention was not being worked in the national economy
within six years from the grant of the patent. The legislation has been
revised by the Patent Act B.C. 2535. The amended s.55, authorises the
Board of Patents to revoke the patent when certain conditions are met.
Where it appears that a compulsory license has already been issued to
a third party but it is unsuccessful to compel local working of the patent,
the patent shall be revoked after the expiration of two years from the
grant of the compulsory licensing.75 This
means in effect that the forfeiture has now become a secondary instrument.
The forfeiture will be applied only when the use of the compulsory licensing
is ineffective. Since the revocation of patents under new s.55 of Thailand's
Patent Act is essentially dependent on the grant of a compulsory license,
the absence of the license means the amended provision is unworkable.
Again,
the revision of this provision reflects the desire of the Thai legislature
to relate the forfeiture system of the Thai patent law to Art.5A (3) of
the paris Convention. Curiously, this ambition has gone in the opposite
direction from the attempts of a number of developing countries to force
some changes in their national patent rules through an amendment of the
Paris Convention. The Thai patent law has been altered to be in line with
the international treaty and continues its adoption of the main principles
of the Paris convention, despite the facts that Thailand has no obligation
to do so, and that it is widely recognised that these principles generate
no merits to developing economies.76
It
may be observed that the mechanisms for imposing local working under the
old law were well balanced. The law provided a three- year period for
the patentee to work the invention. If he did not do so, a compulsory
license may be granted. After the expiration of six years from the grant
of the patent, if the patentee still did not use the invention for public
benefit, the sanction of revocation may be applied, regardless of whether
a compulsory license had been granted or not.
C. Patented Medicine
Prices Review Board
Apart
from the compulsory licensing and the revocation of patents, the Patent
Act B.E. 2522 also provided another legal measure to control the abusive
practices of patent holders. This was known as "parallel importation".
The Thai law on paralell importation was unique, as it did not appear
in any other countries laws. The old s.77 provided that at any time before
the patented product was manufactured or a patented process was applied,
any person may import the patented products made in a foreign country
into Thailand for commercial purposes.
This
provision authorised another party wishing to sell goods covered by a
patent to import the products available in another country into Thailand
without liability to the patentee, as long as the patentee had failed
to respect his legal obligation. This provision, however, was cancelled
by the Patent Act B.E. 2535. The reason for discarding the paralell importation
was that this provision had not been a very effective mechanism, and had
never been put to much use in the country. In addition, the system of
parallel importation was not in conformity with the international norms
and standards.77
The
argument against this system seems to be inaccurate. The Thai Government
has been wrong to try, to accept the approach that has not yet been established.
Up to date, there has been no international norms and standards in the
field of patent, other than those laid down in the Paris Govention.78 Obviously, Thailand, not being a contracting State, has by no means violated
those norms.
The
merit of the parallel import was that it was the most effective and flexible
method of enhancing competition and curtailing the serious restrictions
of non-working on the national economy. Unlike the compulsory licensing
system, the importation right of the third party was automatic and was
notsubject to a length of time and complex granting procedures. The parallel
import could pressurise patentees to perform their duty by carrying the
patented invention into effect.
Instead,
the amended Patent Act establishes a pharmaceutical patent board consisting
of eight government officials and three representatives of drug companies.79 The major role and duty of the board are to monitor the availability of
newly-developed medicines in the market. The Board is also charged with
the responsibility of maintaining reasonable drug prices in Thailand.80
The
Board is given an extensive authority to make the medicine available to
the public at reasonable prices. Where it determines that no patented
pharmaceutical product is sold in any domestic market or that such a product
is sold but at an unreasonably high price or does not meet public demand
without and legitimate reason, the Board may inform either the Central
Commission on Prices and Prevention of Monopoly to enforce the anti-monopoly
legislation or the Director-General to grant a compulsory license to an
interested person to produce such medicines.81
In
order to enable the Board to exercise control over the prices of patented
drugs, the Act makes it obligatory for every pharmaceutical patentee to
provide the Board with information as to drug prices, costs of invesments
in R&D and marketing relating to medicines, and details of voluntarily
patented licensees (if any).82 The Powers
of the new pharmaceutical patent committee are considerable and final
as the parties cannot appeal any of its decisions.
Although
an attempt has been made by the Thai Government to establish a mechanism
to combat possible abusive practices, particularly when the monopoly rights
have been extended to products as vital as pharmaceuticals, the efficacy
of this system is still doubtful. Since the Patented Medicine Prices Review
Board comprises Government officials and some representatives of foreign
interests, it is likely that the price control system may not be an effective
measure of consumer protection in the pharmaceutical market.
The
US Government considers the measures for the control of patent abuses
as a trade barrier and requires Thailand to abolish these measures or
to increase the conditions for the grant of a non-voluntary license. Since
Thailand has declined to provide further amendments to conform with the
US requirements, the US Trade Representative is still keeping Thailand
on the list of nations it deemed to be among the worst violators of US
innovations.83
There
is no doubt that the compulsory licensing and revocation systems appear
in the Paris Convention and many patent laws of both developed and developing
countries. The establishment of the Patented Medicine Prices Review Board
under the Thai law cannot claim origi- nality. Some countries such as
Canada also constitute this sort of committee under their patent laws,
in order to safeguard the national public interest.84
The
demand of the US Government for the elimination of the local working requirement
and the drug price control mechanism raises many arguments as to why a
State should grant exclusive rights where the patentee does not make use
of his invention for the benefit ofsociety. This demand seems to be contrary
to the function of the patent system aimed at encouraging industrial exploitation
of inventions. A second argument is based on the ground of public benefit.
If a patentee decides not to distribute patented articles to fulfil domestic
demand, is not there justification for the State to prevent the patent
holder from ignoring such a public need?
CONCLUSION
To
the extent that a patent law is needed to protect a property right in
an inventor's idea, it illustrates in very clear terms the extent of the
relationship of law to other socio-economic factors. For a patent system
to succeed in stimulating the development of the country's competitive
edge in the world economy, it must align itself to conditions of social,
and the evolution of progressive national technological and industrial
policies.
Although
the major rules and procedures relating to patent protection in Thailand
are not much different from those established under the patent laws of
advanced developed countries, the implication of those rules in the former
can generate opposite results. Looking at the reform of Thailand's patent
law, there is no doubt that Thailand has now offered as a high degree
of patent protection as advanced developed countries. While the current
rapid development of new technologies is beyond the reach of the country's
infrastructures, it is doubtful whether this type of patent regime is
appropriate for Thailand in encouraging domestic inventions, innovations
and adaptation.
If
Thailand is to achieve the goal of industrial and economic development,
it should be prepared to offset negative impact that may result from the
abusive practices of foreign patent holders. At the same time, it must
also initiate an inward-looking strategy to increase the country's competitive
edge in the world economy, by utilising the patent system as an economic
tool to procure technological modernisation and to expand industrial capabilities.
65
Patent Act B.E. 2522, s.48.
66 Patent Act B.E. 2522, amended by Patent Act B.E. 2535,
s.46 para.3.
67 Ministerial Regulations No.6 (B.E.2524), clause 14(1)
. The Royal Gazette. Special Issue, Vol.98 Part 196,17 November 1981.
68 Art.5A(4) of the Paris Convention states that "…it should
be refused if the patentee justifies is inaction by legitimate reason."
69 UNCTAC, The International Patent System : The Revision
of the Paris Convention for the protection of Industrial Property, para.32;
and Yankey, op.cit ., at p.73.
70 See UNCTAD, The Role of Patent System in the Transfer
of Technology to Developing Countries, para.339.
71 ibid.
72. See Yankey, op.cit, at p.74
73 UNCTAD, The Role of the Paten System in the Transfer
of Technology to Developing Countries, p.50.
74 Ibid.
75 Patent Act B.E. 2522, amended by Patent Act B.E.2535.s.55(1)
76 See Vaitsos, op.cit; and Yankey, op.cit.
77 Unpublished Parliamentary Document, op.cit., at p.11.
78 In fact, apart from some basic standards, the Paris
Convention does require its member parties to adopt any obligations.
79 Patent Act B.E. 2522, amended by Patent Act B.E. 2535.
S.55 B.
80 Ibid, s.55 c.
81 Ibid, s.55 d.
82 Ibid, s.55 A.
83 "Thai-US Takls Turn to Pharmaceuticals", Bangkok Post
Weekly, 14 May 1993, pp.18-19.
84 See Chromecek, M., The Amended Canadian Patent Law: General
Amendments and Pharmaceutical Patents Compulsory Licensing Provisions,
Fordham International Law Journal, Vol.11,1988, p.537; and Oyen, op.cit.,
pp.237-262. |