In March, 2011 the Australian Government announced that it would introduce legislation to implement the Doha Declaration in relation to TRIPS and public health.  The effect of this would be to allow Australian Courts to grant compulsory licences to manufacture patented pharmaceuticals and export them to countries dealing with epidemics and other health crises.   The Australian Government has now released an exposure draft in the form of the Intellectual Property Laws Amendment Bill to formally implement the Declaration although the proposed provisions go beyond the requirements of the Declaration.

To date, over 40 World Health Organization member countries have acceded to the Doha Declaration including Australia (on 12 September, 2007), New Zealand (on 21 October, 2011), the United States, India, Japan, China and the European Union. 

If the exposure draft is passed into legislation, the following regime will be established:

  1. Any person may apply to the Federal Court of Australia for a compulsory licence in respect of a patented pharmaceutical invention for the purpose of exporting a pharmaceutical product to an eligible importing country, provided that the application includes a statement from the eligible importing country to the effect that it will take reasonable measures within its means to prevent re-export of the product from its territory.
  2. An eligible importing country is one which is: (a) recognised by the United Nations as a least developed country; (b) has made a notification to the Council for TRIPS of its intention to use the system; or (c) included in a class of foreign countries to be prescribed for the purposes of the Act.
  3. The Federal Court is given power to grant a compulsory licence if it is satisfied that, among other things, the application is made in good faith, the proposed use of the pharmaceutical product is to address a public health problem in circumstances of emergency or by the public non-commercial use of the product in the eligible importing country, the applicant and the eligible importing country will take reasonable measures to prevent the exported pharmaceutical product to be used for purposes other than addressing the relevant public health problem and, in the case of public non-commercial use, a voluntary licence was unable to be obtained.
  4. The terms of the compulsory licence must include the quantity of the product to be produced, that the product be labeled and marked in accordance with certain Regulations (yet to be released) or as determined by the Court and that certain notifications be made, among other things. 
  5. In default of agreement between the patentee and the applicant, the Court will determine the remuneration to be paid to the patentee for the licence. 
  6. Applications may be made to amend a licence, the granting of cross-licences and the revocation of licences. 
  7. A licence may be revoked if the substantive circumstances which justified the grant have changed or the terms of the licence have been breached, provided that, in each case, the Court is satisfied that the legitimate interests of the licensee or the eligible importing country are not likely to be adversely affected by the revocation. 

Two points to note in respect of the Bill are that:

  1. The definition of "eligible importing country" goes beyond the class of countries which were to benefit from the Doha Declaration.  Under the Declaration, an eligible importing country had to be a member of the World Trade Organization.   This departure has at least three consequences.  First, non-members can now take a significant benefit which membership would otherwise bestow and which would otherwise encourage non-members to become members.  It also defeats one of the premises on which TRIPS was founded; that there should be a set of universal standards for the protection of intellectual property.  As part of the Declaration, least developed member countries were given an extension for compliance with this objective to 1 January, 2016.  By allowing non-members to obtain the benefits of the system, Australia is not putting pressure on non-members to join WTO and agree to the adoption of these standards. 

Secondly, the dispute settling mechanisms existing within the WTO will not be applicable to the extent that disputes might arise between Australia and eligible importing countries which are not members of the WTO.   

Finally, the inability of member countries to challenge compulsory licences granted in conformity with the Doha Declaration is compromised to the extent that the Australian legislation departs from the terms of the Declaration.  Thus, in a politically charged environment, another member country could challenge compulsory licences granted on the basis that Australia is not complying with TRIPS. 

  1. The Court must be satisfied that, among other things, the patented product will be imported by or "on behalf of, and with the authorization of" the eligible importing country.  However, a person importing a patented product "on behalf of" an eligible importing country is not a party to the proceedings and therefore cannot be compelled to give undertakings as to dealings with the product which is the subject of the compulsory licence.  Whilst the eligible importing country is required to satisfy the Court as to the steps it will take to prevent re-export and licensed use, the actual importer is not.  Again, the notion that a pharmaceutical product subject to a compulsory licence can be imported "on behalf of" an eligible importing country was not contemplated in the Declaration.  The rationale for this extension given by the Australian government is that it allows a product to be imported by another country, regional group or non-government organization to provide for more flexible and efficient distribution in appropriate circumstances.

It is interesting that the government states in the Explanatory Memorandum accompanying the Bill that the limitation in the Declaration to importation by eligible importing "Members" alone was included "to avoid misuse".  Notwithstanding this, the draft Bill broadens the range of permissible applicants to other countries, regional groups and NGOs, among others, in the interests of flexibility and efficiency without imposing any additional requirements to avoid the misuse which was apparently of concern to the negotiators of the Declaration.      

Submissions on the Bill can be made up until 1 October 2012.