KEI RN 2007:2 Recent examples of compulsory licensing of patents

KEI Research Note 2007:2 [1]

(A PDF version of this is available here.)

Recent examples of the use of compulsory
licenses on patents[1]

KEI Research Note 2007:2

James Packard Love
Knowledge Ecology International
8 March 2007, revised 6 May 2007

I. Introduction
II. North America
A. United States

1. Mandatory compulsory license for patents whose term was extended by GATT implementation
2. Cases involving government use under 28 USC1498
3. Cases involving Bayh-Dole Act
4. Cases involving merger reviews
5. Cases involving non-merger remedies to anticompetitive practices
6. Cases involving the new US Supreme Court standard for granting injunctions on patents
B. Canada
A. ECJ Decision in IMS Health
B. The Regulation (Ec) No 816/2006 Of The European Parliament And
Of The Council of 17 May 2006 on compulsory licensing of patents
relating to the manufacture of pharmaceutical products for export
to countries with public health problems. 8
C. United Kingdom
D. Germany
E. France
1. RU 486
2. BRAC1 and BRAC2 patents on breast cancer tests
F. Belgium
G. Italy
1. Sorin/Chrion dispute
2. Merck antibiotic (Imipenem Cilastatina) patents
3. Glaxo patents on migraine drug
4. Merck patents on prostate and male-pattern baldness drug
A. China
B. India
C. Indonesia
D. Malaysia
E. Korea
F. Taiwan
G. Thailand
A. Argentina
B. Dominican Republic
C. Chile
D. Ecuador
E. Brazil
A. Cameroon
B. Ghana
C. Guinee
D. Eritre
E. Mozambique
F. South Africa
A. Israel

I. Introduction

The term “compulsory License” is used to describe a number of
mechanisms for non-voluntary authorizations to use patents. The
most important global norm for the use of compulsory licenses is
Article 31 of the WTO TRIPS Agreement, which addresses uses “of a
patent without the authorization of the right holder, including use
by the government or third parties authorized by the government.”
Other TRIPS provisions that are important are Articles 1, 6, 7, 8,
31 bis, 40 and 44, as well as the provisions of the 2001 Doha
Declaration on TRIPS and Public Health.

Contrary to many popular news reports and statements by misinformed
government officials and industry lobbyists, the WTO rules are
quite liberal in terms of the grounds for granting compulsory
licenses. There are no limitations on the scope of disease. Indeed,
there is no requirement that compulsory licenses be limited to
cases involving health care problems at all.

This paper reports on a number of recent examples of the use of
compulsory licenses, in both developed and developing economies.
The examples cover a wide variety of technologies, legal
mechanisms, and grounds for non-voluntary authorizations to use

II. North America

A. United States

1. Mandatory compulsory license for patents whose term was extended
by GATT implementation

In 1995, as mandated by the Uruguay Round Agreements Act, patent
terms in the United States were changed from 17 years from the date
the patent was granted to 20 years from the date the patent
application was filed. This extended patent terms for many
products, including pharmaceuticals. In 1996, Congress enacted a
statutory mandatory compulsory license for products brought to
market prior to patent expiration, provided that a generic
manufacturer had previously made “substantial investment” toward
bringing a product to market in anticipation of the pre-1995 patent
expiration.[2] The mandatory compulsory license applied to over 100
brand name pharmaceutical products. However, the benefits of these
compulsory licenses were undermined because drug registration
issues were not addressed in the GATT implementation

2. Cases involving government use under 28 USC

In 2001, DHHS Secretary Tommy Thompson used the threat to use 28
USC 1498 to authorize imports of generic ciprofloxacin, for
stockpiles against a possible anthrax attack.[3]

In 2005, the US Department of Justice cited its right to use
patents in 28 USC 1498 when it opposed injunctive relief for
infringement of the patents relating to the Blackberry email
services supplied to both the government and private firms that
used the Blackberry device to communicate with the

In a November 2005 Congressional Hearing, DHHS Secretary Michael
Levitt testified before the House of Representatives that he had
effectively required the patent owners for Tamiflu (Roche/Giliead)
to invest in US manufacturing facilities for the product, so that
the United States government would have access to Tamiflu if
confronted with an avian flu pandemic.[5]

In 2007, the US Supreme Court was petitioned to hear an appeal of
Zoltek Corp. v. U.S.[6] Zoltek has a US patent on a process for
making material used in F-22 fighter jets, but the U.S. imports the
product from an unlicensed foreign manufacturer without paying
royalties to Zoltek. The United States argues that it may, in
effect, has a royalty-free compulsory license for government use of
the product because the patented process is carried out in a
foreign country, meaning that the patent holder is not entitled to
“reasonable and entire compensation” under 28 USC 1498.

3. Cases involving Bayh-Dole Act

In 1997, a March-In rights petition by Cell-pro was denied, and
ultimately their infringing device was pulled from the market
despite its clinical advantages and lack of a licensed

In 2001, DHHS used its authority to exercise March-In rights for
patents on stem cell lines resulting from publicly funded research
and held by the Wisconsin Alumni Foundation (WARF) as leverage to
secure an open license on those patents.[7]

In 2004, DHHS and NIH refused to grant March-In rights in a case
brought by Essential Inventions involving patents on the AIDS drug
ritonavir/Norvir[8]. Abbott Laboratories had increased their U.S.
price of the drug by 400% in one day to promote sales of their new
combination therapy and undermine sales of competitors’ drugs. A
similar request by Essential Inventions for march-in rights to
patents involving the glaucoma drug latanoprost (Xalatan) was also

In 2006, the Centers for Disease Control threatened to use March-In
rights to issue compulsory licenses on patents on reverse genetics,
which are needed to manufacture vaccines for avian flu.

In 2007, Essential Inventions requested Robert Portman, Director of
the Office of Management and Budget, to take steps to develop and
accept alternative competitive sources of supply for federal
procurement of two HIV-AIDS medicines: stavudine/d4T and
ritonavir[10]. Due to public funding for the development of both
drugs, the US government has a royalty free, nonexclusive,
worldwide statutory license to the patents for each product.[11] On
March 1, 2007, Essential Inventions met with OMB officials, and
extended the proposal to include the AIDS drug emtricitabine

4. Cases involving merger reviews

In 2002, the US Federal Trade Commission (FTC) ordered[12] a
compulsory cross-license of the Immunex tumor necrosis factor
(“TNF”) patent, to Serono, including the “freedom to practice in
the research, development, manufacture, use, import, export,
distribution and sale of TNFbp-I Products and certain glycosylated
and nonglycosylated fragments, derivatives and analogs thereof in
the United States.” Note the permission to export, which is
anticipated by Article 31.k of the TRIPS. In this case, the
compulsory cross-license allows a Swiss firm to compete with the US
patent owner.

In 2005, the FTC ordered a compulsory license of Guidant’s
intellectual property surrounding the RX delivery system for
Drug-Eluting Stents (DES) as a condition of Guidant’s acquisition
by either Johnson & Johnson or Boston Scientific.[13] Boston
Scientific, which eventually won the bidding to acquire Guidant,
was required to license DES patents to a potential entrant,

5. Cases involving non-merger remedies to anticompetitive

In 2002, the US Department of Justice required Microsoft to license
on reasonable and non-discriminatory terms intellectual property
rights in a number of different protocols needed to create products
that were interoperable with Microsoft Windows.[14]

In February 2007, in a case involving a failure to disclose patents
on the standard, an FTC antitrust remedial order compelled memory
chipmaker Rambus to license its patented technology on certain
specified terms and limited the maximum royalty rates that Rambus
can collect for use of its patents to 0.25 percent for SDRAM
products; 0.5 percent for DDR SDRAM products, as well as SDRAM
memory controllers or other non-memory chip components; and 1
percent for DDR SDRAM memory controllers, or other non-memory chip
components. After three years, the royalty rate will be zero

6. Cases involving the new US Supreme Court standard for
granting injunctions on patents[16]

In May 2006, the U.S. Supreme Court issued an opinion in eBay v
MercExchange, which set the standards under which a court should
evaluate requests for injunctions to enforce a patent owners’
exclusive right to authorize the use of a patented invention. To
get an injunction, a patent owner must show the court:

1). That it has suffered an irreparable injury;

2). That other possible legal remedies, including the payment of
royalties, are inadequate to compensate for that injury;

3). That considering the balance of hardships between the plaintiff
and defendant, a remedy in equity is warranted; and

4) That the public interest would not be disserved by a permanent

Under this standard, a court can choose to issue a compulsory
license to use the patent, rather than enforce the exclusive right,
a path that has been taken several times since May 2006.

The Wall Street Journal praised the US Supreme Court for “restoring
some sanity to America’s runaway patent law” by giving “judges
much-needed flexibility in granting or denying permanent
injunctions.”[17] The evolving doctrine under eBay v. MercExchange
places the U.S. closer to legal traditions in Europe and Japan,
where governments and courts have the authority to issue compulsory
licenses in a wide range of cases, including those involving uses
of dependent patents, refusals to license (such as the three recent
Italian cases on pharmaceutical patents), and to more generally
protect the public interest.

The TRIPS addresses the issue of injunctions in the two paragraphs
of Article 44. Article 44.1 says “judicial authorities shall have
the authority to order a party to desist from an infringement,”
which a court may do under the eBay decision. When compulsory
licenses are issued to address “use by governments, or by third
parties authorized by a government,” WTO members need not provide
for injunctive relief. However, when non-voluntary authorizations
are made by a court, rather than a government, injunctive relief
shall be available, unless “these remedies are inconsistent with a
Member’s law.” In such cases, “declaratory judgments and adequate
compensation shall be available.”

The eBay decision illustrates an additional way that WTO members
can make non-voluntary authorizations to use patents. So long as a
court provides for “adequate compensation” it can effectively issue
compulsory licenses, when dealing with remedies to infringement.
The following are some recent cases by U.S. Courts.

In June 2006, a court granted Microsoft a compulsory license to use
two patents owned by z4 Technologies that relate to Digital Rights
Management systems used by Microsoft for its Windows and MS Office
software programs.

In July 2006, a court granted DirectTV a compulsory license to use
the Finisar patent on integrated receiver decoders (satellite set
top boxes), for a royalty of $1.60 per device[18].

In August 2006, a court granted Toyota a compulsory license on
three Paice patents for hybrid transmissions, for a royalty of $25
per automobile.[19]

In September 2006, a court granted Johnson and Johnson a compulsory
license to use three of Dr. Jan Voda’s patents on guiding-catheters
medical devices for performing angioplasty.[20]

On January 4, 2007, Judge Avern Cohn rejected an injunction to
enforce the exclusive right to use patent 5,026,109, which was held
by Sundance, Inc. and Merlot Tarpaulin and Sidekit Manufacturing
Company. The patent was infringed by DeMonte Fabricating and Quick
Draw Tarpaulin Systems. In deciding the case, the Court noted the
injunction affect the ability of DeMonte to compete, and “would
harm third parties (DeMonte’s employees and customers).”[21]

On January 12, 2007, Abbott Laboratories lost a bid in a federal
district court for a compulsory license on a patent held by
Innogenetics, Inc. that a judge and jury said Abbott infringed to
manufacture and sell Hepatitis C virus (HCV) genotyping test kits.
Abbott’s request for the compulsory license was denied by the Court
of Federal Appeals on March 8, 2007.[22] According to the January
12, 2007 Court Decision by Judge Barbara Crabb:[23]

Defendant [Abbott] made an effort to show through cross
examination of plaintiff’s witnesses that it would be risky to
public health to enjoin defendant from the market both because
reliance on one major manufacturer was risky in and of itself and
because plaintiff’s manufacturing facility had quality control
problems with another product over a period of

In rejecting the Abbott request for the compulsory license, the
Court said “Hepatitis C is a chronic disease that does not require
instant genotyping,” and “other diagnostic techniques exist and
would suffice, even if they are not as effective as the patented

According to Harold Wegner, “Innogenetics represents the first
medical case where injunctive relief has been granted where the
court has expressly acknowledged that the patient-public will be
deprived of the best medical technique on the market.”[24]

B. Canada

In a September 2001 Speech on the Myriad Gene Patent, the Ontario
Health Minister called for compulsory licensing of patents on genes
relevant to tests for breast cancer. In January 2002, the Ontario
Advisory Committee on New Predictive Genetic Technologies published
“the Ontario Report to Premiers: Genetics, Testing & Gene
Patenting: Charting New Territory in Healthcare.” This report noted
that the Doha Declaration calls upon nations to take measures “to
protect public health and, in particular, to promote access to
medicines for all,” and concluded:

In order to prevent the statement from providing a
hollow right, the concept of promoting access to medicines for all
must include providing access to the diagnostic procedures
necessary to determine when and which medicines to provide. The
federal government should, therefore, amend the Patent Act to
specifically allow the potential for compulsory licensing of
patents relating to the provision of genetic diagnostic and
screening tests should this power be necessary.

On October 18, 2001, Health Canada overrode the Bayer patents on
ciprofloxacin, and authorized generic manufacture for purposes of
building a stockpile as protection against an attack of certain
strains of anthrax. In announcing the action, Paige Raymond Kovach,
a spokeswoman for Health Canada, said: “These are extraordinary and
unusual times . . . Canadians expect and demand that their
government will take all steps necessary to protect their health
and safety.”

On May 14, 2004, Canada passed BILL C-9: An Act to amend the Patent
Act and the Food and Drugs Act. The law came into force on May 14,
2005 creating Canada’s Access to Medicines Regime (CAMR). The
purpose of the legislation is to allow Canadian manufacturers to
export medicines to countries lacking manufacturing capacity.
Proposed royalties paid to the patent holder vary according to the
importing country’s Human Development Index. The benefits of the
Act are limited to products listed on “Schedule 1,” the list of
patented pharmaceutical products that are eligible to be exported
under the compulsory license. Civil society groups supported the
passage of the legislation, yet they also pointed out a number of
flaws in the bill.

There have been three requests for compulsory licenses under the
CAMR. The first was a December 14, 2004 request from Essential
Inventions, for the manufacture and export of Imatinib Mesylate to
Chile. The Canadian government was not responsive. The second was a
request from Apotex and MSF for the manufacture and export of a
fixed dose combination for the treatment of AIDS. The third was a
February 13, 2006 request from Biolyse Pharma Corporation, for
patents on oseltamivir phosphate and sold by Roche under the brand
name Tamiflu.

On August 31, 2005, Schedule 1 of the Patent Act was amended to add
lamivudine (150 mg) + nevaripine (200 mg) + zidovudine (300 mg)
tablets – the fixed dose combination in the Apotext/MSF

On July 1, 2006, the Canadian government published a proposed
amendment to Schedule 1 of the Patent Act to add oseltamivir
phosphate (75 mg capsules and 12 mg/mL powder for oral suspension),
which is used in the treatment and prophylaxis of Type A and Type B
influenza[25]. In September 2006, the product was included in
Schedule 1.

Apotex claims as defense to an infringement claim, that it’s sales
of generic copies of AstraZeneca’s Zestril and Merck’s Prinivil
tables are permitted under terms of a compulsory license. A trial
started in January 2006.[26]

On May 7, 2004, Torpham successfully appealed a rejection of a
compulsory license application involving Merck patents for the
manufacture and sale of Lisinopril.[27] Torphan had sought a
license to the use the patents for purposes of manufacturing and
exporting to the United States. The court held that the request for
the compulsory license had sufficient merit to be proceed to the
next stage. The court held that serving export markets abroad
constitutes Canadian demand for the patented product.

On September 16, 1998, Brantford asked a Canadian federal court for
an order compelling Merck to licence patents needed to manufacture
SESIC. On April 30, 1999, Brantford filed another application for a
compulsory license. The case involved a number of procedural
disputes and appeals, such as a February 2, 2005 court decision
rejecting Merck’s efforts dismiss the compulsory licensing
application on certain procedural grounds.[28] A hearing on the
compulsory license was held in April 2005 before the Patent Appeal
Board. On September 1, 2005, the Patent Appeal Board upheld an
earlier rejection of the compulsory license. Brantford appealed to
the court. On November 7, 2006, a court in British Columbia upheld
the rejection of the compulsory license, holding the Commissioner
of patents had not erred in determining that patent abuse had not
been established, since it was reasonable for the Commissioner to
find on the evidence that there was no genuine market demand for
the product, and that it was reasonable to find that not enough
time had been afforded Merck to respond to Brantford’s request for
a licence, and Merck’s silence could not be construed as a refusal
to license.[29]


A. ECJ Decision in IMS Health

On April 29, 2004, the European Court of Justice issued a
preliminary ruling on compulsory licensing of intellectual property
rights under European competition law, in the IMS Health vs NBC
case. The ECJ held that under certain circumstances an obligation
to license an intellectual property right exists. The four
conditions were:

  1. The intellectual property right should constitute, upstream, an
    indispensable factor in the downstream supply of a (secondary)
  2. The potential licensee should intend to produce new goods or
    services not offered by the owner of the right, and for which there
    is a potential consumer demand.
  3. The refusal should not be justified by objective reasons.
  4. The refusal should be of such a nature that it reserves for the
    owner of the right the market for the provision of the product, by
    eliminating all competition on that market.

B. The Regulation (Ec) No 816/2006 Of The European
Parliament And Of The Council of 17 May 2006 on compulsory
licensing of patents relating to the manufacture of pharmaceutical
products for export to countries with public health

This regulation set out the following requirements and conditions
for implmening the WHO’s 30 August 2003 decision on the export of
medicines to countries that lack sufficient manufacturing

  1. There are no limits on the scope of diseases. It extends to all
    medicinal products as defined in Article 1(2) of Directive
    2001/83/EC on medicinal products for human use (1), active
    ingredients and diagnostic kits ex vivo.
  2. The compulsory licenses are mandatory: “Member States shall
    grant a compulsory licence to any person making an application in
    accordance with Article 6 and subject to the conditions set out in
    Articles 6 to 10.”
  3. Prior negotiation with right owners is waived “in situations of
    national emergency or other circumstances of extreme urgency or in
    cases of public non-commercial.” In these cases, “the remuneration
    shall be a maximum of 4 % of the total price to be paid by the
    importing country.” In other cases, remuneration may consider
    “humanitarian or noncommercial circumstances relating to the issue
    of the licence.”
  4. The “safety and efficacy of medicinal products” may be
    evaluated through evaluation of “the scientific opinion procedure
    as provided for under Article 58 of Regulation (EC) No 726/2004, or
    . . . any similar procedures under national law, such as scientific
    opinions or export certificates intended exclusively for markets
    outside the Community.”
  5. In Article 18.2, when compulsory licenses to data are issued
    under this regulation, EU “protection periods” for test data “shall
    not apply.” This waiver of data exclusivity for a case involving a
    compulsory license is quite important. Note that the remuneration
    for the patent is the sole remuneration in such cases.

C. United Kingdom

Following the passage of Directive 98/44/EC of the European
Parliament and of the Council of 6 July 1998 on the Legal
Protection Of Biotechnological Inventions, the United Kingdom
amended its patent law to provide for mandatory compulsory
cross-licenses of certain biotechnology inventions used for
agriculture. The license is available to plant breeders who
demonstrate a technical advance. The December 6, 2006 UK Gowers
Review noted the British Society of Plant Breeders complained the
provision is “ineffective in the UK at least”, because to prove an
advance the product must actually be created, thereby infringing
the patent, in calling for an expanded research exception, to
permit broader use of the compulsory license.

D. Germany

In 2000, Roche asked the German government to grant a compulsory
license on a patent protecting the Blood Screening HIV Probe owned
by Chiron. On May 22, 2001, a licensing agreement was reached
between Roche and Chiron. In return for its license, Roche agreed
to end its attempts to obtain a compulsory license.[30]

E. France

1. RU 486

France considered the use of compulsory licenses in the case of the
abortion pill RU 486, which was developed by the French
pharmaceutical manufacturer ROUSSEL UCLAF. In response to threats
of boycotts by pro-life organizations, the company withdrew the
product from the market. In the subsequent efforts by the French
government to reverse the decision, a court ruled the government
could obtain access to the medicine by using the ex-officio license
system. Earlier, however, the product was already back on the
market, so the ex officio license was not needed

2. BRAC1 and BRAC2 patents on breast cancer

France was among several European countries who were outraged by
the high prices of breast cancer diagnostic tests, because of the
Myriad gene patents. In 2004, France amended its patent law to
allow the broader use of ex officio licenses, and in particular, to
authorize the government to issue ex officio licenses to patents on
certain dialogistic technologies. The new act provide that:

Where the interests of public health demand, and in the
absence of a voluntary agreement with the patent holder, the
minister responsible for industrial property, may, by order of the
minister responsible for public health, request ex officio licenses
in accordance with Article L. 613-17 for any patent granted

a) a medicine, a medical device, a medical device for
in vitro diagnosis, a related therapeutic product;

b) processes for obtaining them, [or] for products necessary in
obtaining such medicines or for processes for manufacturing such

c) a diagnostic method ex vivo.

F. Belgium

Belgium modified its patent law in 2005, creating a new compulsory
cross-license for biotechnology inventions, and also a new
compulsory license for public health purposes.[31]

G. Italy

1. Sorin/Chrion dispute

On 14 June 1994, Sorin Biomedica S.p.A. filed a lawsuit with the
Court of Milan, Italy against Chiron Corporation and Ortho
Diagnostic Systems S.p.A. for a declaration of nullity and
noninfringement of the Italian counterpart to Chiron’s European
Patent 0 318 216 (the ” ‘216 patent”). Sorin additionally filed a
request with the Italian Ministry of Industry, Commerce and
Artisanship (“ICA”) for compulsory license to the ‘216 patent.
Chiron filed a counterclaim and sought a finding that the patent is
valid and infringed by Sorin. The ICA suspended Sorin’s request for
compulsory license pending the outcome of the litigation.

2. Merck antibiotic (Imipenem Cilastatina)

On 23 February 2005, the Autorità garante della concorrenza e del
mercato (the AGCM) opened an investigation into abuses of a
dominant position by refusals to license rights to active
pharmaceutical products by two large pharmaceutical companies —
GlaxoSmithKline and Merck & Co Inc (Cases A363 and A364).

On 21 June 2005, the AGCM ordered a compulsory license for Merck
patents on antibiotics that use the active ingredients Imipenem

3. Glaxo patents on migraine drug

On 8 February 2006, the AGCM closed the investigation into the
Glaxo Group’s refusal to grant a licence to Fabbrica Italiana
Sintetici SpA (FIS), a chemical company, for the manufacture in
Italy of an active ingredient, Sumatriptan Succinate, used in the
production of migraine medicines. According to the AGCM press
release, “To remedy the earlier refusal to license, Glaxo granted
the licences originally requested by FIS, but also set conditions
such as to allow the time to be made up which had been lost because
of the original refusal. Those conditions include the granting of a
number of additional procedural licences, whereby Glaxo has allowed
FIS to save the time otherwise required to research and test an
efficient manufacturing process for Sumatriptan Succinate. FIS will
thus be enabled to offer the active ingredient to manufacturers of
generics as early as if Glaxo had never refused the original
request for a licence.”[32] The AGCM sought to prevent delays in
bringing generic pharmaceuticals to market, thus paving the way for
substantial price reductions. FIS initially used the compulsory
license entirely for the export market, supplying generic firms
that were selling products in markets outside of Italy (such as
Spain), where the patents had expired. It did so outside of the
framework of the WTO 30 August 2003 decision on exports on
medicines manufactured under a compulsory license, which Spain and
other EU members had “opted out” as an importer. This was possible
in part because the TRIPS waives all restrictions on exports in
cases where the licenses were issued to remedy to anticompetitive

4. Merck patents on prostate and male-pattern baldness

On 21 March 2007, the AGCM required Merck to “grant free licences
to allow the manufacture and sale in Italy of the active ingredient
Finasteride and related generic drugs two years before the 2009
expiration of the Complementary Protection Certificate.”[33]
Finasteride is the active ingredient of a drug marketed initially
under the brand name Proscar and Propecia. It is used to treat
hypertrophy of the prostate, cancer of the prostrate, and
male-pattern baldness. The Merck royalty free compulsory licenses
were remedies to Merck’s earlier refusal to license the patents to
Italian manufactures of active pharmaceutical ingredients. Again,
the licenses anticipate exports to “other European countries.”


A. China

In 2005, China used the threat to a compulsory license to obtain
voluntary licenses to manufacture generic Tamiflu.

B. India

In February 2005, India amended its patent law, to provide for
patent protection for pharmaceutical inventions. The legislation
created a mandatory compulsory license for products that were
already manufactured and marketed in India. The new provision was
added under Section 11 A of the Indian Patent Act read as

“(7) On and from the date of publication of the
application for patent and until the date of grant of a patent in
respect of such application, the applicant shall have the like
privileges and rights as if a patent for the invention had been
granted on the date of publication of the application:

Provided that the applicant shall not be entitled to institute any
proceedings for infringement until the patent has been granted:

Provided further that the rights of a patentee in respect of
applications made under sub-section (2) of section 5 before the 1st
day of January, 2005 shall accrue from the date of grant of the

Provided also that after a patent is granted in respect of
applications made under sub-section (2) of section 5, the
patent-holder shall only be entitled to receive reasonable royalty
from such enterprises which have made significant investment and
were producing and marketing the concerned product prior to the 1st
day of January, 2005 and which continue to manufacture the product
covered by the patent on the date of grant of the patent and no
infringement proceedings shall be instituted against such
[34].” [Emphasis added]

C. Indonesia

On October 5, 2004, Indonesia issued a government use compulsory
license to manufacture generic versions of two HIV-AIDS drugs,
lamivudine and nevirapine, until the end of the patent term in 2011
and 2012 respectively. The license includes a royalty rate of 0.5%
of the net selling value[35]. Production of the ARVs has started by
PT Kimia Farma.

In March 2007, Indonesia reportedly issued a compulsory license for
patents on the AIDS drug efavirenz.

D. Malaysia

On September 29, 2004, the Malaysian Minister of Domestic Trade and
Consumer Affairs issued a two-year government use compulsory
license to import from India didanosine (ddI), zidovudine (AZT) and
lamivudine+zidovidine (Combivir) [36]. The Ministry of Health
proposed a royalty rate of 4% of the value of the generic

E. Korea

On January 30, 2002, the People’s Health Coalition for Equitable
Society, the Association of Physicians for Humanism, and the Korean
Pharmacists for Democratic Society jointly filed for a compulsory
license for Glivec, a drug to treat chronic myelogenous leukemia
(CML), and gastrointestinal stromal tumor (GIST). The request was

In October 2005, the Korea Food and Drug Administration (KFDA)
announced it was considering a compulsory license for the
manufacture of generic versions of Tamiflu.[38]

F. Taiwan

On July 26, 2004, the Taiwan Intellectual Property Office (TIPO)
issued a compulsory license to Gigastorage for 5 patents related to
CD-R of Phillips. The term of the license is through the expiration
of the patent terms.

In November 2005, Taiwan issued a compulsory license for patents
needed to manufacture and sell generic versions of Tamiflu.[39]
According to this report by Deutsche Presse-Agentur dpa:

The Intellectual Property Office (IPO) granted compulsory licensing
to Taiwan pharmaceutical companies after talks with Roche and
Gilead Science – the U.S. developer of Tamiflu – broke down. ‘Roche
and Gilead insisted they can supply enough Tamiflu if bird flu
erupts in Taiwan. Our argument was: When there is a bird flu
pandemic, millions of people will be hospitalized or dead, and some
countries might confiscate Tamiflu or ban its export. We cannot
gamble our people’s lives on their unreliable promise,’ Lai
Chin-hsiang, secretary-general of the Department of Health (DOH),
told Deutsche Presse-Agentur dpa. Under the compulsory license,
valid until December 31, 2007, Taiwan drug firms can make Tamiflu
for domestic use and should use it only when there is a shortage of
supply from Roche.[40]

G. Thailand

On November 29, 2006, the Thailand Ministry of Health announced a
government use compulsory license to import (from India) and
locally produce efavirenz until 2011. [41] The proposed royalty was
0.5 percent of the price of the generic product, a figure that is
subject to additional negotiations with the patent owner.

On January 25, 2007 the Thailand government announced two
additional government use compulsory licenses on patents for the
AIDS drug Kaletra (LPV+RTV)[42] and the heart disease drug Plavix
(clopidogrel bisulfate),[43] also with a proposed royalty of 0.5

On January 29, 2007, the Minister of Public Health’s Department of
Disease Control, issued a decree regarding the exploitation of
patents on drugs & medical supplies by the government on the
combination drug lopinavir & ritonavir, which is marketed under
the trade name of Kaletra by Abbott.

The Thailand government has repeated said that the patent owners my
negotiate for higher royalties, but so far have show no interest in
doing so, while waging an intense lobbying and public relations
campaign against the Thailand government. Thailand’s actions have
been widely supported in treatment and public health circles, and
attacked by the pharmaceutical industry.


A. Argentina

On October 18, 2005, Health Minister Gines Gonzalez Garcia
announced the government would issue compulsory licenses on the
patents for Tamiflu. However, it was later determined that patents
on Tamiflu had not been not granted in Argentina.

B. Dominican Republic

There have been requests for compulsory licenses on the patents for
Plavix, a heart disease drug. On May 14, 2002, the French embassy
in Dominican Republic wrote to Sr. Hugo Guiliani Cury, Secretary of
State of the Dominican Republic, expressing opposition to the
compulsory license[44].

C. Chile

In December 2004, Essential Inventions requested a compulsory
license to supply Glivec to Chile[45].

D. Ecuador

In 2003, Acromax, a local manufacturer, petitioned the patent
office to grant a compulsory license for the fix-dose combination
of Lamivudine (3TC) and AZT (sold under the trade-name Combivir by
Glaxo). The request was rejected and Glaxo granted Ecuador
preferential prices on all their HIV-AIDS medicines. ACROMAX
appealed and the request was rejected again.[46]

E. Brazil

On January 8, 2001, 12 days before President Clinton left office,
USTR filed a complaint over the Brazil compulsory licensing law in
the WTO Dispute Settlement Body. USTR officials called this the
“Merck” case. At issue was Article 68 of Brazil’s patent law, which
allows compulsory licenses to be issued in situations where the
patent holder does not locally manufacture the patented product
(known as a “local working” provision). The US received a large
amount of negative publicity, and on June 25, 2001, the Bush
administration withdrew the complaint. However, under the agreement
between the two countries, Brazil agreed to provide the US with
advance notice if a license is issued under Article 68 of the
Brazil patent act, and disputes would be discussed through a
bilateral “Consultative Mechanism.” The agreement was not made

In early 2001, Brazil announced it was considering compulsory
licenses for patents on nelfinavir and efavirenz.

In March 2001, the Brazil government reached a settlement with
Merck, for price discounts on efavirenz, in return for not issuing
a compulsory license.

On August 22, 2001, Brazilian Health Minister Jose Serra announced
the Brazilian government would issue a compulsory license for the
manufacture of the antiretroviral drug nelfinavir (sold under the
brand name Viracept by Roche) to the Brazilian pharmaceutical
producer Far Manguinhos. On August 28, the two parties resumed
talks, and on August 31, they reached an agreement; Roche will sell
the drug in Brazil at an additional 40% discount, and Brazil will
not issue the compulsory license.

On September 5, 2003, the Brazilian government issued a decree that
would allow it to produce or import generic anti-AIDS drugs without
the consent of companies holding the patent on those medications.
The health minister made it clear that the decree was meant to
apply to antiretroviral drugs – specifically lopinavir, efavirenz
and nelfinavir. The ministry said in a statement it had negotiated
with the name-brand companies in August seeking a reduction of more
than 40%, but was offered a maximum discount of 6.7%. Brazil and
Merck reached an agreement in November.

In 2005, Health Minister Humberto Costa signed a decree declaring
the patent of Kaletra in the public interest and appropriate for
compulsory licensing. A subsequent settlement with Abbott reduced
the price of by 46 percent.

In 2005, the government of Brazil declared that they were
considering issuing compulsory licenses to permit the manufacture
of Viread. “As a result of discussions with the Brazilian
government Gilead reached agreement with the Brazilian Health
Ministry in May 2006 to reduce the price of Viread in Brazil by
approximately 50%.”[47]

Brazil also used the threat of compulsory licenses on the patents
for Gleevic to obtain a price discount of more than 65 percent.

On April 25, 2007, the Brazilian The Minister of Health, José Gomes
Temporão, signed Decree 866, published in the Federal Official
Gazette Government, declaring the AIDS drug efavirenz to be of
public interest. This started a process that culminated in the
compulsory licensing of the patent of the antiretroviral drug
Efavirenz on May 4, 2007, in a dramatic televised ceremony attended
by the Health Minister José Gomes Temporão and President Luiz
Inácio Lula Da Silva. The Brazil action on Efavirenz followed a
similar decision by Thailand. Because of the Thailand compulsory
license authorized competition from generic suppliers, Merck was
forced to offer Efavirenz at a much lower price in Thailand. The
Brazil government was unable to obtain similar price concessions
from Merck, and issued the compulsory licenses.

In Spring 2007, 75,000 (about 38 percent of those receiving
treatment) of Brazilian AIDS patients were taking Efavirenz, in
combination with other products. Efavirenz is sold by Bristol Myers
Squibb in the United States for $15.67 per day.[48] Before the
compulsory license, Merck had been charging $1.59 per day in
Brazil, a deep discount from the U.S. price, but still difficult
for the Brazil government, given the differences in average incomes
and the large number of persons receiving treatment in Brazil.
Merck had offered to sell Efavirenz for $.65 per day in Thailand.
The current generic prices were about $.45 per day, and falling as
demand for the generic versions grow. Generic competition may drive
prices for Efavirenz below $.25 per day.


Compulsory licensing in Africa is now fairly common, but often not
widely publicized. A typical compulsory license may be based upon
model authorizations prepared by organizations who are engaged in
providing treatment for AIDS, in order to satisfy donor
requirements that purchases of generic medicines are consistent
with trade rules.

A. Cameroon

On January 2005, the nonprofit corporation Essential Inventions
requested the Minister of Public Health to grant ex officio
licenses for the patents relevant for importation, manufacture or
sale of generic versions of the following medicines used in the
treatment of HIV/AIDS: Nevirapine/Viramune®, Lamivudine/3TC®, and
Fixed dose combinations of Lamivudine and Zidovudine/Combivir®. The
request is still pending[49].

B. Ghana

In October 2005, the Minister of Health issued a government use
compulsory licenses for importation into Ghana of Indian generic
HIV-AIDS medicines[50].

C. Guinee

On April 18, 2005, the Ministry of Health issued compulsory
licenses for importation on patents on drugs to treat HIV-AIDS.

D. Eritre

On June 5 2005, the Minister of Health issued compulsory licenses
for importation into Eritrea of generic HIV-AIDS medicines[51].

E. Mozambique

On April 5, 2004, Mozambique’s Deputy Minister of Industry and
Commerce issued Compulsory License no. 01/MIC/04 for patent rights
to lamivudine, stavudine and nevirapine. The license was granted to
Pharco Moçambique Lda, a local producer that plans on manufacturing
the antiretrovirals as a fixed-dose combination. Royalties are not
to exceed 2% of sales[52].

F. South Africa

On March 7, 2001, Indian pharmaceutical manufacturer CIPLA formally
requested the South African Department of Trade and Industry issue
compulsory licenses to patents on the following HIV drugs:
nevirapine, lamivudine, zidovudine, stavudine, didanosine,
efavirenz, indinavir and abacavir.

On September 19, 2002, Hazel Tau, working with the Treatment Action
Campaign (TAC), filed a complaint with South Africa’s Competition
Commission against GlaxoSmithKline (GSK) and Boehringer Ingelheim
(GI). Twelve parties would join the complaint, which charged GSK
and BI with excessive pricing in respect of ritonavir, lamivudine,
ritonavir+lamivudine and nevirapine.

On October 16, 2003, after an extended investigation, the South
Africa Competition Commission issued a statement, saying:

pharmaceutical firms GlaxoSmithKline South Africa (Pty)
Ltd (GSK) and Boehringer Ingelheim (BI) have contravened the
Competition Act of 1998. The firms have been found to have abused
their dominant positions in their respective anti-retroviral (ARV)

In particular the Commission has found the firms have
engaged in the following restrictive practices:

1. Denied a competitor access to an essential

2. Excessive pricing

3. Engaged in an exclusionary act

On December 10, the competition commission announced it had reached
a settlement with GSK. The settlement required GSK to:

1) extend a voluntary licence granted to Aspen
Pharmacare in October 2001 in respect of the public sector to
include the private sector;

2) grant up to three more voluntary licences on terms no less
favourable than those granted to Aspen Pharmacare;

3) permit the licensees to export the ARVs to sub-Saharan African

4) permit the importation of the drugs for distribution in South
Africa if the licensee does not have manufacturing capability in
South Africa;

5) permit licensees to combine the relevant ARV with other
antiretroviral medicines; and

6) charge royalties of no more than 5% of the net sales of the
relevant ARVs.

Shortly thereafter, a similar settlement was reached with

G. Swaziland

On April 20, 2004, the Ministry of Health and Social Welfare in
Swaziland noted the existence of an emergency relating to AIDS, and
authorized procurement of medicines for HIV/AIDS “in the best
cost/effective way possible on the international market
irrespective of the existence of any patent or other Intellectual
Property protection applicable in Swaziland until such time as it
will no longer be considered essential to address the current
Public Health crisis related to HIV/AIDS.”

H. Zambia

On September 21, 2004 the Zambian Minister of Domestic Trade and
Consumer Affairs issued a compulsory license for lamivudine,
stavudine and nevirapine. The license was granted to Pharco Ltd., a
local producer, which will produce a triple fixed-dose combination.
A maximum royalty rate of 2.5% applies[53].

I. Zimbabwe

In May 2002, Zimbabwe’s Minister of Justice, Legal and
Parliamentary Affairs declared a Period of Emergency in order to
override antiretroviral drug patents for a period of 6 months[54].
The declaration included a government use compulsory license to
make, use or import generic HIV/AIDS medicines. In 2003, the period
of emergency was extended by five years (until 31 December 2008).
With assistance from India, Zimbabwe has begun local production of
antiretrovirals though the generic company Varichem Pharmaceuticals
(Private) Limited.


A. Israel

“In January 1992, BTG-Israel filed an application in the Israeli
Patent Office for a compulsory license to manufacture BTG’s
Bio-Hep-B under Biogen’s Israeli patent which license, upon
approval, would enable BTG to produce the vaccine in Israel and
likely to export the vaccine to countries in which neither Biogen
nor others have been granted a blocking patent. In September 1995
the Registrar ruled in an interlocutory decision that BTG-Israel is
entitled to a compulsory license to the Biogen patent. Biogen’s
appeal of the interlocutory decision was rejected.”[55]

“Biogen appealed the Registrar’s decision to the
District Court of Tel Aviv, Israel, and moved for a stay of the
license, which was granted ex parte pending hearings with both
parties. Following hearings which took place in December 1996, the
motion was denied in January 1997; however, the ex parte stay was
left in force pending Biogen’s appeal to the Supreme Court and
maintained by the Supreme Court pending the decision by the
District Court on the merits of Biogen’s appeal. The District Court
heard the appeal in early March 1997, and in June 1997 the District
Court denied Biogen’s appeal and subsequent motion for a stay
pending Biogen’s appeal of the District Court decision to the
Supreme Court on the merits. In March 1998 the Supreme Court
granted Biogen the right to appeal the District Court’s decision. A
date has not yet been set for the hearing. In the absence of any
action by the Supreme Court, the compulsory license is now
effective and allows BTG-Israel to produce the vaccine in Israel
upon receipt of regulatory approval and to export the vaccine to
countries in which neither Biogen nor others have been granted a
blocking patent.”[56]

The Biogen Israeli patent expired in December 1999, before the
Supreme Court ruled on the compulsory license.


[1] This work is licensed under the Creative Commons
Attribution-Noncommercial 3.0 License.
[2] 104TH Congress, Report, Senate, 2d Session, 104-394,
Pharmaceutical Industry Special Equity Act Of 1996, Report Together
With Minority Views [To accompany S. 1277]. For more information:
[3] For more information:
[4] The United States’ Statement Of Interest, November 2005., NTP,
INC., Plaintiffs, V. RESEARCH IN MOTION, LTD., Defendant., Civil
Action No. 3:01CV767.
[5] See video excerpts from November 8, 2005 Hearings of the
Subcommittee on Health of the House Committee on Energy and
[6] Petition available at:
[7] September 5, 2001, “National Institutes of Health and WiCell
Research Institute, Inc., Sign Stem Cell Research Agreement,” Memorandum of
Understanding between WiCell Research Institute, Inc. and Public
Health Service:
[8] For more information:
[9] For more information:
[10] For more information:
[11] See U.S. Code tit. 35. §§ 202(c)(4) and 209(d)(I).
[12] For more information:
[13] For more information:
[14] United States Of America, Plaintiff V. Microsoft Corporation,
Defendant. Civil Action No. 98-1232 (CKK), Final Judgment,
(November 12, 2002), available at: For a detailed
account of work to implement the order, see: Interim Joint Status
Report On Microsoft’s Compliance With The Final Judgments,
available at:
[15] For more information: and
[16] eBay Inc. v. MercExchange, L.L.C., 126 S. Ct. 1837, 1839-1841
(U.S. 2006), available at:
[17] “Patently Obvious,” Wall Street Journal, May 3, 2007; Page
[18] Finisar Corp. v. DirecTV Group, Inc, available at:
[19] Paice LLC v. Toyota Motor Corp., 2006 WL 2385139(E.D.Tex. Aug
16, 2006) (NO. 2:04CV211DF).
[20] Voda v. Cordis Corp., No. CIV-03-1512, 2006 WL 2570614 (W.D.
Okla. Sept. 5, 2006)
[21] Sundance, Inc. v. DeMonte Fabricating Ltd., 2007 WL 37742.
(E.D. Mich. Jan. 4, 2007).
[22] Innogenetics, N.V v. Abbott Laboratories, Fed. Cir. App.
2007-1145, 2007 U.S. Dist. LEXIS 3148 (W.D.Wis. 2007)(Crabb,
[23] Innogenetics, N.V v. Abbott Laboratories, 12 January 2007.
W.D.Wis. 2007.
[24] Harold Wegner, Innogenetics v. Abbott, April 24, 2007,
[25] Official publication:
[26] AstraZeneca Annual Report and Form 20-F Information 2005
[27] Torpham v. Commissioner of Patents and Canada (AG), May 7,
2004 FCTD (MacKay J.) Abuse of Exclusive Rights/Section 65 of the
Patent Act/Compulsory Licence /Request to Supply Bulk Lisinopril
for Production of Tablets in Canada for Export to the U.S.
[28] Merck v. Brantford Chemicals and Commissioner of Patents and
Canada (Attorney General), February 2, 2005 FCA (Rothstein, Evans,
Malone JJ.A.) Compulsory Licence/Patent Act/Res Judicata/Functus
Officio/Final Decisions.
Citation: 2006 FC 1341, Vancouver, British Columbia, November 7,
2006, Brantford Chemicals Inc. (sub. nom. Apotex Pharmachem
Inc.)Appellant, and The Commissioner Of Patents, Attorney General
Of Canada And Merck & Co., Inc. Respondents. Reasons For
Judgment And Judgment.
5.1 Patent Validity; Enforceability. Immediately upon the Effective
Date, or as soon as possible thereafter, ROCHE shall discontinue
any opposition, challenge,
compulsory license application or the like with respect to the
CHIRON Licensed Patents.
5.2 Compulsory Licensing. ROCHE covenants and agrees on behalf of
itself and its Affiliates to not support any third party in seeking
compulsory licensing of the
CHIRON Licensed Patents in any jurisdiction. As used in this
Section, “support” shall have the same meanings as in Section
[31] VAN OVERWALLE, G. & VAN ZIMMEREN, E., ‘Reshaping Belgian
Patent Law: The Revision of the Research Exemption and the
Introduction of a Compulsory License for Public Health’, IIP Forum
(Japanese journal) 2006;64:42-4.
[32] AGCM. 21 February 2006. PRESS RELEASE: Pharmaceuticals:
Antitrust says Glaxo has made amends and abuse of dominant position
discontinued Granting of licence opens way for manufacture of
generic migraine drugs. PROCEEDING reference n. A363, case
[33] 26 March 2007. Press Release, A364 – Merck – Active
Ingredients (Conclusion Of Investigation): Antitrust Authority
Rules Merck Must Grant Free Licences For The Active Ingredient
Finasteride. The Authority accepts and renders obligatory a
commitment presented by the companies Merck & Co. Inc. and
Merck Sharp & Dohme (Italia) in order to conclude the
investigation launched in February 2005 into possible abuse of a
dominant position. Expected price reductions for the drug to
benefit consumers and the National Health System.
[34] The Indian Patents (Amendments) Act 2005, available at:
[35] Translated text of the actual license is available at:
[36] Translated text of the actual license is available at: For
more information: Chee Yoke Ling, Malaysia’s Experience in
Increasing Access to Antiretroviral Drugs: Exercising the
“Government Use” Option (Third World Network, IPR Series No 9,
2006), available at:
[37] For more information:
[38] Kim Cheong-won, “Health Regulator Seeks to Produce Bird Flu
Drug,” the Korea Times.
[39] Kathrin Hille, “Taiwan employs compulsory licensing for
Tamiflu,” FT, November 25 2005.
[40] Taiwan issues compulsory license for making Tamiflu, Nov 25,
[41] Translated text of the actual license is available at:
[42] Translated text of the actual license is available at:
[43] Translated text of the actual license is available at:
[44] The letter (in Spanish) is available at:
[45] For more information:
[46] Lucia Gallardo, El negocio del VIH/SIDA Patentes farmaceuticas
¿para que y para quien? (2006, Universidad Andina Simon
[47] SEC Form 10-Q — Quarterly report [Sections 13 or 15(d)],
Period of Report: 2006-09-30.
[48] Price at, 5 May 2007.
[49] For more information,
[50] Text of the actual license is available at:
[51] Text of the actual license is available at:
[52] Translated text of the actual license is available at:
[53] Text of the actual license is available at:
[54] Text of the actual license is available at:
[55] Bio-Technology General Corp., 10-K Report, April 1, 1996.
[56] Savient Pharmaceuticals Inc, Form:10-K Filing Date: