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Government COVID-19 response includes compulsory licences for patented emergency medical needs

Author(s): Nathaniel Lipkus, Simon Hodgett, Jaymie Maddox

Mar 31, 2020

For further information on the changes below or other intellectual property matters, please contact one of the authors above or any member of our Intellectual Property or Intellectual Property Litigation Groups.

What happens when the public desperately needs medical supplies in an emergency, but those supplies are protected by a patent? In ordinary circumstances, the Canadian government or a provincial government can apply for a government use licence for its own use if commercial terms cannot be reached with the patent holder. We are not, however, living in ordinary circumstances right now.

The Canadian government has created a new pathway for COVID-19. The COVID-19 Emergency Response Act (Bill C-13) received Royal Assent on March 25, 2020. It introduces various measures to safeguard Canadians’ health and safety and stabilize the country's economy amidst the COVID-19 pandemic. These measures include extreme emergency access provisions for patented drugs and medical devices.

Introduction of a time-limited emergency compulsory licence provision

Section 19.4 has been added to the Patent Act to bolster Health Canada’s ability to procure drugs and medical devices needed across the country to combat this pandemic. Where the Federal Minister of Health believes that there is a public health emergency, the Commissioner of Patents may authorize the government and others to make, construct, use and sell a patented invention without legal consequence during a national public health emergency.

This new amendment aligns with other similar permissive provisions that already exist under the Patent Act. These include available authorizations for government use of patents in situations of national emergency and for public non-commercial use (ss. 19-19.1). The Patent Act also allows the Commissioner of Patents to authorize use of patented rights by persons in circumstances of international humanitarian need or patent abuse (e.g., ss. 21.04, 65-66). However, new section 19.4 goes further by expressly allowing non-government entities to obtain compulsory patent licences even in circumstances where a patentee is capable of making, constructing, using and selling their patented invention.

This new provision is time-limited, as the Minister of Health may only obtain an authorization under this section if she confirms the existence of a national emergency (s. 19.4(2)) between now and September 30, 2020 (s. 19.4(9)). Plus, any such authorization is non-transferable and can last no longer than a year (s. 19.4(3), (6)). Patent holders will be compensated by those making use of their inventions in an amount set by the Commissioner of Patents and may apply to the Federal Court for relief if an authorized party exceeds its limited rights (s. 19.4(5), (8)).

This emergency measure appears to be driven by past government experience attempting to compel licences for patented medical supplies in past emergencies. During the 2001 anthrax scare following the 9/11 terrorist attacks, Health Canada ordered ciprofloxacin from generic manufacturer, Apotex, as a precautionary measure. The government made this order after determining that Bayer, the patent holder and only manufacturer with a Notice of Compliance to market the drug in Canada, had insufficient stock of the drug. Bayer denied that it had an inadequate supply of ciprofloxacin and threatened legal action against the government for violating its patent rights, noting that the Canadian government had not made proper use of the government use provisions under the Patent Act. An agreement was reached for Bayer to supply Health Canada with ciprofloxacin before any Canadian required the drug.[1]

The emergency compulsory licence provision has limited application

The emergency compulsory licence provision has the potential be very effective for medical supplies not requiring any technology transfer from the patent holder. For example, several well-understood medicines are now being tested for use to treat COVID-19 and its symptoms, and generic drug companies may be well-positioned to manufacture these medicines if they are found to be effective.

However, the provision on its own will be less valuable for newer, less-understood treatments and for complex machines requiring associated software to be developed. A licence of patents does not mean a licence of technology and know-how. For example, if a generic drug manufacturer does not have access to the patented product to assess bioequivalence, it cannot manufacture a generic version of the patented drug. If a company wishes to ramp up ventilator production, it may require specifications and plans from the current manufacturer/patent holder to build the ventilators with the speed necessary to be useful in the current crisis. In this latter respect, the medical device company Medtronic’s announcement on March 30 that it is publicly sharing design specifications for its PB560 ventilator is a critical complementary initiative to ramp up ventilator access.

In many instances, co-operation with a party that holds non-patent knowledge necessary for timely manufacture of medical supplies will be essential, and protection from a patent infringement action is only part of the picture.

Other government measures

The Government of Canada has taken additional steps to facilitate the procurement of drugs and other medical equipment needed to respond to the COVID-19 pandemic. This includes Part 9 to the COVID-19 Emergency Response Act, which amends the Food and Drugs Act to allow for regulatory changes to prevent or alleviate shortages of therapeutic products. Health Canada has also taken interim measures to allow for expedited access to medical tools including test kits, sanitizers, disinfectants and personal protective equipment, even if not fully compliant with Health Canada requirements or approved for use in Canada.[2]

For more information about intellectual property aspects of manufacturing initiatives for COVID-19 medical supplies, contact Nathaniel Lipkus.