Government Rights Over Patented Inventions In Malaysia.
Legal News & Analysis - Asia Pacific - Malaysia - Intellectual Property
2 October, 2018
In September 2017 the Malaysian Government (“Government”) exercised its rights to exploit Gilead’s patented drug, Sofosbuvir, used for the treatment of Hepatitis C without Gilead’s authorisation. The Government proceeded with the exercise of its rights despite Gilead’s announcement of the extension of its voluntary licensing scheme to supply licensed generic Sofosbuvir to Malaysia. This is the second time that Malaysia has exercised its government rights to exploit a patented invention without the authorisation of the rights holder. The first time was in 2003, when the Government exercised its rights for the supply of affordable HIV/AIDS drugs patented by GlaxoSmithKline and Bristol-Myers Squibb after failed lengthy price negotiations with the patent owners.
Patent rights are not absolute monopoly rights and are subject to compulsory licences on the grounds of non-use and interdependence of patents as well government use under the Malaysian Patents Act 1983 (“Act”). Malaysia was the first country in the world to rely on government use rights to have access to affordable medicines following the adoption of the Doha Declaration onthe Agreement on Trade-Related Aspects of Intellectual Property Rights (“TRIPS”) and Public Health (“Doha Declaration”) in 2001 by member nations of the World Trade Organisation.
Section 84 of the Patents Act allows the Government to use patented invention even without the agreement of the patent owner “where there is a national emergency or where the public interest, in particular, national security, nutrition, health or the development of other vital sectors of the national economy as determined by the Government, so requires”.
The patent owner will be notified of the Government’s decision to exercise its rights as soon as reasonably practicable and will be compensated with adequate remuneration. The patent owner will have the right to be heard on the remuneration, to request that the authorisation be terminated or varied as well as to appeal to the High Court against the Government’s decision.
Section 84 of the Patents Act closely mirrors Article 31 of the Agreement on Trade-Related Aspects of Intellectual Property Rights on Other Use Without Authorization of the Right Holder which also provides that:
“authorization for such use shall be liable, subject to adequate protection of the legitimate interests of the persons so authorized, to be terminated if and when the circumstances which led to it cease to exist and are unlikely to recur. The competent authority shall have the authority to review, upon motivated request, the continued existence of these circumstances”.
Paragraph 5(c) of the Doha Declaration further provides that:
“Each Member has the right to determine what constitutes a national emergency or other circumstances of extreme urgency, it being understood that public health crises, including those relating to HIV/AIDS, tuberculosis, malaria and other epidemics, can represent a national emergency or other circumstances of extreme urgency.”
While Malaysia’s right to protect public health and promote affordable access to the drug is recognised under the Doha Declaration, many in the biopharmaceutical industry have questioned the necessity for Malaysia to invoke section 84 of the Patents Act and continuing to exercise its government use right in respect of medicines for the treatment of Hepatitis C particularly, given that Gilead has extended its voluntary licensing programme for licensed generic Sofosbuvir to Malaysia.
As a result of Malaysia’s exercise of its government use rights in respect of Sofosbuvir, Malaysia’s international ranking for its intellectual property system has seen a significant drop in the latest Annual International IP Index issued by the US Chamber of Commerce Global Innovation Policy Center.
In the 2018 Special 301 Report, it is stated that “USTR will conduct an Out-of-Cycle Review of Malaysia, which will consider the extent to which Malaysia is providing adequate and effective IP protection and enforcement, including with respect to patents”. It remains to be seen as to whether the newly elected Government will continue to impose government use licences as a means to provide affordable medicines to the Malaysian public.
For further information, please contact:
Mike Ho Mun Keat, Shearn Delamore & Co
1] Press Statement Minister of Health 20th September 2017 – Implementation of the Rights of Government for Sofosbuvir Tablet to Increase Access for Hepatitis C Treatment in Malaysia,
 Malaysia Grants Compulsory Licence For Generic Sofosbuvir Despite Gilead Licence BY CATHERINE SAEZ, INTELLECTUAL PROPERTY WATCH,
 Access to affordable medicines for HIV/AIDS and hepatitis: the intellectual property rights context by World Health Organization, http://apps.searo.who.int/PDS_DOCS/B5144.pdf.
 Declaration on the TRIPS agreement and public health
Adopted on 14 November 2001, https://www.wto.org/english/thewto_e/minist_e/min01_e/mindecl_trips_e.htm.
 Part II — Standards concerning the availability, scope and use of Intellectual Property Rights of The Agreement on Trade-Related Aspects of Intellectual Property Rights, www.wto.org/english/docs_e/legal_e/27-trips_04c_e.htm.
 “Create” by the U.S. Chamber of Commerce Global Innovation Policy Center (GIPC) –– globalipcenter.wpengine.com//wp-content/uploads/2018/02/GIPC_IP_Index_2018.pdf.
 2018 Special 301 Report by Office of the United States Trade Representative –– https://ustr.gov/sites/default/files/files/Press/Reports/2018%20Special%20301.pdf.