WTO TRIPS Council (October 2020): Hungary answers queries posed by South Africa regarding Hungarian compulsory licensing provisions

At the October 2020 session of the World Trade Organization’s (WTO) TRIPS Council, under agenda item 1, IP measures in the context of COVID-19, the European Union read out Hungary’s detailed responses to questions posed in July 2020 (at the previous session of the TRIPS Council) by South Africa concerning Hungary’s government decree for public health compulsory licenses.

The EU would like to read out the replies provided by Hungary to the questions raised by South Africa at the last TRIPS Council.

Question 1 raised by South Africa:

1. Why has the Government of Hungary decided to rely on its emergency powers to issue a Government decree for public health compulsory licenses.

Hungary’s reply:

In connection with the COVID19 pandemic, on 11 March 2020, the Hungarian Government declared special legal order (State of Danger) that lasted until 18 June. During the State of Danger, the Government may adopt decrees by means of which it may, as provided for by a cardinal Act, suspend the application of certain Acts, derogate from the provisions of Acts and take other extraordinary measures.

The pre-existing compulsory licence regime for public health purposes provided in the Hungarian Patent Act (Law No. XXXIII of 1995 on the Protection of Inventions by Patents, hereinafter mentioned as “HPA”) was based solely on Regulation of the European Parliament and of the Council (EC) No 816/2006 on compulsory licensing of patents relating to the manufacture of pharmaceutical products for export to countries with public health problems (hereinafter mentioned as “Regulation (EC) No 816/2006”).

Besides this specific regime under Regulation 816/2006, the Hungarian patent law did not provide for a compulsory licence regime for public health purposes. The COVID19 pandemic, as a situation of national emergency, created a risk that holders of patents or supplementary protection certificates valid in Hungary of medical products, active substances, procedures and equipment needed to fight the COVID19 pandemic would not be able to ensure the required supply. Should voluntary mechanisms fail, compulsory licences could be an option to secure this supply. Therefore, a system that would handle domestic public health problems was deemed necessary and swift legislative action was required. The special legal order provided the most suitable and fastest framework to regulate the new regime of compulsory licences for public health purposes.

Question 2 raised by South Africa:

2. Section 1(4) of the Decree states the period for which a public health compulsory licence is granted shall not last longer than until 31 March 2021. Given that the Covid-19 challenge is expected to continue for a number of years, and shortages are likely, what other provisions exist in Hungary’s patent law that will allow Hungary to issue compulsory or government use license to import or manufacture patented medical products.

Hungary’s reply:

The special legal order (State of Danger) was terminated on 18th of June, 2020, and thus Government Decree 212/2020 ceased to have effect on that day. There were no compulsory licenses filed for or granted based on the Decree.

Act LVIII of 2020 on Transitional Rules related to the Termination of State of Danger and on Epidemiological Preparedness made necessary modifications regarding the termination of the special legal order, including the modification of the HPA, which came into force on 18th of June, 2020. This modification added the provisions on the public health compulsory license system to the HPA.

Question 3 raised by South Africa:

3. The public health CL decree allows exploitation of patented inventions presumably including importing from other countries. How will the opt-out of Hungary as an eligible importing country in connection with the 30th August 2003 and Article31bis mechanism impact the utility of Hungary’s public health compulsory license decree.

Hungary’s reply:

The Government Decree 212/2020 provided for a regime of compulsory licences for public health purposes for the supply in Hungary. It did not amend the compulsory license based on Regulation (EC) No 816/2006 (Art 33/A of HPA) concerning the compulsory licences for export to countries with public health problems. Status of Hungary as an importer under Article 31bis of the TRIPS Agreement has also not changed.

Question 4 raised by South Africa:

4. What circumstances informed the government’s decision to terminate the special legal order (State of Danger) on 18 June 2020?

Hungary’s reply:

Hungary successfully completed the first phase of the fight against the coronavirus, following which Hungary was among the first EU Member States to terminate the special legal order. The special legal order served its purpose, it helped in preventing the pandemic from reaching tragic proportions, because the Hungarian government could take all the necessary measures in due time and could rely on the sacrifice and discipline of the Hungarian citizens. With the stabilisation of the epidemic situation, the termination of the special legal order was justified.