The counterplan solves while avoiding WTO fights and retaliation against developing countries

3. The international context: the ineffectiveness of TRIPS compulsory licence and WTO waiver.

There is a consistent number of authors, including Dinwoodie and Dreyfuss, according to which the significance of the TRIPS Agreement is decreasing internationally,39 due to the following indicators: the response to emerging technological trends offered by new IPs treaties, such as the World Intellectual Property Organization (WIPO) Treaties; the enactment of new free trade agreements (FTAs), concluded by the USA and European Union (EU), where provisions usually deviate from the TRIPS rules; the US willingness to retaliate in case the implementation of TRIPS is too consistent; and the limited use of the WTO dispute settlement system to deal with TRIPS-generated disputes.40 Without going into a detailed analysis, it will be seen that all these aspects contribute to the ineffectiveness of a very important instrument provided in TRIPS: the compulsory licence.41 This is ‘a state-granted license issued to a third party to manufacture and produce a patented invention without the patent owner’s consent’.42

This instrument was one of the main controversial aspects for the ratification of TRIPS. As it can be easily imagined, on the one side, developed countries desired stronger protection for patented inventions.43 On the other side, developing countries preferred easier access to patented technologies, and thus a wider application of compulsory licences.44 The final compromise can be found in Article 31 entitled ‘Other Use Without Authorization of the Right Holder’ which gives the countries ample discretion in using compulsory license. However, there are some conditions that must be satisfied to apply this instrument, including, among others: (i) that the authorization of this instrument should be assessed on its specific merits; (ii) that the government and the right holder should attempt to negotiate a voluntary licence on reasonable commercial terms, although in a situation of emergency—such as the current pandemic—this condition can be waived, provided that nevertheless the patent holder is notifed as soon as reasonably possible; (iii) that the licence must be ‘predominantly for the supply of the domestic market’; (iv) that the government must grant ‘adequate remuneration’ to the patent owner.45 As easily noticed, some of these conditions can prove particularly burdensome when it comes to the application of the licence. Therefore, a second type of compulsory licence, situated in Article 31bis, is considered a waiver of the instrument contained in Article 31. In particular, this second instrument enables countries, which do not have the capacity to produce generic substitutes of patented pharmaceuticals under the domestic compulsory licences, to import the substitutes from countries that have the capacity to manufacture them, without risking the intrusion of the patent holder.46 It was the crisis due to the AIDS pandemic in South Africa that led to the adoption of the Doha Declaration on the TRIPS Agreement and Public Health which recognized that ‘WTO Members with insuffcient or no manufacturing capacities [of pharmaceuticals] could face diffculties in effective[ly] us[ing] compulsory licensing under the TRIPS Agreement’.47 Hence, the amendment to Article 31 was enacted to improve access to essential medicines worldwide.

Notwithstanding the great expectations for the use of compulsory licences to address public health problems that mostly affected developing countries, these instruments proved to be not particularly effective for three main reasons, identifed by Harris. First, the special compulsory licence system in Article 31bis is not fexible enough for both the exporting and importing countries.48 For instance, when Canada and Rwanda, respectively as the exporting and importing countries, attempted to implement the waiver, Apotex, which was the manufacturer of the generic AIDS medicine destinated to Rwanda, declared that the process was too cumbersome and involved huge costs with few incentives.49 And the complications were mostly caused by the long negotiations between Apotex and the patent holders.50 It is clear here that, despite the willingness of a country to take certain actions, the rightsholders can still play a relevant role, since they often require consistent incentives for the concession of IP rights. The second reason why compulsory licence in TRIPS is reputed to be ineffective is that, as in the case of the implementation of TRIPS in general, some countries fear retaliation from other countries and their pharmaceutical companies.51 As an example, when in Thailand the national government decided to issue a compulsory licence under Article 31 to produce antiretroviral drugs, USA and EU censored the country, and the pharmaceutical company Abbott decided not to licence some of its products in Thailand.52 States, on the one hand, do not want to antagonize pharmaceutical companies that bring jobs and investment in their territories, and, on the other hand, they prefer to not destabilize political relations with major regions of the world, such as USA and EU.53

Last reason for the ineffciency and scarce application of Articles 31 and 31bis is once again similar to the one related to the ineffciencies of TRIPS in general; namely, the obligations contained in bilateral agreements may limit the application of the compulsory licence mechanisms.54 For instance, in the several FTAs stipulated by the USA with least-developed and developing countries,55 there are provisions that allow the use of compulsory licences to obtain generic medications only when certain conditions are met. These include the exclusivity of the data generated by the patent holder to the holder themselves, or a prior notifcation to or a consent by the patent owner to issue the compulsory licence for their invention.56

Also by taking into account these difficulties to implement compulsory license mechanisms, a specific instrument, which has been implemented on the international level in an attempt to ease the access to vaccines during and after the pandemic, is the TRIPS waiver on Covid-19 vaccines. The approval of this waiver has had a very troublesome process. Originally, the proposal by India and South Africa to internationally waive obligations of TRIPS, namely all the IP rights, to make Covid technologies— especially vaccines—publicly available for all the world did not receive a positive respond and was blocked in October 2020. When the two proposing countries renewed this request of a general waiver of patent rights in March 2021, this time supported by over 80 developing countries, developed countries, such as USA, EU, Japan, Canada and Switzerland continued to block it, asserting that the existing compulsory licences mechanisms provided in TRIPS are suitable to guarantee enough supply of vaccines and treatments around the world. Only later on, in May 2021, the USA changed its policy, when it announced support to the proposed temporary waiver of IP rights on Covid-19 technologies.57 The fnal compromise can now be found in the 12th Ministerial Conference Decision [WT/L/1141; WT/MIN(22)/30] adopted on 17 June 2022.58 The signifcant issue is that this waiver applies only in relation to ‘the use of the subject matter of a patent required for the production and supply of Covid-19 vaccines […] to the extent necessary to address the Covid-19 pandemic’.59 Despite a commitment to decide on the extension of the waiver to any Covid-19 diagnostics and therapeutics,60 the deadline for such decision— originally scheduled for 17 December 2022—has been extended indefnitely.61 And no decision has been made so far.62 One the one side, some developing countries rightly push for such extension by arguing that the current waiver is not enough to allow the access to life-saving medicines against Covid-19 and to face future pandemics and health challenges.63 On the other side, WTO members that are developed countries, advocated for caution on the extension to therapeutics and diagnostics, by also underlining the lack of evidence on the correlation between strong IP rights and weak access to Covid-19 technologies.64 It is diffcult to say how this situation will be solved. However, a simple waiver—even with an extension to any Covid-19 technology—might not be enough. Instead of suspending rights, it is important to introduce international measures that, one side, provide technology and knowledge transfer, and, on the other side, they guarantee enforcement of such transfer.65 The inclusive right that is proposed in this paper goes into that direction by taking always into high consideration that open access should not only be advocated but also be implemented.