Malaysia: Assessing government rights over patented inventions
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Malaysia: Assessing government rights over patented inventions

In September 2017, the Malaysian government exercised its right to exploit Gilead's patented drug, Sofosbuvir, used for the treatment of Hepatitis C without Gilead's authorisation. The Malaysian government proceeded with the exercise of its rights despite Gilead's announcement of the extension of its voluntary licensing scheme for the supply of 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 as government use under the Malaysian Patents Act 1983 (the Act). Malaysia was the first country in the world to rely on government use rights to create access to affordable medicines following the adoption of the Doha Declaration on 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 inventions 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 shall be notified of the government's decision to exercise its rights as soon as reasonably practicable and shall 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 (TRIPS) on Other Use Without Authorization of the Right Holder which also provides that the "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 to 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 continue 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 U.S. Chamber of Commerce Global Innovation Policy Center (GIPC). The 2018 Special 301 Report 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 whether the newly elected Malaysian government will continue to impose government use licences as a means to provide affordable medicines to the Malaysian public.


Timothy Siaw

Timothy Siaw and Mike Ho Shearn Delamore & CoKuala Lumpur

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