Views and Suggestions of the

Pharmaceutical Research and Manufacturers of America (PhRMA) and the European

Federation of Pharmaceutical Industries and Associations (EFPIA)
in response to the Invitation of the Government
of India on Compulsory Licensing

PhRMA and EFPIA would like to thank the Department of Industrial Policy & Promotion (the
Department) of the Government of India for permitting the submission of views and suggestions
by interested stakeholders on the draft Discussion Paper on Compulsory Licensing. PhRMA
represents the United States' leading pharmaceutical research and biotechnology companies,
which are devoted to inventing medicines that allow patients to live longer, healthier and more
productive lives. EFPIA is the representative voice of the research-based pharmaceutical
industry operating in Europe with a direct membership of 31 national associations and 40
companies.

When considering the Discussion Paper, several broad themes emerged, including:

• concerns relating to the availability of medicines and other products in the Indian market;

• concerns relating to the affordability, as measured by prices, of medicines and other

products in the Indian market; and

• concerns relating to the potential impact of foreign acquisition of Indian pharmaceutical

companies.

Compulsory licensing of patented inventions, including innovative, life-saving medicines, is not

a sustainable course of action to address these concerns, and its widespread use would
unnecessarily compromise the development of new medicines; an outcome which negatively
impacts patients. It could also undermine incentives to make and introduce new
biopharmaceutical products in India.

While the compulsory license concepts of the Paris Convention for the Protection of Industrial
Property (Paris Convention) and the World Trade Organization’s Agreement on Trade-Related
Aspects of Intellectual Property Rights (TRIPS Agreement)1 exist in India’s laws, widespread
use of compulsory licenses is not good public policy. Alternatives to this exceptional measure
exist that may address concerns relating to pricing of pharmaceuticals in the domestic market,
while retaining the integrity of intellectual property rights. For example, purchasing
arrangements, differential pricing, and, where appropriate, resort to foreign aid or international

1
Compulsory licenses would be subject to Indian law concerning expropriation of property as well as requirements
of international agreements, including the TRIPS Agreement.
credit programs are available to help drive down prices in the local market.2 In that light, we
share the view of many governments and experts that compulsory licenses should be used only in
exceptional circumstances – and only as a “last resort.”3

Intellectual property protection, including patent protection, is important to the development

and availability, of new medicines that represent life-saving treatments for the Indian
population. Local patent laws that provide effective incentives to develop products, including
those adapted to specific local needs, e.g., formulations which are specifically adapted to Indian
climatic and infrastructural conditions, are essential to promoting sustainable access to
medicines and economic growth. We note that empirical data from a recent study demonstrates
that biopharmaceutical firms were more likely to invest in research for anti-malaria treatments,
for example, following improvements in intellectual property protection in countries subject to
malaria outbreaks.4

A reliable patent system provides:

• incentives for technology transfer to, investment in and partnerships with local
enterprises;
• an environment that enables companies (including biopharmaceutical companies) to
invest in R&D facilities; and
• a system that assures companies that their inventions will be protected, and, therefore,
that they will have a chance to recoup their fixed costs for long and costly R&D
investment and earn a return on that investment – which is essential to encourage
investment in further medical advances, including advances addressing needs specific to
the local market.5

2
See Richard A. Epstein and A. Scott Kieff, “Questioning the Frequency and Wisdom of Compulsory Licensing for
Pharmaceutical Patents, The Law School of the University of Chicago: John M. Olin & Economics Working Paper
No. 527 (2010) (available at http://www.law.uchicago.edu/files/file/527-rae-pharma-patents.pdf) [hereinafter
Epstein and Kieff]. The paper examines several alternatives available to governments that seek to improve access to
medicines in the domestic market.
3
See, e.g., Letter from Peter Mandelson to Dr. Mongkol Na Songkhla, Minister of Public Health, Thailand (July 18,
2007), stating that compulsory licenses, while allowed by the WTO rules, are “exceptional measures.” See also,
Commission of the European Communities, Commission Staff Working Document: IPR Enforcement Report 2009,
SEC(2009) 1360, section 5.4, p. 7, stating that compulsory licenses should remain a “last resort.” (Available at
http://trade.ec.europa.eu/doclib/docs/2009/october/tradoc_145204.pdf)
4
Jean O. Lanjouw and Iain Cockburn I, Do Patents Matter?: Empirical Evidence after GATT, National Bureau of
Economic Research Working Paper No. 7495, Jan. 2000 (summary available at http://www.nber.org/papers/w7495).
5
Epstein and Kieff, supra note 2 at p. 6.. The paper, inter alia, explains that compulsory licenses aiming to force
lower pricing cannot be applied universally because marginal cost pricing makes it impossible for firms to recover
their fixed costs of development. Imposing compulsory licenses thereby may result in delays of new drugs or
abandonment of projects, where impacts are “especially large for those drugs targeting so-called orphan diseases
most prevalent in those countries that champion CL.”

2
Although concerns regarding the impact of intellectual property on prices persist, for the reasons
above, adopting policies that seek to expand or regularize compulsory licensing will likely
reduce the availability of medicines in India and diminish India’s economic growth – clearly an
undesired outcome.

Additionally, actions which reduce the security of intellectual property may discourage the
integration of and partnerships between Indian and multinational stakeholders in the domestic
market. Partnerships with multinational corporations provide needed foreign direct investment
in India, encourage scientific cooperation and greater technology transfer with Indian partners
thereby facilitating the establishment of a world-class research-based Indian industry. For
example, conducting research and development and clinical trials locally creates “spillover
effects” by building local capacity to conduct trials in support of local or domestic drug
development programs and can promote development of competitive capabilities in clinical
investigation and basic research over time, and improved healthcare capacity locally. Such
effects may be less likely when the intellectual property system is deemed weak by external
stakeholders.

We thank the Department for inviting the views of stakeholders on specific questions identified
in the Discussion Paper. As an association of interested stakeholders, we comment on the
“Issues for Revision” listed in Section XVII of the Discussion Paper in the following pages.
Our comments are grouped along the lines of themes in related questions. We also provide
comments at the end on statements in the Discussion Paper that appear to be based on
misunderstandings. We welcome the opportunity to work with the government of India to
discuss our views further.

3
Issues for Revision (Section XVII)

Question 1: Are guidelines necessary or required for the issue of compulsory licences?
Can it be argued that it is inadvisable to fetter the discretionary power of government
relating to the circumstances in which compulsory licences should be issued, and thus
such guidelines should not be applied to Category I CLs but be restricted to Category II
CLs? Even the latter are issued through the exercise of quasi judicial powers by the
Controller. Will the issue of guidelines to trammel her subjective satisfaction be desirable?
Should therefore such guidelines be restricted to the royalty payment to be awarded while
issuing a CL?

Question 3: How should recourse to issue of a compulsory licence under section 92 and
recourse to use by the Central Government of an invention under Section 100 be
differentiated in the matter of use? Under what circumstances should each be invoked?

Question 4: Can products manufactured under a Category I licence be effectively

distributed solely through government channels? Does issue of Category I CL envisage sale
of the compulsory licensed goods outside the ambit of government and in the market?

Question 7: How should the essential elements of a Category II CL outlined in Para 54

and 55 above be proved by the applicant to the satisfaction of the Controller?

Question 12: Should the Controller be obligated to examine and take a final view on all
CL applications within a specified time period? What should be this time period? Should
this time period be the same for Category I and Category II CL applications?

Response

Compulsory licenses should only be used in exceptional circumstances, which, by their nature,
will be rare and arise in highly unpredictable situations. Attempting to detail unforeseen events
in guidelines may actually restrict the ability of the government to act when genuinely needed.
In our view, detailed guidelines are not needed as it is simply not possible to predict situations
where compulsory licenses should be used.

Should the Government of India decide to formulate guidelines, however, we recommend that
the process be openly collaborative and that the procedures in the guidelines ensure transparency,
rule of law, and due process. The process for formulating any guidelines should include
opportunities for stakeholders to comment on the proposed guidelines as this assists in ensuring
an effective balance of interests and will better serve patients and the healthcare system. Any
procedures adopted that govern the application for, and consideration of, compulsory licenses,
including relevant timelines, should be clear and accessible to interested parties. Additionally,
procedures for appeal of determinations, consideration of factors for appropriate remuneration,
and requests for terminating licenses in the rare circumstances that a compulsory license is
actually granted should also be clearly set forth. We remain willing to participate constructively
in the process.

4
As noted above, the use of compulsory licences is rarely the best policy option. They are not a
suitable tool to deal with the long-term healthcare issues confronting India. These issues need to
be addressed in partnership with all stakeholders, including the innovative biopharmaceutical
industry. PhRMA members are committed to be a valued partner with India and share the Indian
government’s goal to address access issues in a meaningful way. An active compulsory
licensing policy will not promote such a partnership and is not in the best interest of Indian
patients or promoting a sustainable system for accessing healthcare.

Question 2: Do the requirements for issue of a notification by the Central Government

(national emergency; extreme urgency; public non commercial use) under Section 92
require amplification through issue of guidelines? Further are these grounds sufficient to
meet all the circumstances and exigencies that may necessitate issue of a compulsory
licence? Does the term public non commercial use necessarily imply free distribution?
Should such distribution be confined to government channels? Should drugs for treating
diseases like cancer or diabetes should also fall within the ambit of CLs? Should such
notifications be confined to public health emergencies? Are there other valid circumstances
when such provisions can be invoked?

Question 2 asks about the meaning of the term “public non-commercial use”, particularly
whether the term implies “free distribution” of patented good. Moreover, paragraph 51 of the
Discussion Paper appears to equate the term with the distribution of patented goods without
profit. The plain meaning of the “public” part of the term relates to use for the “people as a
whole” or that which “belongs to, affects, or concerns the community or the nation”.6 This would
include government purposes.7 According to WTO jurisprudence, “commercial” use pertains to
the trading of goods in the market, even where the pricing is “without profit” or perhaps even at
a loss (or even for free).8 Thus, distribution through commercial markets affects commercial
relationships and competition and, therefore, cannot be said to be “non-commercial use” even if
it is funded by the government and without charge to patients accessing that system.

Question 5: The Competition Act 2002 does not explicitly provide for issue of Compulsory
Licences as a remedy for anti competitive practices. However, Section 27(g) empowers the
Competition Commission to pass ‘such other order or issue such other directions as it may
deem fit’. Further Section 90(ix) of the Patents Act recognizes that CLs can be granted to
remedy a practice determined, after judicial or administrative process to be anti
competitive. Should CLs be issued on the basis of anti competition law – if it is determined

6
Definition of “public” found at www.oed.com
7
See, e.g., TRIPS Agreement, Article 31(b), which provides that “public, non-commercial use” includes use “by or
for the government.”
8
WTO Dispute Panel Report on China -- Measures Affecting the Protection and Enforcement of Intellectual
Property Rights, WT/DS362/R, para. 7.535. The panel determined that “‘commercial’ means, basically, engaged in
buying and selling, or pertaining to, or bearing on, buying and selling.”

5
 that companies have abused their dominant position in the market or engaged in unfair
competition?

Response

Some countries provide for the grant of licenses to remedy anti-competitive acts and condition
approval of mergers and acquisitions on acceptance of compulsory licenses. The two practices
are very different from each other and neither is similar in commercial or policy implications to
compulsory licensing contemplated by the Division Paper (see final section of this paper for
additional detail). We read this question as being directed to remedies for violations of
competition law, not conditions for merger approval.

No evidence or examples are given in the Discussion Paper of situations where it is felt that a
compulsory licence might be an appropriate remedy for a competition law violation. We are not
aware of any current practices in India that would constitute abuse or merit the imposition of
compulsory licenses as competition law remedies. Indian authorities can, as we understand
India’s legal system, address on a case by case basis remedies appropriate to particular
circumstances that arise and the statutory provisions cited appear to give adequate power for
these purposes. Consequently, additional guidelines in this area are unnecessary.

Question 6: Should working of a patent in the territory of India be interpreted to mean that
it should be manufactured within the territory of India? Under what circumstances should
the provisions of Section 84(7) (e) regarding working of the patent being prevented or
hindered by importation from abroad be applied?

Response

As a WTO member, India is not permitted to require manufacturing in India as the only method
of working a patent in India. The TRIPS Agreement makes it clear that WTO Members must
permit working requirements to be met not only through local manufacture but also through
importation of patented products ─ TRIPS specifically requires that patent rights be enjoyable
“without discrimination as to … whether products are imported or locally produced.”9 Thus,
contrary to the assertion at paragraph 66 of the Discussion Paper, the local working provisions of
the Patents Act must be interpreted so that imported products are sufficient for “working” of an
invention in India. Otherwise, paragraph 66 would be discriminating against imported products
which the TRIPS Agreement does not permit. This is also supported by a WTO dispute panel
decision.10

9
TRIPS Agreement, Article 27(1).
10
The Discussion Paper states, in paragraph 66, that “local working stipulations are valid and enforceable” under the
TRIPS Agreement. This may be the case where the working requirement includes importation. The Discussion
Paper, however, goes further and cites a paper, in the same paragraph, that alleges TRIPS Articles 30 and 31
“override” the general stipulations in TRIPS Article 27. This allegation is inconsistent with the views of the WTO
Dispute Panel Report on Canada – Patent Protection of Pharmaceutical Products, WT/DS114/R (Mar. 17, 2000),

6
 Question 8: What should be the basis for royalty payments to compensate for CLs? Should
a uniform stance be taken for Category I CLs; Category II CLs and Central Government
use of inventions? Or should a differential approach be adopted?

Question 9: Should payments to the patent holder include a component of solatium as

indicated in Para 62? How should such a solatium be arrived at? Should the aggregate
royalty and solatium be fixed at say 10% of the generic price?

Response:

The TRIPS Agreement requires that a right holder be paid “adequate remuneration in the
circumstances of each case, taking into account the economic value of the authorization.”11

Attempting to fix a percentage or standard (such as the Tiered Royalty Method (TRM) noted in
the Discussion Paper) would not be consistent with the international standards that require that
the circumstances of each case be considered. Such standards would not take into account what
is adequate remuneration nor the economic value of the authorization as these will vary
according to the facts. Instead, remuneration must be assessed on a case-specific basis to ensure
that the full economic value of the authorization is considered. There is no need to differentiate
between “categories” of compulsory licenses when determining value. As a practical matter, in
the rare instances where a compulsory license may be considered, the principles required by the
TRIPS Agreement can be applied in a manner taking into consideration the facts of each case.

Question 10: How can the operational constraints in the implementation of the August 30
decision be resolved during the course of issue of CLs under Section 92A?

Response:

The August 30, 2003 decision of the World Trade Organization, which is read in light of several
“key shared understandings” contained in a statement made by the Chairman of the WTO
General Council,12 constitutes a delicately balanced solution to WTO Members that identify a
need for a compulsory license in response to a particular public health need and that lack
manufacturing capacity.

7.91, and should be completely discounted. Even the authors of the paper cited, while disagreeing with views stated
in the Panel Report, admit their view is inconsistent with the Panel Report.
11
TRIPS Agreement, Article 31(h).
12
General Council, Implementation of Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public
Health, World Trade Organization, WT/L/540 (Sep. 2, 2003) [hereinafter Implementation Decision]. See also
General Council, Minutes of Meeting, World Trade Organization, WT/GC/M/82 (Nov. 13, 2003); paragraph 29
reproduces the Chairman’s Statement.

7
The solution has been used once since its inception. Despite concerns cited in the Discussion
Paper regarding “complex” procedures created by the solution, triggering the solution is
straightforward. All that is required is that the eligible importing WTO Member has made a
notification to the TRIPS Council that:

(i) specifies the names and expected quantities of the product(s) needed;

(ii) confirms it has established insufficient or no manufacturing capacities in

the relevant pharmaceutical sector (note: this is waived for LDCs); and

(iii) confirms that, where a pharmaceutical product is patented in its territory, it

has granted or intends to grant a compulsory licence in accordance with
Article 31 of the TRIPS Agreement and the provisions of this Decision.13

As noted, compulsory licenses have not proven to be an appropriate solution when considering
supply or access to medicines issues. Thus, it is not surprising that the August 30, 2003
“solution” has only received one notification. The “complexity” or “burden” of the system is not
the issue. The reason for the lack of use of the solution is because compulsory licenses have not
proven to be effective of in addressing supply and access issues.

Question 11: While originally applying for a patent, the applicant is required to disclose
complete specifications of the invention, as well as the best method for working it.
However, there may be an incentive for the patentee to limit the description in the patent
resulting in critical portions of the technology remaining undisclosed. This may cause
delay in working of the CL. should such a problem of insufficiency of information in the
Patent application arise in relation to the issue of a CL, how should it be addressed?

Response

TRIPS Article 29.1 requires that patent applicants disclose their inventions “in a manner
sufficiently clear and complete for the invention to be carried out by a person skilled in
the art.”14 Failure to do so would result in an invalid patent. We understand that these
international requirements have been translated into Indian law. Thus, we believe that
the current system provides significant incentives to ensure that a full and complete
disclosure is submitted. Moreover, Indian companies are readily able to produce generic
versions of innovative products on the basis of the descriptions in patent documents and
their own skills. Thus, we see no justification to consider a potential remedy when there
is no substantiation that such a “problem” exists in the first instance.

13
Id.
14
TRIPS Agreement, Article 29(1).

8
 Question 13: Should publicly funded Indian research organizations stipulate while selling/
transferring patents to Indian private sector companies that the ownership of patents will
revert to these organizations in case the ownership of those companies passes on to foreign
hands?

Response

We suggest the Department avoid what will be perceived as protectionist measures when
considering the integration of multinational corporations in the Indian market.

The main impact of including measures which will deprive Indian companies of their intellectual
property if these companies are acquired by foreign entities would be to reduce the value of these
Indian private sector companies and to severely undermine their ability to attract foreign
investment and partnerships that are critical to the growth of the Indian research-based
biopharmaceutical sector, as well as other industry sectors, in India.

Moreover, the type of stipulation proposed will strike at the heart of the mechanism to develop
innovative products with incentives provided by Indian research funding and to introduce such
products into the local market. The benefits of systems which permit secure private ownership
of patents for inventions developed with the assistance of public funding are well-proven around
the globe.15 Instead of undermining them, these mechanisms should be strengthened.

II. Other Issues Raised in the Discussion Paper

In addition to the issues specifically raised in the questions recited in Section XVII of the
Discussion Paper, we would like to provide comments on certain statements made in earlier
sections of the Discussion Paper that provide inaccurate information. We have not exhaustively
addressed all statements and claims made in the Discussion Paper, but will mention examples of
statements that are misleading, focusing on statements contained in Sections III and XVI.

A. Misleading examples of compulsory licensing

Section III of the Discussion Paper regarding “recent instances” of compulsory licenses contains
misleading statements that, if not clarified, may result in ill-informed policy decisions. The term
compulsory license is used as a label for a broad range of actions that have materially different
economic and policy effects. For example, “cases involving the Bayh-Dole Act” are cited as
recent instances of compulsory licensing in the United States. This appears to be a reference to
“march-in rights” available under the Bayh-Dole Act. However, Bayh-Dole Act “march-in

15
See Turning Science into Business: Patenting and Licensing at Public Research Institutions, Organization for
Economic Co-operation and Development, Directorate for Science, Technology and Industry (2003). This
publication includes an analysis of the success of enhancing social and economic benefits of publicly funded
research by permitting institutions to retain ownership over intellectual property related to their inventions.

9
rights” are not compulsory licensees as suggested by the Department. Instead, these are rights
reserved by the U.S. Government when a researcher voluntarily agrees to accept U.S.
government funding. Furthermore, we are unaware of the U.S. government ever exercising their
reserved rights.

This Section also conflates a number of other acts in different jurisdictions, all referred to as
“compulsory licensing,” that arise in entirely different circumstances. We have considered, in
more detail below, the examples given in the context of the United States and have found that the
cited examples are significantly different from a “compulsory license” as described in the
Discussion Paper and where unauthorized use is granted proactively by a government agency
without any finding of wrongdoing, such as the recent compulsory licenses granted in Brazil and
Thailand.

1. Cases involving merger reviews or remedies for anti-competitive practice are not
compulsory licenses

The Discussion Paper equates “cases involving merger reviews” and “cases involving non-
merger remedies to anti-competitive practices” with compulsory licenses. Merger reviews may
involve a company’s agreement to transfer assets (including patents) to secure government
approval of a merger. This is not a compulsory license, but a voluntary act to secure the
approval being sought. In addition, while U.S. Government-initiated actions to enforce anti-
competition laws may result in remedies which can require transfers of assets, including patents,
to counter unlawful conduct, these are also not “compulsory licenses” in the sense used in the
Discussion Paper. Instead, these outcomes result only after an extensive proceeding or
adjudication resulting in a conclusion that an entity has abused significant market power.16
Penalties for proven violations of anti-trust laws or the more common acceptance in a consent
decree of terms by a litigant, are not similar to compulsory licenses imposed by a government by
seeking to obtain a lower price for an innovative product.

2. Compensation under section 1498 of title 28 of the United States Code is not the
same as a compulsory license

Application of rules of compensation for “government use” of patented technology under 28

U.S.C. Section 1498 is also distinct from compulsory licenses as contemplated by the Discussion
Paper. There is no authorization for the government to use an invention protected by a patent in
28 USC 1498. Instead, the statute sets out that, in the event that the U.S. Government uses a
patented invention without authorization from the patent owner, the remedy against the
Government will be an action by the patent owner in the U.S. Court of Federal Claims to recover

16
Epstein and Kieff, supra note 2.

10
“reasonable and entire compensation.”17 Further “reasonable and entire compensation” entitles
a patentee to recover what he has lost. If one does draw an analogy, it must involve acceptance
that the patent owner subject to a compulsory license should be compensated to the full extent of
his loss over the period of the licence.

3. Denials of injunctive relief in U.S. courts are not the same as compulsory licenses

The Discussion Paper also refers to cases subsequent to the decision of the U.S. Supreme Court
in eBay, Inc. v. MercExchange, LLC.18 However, those cases are not analogous to compulsory
licenses described in the Discussion Paper.19 The Discussion Paper compulsory licenses would
significantly alter the market circumstances between competitors in situations where the patent
owner is willing and able to sell the product for which a compulsory licence is sought. The post-
eBay decisions do not do that. In these cases, the courts have refused to stop infringers’ sales
because there was no competition between the parties. These cases merely deny a particular
remedy (an injunction) based on the specific circumstances of that case, after a finding of
infringement. They awarded money damages sufficient to pay for infringement of a patent right
in the absence of direct competition.20

B. Section XVI: Questionable Support Regarding Compulsory Licensing Effect on

Domestic Invention

As another example, Section XVI of the Discussion Paper cites a single report to the effect that
compulsory licensing has “a strong and persistent effect on domestic innovation” and then
concludes that it must be so. Again, we find this to be misleading and troubling. The

17
Subsection 1498 of title 28 of the United States Code (available at http:// www.gpoaccess.gov/uscode/).
18
In eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006), the U.S. Supreme Court held that the traditional
“four-factor test” employed by U.S. courts of equity in determining whether a permanent injunction should be
granted applies equally to litigation arising under the U.S. patent laws. The four-factor test requires a plaintiff to
demonstrate: (1) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary
damages, are inadequate to compensate for the injury; (3) that, considering the balance of hardships between the
plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a
permanent injunction. After the eBay decision, a U.S. patent owner is required to provide evidence of all four
factors in order for a court to properly grant a permanent injunction in their favor.
19
Epstein and Kieff, supra note 2, subsection V.B, p. 10. Note especially, “… the eBay rule bears no resemblance
to the Thai [compulsory license] regime…” at p. 11.
20
See Philip C. Swain and Ashley A. Weaver, Patent Injunctions One Year After eBay v. MercExchange, Current
and Future Trends in Patent Law, Suffolk University Law School Center for Advanced Legal Studies (2007). At
pp. 12-13, Swain et al. conclude, after a lengthy review of post eBay cases, that “[a]lthough the district courts will
grant injunctions where the patent owner practices its invention or otherwise competes with the adjudged infringer,
the district courts are denying injunctions where the patent holder does not practice its own invention or otherwise
does not compete with the infringer, or where the patented invention is merely a small component or feature of a
larger commercial product.”

11
importance of patents to innovation, and to the development of new medicines in particular, has
been recognized at the global level.21 While compulsory licensing may be used in exceptional
circumstances, compulsory licensing as a general matter undermines the patent system’s
incentives for innovation. The report cited in the Discussion Paper looked at a very unique time
in the history of the United States, during and immediately after the First World War At that
time, a statute was passed permitting confiscation of property, including compulsory licensing of
patents, by “enemy persons,” i.e., nationals of particular countries deemed enemies of the United
States at that time – including Germany, Austria-Hungary, Bulgaria and Turkey (as well as the
occupied parts of Belgium, France, Russia and the Balkans).22 This legislation was clearly
motivated by hostilities relating to the First World War and, for that reason alone, is of
questionable relevance to modern India’s relationships with important trading partners.

In addition, it is notable that measure of the “persistent innovation” noted in the paper is based
on the number of patents applied for by compulsory licensees. Those patents were under no
comparable threat of compulsory licensing. Had they been, it is unlikely that the compulsory
licensees would themselves have engaged in innovation. A conclusion on the basis of this paper
to the effect that compulsory licences support domestic innovation cannot be sustained.

Conclusion

We hope that these comments are helpful. PhRMA appreciates the opportunity to comment on
the Discussion Paper and hopes that the Department will continue to provide opportunities for
stakeholders to participate in any further consideration of the issues presented in the Discussion
Paper.

21
See, e.g., Declaration on the TRIPS Agreement and Public Health. Paragraph 4 states that “we recognize that
intellectual property protection is important for the development of new medicines.” See also, KAMIL IDRIS (former
Director-General of WIPO), INTELLECTUAL PROPERTY: A POWER TOOL FOR ECONOMIC GROWTH, WIPO
Publication 888.1 (2003), pp. 9-17, available at
http://www.wipo.int/freepublications/en/intproperty/888/wipo_pub_888_1.pdf. This report discusses several ways
in which patents provide an incentive for innovation and economic growth.
22
Petra Moser & Alessandra Voena, Compulsory Licensing: Evidence from the Trading with the Enemy Act,
National Bureau of Economic Research Working Paper 15598 (Dec. 2009) at p. 5 (summary available at
http://www.nber.org/papers/w15598).

12