The Compulsory Licensing is a measure proposed by the Brazilian Industrial Property Law No. 9.279/96 (IP Law), in order to prevent the abuses which might result from the exercise of rights conferred by the patent.
Under article 41 of IP Law, the scope of the protection conferred by the patent shall be determined by the contents of the claims as interpreted on the basis of the description and the drawings. A patent shall afford to its owner the right to prevent third parties from producing, using, offering for sale or importing for such purposes without his consent, product patent, process or product directly obtained by patented process.
The patent owner can exploit and commercialize its patent, through the production and sale of the object of the patent, either individually or in partnership.
However, to avoid any kind of abuse in the exercise of the right conferred by the patent, the Brazilian IP Law provides in articles 68-74, the grant of compulsory licensing, which is possible in cases such as: 1. Insufficiency of exploitation (art. 68 § 1, item I); 2. Misuse (art. 68 § 1, item II); 3. Abuse of economic power (art. 68 § 3); 4. Dependence of one patent in relation to another (art.70 – when the patent whose exploitation necessarily depends on the use of the object of a prior patent) and 5. Public interest or national emergency (art. 71).
A compulsory licensing may not be granted if, at the time of applying for the license, the holder (Art. 69 of the LPI):
I – Justify the disuse for legitimate reasons;
II – Prove the serious and effective preparations for exploitation of the object of the patent;
III – Justify the lack of marketing or manufacturing by legal obstacles.
All above measures of protection, as well as forfeiture, aim the effective exploitation of the invention in the country, by the owner or third parties legally licensed, so that the privilege granted to bring benefits to society and not simply to be used as a measure of abuse of power.
The compulsory licensing is not a common measure in Brazil, we are aware of two cases: the first is KALETRA, from Abbott Laboratory; and in 2007, the Brazilian President Luiz Inácio Lula da Silva issued a compulsory licensing to produce a lower-cost, generic version of Mercks anti-retroviral EFAVIRENZ (a “public interest” medicine). This measure is erroneously called by the Brazilian press as “breaking of patent”.
To conclude, it is important to emphasize some aspects regarding Compulsory Licensing:
i) Should always be non exclusive and the sub-licensing is not permitted;
ii) Remuneration should be paid to the patent owner; and
iii) The World Trade Organization regulations, as well as provisions of our IP legislation allow Brazilian government to declare, in cases of “national emergency”, compulsory licensing.