Compulsory licensing in Panama
CLD Legal, Panamá
The Industrial Property law in Panama, which is barely 24 years old, was established by Law 35 of 1996, ‘[w]hich dictates disposition regarding Industrial Property’. This law contemplated the Bolar provision and uses for scientific and/or educational research purposes as flexibilities of the Patent Law.1 In 2012, through Law 61, the provisions of Law 35 were modified to add to the flexibilities mentioned above and a mechanism for compulsory licences of granted patents was introduced.
Compulsory licences, in the field of patents, were introduced into Panamanian law by the amendment of the Industrial Property regulations under Law 61 of 2012, ‘[w]hich reforms Law 35 of 1996’. This enacted the first provision on Industrial Property in Panama.
Panamanian law recognises this type of licence as non-voluntary, contemplated in Article 56, as follows: ‘The exploitation of a patent or registration may be granted through agreements, voluntary or non-voluntary licences. The Licence will be registered in DIGERPI [General Directorate of the Industrial Property Registry] in order to produce effects before third parties’.
Non-voluntary licences may be granted in three specific cases: when the owner of the patent is engaged in practices declared contrary to free competition; when its granting is justified for reasons of declared emergency or extreme urgency by the competent authority; and when the non-voluntary licence has, as its object, the exploitation of a subsequent patent that cannot be exploited without infringing a previous patent.2
The compulsory licences in Panamanian territory have the characteristics of being non-exclusive, for non-commercial public use, and can only be granted for a specific period of time. Notwithstanding this, a remuneration must be granted to the right holder for this exploitation.
The procedure for granting these non-voluntary licences requires the presentation of a proposal form to the Ministry of Commerce and Industries, who will then issue an administrative resolution on the effect to the patents rights that will be subject to the licence, previously agreed with the Minister of the competent authority responsible for attending the National Emergency situation. Finally, a substantiated resolution will be published in the Intellectual Property Bulletin, serving as notice to those affected by the licence.3
Compulsory licences in the framework of Public Health.
In the particular case of public health and the Covid-19 situation, a non-voluntary licence would be possible under the above criteria, as contemplated in Article 58, numeral 2:
‘The granting of a non-voluntary request shall proceed, depending on its own circumstances, and subject to the provisions of this article, in the following cases:
2. When for reasons of non-commercial public use or national emergency or others declared of as extreme urgency, including public health and national security, as declared by the competent authority, the granting of aforementioned licenses is justified. It will be the responsibility of the Minister of Commerce and Industries to establish the terms of the non-voluntary License under this ground and notify the patent holder when it is reasonably possible.’
It must be stressed that patent holders affected by compulsory licences can appeal to judicial instances to oppose the validity of said grant. However, in cases related to public health, such as this case, the Law clearly states that ‘Nothing will prevent the Republic of Panama from taking measures to protect public health on the basis of numeral 2’. In these cases, a judicial or independent review by a higher administrative authority may be requested.
Law 66 of 1947, through which the National Health Code was enacted, establishes the executive power of the corresponding Ministry as holding the authority to intervene
in public health situations, through the National Department of Public Health.4 This regulation includes, among the faculties and duties of said Department, a provision to ‘adopt the national emergency measures that are essential and cannot be postponed in the event of epidemics or other public calamities.’5
It is important to mention that the Ministry of Health, which is the national health authority, was not created until 1969 and it adopted the power established by the Health Code.6 Therefore, it is the responsibility of the Ministry of Health to make the declaration of emergency for the grant of a compulsory licence. However, neither the national sanitary regulation, nor the regulations governing them, contain a process for declaring a national emergency situation and, consequently, there is no procedure established at ministerial level for the granting of compulsory licences for reasons of public health.
Compulsory licences during Covid-19
Clearly, there are inconsistencies between the sanitary regulation and the industrial property regulations, since the sanitary regulation is old and it has not been substantially updated, thus creating an incompatibility between both and preventing the National Government from acting with justification during the Covid-19 pandemic.
The novelty of the flexibility provisions in the Panamanian patent system, regarding the granting of compulsory licences, raises a question: if there were a patented invention that could serve for the mitigation, or treatment, of Covid-19 in Panama, what would the process of declaration of emergency or of notorious urgency be? Is the declaration that has already been made sufficient?
Panama has been in a State of National Emergency since 13 March 2020, through Cabinet Resolution 11 of 2020 ‘[t]hat Declares the State of National Emergency and dictates other provisions’. This declaration has been the subject of criticism and conflicting points of view among the national legal community, since the emergency declaration is based on Law 22 of 2006, which regulates public contracting, and not on the process contained in the constitutional regulation (the regulatory text that provides the formulation of the State of National Emergency and the procedure for its declaration).
Thus, the legality of such declaration is questionable and whether, through it, the Ministry of Health can choose to grant compulsory licences, if possible, without affecting the rights of third parties due to the questionable legality of the main act which establishes the national emergency. In this case, the Panamanian State could be held liable for the violation of the rights of third parties.
It is unquestionable that the moment we live in is unique and that the Industrial Property system must fully comply with the purpose for which it was created. However, it is necessary that the States establish the adequate regulations and procedures to be followed in exceptional circumstances like this one and, in this way, decrease the risk of the inventor's rights being affected and, at the same time, ensure national public health.
1 Law 61 ‘which reforms Law 35 of 1996’, Official Gazette No 27136. Panama, 5 October 2012. See Art 19 ,numerals 1 and 2
2 Ibid, Art 58.
3 Executive Order No 85 ‘by which Law No 35 of May 10, 1996, on Industrial Property, as amended by Law No 61 of October 5, 2012, is regulated’, Official Gazette No 28316 Panama. 7 July 2017. See Arts 60, 61 and 62.
4 Sanitary Code approved by Law 66. Official Gazette No 10467. Panama, 10 November 10 1947. Art 4, numeral 1.
5 Ibid, Art 85, numeral 10.
6 Cabinet Decree No 1, ‘By which Ministry of Health is created and determined its structure, functions and establish its integrations norms to the public sector’. Official Gazette No 16292. Panama, 4 February 1969.