Public Non-Commercial Use Compulsory Licensing

Michigan Journal of International Law
Volume 32 Issue 2
2011
Public Non-Commercial Use' Compulsory Licensing for

Pharmaceutical Drugs in Government Health Care Programs
Pier DeRoo
University of Michigan Law School
Follow this and additional works at: https://repository.law.umich.edu/mjil
Part of the Food and Drug Law Commons, Intellectual Property Law Commons, International Trade
Law Commons, and the National Security Law Commons
Recommended Citation
Pier DeRoo, Public Non-Commercial Use' Compulsory Licensing for Pharmaceutical Drugs in Government
Health Care Programs, 32 MICH. J. INT'L L. 347 (2011).
Available at: https://repository.law.umich.edu/mjil/vol32/iss2/3
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STUDENT NOTE
"PUBLIC NON-COMMERCIAL USE"
COMPULSORY LICENSING
FOR PHARMACEUTICAL
DRUGS IN GOVERNMENT
HEALTH CARE PROGRAMS
PierDeRoo*
INTRODUCTION .............................................. ........ 348

1. THE EMERGENCE OF COMPULSORY LICENSING
UNDER TRIPS ................................ 353
A. National Emergency Compulsory Licensing... ...... 354
B. The Emergence of Public Non-Commercial
Use Compulsory Licensing............. .............. 359
11. NEW COMPULSORY LICENSING CONCERNS PRESENTED
BY GoVERNMENT-RUN HEALTH CARE............ .......... 362
A. Health Care as a Human Right and Government
Health Care ................................ 363
B. The PharmaceuticalDevelopment Outlook..... ..... 365
C. The Fading Wisdom of Relying on the Developed
Worldfor Funding PharmaceuticalResearch
and Development ............... ................ 370
III. THE TRIPS CONTEXT FOR PUBLIC NON-COMMERCIAL
COMPULSORY LICENSING ................................... 374
A. Changing Winds: The Likelihood of a WTO
Panel Decision on TRIPS Article 31.............. ....... 375
B. The Standardfor InterpretingTRIPS ....... ........ 379
C. Relevant Context Under the Vienna Convention:
TRIPS Preamble, Objectives, & Principles....................... 380
D. Article 31: Compulsory Licensing...... .......... 382
IV. COMPULSORY LICENSING FOR PUBLIC
NON-COMMERCIAL USE..................... ................ 386
A. Defining Public Non-Commercial Use.............................. 387
B. Government-Run Health Care and
Non-Discrimination ................................ 391
CONCLUSION ....................................................... 393
* J.D. Candidate 2011, University of Michigan Law School; A.B. 2006, Chemistry,
Princeton University. Thank you to my fianc6e Sarah for her support and inspiration; to
Professor Margaret Radin for her advice and guidance; and to my editors and the staff of the
Michigan Journalof Internationallaw for their patience and hard work on this Note.
347
348 Michigan Journalof InternationalLaw [Vol. 32:347
INTRODUCTION
Suppose a relatively prosperous nation with universal public health

coverage faces an HIV/AIDS crisis. It refuses to negotiate with the pat-
ent-holding manufacturers of the best antiretrovirals (ARVs) available,
instead issuing compulsory licenses. Compulsory licenses permit the
generic drug manufacturers designated in the compulsory licenses to
make, use, import, and sell the patented ARVs without the permission of
the patent owners, increasing competition and lowering prices.' Realiz-
ing that drugs are much cheaper without patents,2 the nation decides to
issue another round of compulsory licenses for an extensive list of pat-
ented drugs for its universal health care program. While improving
public access to these drugs, the compulsory licenses also reduce the
market exclusivity that patent holders depend on, decreasing the patent
holders' anticipated return on their research and development (R&D)
investments. Whether governments may legally act in this manner under
the current Agreement on Trade-Related Aspects of Intellectual Property
Rights (TRIPS) has profound consequences for public access to pharma-
ceuticals and for public and private contributions to pharmaceutical
R&D, especially as health care purchasing power continues to consoli-
date in the hands of government programs.
I. Broadly defined, a compulsory license may be issued by a government to permit a

third party to make, use, or sell patented technology without the permission of the patent
holder. A government seeking to increase access to pharmaceutical drugs will usually issue the
compulsory license to a state-run pharmaceutical company, or solicit bids from domestic and
international generic pharmaceutical producers, resulting in lower prices for the compulsory-
licensed drugs than under the patent monopoly. See JEROME H. REICHMANN WITH CATHERINE
HASENZAHL, NON-VOLUNTARY LICENSING OF PATENTED INVENTIONS 10 (Int'l Ctr. for Trade
and Sustainable Dev. & United Nations Ctr. for Trade and Dev., Issue Paper No. 5) (defining
compulsory licensing); Peggy B. Sherman & Ellwood F. Oakley III, Pandemicsand Panaceas:
The World Trade Organization'sEfforts to Balance PharmaceuticalPatents and Access to
AIDS Drugs, 41 AM. Bus. L. J. 353, 369 (2004) (defining compulsory licensing); see also
COMM'N ON INTELLECTUAL PROP. RIGHTS, INTEGRATING INTELLECTUAL PROPERTY RIGHTS
AND DEVELOPMENT POLICY 42 (2002) [hereinafter CIPR REPORT] (discussing pharmaceutical
compulsory licensing); CAROLYN DEERE, THE IMPLEMENTATION GAME 229-32 (2009) (de-
scribing compulsory licensing negotiations); Jon Cohen, Brazil, Thailand Override Big
Pharma Patents, 316 Sci. 816, 816 (2007) (describing pharmaceutical compulsory licensing);
Editorial, Theft in Thailand, WALL ST. J. (Asia ed.), Feb. 10, 2007, at A8 (anticipating that
Thailand, despite having a domestic generic drug industry, would turn to India to supply
cheaper generic drugs).
2. Thailand, for example, expected its HIV/AIDS compulsory licenses to halve treat-
ment costs. See MINISTRY OF PUB. HEALTH & NAT'L HEALTH SEC. OFFICE, FACTS AND
EVIDENCES ON THE 10 BURNING ISSUEs RELATED TO THE GOVERNMENT USE OF PATENTS ON
THREE PATENTED ESSENTIAL DRUGS IN THAILAND 13 (2007) (Thai.) [hereinafter THAI
WHITE PAPER]; Nicholas Zamiska, Thai Move to Trim Drug Costs Highlights Growing Patent
Rift, WALL ST. J. (Asia ed.), Jan. 30, 2007, at A8.
3. Agreement on Trade-Related Aspects of Intellectual Property Rights, Apr. 15, 1994,
Marrakesh Agreement Establishing the World Trade Organization, Annex IC, 1869 U.N.T.S.
Winter 2011 ] "PublicNon-Commercial Use" 349
The TRIPS Agreement forms one of the three pillars of the World
Trade Organization (WTO),4 formally linking intellectual property (IP)
protection with trade. In order to harmonize IP protection at a global lev-
el, TRIPS aims to "reduce distortions and impediments to international
trade" from an IP perspective.! Thus, TRIPS obligates all WTO Member
states to implement a minimum regime of IP rights to provide security
and predictability, and to ensure that IP protection contributes "to the
mutual advantage of producers and users of technological knowledge.'
For many countries, the minimum TRIPS standards required that they
take pharmaceutical drugs out of the public domain.
TRIPS recognizes that patents may pose an inappropriate barrier to
technology access under certain circumstances, and therefore permits
Member states to use compulsory licenses. Through compulsory licens-
ing and other "TRIPS flexibilities,"' IP harmonization is incomplete.! A
299 [hereinafter TRIPS]. All World Trade Organization (WTO) Members are required to be
parties to TRIPS. Marrakesh Agreement Establishing the World Trade Organization art. 11.2,
Apr. 15, 1994, 1867 U.N.T.S. 154 ("The agreements and associated legal instruments included
in Annexes 1, 2 and 3 .. . are integral parts of this Agreement, binding on all Members.").
4. The three pillars of the WTO regime are TRIPS; the Multilateral Agreements on
Trade in Goods, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organiza-
tion, Annex IA, 1867 U.N.T.S. 187; and the General Agreement on Trade in Services, Apr. 15,
1994, Marrakesh Agreement Establishing the World Trade Organization, Annex IB, 1869
U.N.T.S. 183.
5. TRIPS pmbl.
6. Id. arts. 1.1, 7.
7. Id. art. 27.1 ("[Platents shall be available and patent rights enjoyable without dis-
crimination as to . . . the field of technology."). Although most developing nations inherited
colonial intellectual property (IP) laws, certain reformist nations like India, Brazil, and Mex-
ico had lowered patent protection for pharmaceuticals in order to ensure a cheap supply of
drugs for their populations. DEERE, supra note 1, at 40. They had to increase pharmaceutical
patent protection under TRIPS, although they were given a period of time to implement these
changes. Id. at 68-69, 70-74. One account of the TRIPS negotiations suggests that African
nations "signed a death warrant for citizens of their country" by accepting heightened IP pro-
tections. PETER DRAHOS WITH JOHN BRAITHWAITE, INFORMATION FEUDALISM 142 (2002).
8. "TRIPS flexibilities" are the provisions that explicitly or implicitly permit deviation
from the intended harmonizing minimum standards of IP rights. See World Trade Organiza-
tion, Declaration on the TRIPS Agreement and Public Health, 114, 5(b), WT/MIN(0l)/DEC/2
(Nov. 14, 2001), 41 I.L.M. 755 (2002) [hereinafter Doha Declaration] ("We agree that the
TRIPS Agreement does not and should not prevent Members from taking measures to protect
public health.... [W]e reaffirm the right of WTO Members to use, to the full, the provisions
in the TRIPS Agreement, which provide flexibility for this purpose.... [W]e recognize that
theseflexibilities include [compulsory licensing, etc.]") (emphases added).
9. See TRIPS art. 31. TRIPS is further flexible, for example, with regard to patentable
subject matter, patent exhaustion, and substantive standards for patentability. See id. art. 27.3
(permitting member states to exclude medical procedures and life forms from patentability);
id. art. 6 (leaving the issue of exhaustion of intellectual property rights to member states); id.
art 27.1 (requiring only that an invention be "new, involve an inventive step, and [be] capable
of industrial application," without dictating the strength of these criteria); Geeta Anand, Drug
Makers Decry Indian Patent Law, WALL ST. J., Feb. 12, 2010, http://online.wsj.com/article/
SBl0001424052748703455804575057621354459804.html (illustrating that the Indian patent
compulsory license, which must be issued by a government, revokes a

patent holder's property right'o to exclude any party designated in the
compulsory license from making, using, importing, or selling the pat-
ented invention." Pharmaceutical compulsory licenses therefore prevent
innovative pharmaceutical producers from suing for infringement the
generic manufacturers producing and selling under the compulsory li-
censes. In these situations, patent-holding producers must compete with
generic producers who did not have to incur the significant drug devel-
opment and regulatory approval costs.12
TRIPS therefore restricts the permissible situations for granting
compulsory licenses. Under TRIPS Article 31(b), compulsory licenses
may be used (1) when reasonable commercial negotiations have failed;
(2) without prior negotiation when a national emergency or other cir-
cumstance of extreme urgency has arisen; or (3) without prior
negotiation when the compulsory license is for "public non-commercial
use." 3 Nearly every compulsory license for pharmaceutical drugs under
TRIPS has aimed to increase access to ARVs to combat HIV/AIDs epi-
demics, 14 which falls squarely within the enumerated "national
emergency" language of TRIPS Article 31. " In 2006 and 2007, however,
Thailand issued three compulsory licenses under the public non-
commercial use provision. 6 Two of the compulsory licenses permitted
generic production of patented HIV/AIDS drugs; the other permitted
agency "has a higher bar for issuing patents," much to the consternation of the pharmaceutical
industry).
10. TRIPS pmbl. ("[r]ecognizing that intellectual property rights are private rights").
11. See sources cited supra note 1.
12. See, e.g., Cohen, supra note 1, at 816 (describing Merck's competition with a ge-
neric version of an HIV/AIDS drug under compulsory license); Editorial, Drugs in Thailand,
FIN. TIMEs (London), Jan. 31, 2007, at 14 (describing a generic version of an HIV drug under
compulsory license, which undercut Merck's market for its patented version); Jean Francois
Tremblay, Drug Patent Struggles in Asia, CHEMICAL & ENGINEERING NEWS, Feb. 5, 2007, at
11 (describing legal activity taken by innovative pharmaceutical companies faced with generic
competition under compulsory licenses); see also DEERE, supra note 1,at 230-32 (illustrating
that the mere threat of a compulsory license often causes patent-holding pharmaceutical com-
panies to reduce prices).
13. TRIPS art. 3 1(b); see also DEERE, supra note 1, at 81-82 (noting that a compulsory
license can only be granted after reasonable negotiations have failed, although "[prior negotia-
tion] does not apply in the case of public, non-commercial use or in the case of a national
emergency"); Cynthia Ho, Patent Breaking or Balancing?: Separating Strands of Fact from
Fiction Under TRIPS, 34 N.C. J. INT'L L. & COM. REG. 371, 400 (2009) (describing three
situations when prior negotiation is not required: "a national emergency, a 'circumstance of
extreme urgency,' or public non-commercial use").
14. Countries issuing compulsory licenses have included Mozambique, Swaziland,
Malaysia, Zambia, Zimbabwe, India, Guinea, Ghana, Rwanda, Brazil, and Thailand. See
DEERE, supra note 1, at 229-30.
15. See Doha Declaration, supra note 8, 5(c) ("it being understood that public health
crises, including those relating to HIV/AIDS . . . can represent a national emergency").
16. See THAI WHITE PAPER, supra note 2, at 38-46.
Winter 2011 ] "Public Non-Commercial Use" 351
generic production of Plavix, a heart disease drug. 7 In 2008, Thailand

issued compulsory licenses for four anti-cancer drugs, also under the
public non-commercial use provision.'
No WTO panel decision has defined "public non-commercial use,"
but pharmaceutical compulsory licenses issued by government health
care programs appear to fall within the public non-commercial use re-
striction. Because a government issuing a compulsory license usually
distributes the generically produced drugs to its citizens through its
health care program, the use appears public.'9 Furthermore, because the
government program will generally provide the drugs to the public free
of charge or on a non-profit basis, the use also appears non-
20
commercial.20 Indeed, legal scholars generally agree that any definition
of public non-commercial use encompasses "government use" of the
patented technology. 2' A few scholars have even suggested that the va-
gueness of public non-commercial use may permit nearly limitless
17. Id.
18. MINISTRY OF PUB. HEALTH & NAT'L HEALTH SEC. OFFICE, THE 10 BURNING
QUESTIONS REGARDING THE GOVERNMENT USE OF PATENTS ON THE FOUR ANTI-CANCER
DRUGS INTHAILAND 22-29 (2008) (Thai.). The Thai government cancelled one of the com-
pulsory licenses after one patent holder agreed to provide its cancer drug for free, but after a
governmental regime change, the new government indicated it would not revoke its other three
anti-cancer compulsory licenses. Ho, supra note 13, at 415-19; Darren Schuettler, Thailand
Scraps Patent Override on Novartis Drug, REUTERS ALERTNET, Feb. 1, 2008,
http://www.alertnet.org/thenews/newsdesk/BKK24285.htm [hereinafter Schuettler, Thailand
Scraps Patent Override]; Nopporn Wong-Anan, Thailand Will Override Cancer Drug
Patents, REUTERS, Mar. 10, 2008, available at http://www.reuters.com/article/
idUSBKK147647200803 10; see also Sinfah Tunsarawuth, Thailand Avoids Compulsory Li-
cense on Cancer Drug; 3 More Drugs Undecided, INTELLECTUAL PROPERTY WATCH (Jan. 31,
2008), http://www.ip-watch.org/weblog/2008/01/31/thailand-avoids-compulsory-licence-on-
cancer-drug-3-more-drugs-undecided/.
19. See, e.g., E. Richard Gold & Danial K. Lam, Balancing Trade in Patents: Public
Non-Commercial Use and Compulsory Licensing, 6 J. WORLD INTELL. PROP. 5, 25 (2003);
Ho, supra note 13, at 402-04.
20. See Gold & Lam, supra note 19, at 25-26; Ho, supra note 13, at 412-13. A gov-
ernmental single-payer health care program is the paradigmatic example of a purely
government-run health care program. This governmental character gradually deteriorates the
more patients have to pay out of pocket for treatment. See, e.g., CONSTITUTION OF THE KING-
DOM OF THAI., § 51 (2007) ("A person has the right to be appropriately protected by the State
against harmful contagious diseases, and to have such diseases eradicated, without charge and
in a timely manner.").
21. MICHAEL BLAKENEY, TRADE RELATED ASPECTS OF INTELLECTUAL PROPERTY
RIGHTS 91 (1996) ("[Public non-commercial use] will invariably be use by government or by
a government instrumentality."); CARLOS M. CORREA, TRADE RELATED ASPECTS OF INTEL-
LECTUAL PROPERTY RIGHTS 316 (2007) (substituting the term "government use" for public
non-commercial use); Gold & Lam, supra note 19, at 25; see Ho, supra note 13, at 431-32;
Patrick Marc, Compulsory Licensing and the South African Medicine Act of 1997: Violation or
Compliance of the Trade Related Aspects of Intellectual Property Rights Agreement?, 21
N.Y.L. SCH. J. INT'L & ComP. L. 109, 116 (2001); Jerome H. Reichmann, Comment, Compul-
sory Licensing of Patented PharmaceuticalInventions: Evaluating the Options, 37 J.L. MED.
& ETHICS 247, 256 (2009).
justification for compulsory licensing.22 By utilizing "public non-

commercial use" compulsory licensing for arguably non-emergency me-
dicines addressing non-infectious diseases like heart disease and
cancer,23 Thailand has begun to illustrate the possibility of employing
compulsory licensing purely as a cost-control element of a government
health care program.2' Such extensive compulsory licensing by govern-
ment health care programs raises serious concerns for governments,
patients, taxpayers, and the pharmaceutical industry. These concerns in-
clude governments' abilities to fulfill universal health care promises,
disproportionate burden-sharing for publicly funded R&D among devel-
oped nations, potential disincentives for pharmaceutical companies to
research financially risky areas of medicine, and the continued viability
of TRIPS if it contains significant pharmaceutical loopholes.
In light of the multifaceted challenge that compulsory licensing
represents in an era of government-run health care, this Note sidesteps
22. James Love, Access to Medicine and Compliance with the WTO TRIPS Accord:
Models for State Practice in Developing Countries, in GLOBAL INTELLECTUAL PROPERTY
RIGHTS 74, 74 (Peter Drahos & Ruth Mayne eds., 2002) ("[TRIPS] is actually fairly permis-
sive on [compulsory licensing]. For example, for public non-commercial use, . . . the only
obligation [is] the payment of 'adequate' compensation."); SISULE F. MUSUNGU & CECILIA
OH, COMMISSION ON INTELLECTUAL PROPERTY RIGHTS, INNOVATION AND PUBLIC HEALTH,
THE USE OF FLEXIBILITIES IN TRIPS BY DEVELOPING COUNTRIES: CAN THEY PROMOTE Ac-
CESS TO MEDICINES? 20 (2005) [hereinafter CIPIH REPORT]; Gold & Lam, supra note 19, at
25-26, 30 (arguing that public non-commercial use should be similarly "liberally inter-
preted"); Ho, supra note 13, at 402-04 (coming to a definition "sufficiently broad to cover
nearly any use relating to a nation's citizens ... [not] for business or profit").
23. For example, one commentator described the Plavix licensing efforts as "chal-
leng[ing] patents for a 'life-style' disease," although there are no minimum criteria for
determining whether a disease has reached national emergency status. Piya Wong, Thailand
Backs Off Threat to Break Drug Patents, SCIDEv.NET (Feb. 8, 2007), http://www.scidev.net/
en/news/thailand-backs-off-threat-to-break-drug-patents.html; see also Roger Bate, Thai-ing
Pharma Down, WALL ST. J. (Eastern ed.), Feb. 9, 2007, available at http://www.aei.org/
article/25585 ("[P]atents can be broken in emergencies. However, it's hard for anyone to argue
that heart disease meets such stringent tests."); Bangkok's Drug War Goes Global, WALL ST.
J., Mar. 7, 2007, http://online.wsj.com/article/ SBl17322181443628799.html ("Thailand
clearly doesn't have an HIV/AIDS epidemic, and heart disease isn't a 'national emergency.'");
Theft in Thailand, supra note 1.
24. This Note recognizes that categorizing diseases as "emergencies" or "non-
emergencies" or "lifestyle diseases" is a tenuous endeavor, since HIV/AIDS could be framed,
for example, as the result of the unfortunate lifestyle choice to engage in unprotected sexual
activity. Accordingly, given Thailand's compulsory licenses under the public non-commercial
use provision of TRIPS Article 3 1(b), and its maintenance of a "wish list" of patented drugs to
treat cancer and other diseases, this Note instead suggests that Thailand has at least contem-
plated a broad program of compulsory licensing under the public non-commercial use
provision, and attempts to address the issues that broader similar compulsory licensing prac-
tices present. See THAI WHITE PAPER, supra note 2, at 2 (noting that Thai citizens are entitled
to full access to 900 drugs, many patented, on the government's essential drugs list); Editorial,
The Licensing of Key Drugs, BANGKOK PosT, June 16, 2010, http://www.bangkokpost.com/
opinion/opinion/38827/the-licensing-of-key-drugs (illustrating that Thailand continues to
maintain its compulsory licensing practices).
other drastic reform proposals, pragmatically attempting to discern lim-

its on "public non-commercial use" within the current TRIPS regime of
patent rights. Part I reviews the evolution of compulsory licensing prac-
tices under TRIPS. Part II presents the new compulsory licensing
concerns raised by the growth of government-run health care, taking into
account health care's status as a human right, the economic realities of
pharmaceutical R&D, and recent shifts in the global pharmaceutical
market. Part III analyzes the TRIPS context in which the public non-
commercial use restriction appears, while Part IV interprets public non-
commercial use and finds that TRIPS establishes an appropriate balance
for public non-commercial use. Part V concludes.
I. THE EMERGENCE OF COMPULSORY LICENSING UNDER TRIPS

Throughout the Uruguay Round negotiations, which spawned the
WTO and TRIPS, the United States advocated a compulsory licensing
provision narrowly limited to declared national emergencies, national
25. Many have suggested alternative remedies to ensure expanded access to pharma-
ceutical drugs while maintaining the profit margins required for continued research and
development (R&D). Some of these include adjusting the TRIPS-mandated royalty payments
to the patent holder under a compulsory license, employing parallel importation to encourage
price competition, segregating markets to better enable price discrimination, and governmental
R&D systems. See, e.g., Daniel R. Cahoy, Confronting Myths and Myopia on the Road from
Doha, 42 GA. L. REV. 131 (2007); Patricia M. Danzon & Adrian Towse, Diferential Pricing
for Pharmaceuticals:Reconciling Access, R&D and Patents, 3 INT'L J. HEALTH CARE FIN.
ECON. 183 (2003); John A. Harrelson, TRIPS, PharmaceuticalPatents, and the HIV/AIDS
Crisis: Finding the ProperBalance Between Intellectual Property Rights and Compassion, 7
WIDENER L. SYMP. J. 175 (2001); Zita Lazzarini, Making Access to Pharmaceuticalsa Real-
ity: Legal Options Under TRIPS and the Case of Brazil, 6 YALE HUM. RTs. & DEv. L.J. 103,
111-12 (2003); Antony Taubman, Rethinking TRIPS: 'Adequate Remuneration' for Non-
Voluntary PatentLicensing, 11 J. INT'L EcoN. L. 927 (2008).
Policy changes tend to occur at a glacial pace at the politically charged intersection of
patents and public health. See, e.g., Frederick M. Abbott & Jerome H. Reichmann, The Doha
Round's Public Health Legacy: Strategiesfor the Productionand Diffusion of Patented Medi-
cines Under the Amended TRIPS Provisions, 10 J. INT'L EcoN. L. 921, 933 (2007)
(pessimistically expressing, with regard to the TRIPS Amendment, WTO General Council,
Amendment of the TRIPS Agreement, Decision of 6 December 2005, WT/L/641 (Dec. 8,
2005), that "[tihe authors are inclined to believe there is not much room in the present global
political environment for negotiating a different deal from the one presently on the table"); In
Parenthesis,EcoNoMisT, Nov. 13, 1999, at 112 (describing that in WTO trade-liberalization
talks "'[t]here are 77 paragraphs and they're nearly all bracketed. That means almost nothing
is agreed' . . . Many developing countries, including India and Pakistan, say they will not even
discuss an agenda for further liberalization unless they are granted some leeway in implement-
ing previous commitments in such areas as intellectual property and customs practices. But
America, among others, says this is tantamount to reopening done deals. And so on.").
security, and critical peril to the life of the general public.26 Powerful de-
veloping countries, first pushing to keep IP issues outside the Uruguay
negotiations, later advocated for a broader compulsory licensing provi-
sion. 2 ' The final agreement represented a compromise, permitting
Member countries to issue compulsory licenses on their individual mer-
its (1) when reasonable commercial negotiations have failed; (2) without
prior negotiation when a national emergency or other circumstance of
extreme urgency has arisen; or (3) without prior negotiation when the
compulsory license is for "public non-commercial use." 28 No relevant
WTO panel decisions or other authoritative interpretations of this lan-
guage exist, leaving countries facing health problems hopeful that
compulsory licensing will help improve access to drugs, while the phar-
maceutical industry fears that extensive compulsory licensing will
dissolve its R&D structure and leave a generic drug commodities market
in its place.29 Compulsory licensing practices, however, continue to ex-
pand from responding to purely national emergencies toward addressing
everyday health care.
A. NationalEmergency Compulsory Licensing

Compulsory licensing for epidemics constituting national emergen-
cies has grudgingly gained acceptance. Initially, compulsory licensing
addressing HIV/AIDS and other epidemics was successfully deterred"o
26. DRAHOS WITH BRAITHWAITE, supra note 7, at 145; DANIEL GERVAIS, THE TRIPS
AGREEMENT: DRAFTING HISTORY AND ANALYSIS 3, 248 (2d ed. 2003) (providing the July 23,
1990 draft text of TRIPS Article 31).
27. Certain developing countries, especially India and Brazil, attempted to negotiate
compulsory licensing provisions as broadly as possible. See DEERE, supra note 1, at 54-56;
REICHMANN WITH HASENZAHL, supra note 1, at 14; Reichmann, supra note 21, at 247-48
("[If the developing countries lost the war, in the sense that their generic pharmaceutical
industries could no longer freely reverse-engineer [foreign patented drugs], then they won a
great battle with specific regard to the question of compulsory licenses.").
28. TRIPS art. 3 1(b); DEERE, supra note 1, at 81-82; see also Ho, supra note 13, at
399-400.
29. A commodities market for pharmaceuticals merely reflects the costs of ingredients
and production, leaving little margin to conduct R&D. For a brief discussion of a knowledge-
based R&D industry encountering a market-shift to a commodities market, see DRAHOS WITH
BRAITHWAITE, supra note 7, at 57-60.
30. Developing countries hoped that the multilateral TRIPS Agreement would reduce or
eliminate bilateral trade pressure to strengthen IP protection. See, e.g., DEERE, supra note 1, at
159; MICHAEL P. RYAN, KNOWLEDGE DIPLOMACY: GLOBAL COMPETITION AND THE POLITICS
OF INTELLECTUAL PROPERTY 112 (1998). The United States in particular, however, has actu-
ally increased its use of bilateral trade pressure post-TRIPS, although actual retaliation has
been rare. See DEERE, supra note 1, at 159-61, 341-42. Europe has also been active, although
at times a "quiet free-rider" on American bilateral trade activity. Id. at 50; see, e.g., DRAHOS
WITH BRAITHWAITE, supra note 7, at 7. Although some maintain that the "whole point of
multilateral agreements is to protect countries from the bilateral jungle where the strongest
always win," a WTO panel has upheld U.S. bilateral trade legislation in a case brought by the
WAinter 2011]1 "PublicNon-Commercial Use" 355
by U.S. "sticks and carrots" trade legislation in the form of benefits un-
der the Generalized System of Preferences3 ' (GSP), Section 301,32 and
the Special 301 "watch lists.""3 IP-related trade pressure came to a cata-
clysmic convergence with public health interests in South Africa in the
late 1990s, however, when the South African government issued compul-
sory licenses for drugs to combat its rapidly spreading HIV/AIDS
epidemic.*14
Nelson Mandela signed amendments to South Africa's Medicines
and Related Substances Control Acte in late 1997 to allow South Africa
to buy cheaper drugs from other countries via parallel importation" to
European Union. Evelyne Herfkens, Comment, TRIPs and Public Health, Opportunitiesfor
Doha, BRIDGES (Int'l Ctr. for Trade & Sustainable Dev.), Oct. 2001, at 3, 3, available at
http://ictsd.org/downloads/bridges/bridges5-8.pdf; Panel Report, United States-Sections 301-
310 of the Trade Act of 1974, 1 1.1, 8.1, WT/DS152/R (Dec. 22, 1999).
31. 19 U.S.C. §§ 2461-2467 (2006); see DRAHOS WITH BRAITHWAITE, supra note 7, at
86. The Generalized System of Preferences (GSP) program is "designed to promote economic
growth in the developing world [by] provid[ing] preferential duty-free treatment for over
3,400 products from 131 designated beneficiary countries and territories." OFFICE OF THE U.S.
TRADE REPRESENTATIVE, U.S. GENERALIZED SYSTEM OF PREFERENCES (GSP) GUIDEBOOK 3
(2010). Because developing countries depend on trade with the United States more than the
reverse, threatening revocation of GSP benefits is an effective method of encouraging strong
IP protection. See DRAHOS WITH BRAITHWAITE, supra note 7, at 86-88.
32. 19 U.S.C. § 2411 (2010) (permitting, and sometimes requiring, that the United
States Trade Representative take appropriate action if "an act, policy, or practice of a foreign
country is unreasonable or discriminatory and burdens or restricts United States commerce,"
including inadequate or ineffective protection of IP rights).
33. 19 U.S.C. § 2242 (2010) (requiring that the United States Trade Representative
(USTR) formulate lists of countries that deny adequate and effective protection of intellectual
property rights, with those having the most egregious acts or policies going on the priority
watch list). The USTR thereby publishes, in increasing order of severity, a "watch list," a "pri-
ority watch list," and a list of "priority foreign countries." Priority foreign countries have been
said to reside on "trade's death row." Peter Drahos, Global Law Reform and Rent-Seeking: The
Case of Intellectual Property, 7 AUSTL. J. CORP. L. 45, 51 (1996). There are, however, politi-
cal limits to bilateral trade pressure. India, for example, has made itself a permanent fixture
either as a priority foreign country or on the priority watch list for eighteen consecutive years
without suffering trade sanctions. See DRAHOS WITH BRAITHWAITE, supra note 7, at 88 (not-
ing that India last suffered GSP trade sanctions in 1992); The U.S. Special 301 Reports, 1989
to 2010, KNOWLEDGE ECOLOGY INT'L, http://keionline.org/ustr/special30l (last visited Nov.
13, 2010).
34. See Kathy Chenault et al., Will the AIDS Plague Change U.S. Trade Policy?, Bus.
WK., Sept. 13, 1999, at 58 (noting that around sixteen percent of South African adults are
HIV-positive).
35. Medicines and Related Substances Control Amendment Act No. 90 of 1997 (S.
Afr.).
36. Parallel importation occurs when a country with high drug prices purchases from a
source in a country with lower drug prices. On an individual consumer level, if a pharmaceuti-
cal company charges a high price to U.S. consumers, some U.S. consumers might seek to
purchase their drugs from another country where prices are lower, such as Canada, thereby
engaging in parallel importation. See Alan 0. Sykes, TRIPS, Pharmaceuticals,Developing
Countries, and the Doha "Solution", 3 CHI. J. INT'L L. 47, 63 (2002); see also Mary Pat Fla-
herty & Gilbert M. Gaul, Millions ofAmericans Look Outside U.S. For Drugs: Desirefor Low
356 Michigan JournalofInternationalLaw [Vol. 32:347
ensure availability of essential medicines, which appeared illegal under

TRIPS.3 ' Treating this as a test run to enforce TRIPS restrictions on
compulsory licensing, developed countries and the pharmaceutical in-
dustry mobilized remarkably: in February 1998, thirty-nine
pharmaceutical companies filed a lawsuit against the South African gov-
ernment; in May, the United States Trade Representative (USTR) put
South Africa on the Special 301 Watch List; in June, GSP benefits were
held in abeyance on items for which South Africa had requested GSP
treatment; and in October, U.S. Congress cut off aid to South Africa
pending a State Department report detailing South Africa's efforts to re-
peal the law."
South Africa made no substantive changes in its law and weathered
the full brunt of U.S., European, and industry pressure until the tide be-
gan to turn in 1999 as public scrutiny escalated.39 The Chicago Tribune
described it as a "battle pit[ting] the drug firms . . . against the intentions
Prices Often Outweighs Obeying Law, WASH. POsT, Oct. 23, 2003, http://
www.washingtonpost.com/wp-dyn/content/article/2007/06/28/AR2007062801634.html. Paral-
lel importation has importance beyond pricing when a country issues a compulsory license,
but does not have a domestic pharmaceutical industry capable of producing the drugs under
license. See, e.g., World Health Organization (WHO), Implications of the Doha Declaration
on the TRIPS Agreement and Public Health, at 19-21, WHO/EDM/PAR/2002.3, 34 (June
2002) (by Carlos M. Correa) [hereinafter Implications of the Doha Declaration].TRIPS was
amended in 2005 to explicitly permit parallel importation under such a situation. WTO Gen-
eral Council, Amendment of the TRIPS Agreement, WT/1U641 (Dec. 8, 2005).
37. TRIPS requires that production under a compulsory license be "predominantly for
the supply of the domestic market." TRIPS art. 31 (f). Thus, a country producing under a com-
pulsory license will likely have very little excess supply to import to other countries having a
compulsory license on the same drug without treading into uncertain legal territory. After a
recent TRIPS amendment, however, parallel importation is permitted in situations like the one
South Africa faced in the late 1990s. See infra text accompanying notes 50-52.
38. DEERE, supra note 1, at 227-28; [1 MAKING THE RULES] CHARAN DEVEREAUX ET
AL., CASE STUDIES IN US TRADE NEGOTIATION 82-87 (2006); Marc, supra note 21, at 121-
22; Chenault et al., supra note 34, at 58; Pharm. Research Mfrs. Ass'n, Submission of the
Pharmaceutical Research and Manufacturers of America (PhRMA) for the National Trade
Estimate Report on Foreign Trade Barriers (NTE) 2000: South Africa (Dec. 3, 1999) (unpub-
lished report), availableat http://www.cptech.org/ip/health/phrma/nte-99/safrica.html; see Act
of Oct. 21, 1998, Pub. L. No. 105-277, 112 Stat. 2681-1, 2681-155 ("[N]one of the funds
appropriated under this heading may be made available for assistance for the central Govern-
ment of the Republic of South Africa, until the Secretary of State reports ... on the steps
being taken . . . to negotiate the repeal, suspension, or termination of section 15(c) of South
Africa's Medicines and Related Substances Control Amendment Act No. 90 of 1997[.]"). The
USTR also alleged in its Special 301 Report that "[d]uring the past year, South African repre-
sentatives have led a faction of nations in the World Health Organization (WHO) in calling for
a reduction in the level of protection provided for pharmaceuticals in TRIPS." 1999 USTR
SPECIAL 301 REP. 21.
39. See Marc, supra note 21, at 117, 119-22.
Winter 2011] "Public Non-Commercial Use" 357
of some countries to issue [compulsory licenses]."" The New York Times

later criticized the U.S. government, stating:
[The dispute] has revealed the need to broaden the Administra-
tion's policy, which has been dominated by trade issues and the
desire to protect American pharmaceutical patents. Washington
should stop pressuring South Africa to change the law, but even
then far more will need to be done to get lifesaving medicines to
poor Africans with AIDS.41
By October, reports covered protestor's chants of "Gore's Greed
Kills" in response to "the way the Clinton/Gore Administration has been
using political and economic blackmail to keep Third World countries
from [issuing compulsory licenses for or parallel importing] patented
AIDS-fighting drugs, many of which were developed with [U.S.] tax-
payer-funded research." 42
The publicity nightmare quickly penetrated Washington, D.C.43 In
September 1999, the USTR reached a settlement permitting South Africa
to use the compulsory licensing provisions of TRIPS to enhance access
to pharmaceutical drugs, while South Africa pledged to "honour its obli-
gations under the TRIPS Agreement."" In May 2000, President Clinton
signed an Executive Order prohibiting the U.S. government from taking
Section 301 action against sub-Saharan African countries whose laws
promote access to HIV/AIDS pharmaceuticals and comply with TRIPS. 45
The pharmaceutical industry held out until 2001, but ultimately reached
a similar agreement whereby the pharmaceutical industry withdrew its
lawsuit and South Africa promised to apply the compulsory licensing
laws with discretion.46
40. Merrill Goozner, Third World Battles for Aids Drugs, CHI. TRIB., Apr. 28, 1999,
http://articles.chicagotribune.com/1999-04-28/news/9904280067_1_compulsory-licensing-
south-africa-aids-drugs; see also DEERE, supra note 1, at 229.
41. Editorial, Drugs for AIDS in Africa, N.Y. TIMEs, Aug. 23, 1999, http://www.
nytimes.con1999/08/23/opinions/drugs-for-aids-in-africa.html?scp=2&sq=%22drugs+for+
aids+in+africa%22&st=nyt.
42. Doug Ireland, Editorial, AIDS Drugsfor Africa, NATION, Oct. 4, 1999, at 5.
43. See, e.g., id.
44. Press Release, S. Afr. Dep't of Trade & Indus., Joint Understanding Between the
Governments of South Africa and the United States of America (Sept. 17, 1999), available at
http://www.info.gov.za/speeches/1999/9909201219pl007.htm; DEVEREAUX ET AL., supra
note 38, at 87; Steven Lee Myers, South Africa and U.S. End Dispute over Drugs, N.Y. TIMES,
Sept. 18, 1999, at A8.
45. Exec. Order No. 13155, 3 C.F.R. 268, 270 (2000).
46. The parties essentially agreed that South Africa would proceed "cautiously and
prudently" with regards to compulsory licensing practices. DEERE, supra note 1, at 229. The
pharmaceutical industry also lowered the prices of HIV/AIDS medications in Africa while
"requiring assurances that the drugs would not be reexported elsewhere and demonstration of
an adequate health care infrastructure." DEVEREAUX ET AL., supra note 38, at 90-91, 94.
358 Michigan Journal of InternationalLaw [Vol. 32:347
The South Africa confrontation permanently altered the TRIPS flex-

ibilities landscape. In its 2001 WTO dispute with Brazil, the U.S.
withdrew from a potential WTO panel decision, unwilling to "give cre-
dence to the idea of the WTO interfering with poor countries' health
policies."47 Emboldened, developing countries pursued a multilateral
declaration of their right to use TRIPS flexibilities, "not because of the
lack of clarity in [TRIPS], but as a result of the obstacles that the au-
thorities in those countries had experienced when trying to make
effective use of such flexibility." 48 The resulting Doha Declaration on the
TRIPS Agreement and Public Health at the WTO Doha Ministerial Con-
ference in November 2001 affirmed:
that [TRIPS] can and should be interpreted and implemented in
a manner supportive of WTO Members' rights to protect public
health and, in particular, to promote access to medicines for all.
In this connection, we affirm the right of WTO Members to use,
to the full, the provisions in the TRIPS Agreement, which pro-
41
vide flexibility for this purpose.
The Doha Agreement recognizes that "[e]ach Member has the right
to grant compulsory licenses and the freedom to determine the grounds
upon which such licences are granted,"50 and that "HIV/AIDS, tubercu-
losis, malaria, and other epidemics, can represent a national emergency
or other circumstances of extreme urgency."" Because many developing
nations lack the domestic pharmaceutical manufacturing facilities neces-
sary to produce a drug after a compulsory license, a TRIPS Amendment
was passed in 2005, which permits countries to use parallel importation
"to the extent necessary for the purposes of production of a pharmaceu-
tical product(s)."52
After the Doha Agreement, compulsory licensing began to prolifer-
ate to address national emergencies or other circumstances of extreme
urgency. Between 2002 and 2005, Brazil, Eritrea, Ghana, Indonesia, Ma-
laysia, Mozambique, Zambia, and Zimbabwe issued compulsory licenses
47. US, Brazil End WTO Case on Patents, Split on Bilateral Process, INSIDE U.S.
TRADE, June 29, 2001, at 1, 2.
48. Implications of the Doha Declaration,supra note 36, at 2.
49. Doha Declaration, supra note 8, 4
50. Id. I 5(b).
51. Id. 5(c).
52. Amendment of the TRIPS Agreement, supra note 36, art. 31 bis, 1; Press Release,
WTO, Members OK Amendment to Make Health Flexibility Permanent (Dec. 6, 2005), avail-
able at http://www.wto.org/english/news-e/pres05_e/pr426_e.htm; see also Taubman, supra
note 25, at 935 (noting that this TRIPS Amendment "remains the sole formal amendment to
the entire Uruguay Round package").
Winter 2011]1 "PublicNon-Commercial Use" 359
for generic HIV/AIDS drugs. 53 Threats of compulsory licensing in nego-

tiations have also successfully reduced prices for drugs to combat
HIV/AIDS 54 and Asian influenza.5 Even the United States has recog-
nized compulsory licensing as a useful bargaining chip in negotiating a
steep discount on Cipro in response to the 2001 anthrax scare. Despite
gradually gaining acceptance, however, compulsory licensing practices
remained confined to addressing national emergencies until the most
recent compulsory licenses issued between 2006 and 2008.
B. The Emergence of Public Non-Commercial

Use Compulsory Licensing
Thailand, after the September 19, 2006 military coup, radically de-
parted from the generally accepted "national emergency" compulsory
licensing for HIV/AIDS drugs. On November 29, 2006, Thailand's mil-
itary-appointed leaders of the Department of Disease Control issued a
compulsory license for an HIV/AIDS drug, Efavirenz;1 on January 24,
2007, they issued a compulsory license for another HIV/AIDS drug,
Kaletra; 9 and on January 25, 2007, they issued a compulsory license for
the heart disease medication Plavix. 0 All were granted under the "public
61
non-commercial use" provision. Claiming that "I am not a politician
53. See Reichman, supra note 21, at 250; Examples of Health-Related Compulsory
Licensing, CONSUMER PROJECT ON TECH., http://www.cptech.org/ip/health/cl/recent-
examples.html (last visited Nov. 13, 2010).
54. See, e.g., Zamiska, supra note 2; Keith Alcorn, Brazil Wins 75% Discount on New
HIV Drug, AIDSMAP NEWS (Nov. 17, 2003), http://www.aidsmap.com/en/news/5719BO79-
1568-4614-89D7-C51 F8A3DC6Al.asp.
55. See Reichman, supra note 21, at 249-50.
56. Id. at 250; Jill Carroll & Ron Winslow, Bayer Agrees to Slash Pricefor Cipro Drug,
WALL ST. J., Oct. 25, 2001, at A3.
57. Karen Emmons et al., One Night in Bangkok: Army Claims Coup in Thailand, IN-
DEPENDENT, Sept. 20, 2006, at 1.
58. Notification of the Department of Disease Control, Ministry of Public Health Re:
Exercising of Right Under Drugs and Pharmaceuticals Products Patent (Nov. 29, 2006)
(Thai.), in THAI WHITE PAPER, supra note 2, at 38-40 [hereinafter Thai Efavirenz License];
see also Apiradee Treerutkuarkul, Local Version of New AIDS Drug Planned, BANGKOK POST,
Nov. 29, 2006.
Exercising of Right Under Drugs and Pharmaceuticals Products Patent for Combined Formu-
lation of Lopinavir and Ritonavir (Jan. 24, 2007) (Thai.), in THAI WHITE PAPER, supra note 2,
at 41-43 [hereinafter Thai Kaletra License].
Exercising of Right Under Drugs and Pharmaceuticals Products Patent for Clopidogrel (Jan.
25, 2007) (Thai.), in THAI WHITE PAPER, supra note 2, at 44-46 [hereinafter Thai Plavix Li-
cense].
61. THAI WHITE PAPER, supra note 2, at 5-7 (referring to the Thai compulsory licenses
as "Government Use of Patent"); Thai Efavirenz License, supra note 58; Thai Kaletra License,
supra note 59; Thai Plavix License, supra note 60.
and I have nothing to lose," Thailand's health minister, Dr. Mongkol,

further stated that Thailand was considering issuing compulsory licenses
for eleven other medicines to fight HIV/AIDS, cancer, and heart dis-
ease.62
While health activists applauded Thailand's actions as "a brave deci-
sion," 63 the USTR elevated Thailand to the Special 301 Priority Watch
List, citing the compulsory licenses as "further indications of a weaken-
ing respect for patents."" One pharmaceutical manufacturer retaliated by
withdrawing six drug applications for Thai regulatory approval, with a
spokesman elaborating: "[t]he Thai government said it will not buy it, so
why is there a need for us to register it?" 65
Surprisingly, the novel concerns raised by the Thai compulsory li-
censes were lost on many of those representing international trade
interests, as they analyzed the licenses under the national emergency jus-
tification that Thailand circumvented.6 The Wall Street Journal reported
that "patents can be broken in emergencies[;] [h]owever, it's hard for
anyone to argue that heart disease meets such stringent tests."67 It later
implied that Thailand's military-installed government had "unilaterally
declare[d] an emergency" to suspend patents.68 Another Wall Street Jour-
nal editorial later lambasted Thailand for breaching at least the spirit, if
not the letter of TRIPS because "it's hard to argue that Thailand has an
Thailand issued all three compulsory licenses pursuant to Section 51 of the Thai Patent
Act, which governs use for "any service for public consumption or which is of vital impor-
tance ... to prevent or to relieve a severe shortage of food, drugs or other consumption items."
Patent Act B.E. 2522, § 51 (1979), amended by Patent Act (No.3) B.E. 2542 (1999) (Thai.),
reprinted in THAI WHITE PAPER, supra note 2, at 30. The Thai government maintains that
drugs produced under a compulsory license "will be distributed only to those patients who are
covered by the government. Those who are well off and can afford to pay out of their own
pocket ... still have to pay the high price of patented products." THAI WHITE PAPER, supra
note 2, at 6 (emphasis omitted).
62. James Hookway & Nicholas Zamiska, Harsh Medicine: Thai Showdown Spotlights
Threat to Drug Patents: Abbott Protests Move to Buy Copycat Pills, But It Yields on Price,
WALL ST. J., Apr. 24, 2007, at Al; Darren Schuettler, Interview-Thailand Fed Up with High
Drug Prices, REUTERS, Feb. 18, 2007, available at http://www.reuters.com/article/
idUSSP34188520070219; see also Zamiska, supra note 2 (noting that there "are more prod-
ucts for which the government may allow copycat versions").
63. Zamiska, supra note 2 (quoting a Doctors Without Borders campaigner); see also
Nopporn Wong-Anan, Thailand Issues More Compulsory Drugs Licences, REUTERS, Jan. 25,
2007, available at http://www.reuters.com/article/idUSSP13566 ("AIDS activists applauded
Bangkok for taking a bold stance.").
64. 2007 USTR SPECIAL 301 REP. 27.
65. Cohen, supra note 1, at 816; see Hookway & Zamiska, supra note 62.
66. See, e.g., Kristina M. Lybecker & Elisabeth Fowler, Compulsory Licensing in Can-
ada and Thailand: Comparing Regimes to Ensure Legitimate Use of the WTO Rules, 37 J.L.
MED. & ETHICS 222, 233 (focusing on "the debate surrounding what constitutes a 'national
emergency,' 'rather than public non-commercial use).
67. Bate, supra note 23.
68. Zamiska, supra note 2.
AIDS epidemic, when its incidence is a little over 1%-and countries

such as South Africa are well over 20%. The same goes for heart dis-
ease." 69
Thailand, however, issued its compulsory licenses for public non-
commercial use. 70 Explaining that Thailand had committed to providing
universal health care for most of its population," Dr. Mongkol reasoned
that "[w]e have to provide health services to forty-nine million people
and with limited resources." 72 Although stating valid health justifications
for these licenses," the Thai government's compulsory license notifica-
tions also explicitly depended on budgetary considerations.74 Dr.
Mongkol explained, "[i]f they reduce their drug price to our satisfaction,
there is no need to make a compulsory license."7 Although the Thai gov-
ernment asserted that it had segregated the market to provide
69. Theft in Thailand, supra note 1; see also Tremblay, supra note 12, at 11 (noting
Doctors Without Borders' estimate that 1.5% of Thailand's population has AIDS).
70. THAI WHITE PAPER, supra note 2, at 5-7 (referring to the Thai compulsory licenses
as a "Government Use of Patent"); Thai Efavirenz License, supra note 58; Thai Kaletra Li-
cense, supra note 59; Thai Plavix License, supra note 60.
71. National Health Security Act B.E. 2545 (2002) (Thai.); see also Drugs in Thailand,
supra note 12 (noting that Thailand "has committed to free universal healthcare, and faces a
particular challenge in treating a large number of HIV-positive patients with drugs that are
costly even for far richer countries," while disapproving of the Plavix compulsory license);
Hookway & Zamiska, supra note 62 ("Thailand began inching towards its confrontation with
the pharmaceutical industry in 2004, when it pledged to provide free AIDS medicine to every-
one who needed it.").
72. Shuettler, supra note 62.
73. THAI WHITE PAPER, supra note 2, at 13-14 (detailing the individual merits of each
compulsory license); Thai Efavirenz License, supra note 58; Thai Kaletra License, supra note
59; Thai Plavix License, supra note 60.
74. Thai Efavirenz License, supra note 58, at 39 ("The price of Efavirenz in Thailand is
twice the price of the same drug which is generic drug in India. Budget allocated by the gov-
ernment is therefore sufficient to provide only some patients with Efavirenz, while the rest has
to use non-patent drugs with higher level of side-effect than Efavirenz because of their lower
prices . . . [T]he Thai law on patent empowers the Ministry, Sub-Ministry and Department to
exercise the right under any patent without prior authorization of the patent holders so as to
provide public service as mentioned above." (emphasis added)); Thai Kaletra License, supra
note 59, at 42 ("The price of [Kaletra] is currently a lot higher than the price of the same drug
which is generic drug in some countries. Therefore, many patients who are resistant to basic
formulations of HIV antiretroviral drugs are unable to access to this drug, leading to opportun-
istic infections and death. Hence, being able to domestically produce or to import HIV
antiretroviral drugs with the same generic name into Thailand to replace the original one will
lead to the price reduction and the increase in accessibility for patients."); Thai Plavix License,
supra note 60, at 45 ("[Slince the high price and limited budget, 20 percent of patients covered
under Universal Coverage scheme can access [Plavix]. As a result of provision of market
competition by imported or locally produced generics, price will reduce dramatically and
accessibility will increase 6 to 12 times which will conform to the Universal Coverage pol-
icy.").
75. Shuettler, supra note 62.
362 Michigan Journal of International Law [Vol. 32:347
compulsorily licensed drugs only to those who cannot afford them,

distrust runs high." Indeed, Thailand issued four more compulsory
licenses in 2008, this time for anti-cancer drugs for public non-
commercial use.7 ' As an alert Wall Street Journal editorial aptly won-
dered: "[TRIPS] Article 31 provides for compulsory licensing in case of
'national emergency' or for 'public non-commercial use' . .. Bangkok
claims the latter case, which is hard to rebut. What does 'public non-
commercial use' mean, anyway?"79 Considering the lack of clarity sur-
rounding the Thai compulsory licenses and the public non-commercial
use standard, Thailand may have provided a preview to how countries
can potentially use compulsory licenses to ensure the highest possible
quality of care at the lowest possible price in everyday circumstances.
II. NEW COMPULSORY LICENSING CONCERNS PRESENTED

BY GOVERNMENT-RUN HEALTH CARE
The idea of a human right to health care and the implementation of

comprehensive government health care programs have proliferated
across the globe. Governments and their patients, however, are not the
only parties concerned with drug prices and availability. The private
pharmaceutical industry depends on patent protection, particularly in
high-income European countries and the United States, to recoup high
R&D costs and fund future development. Taxpayers also contribute bil-
lions of dollars in funding for basic research to support pharmaceutical
R&D through public research entities, with U.S. funding for its National
Institutes of Health (NIH) far outpacing the public R&D funding of all
other countries combined. With Europe instituting hard-ceiling health
care budgets for its universal health care programs, and with the United
States gradually confronting its own health care costs, the large pockets
76. See THAI WHITE PAPER, supra note 2, at 6 ("[T]he drugs derived from the Govern-
ment Use of Patent in Thailand will be distributed only to those patients who are covered by
the government. Those who are well off and can afford to pay out of their own pocket . . . still
have to pay the high price of patented products.").
77. See, e.g., 2009 USTR SPECIAL 301 REP. 21 (Thailand remains on the Priority Watch
List); Theft in Thailand, supra note 1; Zamiska, supra note 2; Ed Silverman, Should the US
Invade Thailand?, PHARMALOT (Apr. 26, 2007, 10:32 AM), http://www.pharmalot.com/2007/
04/should the us invade thailand/.
78. MINisTRY OF PuB. HEALTH & NAT'L HEALTH SEC. OFFICE, supra note 18. at 22-
29; Schuettler, Thailand Scraps Patent Override, supra note 18; Wong-Anan, supra note 18.
The Thai government, however, has not invoked one of the compulsory licenses after Novartis
agreed to distribute its drug, Glivec, for free to nearly all Thai patients. Reghu Balakrishnan,
Novartis Wins Thai Battle, Setback for Indian Firms, THE FINANCIAL EXPRESS, http:/
www.financialexpress.com/news/novartis-wins-thai-battle-setback-for-indian-firms/268596/;
Schuettler, Thailand Scraps Patent Override, supra note 18.
79. Bangkok's Drug War Goes Global, supra note 23.
paying for pharmaceutical drugs may be beginning to shrink. Mean-

while, developing countries continue to drive an increasing share of
pharmaceutical market growth. With compulsory licensing practices pos-
ing both an increasingly attractive option to constrain costs in developed
nations and an effective remedy to increase drug access in developing
nations, compulsory licensing represents a growing concern for govern-
ments, patients, taxpayers, and the pharmaceutical producers of
innovative drugs.
A. Health Care as a Human Right and Government Health Care

A fundamental human right to health care, along with national man-
dates to provide comprehensive health coverage, continues to develop.
The U.N. Universal Declaration of Human Rights asserted in 1948 that
"[e]veryone has the right to a standard of living adequate for the health
and well-being of himself and of his family, including food, clothing,
housing and medical care."80 The right to health care has been further
elaborated in the International Covenant on Economic, Social and Cul-
tural Rights," as well as the Convention on the Rights of the Child, 2 the
Convention on the Elimination of All Forms of Discrimination Against
Women,8 3 the International Convention on the Elimination of All Forms
of Racial Discrimination, and the Yogyakarta Principles" In light of the
80. Universal Declaration of Human Rights art. 25.1, G.A. Res. 217 (IH)A, U.N. Doc.
A/RES/217(HI), at 76 (Dec. 10, 1948) (emphasis added).
81. International Covenant on Economic, Social and Cultural Rights art. 12, opened for
signatureDec. 16, 1966, 993 U.N.T.S. 3 (recognizing "the right of everyone to the enjoyment
of the highest attainable standard of physical and mental health" and requiring parties to pre-
vent, treat, and control epidemics and assure access to "medical service and medical attention
in the event of sickness").
82. Convention on the Rights of the Child art. 24.1, opened for signature Nov. 20,
1989, 1577 U.N.T.S. 3 ("Parties recognize the right of the child to the enjoyment of the high-
est attainable standard of health and to facilities for the treatment of illness and rehabilitation
of health. States Parties shall strive to ensure that no child is deprived of his or her right of
access to such health care services.").
83. Convention on the Elimination of All Forms of Discrimination Against Women art.
12.1, opened for signature Dec. 18, 1979, 1249 U.N.T.S. 13 ("States Parties shall take all
appropriate measures to eliminate discrimination against women in the field of health care in
order to ensure, on a basis of equality of men and women, access to health care services, in-
cluding those related to family planning."). Id. art. 14.2(b) ("States Parties shall take all
appropriate measures to eliminate discrimination against women in rural areas in order to
ensure ... access to adequate health care facilities, including information, counseling and
services in family planning[.]").
84. International Convention on the Elimination of All Forms of Racial Discrimination
art. 5(e)(iv), openedfor signature Dec. 21, 1965, 660 U.N.T.S. 195 ("States Parties undertake
to prohibit and to eliminate racial discrimination in all its forms and to guarantee the right of
everyone ... [t]he right to public health [and] medical care.").
85. YOGYAKARTA PRINCIPLES ON THE APPLICATION OF INTERNATIONAL HUMAN
RIGHTS LAW IN RELATION TO SEXUAL ORIENTATION AND GENDER IDENTITY 22 (2007),
tension between IP rights and access to health care, the U.N. High
Commissioner of Human Rights recognized that "there are apparent con-
flicts between the intellectual property rights regime embodied in the
TRIPS Agreement, on the one hand, and international human rights law,
on the other." 7
A specific human right to health care has also been widely accepted
at the national level, with more than seventy states incorporating provi-
sions guaranteeing a right to health care into their constitutions or
statutes." For example, Thailand's constitution states:
A person shall enjoy an equal right to receive proper and stan-
dard public heath service, and the indigent shall have the right to
receive free medical treatment from public health centers of the
State ... A person shall have the right to receive proper preven-
tion and eradication of harmful contagious diseases without
charge in a timely manner.
South Africa similarly recognizes a right to health care in its constitu-
tion, charging the government to "take reasonable legislative and other
measures .. . to achieve the progressive realisation of [the right to health
care]." 90 Brazil constitutionally declares that "[h]ealth is a right of all and
a duty of the State." Canada takes a less-committal stance, pledging
only to "facilitate reasonable access to health services without financial
or other barriers." Even the United States, long resistant to the idea of
health care reform, is approaching the idea that everyone is entitled to at
least a minimum level of health care. 93
http://www.yogyakartaprinciples.org/principles-en.pdf (Principle 17: "The Right to the High-

est Attainable Standard of Health").
86. See, for example, the discussion of compulsory licensing by South Africa and Thai-
land, supra Part I.
87. Sub-Commission on the Promotion and Protection of Human Rights Res. 20007,
Intellectual Property Rights and Human Rights, 52d Sess., Aug. 17, 2000, U.N. Doc.
EICN.4/SUB.2/RES/2000/7 (Aug. 17, 2000).
88. Wesley A. Cann, Jr., On the Relationship Between Intellectual Property Rights and
the Need of Less-Developed Countriesfor Access to Pharmaceuticals:Creating a Legal Duty
to Supply Under a Theory of Progressive Global Constitutionalism,25 U. PA. J. INT'L EcON.
L. 755, 846-47 (2004).
89. CONSTITUTION OF THE KINGDOM OF THAILAND, § 51 (2007).
90. S. AFR. CONST., ch. 2, § 27, 1996.
91. CONsTITulio FEDERAL [C.F.][CONSTITUTION] art. 196 (Braz.).
92. Canada Health Act, R.S.C. 2009, c. C-6, § 3.
93. See Sheryl Gay Stolberg & Robert Pear, Obama Signs Health Care Overhaul Bill,
with a Flourish, N.Y. TIMES, Mar. 23, 2010, http://www.nytimes.com/2010/03/24/health/
policy/24health.html.
Winter 20111 "Public Non-Commercial Use" 365
When health care is a government-run and government-funded en-

terprise,9 compulsory licenses issued by the government for medicines
appear to fall squarely within the meaning of public non-commercial
use.95 Government health care programs distribute drugs to their citizens,
making the use public, while also providing those drugs free of charge or
on a non-profit basis, making the use non-commercial. With broad and
poorly funded9 7 governmental mandates to provide public health care
spanning the globe, compulsory licensing poses a tempting option to
increase drug availability while maintaining low costs. 98
B. The PharmaceuticalDevelopment Outlook"

Government health care programs, however, when combined with
compulsory licensing and important pharmaceutical markets, represent a
corresponding threat to the current R&D infrastructure of drug
94. See, e.g., Lei No. 8.080, de 19 de Setembro de 1990, DIARIo OFICIAL DA UNIXO
[D.O.U.] de 20.09.1990 (Braz.); Canada Health Act; National Health Policy, 1983, Ministry of
Health & Family Welfare (India); National Health Security Act B.E. 2545 (2000) (Thai.).
95. TRIPS art. 31(b).
96. See, e.g., Gold & Lam, supra note 19, at 25; Ho, supra note 13, at 402-04.
97. For example, Thailand spent only 3.7% of its Gross Domestic Product (GDP), Bra-
zil spent 8.4%, and Canada spent 10.1% of its GDP on health care in 2007, while the United
States spent 15.7%. Health Expenditure, Total (% of GDP), WORLD BANK,
http://data.worldbank.org/indicator/SH.XPD.TOTL.ZS (last visited Nov. 13, 2010). Many also
maintain that health care may be poorly funded as a result of opportunistic governmental
budget decisions. See, e.g., Stephanie Skees, Note, Thai-ing up the TRIPS Agreement: Are
Compulsory Licenses the Answer to Thailand'sAIDS Epidemic?, 19 PACE INT'L L. REv. 233,
243-45 (2007); Bangkok's Drug War Goes Global, supra note 23; Theft in Thailand, supra
note 1.
98. See Reichmann, supra note 21, at 252 ("[T]he goal behind [Thailand's] recent bar-
rage of compulsory licenses was to move the relevant pharmaceutical companies from a 'low
volume-high margin' pricing strategy to a 'high volume-low margin' alternative approach.");
Nopporn Wong-Anna, Thailand Stuns Drug Firms with Generic Licenses, REUTERS (U.K.
ed.), Jan. 25, 2007, available at http://uk.reuters.com/article/idUKSPl 356620070125 (quoting
the Thai Health Minister saying "[w]e have to do this because we have so many patients to
treat with so little budget. We can't watch our people die . . . ."); see also Brazil Reaches with
Abbott Labs in AIDS Drug Dispute, ASSOCIATED PRESS, Oct. 12, 2005, available at Lexis
Nexis Academic (describing how Brazil avoided issuing a compulsory license: "The price we
reached is what the national AIDS program could pay."). Thailand and Brazil are relatively
wealthy nations, which suggests that few countries do not have similar health care budget
problems. See Gross Domestic Product 2009, WORLD BANK, available at http://
siteresources.worldbank.org/DATASTATISTICS/Resources/GDP.pdf (ranking Brazil eighth
and Thailand thirty-third among all nations).
99. This Note presupposes that a patent-driven private pharmaceutical industry is better
and preferable to purely public-funded governmental pharmaceutical innovation programs.
Even should this not be the case, however, the same international R&D free-riding concerns
remain present in such governmental programs unless a global contribution mechanism en-
sures that each nation carries its own burden in funding medical research. Such radical
industry changes are beyond the scope of this Note, which attempts to address concerns re-
garding the current pharmaceutical R&D structure in the current international legal
environment.
development, which is funded both by purchasers of pharmaceutical

products and by taxpayers via public research entities. With only one
of every 5,000-10,000 tested compounds reaching the market and
taking an average of 11.8 years to get there,'m drug R&D investment
requires a high risk premium.'o' Although the exact amount is disputed,
current estimates to develop an innovative, new molecular entity drug
range from $802-$868 million,'02 and costs continue to rise. o0
Pharmaceutical development is also far from a purely private enterprise,
with the NIH annually spending over $31 billion in taxpayer dollars in
basic medical research, which supports downstream drug development
by the pharmaceutical industry.'o4
100. CONGRESSIONAL BUDGET OFFICE, PUB. No. 2589, RESEARCH AND DEVELOPMENT
IN THE PHARMACEUTICAL INDUSTRY 20 (2006). Regulatory approval has also become increas-
ingly risky, with the average time from drug discovery to market entry gradually lengthening.
See id. at 22-23.
101. The capital asset pricing model measures the risk premium for a particular invest-
ment by comparing the expected return on that investment to the expected overall market
return. ROBERT S. PINDYCK & DANIEL L. RUBINFELD, MICROECONOMICs 564-68 (7th ed.
2009); see also Joseph A. DiMasi et al., The Price of Innovation: New Estimates of Drug
Development Costs, 22 J. HEALTH EcON. 151, 153 (2003) (explaining that in viewing R&D as
an investment project, an investor must "know both the amount of expenditures and the timing
of these expenditures, since funds committed to R&D . . . have both a direct cost and an op-
portunity cost"). An informal survey of major pharmaceutical firms yielded nominal "hurdle
rates" (minimum acceptable rates of return) of 13.5% to over 20%. Id. at 163 n.22.
102. See DiMasi, supra note 101, at 180. The $802 million estimate reflects total ex-
penses, including failed research, clinical and approval expenses, opportunity costs of capital,
and tax adjustments. Id. at 158-80. A subsequent study discovered that cost varied greatly by
drug type and producer, noting that the final overall estimate of $868 million "suggests, if
anything, that $802 million is an underestimate." Christopher P. Adams & Van V. Branter,
Estimating the Cost of New Drug Development: Is It Really $802 Million?, 25 HEALTH AF-
FAIRS 420, 427 (2006).
Public Citizen, a non-governmental organization founded by Ralph Nader, however, es-
timated new drug costs in 2001 at $71 million (after adjustments for R&D tax deductions).
PUBLIC CITIZEN, Rx R&D MYTHS: THE CASE AGAINST THE DRUG INDUSTRY'S "SCARE
CARD" 6 (2001). Public contributions to pharmaceutical R&D may also be understated "be-
cause they do not include indirect funds such as tax expenditures ... and additional periods of
marketing exclusivity." Kevin Outterson, Should Access to Medicines and TRIPS Flexibilities
Be Limited to Specific Diseases?, 34 Am. J.L. & MED. 279, 287 (2008). Furthermore, public
entities like NIH often subsidize much of the research that goes into a pharmaceutical product.
For example, NIH spent an estimated $484 million for paclitaxel-related research, including
the development of Taxol, which has generated over $9 billion in sales for a private pharma-
ceutical company, which in turn has paid back only a 0.5% royalty ($35 million) to the NIH.
U.S. GEN. ACCOUNTING OFFICE, GAO-03-829, TECHNOLOGY TRANSFER: NIH-PRIVATE SEC-
TOR PARTNERSHIP IN THE DEVELOPMENT OF TAXOL 13-15 (2003) [hereinafter TAXOL
REPORT].
103. CONGRESSIONAL BUDGET OFFICE, supra note 100, at 35-37 (tracking R&D expen-
ditures by year against the number of new molecular entity drugs approved); see also DiMasi,
supra note 101, at 154 (tracking pharmaceutical R&D expenditures).
104. NIH Budget, NAT'L INSTS. OF HEALTH, http://www.nih.gov/about/budget.htm (last
visited Nov. 13, 2010). "Although only some of that spending was explicitly related to phar-
maceuticals, much of it was for the basic research on disease mechanisms that underlies the
Winter 2011]1 "Public Non-Commercial Use" 367
R&D therefore usually targets drugs that have an expected return

high enough to generate substantial profit and fund subsequent R&D.o
Because R&D investment decisions are guided by the expected eco-
nomic return for a particular line of research, palatability of risk is
proportional to the magnitude of the expected returns.'" Assuming that
research into risky, unexplored areas of health is desirable, low expected
returns, whether due to a small market for a particular drug or weakened
patent exclusivity rights as a result of compulsory licensing, may chill
such R&D.
After a pharmaceutical drug runs the gamut of patenting, clinical tri-
als, and regulatory approval procedures, the patent specification and a
wealth of safety and efficacy data are available to the public, resulting in
serious appropriability concerns.' In the absence of strong patent pro-
tection and regulatory data exclusivity, generic producers are able to
rapidly reverse-engineer drugs, obtain regulatory approval by relying on
search for new drugs." CONGRESSIONAL BUDGET OFFICE, supra note 100, at 27. Not all devel-
oped countries contribute equal public funding to support pharmaceutical R&D, however.
While the NIH spends over $31 billion annually, its counterparts in Europe collectively spend
only $3-4 billion. Glen Whitman & Raymond Raad, Cato Inst., Bending the Productivity
Curve: Why America Leads the World in Medical Innovation, POL'Y ANALYSIS, Nov. 18, 2009,
at 5. Thus, U.S. taxpayers bear a disproportionately heavy burden in developing new pharma-
ceutical drugs. Some distributional concerns of compulsory licensing are explored further with
regards to patient-shouldered and taxpayer-shouldered R&D burdens in Part Il(C), infra.
105. See DRAHOS WITH BRAITHWAITE, supra note 7, at 167 ("Patent-based R&D is not
responsive to demand, but to ability to pay," resulting in drugs for "mental illness, hyperten-
sion and erectile dysfunction, [but not for] tropical diseases"); DiMasi, supra note 101, at
163-64 (finding that nominal cost of capital estimates hover around fifteen percent); see also
Sykes, supra note 36, at 62 ("A policy that requires the developers of [essential] drugs to sacri-
fice their intellectual property rents in the name of a "national emergency" or some similar
moniker will simply discourage research in the areas where it has the most potential to yield
high returns.").
Public R&D funding, with its limited ability to generate a return on investment, does not
necessarily follow the same investment strategy. See, e.g., TAXOL REPORT, supra note 102, at
13-15. Public R&D, however, is most often targeted at basic research, which private pharma-
ceutical companies build upon to bring commercial pharmaceutical products to market. See,
e.g., CONGRESSIONAL BUDGET OFFICE, supra note 100, at 27 (explaining that the government
"focus[es] on basic research, while the drug industry concentrates on applied research and
development"). The drugs that ultimately make it to consumers, therefore, generally reflect
this market reality.
106. Whitman & Raad, supra note 104, at 8 ("Other things being equal, individuals and
firms will tend to invest more in medical innovation when (a) they expect a larger return; (b)
the returns will last for a longer period of time; and (c) the returns arrive sooner rather than
later."); CONGRESSIONAL BUDGET OFFICE, supra note 100, at 44-45 ("Economists broadly
agree that a reduction in profits would cause private-sector investment in drug R&D to grow
more slowly or to decline."). But see Lazzarini, supra note 25, at 110-12 (noting that pharma-
ceutical companies both distribute more profits and spend more on marketing and
administration than they devote to R&D of new drugs).
107. See CARLOS MARiA CORREA, SOUTH CENTRE, PROTECTION OF DATA SUBMITTED
FOR THE REGISTRATION OF PHARMACEUTICALS: IMPLEMENTING THE STANDARDS OF THE
TRIPS AGREEMENT 6-7 (2002).
368 MichiganJournalof InternationalLaw [Vol. 32:347
the patent holder's safety and efficacy data, and sell the generic version
on a competitive market against the innovative firm that incurred the
stratospheric R&D and original regulatory approval costs.0 o Without
such protection, the innovative pharmaceutical developer could expect
little return on investment, and private R&D would dissipate.
Indeed, pharmaceutical appropriability in India resulted in a com-
modified Indian pharmaceutical market devoid of R&D. In the Indian
Patents Act of 1970, India abolished pharmaceutical compound pat-
entability in favor of short seven-year pharmaceutical production-process
patents, creating incentives to devise increasingly efficient production
processes while permitting any manufacturer to produce the pharmaceu-
tical compound itself.'" Drug firms flooded the market as the number of
licensed manufacturers grew from 2,237 enterprises in 1969-70 to an
estimated 16,000 by 1992-93, illustrating that barriers to entry into the
pharmaceutical market were not onerous."0 Profitability predictably
plunged over that period, reducing R&D expenditures from 15.5% of
sales prior to the 1970 Patents Act to a mere 1.4% in 1992-93 because of
comparative declines in expected returns on R&D investment due to the
absence of exclusivity for drug compounds.'" 1.4% does not fund much
R&D: India has become the world's leading generic pharmaceutical pro-
ducer, but contributes little to the development of new pharmaceutical
medicines." 2
The most powerful developing countries followed India in prohibit-
ing patent protection for pharmaceuticals. Between 1971 and 1996,
Brazil prohibited patents for both pharmaceutical products and proc-
esses."' Mexico and Argentina had similarly lowered pharmaceutical
108. See id.

109. DEERE, supra note 1, at 40; see also Carsten Fink, Patent Protection, Transnational
Corporations,and Market Structure: A Simulation Study of the Indian PharmaceuticalIndus-
try, in INTELLECTUAL PROPERTY AND DEVELOPMENT: LESSONS FROM RECENT ECONOMIC
RESEARCH 227, 229 (Carsten Fink & Keith E. Maskus eds. 2005).
110. Fink, supra note 109, at 229.
111. See id. at 231. By comparison, the American innovative pharmaceutical industry
spends approximately 15.6% of sales on R&D. Danzon & Towse, supra note 25, at 184.
112. See Fink, supra note 109, at 221; India's World Class Drug Manufacturers,GLOB-
AL PHARMACY CAN., http://www.globalpharmacycanada.com/India-Pharmaceutical-Industry-
Informationlindias-world-class-drug-manufacturers (last visited Nov. 13, 2010) (describing its
Indian drug sources andnoting that "India is the single largest producer of generic medicine in
the world"); Tremblay, supra note 12, at 11 (noting that Doctors Without Borders "obtains
80% of its AIDS medications from India"); see also THAI WHITE PAPER, supra note 2, at 8
(stating that Ranbaxy, an Indian generics manufacturer, was able to fill Thailand's order for
66,000 bottles of Efavirenz within a month).
113. CfCERO GoNTIUO, CHANGING THE PATENT SYSTEM FROM THE PARIS CONVENTION
TO THE TRIPS AGREEMENT: THE POSITION OF BRAZIL 16 (Andrea Carina Ceschi trans., Hei-
nrich Boll Found., Global Issue Paper No. 26, 2005).
patent protection prior to TRIPS." 4 As a result, today only a handful of

developed countries have a sufficiently sophisticated pharmaceutical in-
dustry and research base to conduct complex R&D."'
Compulsory licensing, if widely used as an escape-hatch from patent
protection, presents a potential threat to continued research by relegating
innovative producers to a level playing field with generic producers.'
Once a compulsory license is granted, licensees simply have to send a
royalty check to the patent holder."7 These royalty payments are uni-
formly puny. For example, Indonesia offered a mere 0.5% royalty on the
generic sale price for its HIV/AIDS compulsory licenses,"' Zambia of-
fered 2.5%,"' and Mozambique offered 2%.120 Meanwhile, Thailand has
offered 0.5% to 2.0%.121
The pharmaceutical market has already encountered the likely bleak
effects of widespread compulsory licensing and its low royalty rates. The
post-1970 Indian pharmaceutical industry demonstrated that extremely
low margins do not incentivize R&D.122 In a similar vein, the Egyptian
pharmaceutical industry is currently discovering that its cost-plus price-
setting system, using the costs of ingredients as the benchmark, estab-
lishes a profit ceiling that acts as a de facto limit on R&D
114. DEERE, supra note 1,at 39.

115. Implications of the Doha Declaration,supra note 36, at 19-20, 52 (listing Belgium,
France, Germany, Italy, Japan, the Netherlands, Sweden, Switzerland, the United Kingdom,
and the United States as countries with "sophisticated pharmaceutical industry and research
base[s]"); KEITH E. MASKUS, INTELLECTUAL PROPERTY RIGHTS IN THE GLOBAL ECONOMY 52
(2002) ("At the top [of the global pharmaceutical industry] lie a relatively small number of
large multinational enterprises, headquartered in the United States, Switzerland, Germany, the
United Kingdom, and Japan, that undertake virtually all the basic pharmaceutical research
done by private entities.").
116. E.g., compare Fink, supra note 109, at 231 (noting that profitability declined in
India, after the Patents Act of 1970, from 15.5% of revenue in 1969-70 to 1% in 1991-92,
matching R&D expenditures), with Danzon & Towse, supra note 25, at 184 (noting that the
U.S. innovative pharmaceutical industry spends approximately 15.6% of sales on R&D).
117. DRAHOS WITH BRAITHWAITE, supra note 7, at 149 (quoting a representative for the
semiconductor industry, which faced similar compulsory licensing issues during the Uruguay
Round negotiations).
118. Keputusan Presiden Republik Indonesia Tentang Pelaksanaan Paten Oleh Pemerin-
tah Terhadap Obat-Obat Anti Retroval [Decree of the President Republic of Indonesia
Regarding Patent Exploitation of Anti Retroviral Drugs by the Government], Presidential
Decree No. 83, Oct. 5, 2004.
119. MINISTRY OF COMMERCE, TRADE AND INDUSTRY, COMPULSORY LICENSE No. CL
01/2004,2004, MCTI/104/l/1c (Zam.).
120. MINIsTtRIO DA INDUSTRIA E COMERCIO [MINISTRY OF INDUSTRY AND COMMERCE],
LICENCA COMPULSIVA [Compulsory License] No. 01/MIC/04, 2004, REF&/GDNAI/
DNI/MIC/04 (Mozam.).
121. THAI WHITE PAPER, supra note 2, at 11.
122. See, e.g., Fink, supra note 109, at 229-31.
expenditures.123 Limiting economic returns on pharmaceutical R&D

through abusive compulsory licensing, especially if in one or more of the
few countries with innovative pharmaceutical industries,'2 therefore pos-
es a threat to continued R&D into unexplored areas of medicine.
C. The Fading Wisdom of Relying on the Developed World

for Funding PharmaceuticalResearch and Development
Supporters of broad compulsory licensing are often quick to illustrate
that the pharmaceutical industry makes the vast majority of its profits in
developed countries,'25 while developing countries have historically taken
a somewhat unproblematic free ride by producing generic versions in the
absence of pharmaceutical patent protection. 2 6 Indeed, developing coun-
tries represent less than ten percent of sales for the world's top
pharmaceutical companies. 27 Yet although widespread compulsory licens-
ing in developing countries appears to represent a minor dent in R&D
revenues, the market status quo is rapidly changing. Developing countries
continue to grow rapidly as pharmaceutical markets, and are expected to
account for forty-eight percent of market growth by 2013.28
Developed countries, however, continue to fund almost all pharma-
ceutical R&D,129 with the United States in particular subsidizing health
care innovation for the rest of the world. 3o The United States accounts
123. Sahar Aziz, Note, Linking Intellectual Property Rights in Developing Countries
with Research and Development, Technology Transfer and Foreign Direct Investment Policy:
A Case Study of Egypt's PharmaceuticalIndustry, 10 ILSA J. INT'L & COMP. L. 1 (2004).
124. See Implications of the Doha Declaration,supra note 36, at 19-20, 52; LISA SACHS,
HUMAN RIGHTS CHALLENGES FACING ABBOTT LABORATORIES: RISKS AND RECOMMENDA-
TIONS, INTERFAITH CENTER ON CORPORATE RESPONSIBILITY REPORT 2 (2007) (noting, while
addressing human rights shortcomings in the pharmaceutical industry, that North America,
Europe, and Japan accounted for eighty-seven percent of global pharmaceutical sales in 2005).
125. See, e.g., Sykes, supra note 36, at 61 (citing FREDERIC M. SCHERER, INDUSTRY
STRUCTURE, STRATEGY AND PUBLIC POLICY 362-66 (1996)).
126. See, e.g., DEERE, supra note 1, at 37-40; Lazzarini, supra note 25, at 108; Reich-
mann, supra note 21, at 247-48.
127. DAVID CAMPBELL & MANDY CHUI, IMS HEALTH, PHARMERGING SHAKE-UP: NEW
IMPERATIVES IN A REDEFINED WORLD 7 (2010) (noting that the world's top fifteen pharmaceu-
tical firms derived just 9.4% of sales from developing countries, which included China, Brazil,
India, Russia, and less-developed countries); SACHS, supra note 124, at 2 ("In 2005, North
America, Europe and Japan accounted for 87% of global pharmaceutical sales.").
128. CAMPBELL & CHUI, supra note 127, at 5 (also noting that seventeen emerging mar-
kets, "[s]uperpowered by China, shored by Brazil, Russia and India, and spurred by the
impetus of the new . .. fast followers," accounted for thirty-seven percent of market growth in
2009); Press Release, IMS Health, IMS Forecasts Global Pharmaceutical Market Growth of
5- 8% Annually Through 2014; Maintains Expectations of 4-6% Growth in 2010 (Apr. 20,
2010) [hereinafter IMS Forecasts] (confirming that the aggregate pharmaceutical market
growth in developing countries through 2014 will be roughly equal to the aggregate growth in
developed countries).
129. See, e.g., SACHS, supra note 124, at 2.
130. Whitman & Raad, supra note 104, at 8-9; see, e.g., Thomas Bodenheimer, High
and Rising Health Care Costs. Part 2: Technologic Innovation, 142 ANNALS INTERNAL MED.
Winter 20111 "PublicNon-Commercial Use" 371
for a disproportionately large share of pharmaceutical sales worldwide,

currently hovering around thirty-five to forty percent, and also contrib-
utes over $31 billion in public R&D funding through the NIH.' By
comparison, most developed nations, including Canada and the Euro-
pean nations, employ governmental universal health care programs that
stringently regulate costs and contribute far less in public R&D fund-
ing.'32 Canada and the United Kingdom, for example, have successfully
constrained health care costs through the use of global budgets,' which
set health care expenditures in advance and are particularly cost-effective
in single payer systems, where the government has "strong bargaining
power vis-a-vis providers." 3 4 In contrast, the United States government
pays only forty-six percent of all U.S. health care costs through single-
payer programs like Medicaid and Medicare"3 and does not employ a
global budget,'3 6 while overall health care costs continue to rise.'
932, 932 (2005) [hereinafter Bodenheimer, Part2] ("Because the spread of new technologies
is relatively unrestrained in the United States, many of these technologies are used to a greater
extent than in other nations, and the United States thereby incurs higher health care costs.");
Jack A. Ginsburg et al., Amer. Coll. of Physicians, Achieving a High-Performance Health
Care System with Universal Access: What the United States Can Learn from Other Countries,
148 ANNALS INTERNAL MED. 55 (2008); Kenneth Rogoff, A Prescriptionfor Marxism, 146
FOREIGN PoL'Y 74, 75 (2005).
131. See Whitman & Raad, supra note 104, at 5, 7 (noting that the United States has
developed a greater number of pharmaceutical products than the European Union and vastly
outspent the European Union on pharmaceutical products in terms of purchases and public
R&D support, even though the European Union has an approximate population of 499 million
while the United States has an approximate population of 307 million); IMS Forecasts, supra
note 128 (noting that the global pharmaceutical market grew to $837 billion in 2009, with the
U.S. market growing to $300 billion in 2009 and expected to grow to $360-390 billion by
2014); Total Unaudited andAudited Global PharmaceuticalMarket By Region, IMS HEALTH
(Mar. 2009), http://www.imshealth.com/deployedfiles/imshealthlGlobal/Content/StaticFile/
TopLineData/GlobalPharmMarket_byRegion.pdf (reporting that of the $773.1 billion
global pharmaceutical market in 2008, North America accounted for $311.8 billion, while
Europe accounted for $247.5 billion).
132. See, e.g., Bodenheimer, Part 2, supra note 130, at 935; Whitman & Raad, supra
note 104, at 5 (noting that the European Union annually spends only $3-4 billion in total on
public R&D).
133. Bodenheimer, Part 2, supra note 130, at 935.
134. Id.; Whitman & Raad, supra note 104, at 8.
135. Ginsburg et al., supra note 130, at 57; David Carey et al., Health Care Reform in the
United States 11 (Org. for Econ. Co-operation & Dev., Econ. Dept. Working Paper No. 665,
2009).
136. Attempts to constrain public health care expenditures paid by governmental pro-
grams have largely failed. For example, "[flor physician services, the effect of price reductions
are partially offset by increases in the quantity of services provided. For every 1%reduction in
Medicare physician fees, the volume of physician services increases by 0.56%." Thomas Bo-
denheimer, High and Rising Health Care Costs. Part 3: The Role of Health Care Providers,
142 ANNALS INTERNAL MED. 996, 997 (2005) [hereinafter Bodenheimer, Part3].
137. See Thomas Bodenheimer, High and Rising Health Care Costs. Part 1: Seeking an
Explanation, 142 ANNALS INTERNAL MED. 847, 847 (2005) [hereinafter Bodenheimer, Part
1]; IMS Forecasts, supra note 128.
As a rare holdout from extensive health care regulation in the devel-

oped world, the relatively unrestrained health care market in the United
States has permitted rapid implementation of new health care technol-
ogy,' including pharmaceuticals, for which the United States pays
higher prices because of the lack of a centrally-organized health care
system.' Without price regulations for pharmaceutical drugs, the
American pharmaceutical market grew from equal the size of the Euro-
pean market at the beginning of the 1990s to nearly double the size of
the European market by the end of the decade, becoming the "dominant
source of innovation and innovative drugs, with Europe lagging be-
hind."'a The relatively open U.S. market also appears to influence
European pharmaceutical R&D, because European firms can count on
higher U.S. prices and earlier assimilation of new technology into the
U.S. market than in the tightly regulated European market.14' An Organi-
sation for Economic Co-Operation and Development (OECD) report
explained:
[P]rice indexes of drugs in 12 countries indicate that foreign
prices are up to 20% lower than public prices in the United
States ... This pricing pattern probably reflects the price con-
trols imposed in many countries, but not in the United States,
where the authorities do not interfere in the determination of
drug prices . . . It might also, however, reflect less price elastic
demand in the United States and, therefore, price discrimination
by monopolistic (owing to patent protection) drug manufactur-
ers. Either way, the relatively high prices paid for patented
drugs in the United States strengthen incentives for the devel-
138. Bodenheimer, Part 2, supra note 130, at 933 ("Physicians in the United States ex-
pand the number of patients deemed eligible for new procedures more rapidly than do
physicians in other nations, in part because the fee-for-service payments made to physicians
and hospitals that use new diagnostic and therapeutic procedures are relatively generous."
(citation omitted)); see Carey et al., supra note 135, 13 ("[T]he availability and use of so-
phisticated medical techniques [in the United States] is significantly higher than in most
countries, except Japan.").
139. Whitman & Raad, supra note 104, at 8.
140. See ALFONSO GAMBARDELLA ET AL., GLOBAL COMPETITIVENESS IN PHARMACEU-
TICALS: A EUROPEAN PERSPECTIVE 28-29 (2000).
141. See Whitman & Raad, supra note 104, at 3 ("[Plharmaceutical companies in other
countries might invest in new drugs with the expectation of marketing them in the United
States .... In this regard, it may prove difficult to isolate the effects of any given country's
policies on innovation."). Indeed, European pharmaceutical firms have remained strong actors
in the pharmaceutical market, although the U.S. industry has surpassed the European industry
over the past decade, both in respect to the quantity and quality (i.e., first-in-class innovative
drugs) of pharmaceutical drugs. GAMBARDELLA ET AL., supra note 140, at 28-29; Whitman &
Raad, supra note 104, at 7.
opment of more effective drugs, which also benefit patients in

other (notably OECD) countries.142
Recent political developments, however, threaten to undermine the
current structure of the global pharmaceutical market. In part due to high
and rising pharmaceutical prices,143 the United States has passed recent
health care legislation mandating that most Americans obtain medical
coverage by 2014.'" Although the new health care legislation fails to
implement a single-payer system or establish a global budget for gov-
ernment-funded health care, the failure to better constrain health care
spending has generated extensive criticism.145 As the United States takes
initial steps to curb health care expenditures approaching twenty percent
of its Gross Domestic Product (GDP),'" extensive compulsory licensing
by developing nations may increasingly lead patients and taxpayers in
the United States and other developed countries to question why they
should foot the astronomical bill for pharmaceutical development. 47
Such concerns especially arise if developing countries continue to spend
far less than the United States on health care on a percentage-of-GDP
basis, despite being the fastest growing markets. 48
Should the United States eventually institute a single-payer system,
or should rising health care costs precipitate a consolidation of payer
142. Carey et al., supra note 135, 114. Pharmaceutical drugs make up ten percent of
U.S. health care expenditures. Ginsburg et al., supra note 130, at 57; see also Whitman &
Raad, supra note 104, at 8 (noting that prices for prescription drugs are thirty-five to fifty-five
percent cheaper in Europe than in the United States).
143. See DiMasi, supra note 101, at 153-54; Carey et al., supra note 135, 14; CON-
GRESSIONAL BUDGET OFFICE, supra note 100, at 35-37.
144. Robert Pear, Changing Stance, Administration Now Defends Insurance Mandate as
a Tax, N.Y TIMES, July 17, 2010, http://www.nytimes.com/2010/07/18/health/policy/
18health.html.
145. See, e.g., Steve Holland, Obama: Healthcare Will Need Adjustments To Cut
Costs, REUTERS, Mar. 29, 2010, available at http://www.reuters.com/article/
idUSTRE62N61 Y20100329; Megan McCardle, The Health Care Reform Already Costs More
Than We Thought It Would, ATLANTIC, May 14, 2010, http://www.theatlantic.com/
business/archive/2010/05/the-health-care-reform-already-costs-more-than-we-thought-it-would/
56752/ (noting that the Congressional Budget Office estimated that the health care reform will
cost $115 billion more over the next ten years than previously thought). For a discussion on
U.S. health care budget concerns, see Ginsburg et al., supra note 130, at 62-73 (detailing the
glaring shortcomings in U.S. health care despite having the highest per capita health care
spending). But see Whitman & Raad, supra note 104, at 2 (noting that U.S. health care "per-
forms poorly in comparison to Europe, Australia, and Japan," but illustrating that comparative
national health care studies fail to account for contributions to health care innovation, an area
where the United States is the dominant actor).
146. Ginsburg et al., supra note 130, at 56.
147. See, e.g., Ronald A. Cass, Drug Patent Piracy, WALL ST. J., May 7, 2007, available
at http://www.aegis.org/news/wsj/2007/WJ070503.html (suggesting that after the Thai and
Brazilian compulsory licenses, "no one wants to be stuck with the extra cost that Thailand or
Brazil isn't paying").
148. See supra note 97.
374 Michigan JournalofInternationalLaw [Vol. 32:347
bargaining power, the United States will encounter budgetary issues sim-
ilar to those of Europe and developing countries, threatening potential
promises to provide comprehensive health care. With rising costs and
increased regulation, compulsory licensing could pose as attractive an
option to increase access to unaffordable drugs in developed nations as it
does for developing countries currently engaging in compulsory licens-
ing, like Thailand.14 9 Thus, the health care budget concerns in the
developed world and the increasing importance of developing country
pharmaceutical markets makes abuse of compulsory licensing a signifi-
cant threat to continued drug development, while simultaneously posing
an attractive option to fulfill universal health care promises within budg-
et constraints. 5 0
III. THE TRIPS CONTEXT FOR PUBLIC NON-COMMERCIAL

COMPULSORY LICENSING
Despite the developed world's deteriorating reliability as the exclu-

sive source of pharmaceutical R&D and the emergence of the developing
world as a powerful market, scholars have often interpreted Thailand's
recent actions as per se valid exercises of compulsory licensing because
they appear to comply with the public non-commercial use provision."'
Scholars generally agree that public non-commercial use encompasses
government use,152 and one particular trend has interpreted public non-
commercial use as a nearly limitless justification for compulsory licens-
ing."' A faithful interpretation of TRIPS Article 31(b) within its context,
however, demonstrates that TRIPS should survive this challenge to its
149. Indeed, the United States has already threatened to issue a compulsory license to
lower the price of a pharmaceutical drug, Cipro, during the 2001 anthrax scare. Carroll &
Winslow, supra note 56.
150. See Whitman & Raad, supra note 104, at 11 (noting that experiences with Medicare
and price controls, let alone compulsory licensing, demonstrate "that expanding government's
role as purchaser of health care services, either by expanding existing government programs or
creating new programs, would tend to reduce innovation in health care delivery").
151. See, e.g., Abbott & Reichmann, supra note 25, at 956 ("[Tlhere is little doubt that
Thailand would win a dispute settlement action based on the TRIPS-compliance of its gov-
ernment use licensing."); Reichmann, supra note 21, at 256 ("[Tlhe Thai approach was a
perfectly 'legitimate' exercise of the State's powers under the TRIPS Agreement, with a possi-
ble caveat for the low royalty paid!"); Ho, supra note 13, at 441-42 (taking the lesser stance
that Thailand's compulsory licenses were "not [yet] a situation where Thailand clearly vio-
lated TRIPS").
152. See, e.g., BLAKENEY, supra note 21, at 91; CORREA, supra note 21, at 316; Gold &
Lam, supra note 19, at 25; Ho, supra note 13, at 402-04, 431-32; Marc, supra note 21, at 116;
Reichmann, supra note 21, at 256.
153. See, e.g., CIPIH REPORT, supra note 22, at 35-36; Gold & Lam, supra note 19, at
25-30; Ho, supra note 13, at 402-04; Love, supra note 22, at 74.
harmonizing legal structure, prescribing a reasonable middle ground be-

tween providing immediate access to drugs and maintaining patent
rights. Such a timely clarification will hopefully reduce obstructionism
that hinders legitimate compulsory licensing in developing nations and
clarify the boundaries of international patent rights for pharmaceutical
investors and producers.
A. Changing Winds: The Likelihood of a WTO Panel

Decision on TRIPS Article 31
Although no WTO lawsuits regarding compulsory licensing are cur-
rently pending, recent events suggest that a clarifying WTO panel
decision is no longer a completely unrealistic probability. To date, a
WTO panel has yet to interpret the compulsory licensing provisions un-
der TRIPS Article 31 because countries are notoriously risk averse in
WTO litigation, strongly preferring to bring only "slam dunk" cases be-
fore WTO panels.154 This is particularly the situation at the intersection
of intellectual property rights and health care, which exists in an emo-
tionally charged, policy-fraught maelstrom. 55 For example, after the
political embarrassment of challenging South Africa's compulsory li-
censes for HIV/AIDS drugs, the United States has been reluctant to haul
a developing country employing compulsory licenses before a WTO
panel and "give credence to the idea of the WTO interfering with poor
countries' health policies."'56 However, developed countries' improved
154. See J.H. Reichman & David Lange, BargainingAround the TRIPS Agreement: The
Case for Ongoing Public-Private Initiatives To Facilitate Worldwide Intellectual Property
Transactions, 9 DUKE J. COMP. & INT'L L. 11, 48 (1998); see also Judith H. Bello, Some
Practical Observations About WTO Settlement of Intellectual Property Disputes, 37 VA. J.
INT'L L. 357, 358-59 (1997) (noting that electing to establish a panel raises expectations, and
that accountable government lawyers and officials are unlikely to engage in WTO litigation
unless there is a high probability of success, from both "a personal as well as institutional
level"). Indeed, developed nations have generally only litigated TRIPS provisions before VTO
panels when the conduct was particularly egregious, constituting an obvious "slam dunk"
violation. See, e.g., Panel Report, Canada-PatentProtection of PharmaceuticalProducts,
IN 4.2, 7.36, WT/DS1 14/R (Mar. 17, 2000) [hereinafter Canada-PatentProtection] (finding
Canada in violation of its TRIPS obligations for abrogating the exclusive patent rights to make
and use the patented subject matter under a Canadian law permitting generic firms to produce
and stockpile drugs prior to patent expiration in order to facilitate generic entry into the phar-
maceutical market); Panel Report, India-Patent Protection for Pharmaceutical and
Agricultural Chemical Products, U 7.6, 7.41-43, 7.63, WT/DS50/R (Sept. 5, 1997) (finding
India in violation of TRIPS where India failed to establish a "mailbox" system under TRIPS
Article 70.8 to receive pharmaceutical patent applications as a temporary measure prior to
implementing pharmaceutical patentability during India's TRIPS transition phase).
155. See supra Part I.A-B (discussing compulsory licensing by South Africa and Thai-
land).
156. US, Brazil End WTO Case on Patents, Split on Bilateral Process, 19 INSIDE U.S.
TRADE, June 29, 2001, at 1-2. The United States took a long hiatus from TRIPS litigation
against developing countries after the controversy surrounding South Africa, withdrawing
376 MichiganJournal of InternationalLaw [Vol. 32:347
respect for the public health concerns of developing countries and in-
creasing risk-tolerance in WTO litigation suggest that a WTO panel
decision clarifying permissible compulsory licensing practices is more
likely than ever before.
In the decade since the South Africa controversy, U.S. trade policy
has grown increasingly conciliatory with respect to TRIPS flexibilities.
For example, the United States was the first nation to approve the TRIPS
amendment to allow parallel importation for pharmaceutical products
under compulsory licenses,' which appears to conflict with U.S. at-
tempts to bilaterally strengthen IP protection through Free Trade
Agreements (FTAs).'-" In every post-2005 FTA, however, the United
States has, at a minimum, signed a side letter of understanding affirming
that the FTA's IP obligations "do not affect the ability of either Party to
take necessary measures to protect public health by promoting access to
medicines for all, in particular concerning cases such as HIV/AIDS, tu-
berculosis, malaria, and other epidemics as well as circumstances of
extreme urgency or national emergency."'"9 Four of the five most recent
FTAs have eschewed a side letter in favor of an operational FTA provi-
sion providing an explicit affirmation of commitment to the Doha
Declaration.' 6 ' The United States appears to have very willingly agreed
from a potential panel decision in a lawsuit against Brazil in 2001, and abstaining from litiga-
tion until bringing a lawsuit against China in 2007. See DEERE, supra note 1,at 156-58.
157. See Intellectual Property (TRIPS) and Public Health: Members Accepting Amend-
ment of the TRIPS Agreement, WTO, http://www.wto.org/english/tratop-e/trips-e/
amendmente.htm (last visited Nov. 13, 2010).
158. The United States' attempts to obtain "TRIPS-plus" IP protection (i.e., IP protection
above and beyond that required by TRIPS) abroad have been highly criticized as coercive
attempts to "achieve [bilaterally] what was not possible to negotiate successfully at the multi-
lateral [TRIPS negotiations]." Pedro Roffe & Christoph Spennemann, The Impact of FTAs on
Public Health Policies and TRIPS Flexibilities, I INT'L J. INTELL. PROP. MGMT. 75, 76-77, 79
(2006); see also Frederick Abbott, Keynote Address at the ICTSD-UNCTAD Dialogue on
Ensuring Policy Options for Affordable Access to Essential Medicines, The Cycle of Action
and Reaction: Latest Developments and Trends in IP and Health 5-7 (Oct. 13, 2004), avail-
able at http://ictsd.org/downloads/2008/08/abbott-bellagio3rev1.pdf. The United States
currently has Free Trade Agreements (FTAs) incorporating TRIPS-plus provisions with Aus-
tralia, Bahrain, Chile, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras,
Jordan, Morocco, Nicaragua, Oman, Peru, and Singapore, and has TRIPS-plus FTAs with
Colombia, Korea, and Panama, pending approval by Congress. See DEERE, supra note 1, at
220-24; Free Trade Agreements, OFFICE OF THE U.S. TRADE REPRESENTATIVE, http://
www.ustr.gov/trade-agreements/free-trade-agreements (last visited Nov. 13, 2010).
159. See, e.g., United States-Bahrain Free Trade Agreements, U.S.-Bahrain, Side Letter
on Public Health, Sept. 14, 2004, 44 I.L.M. 544 (2005), available at http://www.ustr.gov/
sites/default/files/uploads/agreements/ftalbahrain/asset uploadfile447_6296.pdf (reflecting
the language of the Doha Declaration).
160. See Free Trade Agreement between the United States and the Republic of Korea,
U.S.-S. Kor., art. 18.11, June 30, 2007, available at http://www.ustr.gov/sites/default/
files/uploads/agreements/fta/korus/asset uploadfile273 12717.pdf (pending Congressional
approval); United States-Panama Trade Promotion Agreement, U.S.-Pan., art. 15.12, June 12,
to such provisions: Colombia, having publicly declared that a FTA with

the United States was its top foreign policy priority, obtained not one,
but two public health provisions within its FTA.162
The United States has also awakened from its TRIPS dispute resolu-
tion slumber, bringing an uncharacteristically risky lawsuit against China
in 2007.16, It made sweeping facial challenges to China's thresholds for
criminal penalties and customs measures for enforcing its IP obliga-
tions," for which little evidence of non-compliance existed. 6 Because
the United States was already pressuring China bilaterally on strengthen-
ing its IP enforcement measures,'" some wondered why the United
States risked bringing the first-ever WTO lawsuit regarding IP enforce-
ment measures, in which it appeared likely that China's measures were
2007, available at http://www.ustr.gov/sites/default/files/uploads/agreements/fta/panama/

asset_upload-filel31_10350.pdf (pending Congressional approval); United States-Colombia
Trade Promotion Agreement, U.S.-Colom., art. 16.13, Nov. 22, 2006 [hereinafter Colombia
FTA], available at http://www.ustr.gov/webfm-send/1336 (pending Congressional approval);
United States-Peru Trade Promotion Agreement, U.S.-Peru, arts. 16.10(2)(e), 16.13, Apr. 12,
2006, availableat http://www.ustr.gov/webfmsend/1031.
161. DEERE, supra note 1, at 172.
162. The Colombia FTA has a general provision recognizing the Doha Declaration and
the availability of measures to protect public health, much like the Peru, Panama, and Korea
FTAs. The second provision is within the data exclusivity provision, apparently to address
concerns that TRIPS-plus periods of data exclusivity may pose an obstacle for compulsory
licensing. Columbia FTA, supra note 160, arts. 16.10(2)(e), 16.13; Roffe & Spenneman, supra
note 158, at 85 (suggesting that data exclusivity provisions "[have] been interpreted as possi-
bly precluding governments' possibilities to use compulsory licensing"); Carsten Fink,
Tightening TRIPS: The Intellectual PropertyProvisions of Recent US Free Trade Agreements,
TRADE NOTE (World Bank), Feb. 7, 2005, at 2 (also suggesting that data exclusivity may pose
an "obstacle for governments to effectively use compulsory licensing").
163. See Request for Consultations by the United States, China-MeasuresAffecting the
Protection and Enforcement of Intellectual Property Rights, WT/DS362/1 (Apr. 16, 2007).
China is in a relatively nascent stage of WTO membership. See China-MemberInformation,
WTO, http://www.wto.org/english/thewto e/countriese/chinae.htm (last visited Nov. 13,
2010) (noting that China has been a WTO Member since Dec. 11, 2001).
164. Panel Decision, China-MeasuresAffecting the Protectionand Enforcement of Intel-
lectual Property Rights, 2.2, WT/DS362/R (Jan. 26, 2009) [hereinafter China PanelReport].
165. The United States facially challenged China's provisions detailing customs and
criminal measures "as such," rather than challenge specific Chinese IP practices, id. IT 7.212,
7.416, for which evidence appears to have been scarce. See, e.g., id. In 7.616-17 (noting that
the United States submitted a U.S. newspaper article, a statistic from a management consultant
report, and a Time magazine article to support its assertion that China's criminal thresholds are
inconsistent with TRIPS Article 61. The Panel found that "even if these sources were suitable
for the purpose of demonstration of contested facts in this proceeding, the information that
was provided was too little and too random").
166. China has resided on the Priority Watch List since 2005. 2010 USTR SPECIAL 301
REP. 3; 2009 USTR SPECIAL 301 REP. 5; 2008 USTR SPECIAL 301 REP. 19; 2007 USTR SPE-
CIAL 301 REP. 18; 2006 USTR SPECIAL 301 REP. 16; 2005 USTR SPECIAL 301 REP. 15.
compliant with minimum TRIPS standards. 6 Indeed, the WTO Panel

adhered closely to the text of the relevant TRIPS provisions, finding that
the United States failed to establish that China's criminal thresholds
were inconsistent with TRIPS obligations, and that China's customs
measures were also mostly compliant.'6 1
Thus, the United States appears willing to engage the WTO dispute
resolution system to clarify TRIPS obligations despite the risk of an un-
favorable ruling, while its FTAs demonstrate a heightened respect for
TRIPS flexibilities. 6 9 As such, a lawsuit regarding compulsory licensing
may appear to be a legitimate attempt to clarify permissible compulsory
licensing practices under TRIPS, and not so much an inhumane attack on
a developing nation's health policies. Although compulsory licensing
activity has chilled since the Thai compulsory licenses in 2008, behind-
the-scenes activity reveals that compulsory licensing is still at the fore-
front of public health action.o70 With Thailand maintaining a wish list of
drugs for which to issue compulsory licenses"' and Ecuador mobilizing
167. See, e.g., Konstantina K. Athanasakou, Note, China IPR Enforcement: Hard as
Steel or Soft as Tofu? Bringing the Question to the WTO under TRIPS, 39 GEO. J. INT'L L.
217, 225 (2007).
168. The Panel found that except for the hypothetical possibility that China's customs
measures permit the release of seized goods back into "the channels of commerce" after a
simple removal of an infringing trademark, China's customs measures were not inconsistent
with TRIPS obligations under Article 59. China Panel Report, supra note 164, 17.395. The
Chinese custom measures permitted confiscated infringing goods to be (1) donated for "social
public welfare undertakings," (2) assigned to the IP right-holder, (3) auctioned after "eradicat-
ing the infringing features," or (4) destroyed. Id. 17.193. Note that the United States prevailed
on a third facial challenge to China's copyright law, which denied copyright protection to
prohibited/censored works. The Panel unsurprisingly found that China's "entire ban on publi-
cation of a work" is not a form of effective copyright protection that complies with TRIPS
obligation under Article 9.1. Id. [ 7.180-81.
169. See Athanasakou, supra note 167, at 223-25 (citing USTR statements that the Unit-
ed States finds IP enforcement one of China's greatest shortcomings, and quoting E.U.
representatives stating "'[t]his is a case of great importance .... We will watch developments
in these consultations with great interest' as the EU is China's largest trading partner").
170. Thailand continues to extend its existing compulsory licenses. See Editorial, The
Licensing of Key Drugs, BANGKOK PosT, June 16, 2010, http://www.bangkokpost.com/
opinion/opinion/38827/the-licensing-of-key-drugs. Also, Ecuador is currently positioning
itself to issue compulsory licenses. Decreto No. 118 [Decree No. 118], 23 de Octubre de 2009
(Ecuador) [hereinafter Ecuadorian Presidential Decree No. 118] (declaring that access to me-
dicines is in the public interest, and that compulsory licenses may be granted for medicines
necessary for treatment).
171. See THAI WHITE PAPER, supra note 2, at 2 (noting that Thai citizens are entitled to
full access to 900 drugs, many patented, on the government's essential drugs list); Cohen,
supra note I (quoting one economist as saying "[t]here's a big push in Thailand to [issue
compulsory license] for everything"); Zamiska, supra note 2 (noting that "there are more
products for which the government may allow [compulsory licenses]," including other cardio-
vascular and cancer drugs). Thailand continues to extend its compulsory licenses, The
Licensing of Key Drugs, supra note 170, and is presently hoping for a WTO solution regarding
compulsory licensing and low-cost generic drugs, suggesting that Thailand is far from dor-
112
to issue compulsory licenses of its own, a willing complainant and
willing provokers appear to exist, making an analysis of public non-
commercial use under TRIPS Article 31 a timely endeavor.
B. The Standardfor Interpreting TRIPS

When a TRIPS dispute precipitates a WTO lawsuit, the Dispute Set-
tlement Understanding (DSU) applies. 73 Under the DSU, WTO dispute
resolution panels must interpret TRIPS provisions according to the "cus-
tomary rules of interpretation of public international law," in order to
provide "security and predictability to the multilateral trading system." 7 4
These customary rules are set forth in the Vienna Convention on the
Law of Treaties (VCLT),'" which eschews policy arguments in favor of
adhering to the text representing the outcome of treaty negotiations.' 6
First, under VCLT Article 31, "[a] treaty shall be interpreted in good
faith in accordance with the ordinary meaning to be given to the terms of
the treaty in their context and in the light of its object and purpose."'7
Thus, interpretation under the Vienna Convention is both textual and
purposive, with the relevant context for interpretation including the pre-
amble and any subsequent agreements.' However, when interpretation
mant in the area of compulsory licensing. Ying Huang, Thailand Could Seek WTO Solution on
Compulsory Licensing, Generic Drugs, PHARMASIA NEWS, Mar. 29, 2010, http://www.
tginfo.com/Publications/pdf/APR201 0_THWTOsolution.pdf.
172. Ecuadorian Presidential Decree No. 118, supra note 170.
173. TRIPS art. 64.1.
174. Understanding on Rules and Procedures Governing the Settlement of Disputes art.
3.2, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex
2, 1869 U.N.T.S. 401.
175. Vienna Convention on the Law of Treaties art. 31, May 23, 1969, 1155 U.N.T.S.
331 [hereinafter VCLTI. WTO panels and the Appellate Body recognize that "[tihe general
rule of interpretation, expressed in Article 31 of the Vienna Convention, and the rules on sup-
plementary means of interpretation in Article 32 of the Vienna Convention, have attained the
status of rules of customary or general international law." China Panel Report, supra note 164,
7.500. Membership in the Vienna Convention is not universal: the United States is not a
signatory of the VCLT, although it considers much of the VCLT to "constitute customary in-
ternational law on the law of treaties." Vienna Convention on the Law of Treaties, U.S. DEPT.
OF STATE, http://www.state.gov/s/l/treaty/faqs/70I39.htm (last visited Nov. 13, 2010).
176. See VCLT, supra note 175, art. 31; Ho, supra note 13, at 387; see also Bello, supra
note 154, at 365 ("[I]t is the outcome of the [Uruguay Round] negotiations that must control
the deliberations of any dispute settlement panel. .. . There is no constructive role for judicial
activism in the WTO dispute settlement system."). This conservatism plays out both ways in
practice, however, because panels appear reluctant to find TRIPS violations without an explicit
textual reason. See, e.g., infra text accompanying note 220.
177. VCLT, supra note 175, art. 31.1; see also Canada-PatentProtection, supra note
154, T 7.12. The Doha Declaration mirrors the language of the VCLT: "In applying the cus-
tomary rules of interpretation of public international law, each provision of the TRIPS
Agreement shall be read in the light of the object and purpose of the Agreement as expressed,
in particular, in its objectives and principles." Doha Declaration, supra note 8, 5(a).
178. VCLT, supra note 175, arts. 31.2, 31.3.
under VCLT Article 31 "leaves the meaning ambiguous or obscure; or

leads to a result which is manifestly absurd or unreasonable," a panel
may refer to the preparatory work of a treaty or the circumstances of its
conclusion to either confirm an apparent VCLT Article 31 meaning or to
substantively determine the meaning.
C. Relevant Context Under the Vienna Convention:

TRIPS Preamble,Objectives, & Principles
An analysis of the relevant context under the VCLT must recognize
that TRIPS is first and foremost a treaty element of the World Trade Or-
ganization, as the preamble explains:
Desiring to reduce distortions and impediments to international
trade, and taking into account the need to promote effective and
adequate protection of intellectual property rights, and to ensure
that measures and procedures to enforce intellectual property
rights do not themselves become barriers to legitimate
trade. . .0
By aiming to reduce distortions and impediments to international

trade, the overarching purpose of TRIPS is to harmonize IP protection
among WTO Members. Recognizing that IP concerns vary by stage of
economic development, however,"' the preamble avoids a cookie-cutter
approach to IP protection by addressing the "developmental and techno-
logical objectives" of IP protection and "the special needs of the least-
developed country Members in respect of maximum flexibility in the
179. Id. art. 32.

180. TRIPS pmbl.
181. IP rights "tend to strengthen as economic development and incomes rise," because
"[a]s an economy's technological sophistication increases, inventors and creators require
stronger protection for their works; thus, demand for [IP rights] rises." MASKUs, supra note
115, at 102. Cf id. at 102-09 (further explaining, however, that mapping strength of IP rights
against Gross National Product (GNP) results in a U-curve, illustrating that middle-income
countries, such as Thailand, Brazil, and Mexico, have lower-than-expected IP protection).
South Korea is an excellent example of how IP protection strengthens as an economy devel-
ops. See DRAHOS WITH BRAITHWAITE, supra note 7, at 102-04 (illustrating South Korea's
rapid evolution from being IP-protection-resistant to making an "[impressive] commitment to
intellectual property," in large part due to the rapid development of Korean technology- and
patent-driven corporations like Samsung). See generally International Workshop on the Infor-
mation Revolution and Economic and Social Exclusion in Developing Countries, Maastricht,
Neth., Oct. 23-25, 1996, Implications of Intellectual Property Rights for the Access to and
Use of Information Technologies in Developing Countries, at 29 (by Carlos M. Correa) [here-
inafter Implications of Intellectual Property Rights] ("The semiconductor industry is highly
concentrated. A few transnational corporations account for the overwhelming share of semi-
conductor production ... Among developing countries, only South Korea has emerged as a
world-class competitor.").
domestic implementation of laws and regulations in order to enable them

to create a sound and viable technological base." 8 2
The "Objectives" articulated in Article 7 reinforce this notion of bal-
ance in TRIPS:
The protection and enforcement of intellectual property rights
should contribute to the promotion of technological innovation
and to the transfer and dissemination of technology, to the mu-
tual advantage of producers and users of technological
knowledge and in a manner conducive to social and economic
welfare, and to a balance of rights and obligations.
Thus, Article 7 provides an operational treaty provision establishing
that IP protection is not a one-way street for protecting private patent
T 4 Ra-
rights, nor for free dissemination of patented technology to users.'
ther, the crucial balance to be achieved is defined as "mutual
advantage."' Mutual advantage, however, requires defining the bounda-
ries in which such advantage should occur. In the view that TRIPS "was
an agreement [within the WTO] that was negotiated on the basis of quid
pro quos among states," such that "[e]ach state gave something and got
something," mutual advantage has already been assured.16 Under that
view, even if TRIPS generates no benefit for a developing country, the
gains secured via increased market access by virtue of WTO member-
ship makes mutual advantage a non-issue. 8 1 The TRIPS "Objectives"
detail a subtler arrangement, however, by placing mutual advantage
within the purview of "the protection and enforcement of intellectual
property rights,"' requiring that TRIPS be internally mutually advanta-
geous.'89 This comports with the balancing performed in the preamble.
182. TRIPS pmbl.

183. Id. art. 7.
184. See, e.g.,INTELLECTUAL PROPERTY AND INTERNATIONAL TRADE: THE TRIPS
AGREEMENT 13 (Carlos M. Correa & Abdulqawi A. Yusuf eds., 2d ed. 2008) [hereinafter
CORREA & YUSUF] ("[These objectives] serve as a reminder that the TRIPS Agreement is not
simply about the granting of rights to creators and innovators, but that such rights have to be
balanced by measures conducive to social and economic welfare.").
185. TRIPS art. 7.
186. See Bruce A. Lehman, Intellectual Property Rights as a Trade, Health and Eco-
nomic Development Issue, 17 ST. JOHN'S J. LEGAL COMMENT. 417, 417 (2003).
187. See id. at 419.
188. TRIPS art. 7.
189. See, e.g., CORREA & YUSUF, supra note 184, at 12-13 (noting that TRIPS Article 7
"embodies an international recognition of the primary public-policy objectives for which gov-
ernments grant protection and enforcement to [intellectual property rights]" (emphasis
added)).
The Article 8 "Principles" similarly emphasize a balance of rights

and obligations, permitting the use of TRIPS flexibilities within certain
constraints:
1. Members may, in formulating or amending their law and
regulations, adopt measures necessary to protect public health
and nutrition, and to promote the public interest in sectors of vi-
tal importance to their socio-economic and technological
development, provided that such measures are consistent with
the provisions of this Agreement.
2. Appropriate measures, provided that they are consistent with

the provisions of this Agreement, may be needed to prevent the
abuse of intellectual property rights by right holders or the resort
to practices which unreasonably restrain trade or adversely affect
the international transfer of technology.'"
Article 8.1 explicitly justifies a nation's use of TRIPS flexibilities to
protect public health, balanced by a condition of necessity.'9 ' Just as Ar-
ticle 8.2 puts a responsibility on IP owners by suggesting that
"[a]ppropriate measures ... may be needed to prevent the abuse of intel-
lectual property rights by right holders" with regard to public health
situations or in sectors of vital importance, the necessity condition places
a corresponding duty on a Member exercising TRIPS flexibilities to not
unnecessarily undermine the harmonization of IP rights within the WTO
system, as also reflected in the preamble and Article 7.192
D. Article 31: Compulsory Licensing

Keeping in mind the contextual TRIPS objectives of facilitating
trade through harmonizing IP protection and achieving mutual advantage
for producers and users of innovative technology, Article 31 authorizes
compulsory licensing as one of the flexibilities that may be appropriate
190. TRIPS art. 8.

191. See, e.g., NUNO PIRES DE CARVALHO, THE TRIPS REGIME OF PATENT RIGHTS
8.4-.9 (2d ed. 2005) (arguing that "measures must be necessary to protect public health and
nutrition," and illustrating that necessity is especially important with regard to non-violation
complaints); [7 WTO-TRADE-RELATED ASPECTs OF INTELLECTUAL PROPERTY RIGHTS] MAX
PLANCK COMMENTARIES ON WORLD TRADE LAw 197 (Peter-Tobias Stoll et al. eds., 2006)
[hereinafter STOLL] ("[A] measure is necessary only if, among the effective measures, it is the
one which restricts interstate trade the least."); Gold & Lam, supra note 19, at 22-23.
192. TRIPS art. 8.1 (permitting Members to adopt measures necessary to protect public
health "provided that such measures are consistent with the provisions of this Agreement");
see also CARVALHO, supra note 191, 1 31.2; STOLL, supra note 191, at 189, 197 (also noting
the interconnected nature of TRIPS Articles 7 and 8).
under certain circumstances to achieve those goals.193 Members have so-

vereign discretion to decide the most effective method of utilizing a
compulsory license, either by permitting a government to use the patent
subject matter itself or by issuing the license to an authorized third party,
such as a generic pharmaceutical company. 94
Eleven of the twelve Article 31 provisions include important restric-
tions on compulsory licensing, but which are easily complied with and
pose no substantial hurdle for a Member authorizing a compulsory li-
cense.195 For example, non-exclusivity,'" non-assignability,'97 and
considering licenses on their "individual merits" prevent flagrant abuse
of compulsory licensing,' 98 while judicial review of compulsory license
authorization provides a degree of due process to the patent holder.'99
Such provisions essentially amount to a box-checking exercise for a
government desiring to avoid a WTO panel while improving access to
pharmaceutical drugs. Rather, the provision providing the strictest re-
strictions on compulsory licensing is Article 31(b), which states:
[Compulsory licensing] may only be permitted if, prior to such
use, the proposed user has made efforts to obtain authorization
from the right holder on reasonable commercial terms and con-
ditions and that such efforts have not been successful within a
reasonable period of time. This requirement may be waived by a
193. Article 31 does not require that compulsory licensing be available; rather, it implic-
itly permits compulsory licensing by merely providing limits "[w]here the law of a Member
allows for other use of the subject matter of a patent without the authorization of the right
holder." TRIPS art. 31; Ho, supra note 13, at 395.
194. TRIPS art. 31 (permitting "use by the government or third parties authorized by the
government"); CARVALHO, supra note 191, 31.2.
195. See, e.g., TRIPS art. 31(c) (requiring that "the scope and duration of such use shall
be limited to the purpose for which it was authorized:' which places some limits on compul-
sory licenses designed to confront a particular, discrete problem). For example, if a Member
authorized a compulsory license for Ciproflaxin to combat bird flu, it arguably may not supply
the drug under the same compulsory license to citizens suffering from swine flu. And if the
bird flu problem is eradicated, the compulsory license presumably loses its effectiveness under
Article 31(c). Neither of these Article 31(c) situations poses an onerous burden, however,
since the Member could simply issue a second compulsory license to combat swine flu. Also,
the drugs currently under compulsory licenses treat HIV/AIDS, heart disease, and cancer,
none of which appear likely to be eradicated within the duration of those patents' drugs. See
Ho, supra note 13, at 395-96 ("The bulk of Article 31 relates to procedural requirements ...
likely to be non-issues in most cases.").
196. TRIPS art. 31(d) (protecting a patent holder from being excluded from his own
registered invention and allowing the patent holder to compete against the beneficiary of the
compulsory license).
197. Id. art. 31(e) (preventing a compulsory license granted under the restrictive Article
31 conditions from entering the public marketplace, where it may be used for purposes beyond
its original purpose).
198. Id. art. 31(a).
199. Id. arts. 31(g), 31(i), 31(j).
Member in the case of a national emergency or other circum-

stances of extreme urgency or in cases of public non-commercial
use. In situations of national emergency or other circumstances
of extreme urgency, the right holder shall, nevertheless, be noti-
fied as soon as reasonably practicable. In the case of public non-
commercial use, where the government or contractor, without
making a patent search, knows or has demonstrable grounds to
know that a valid patent is or will be used by or for the govern-
ment, the right holder shall be informed promptly.2 00
Faithfully rephrasing Article 31(b) clarifies the three permissible sit-
uations for compulsory licensing: a Member may issue a compulsory
license (1) when reasonable commercial negotiations have failed; (2)
without prior negotiation when a national emergency or other circum-
stance of extreme urgency has arisen; or (3) without prior negotiation
when the compulsory license is for "public non-commercial use."20 '
First, failure to successfully negotiate with the patent holder on rea-
sonable commercial terms may permit a Member to issue a compulsory
license.0 This flexibility furthers the TRIPS principles and objectives by
allowing compulsory licensing when producers fail to live up to their
end of the TRIPS bargain by refusing to license technology on commer-
cially reasonable terms in circumstances when TRIPS flexibilities are
justified.203
Read in isolation, Article 31 appears to make a compulsory license a
default option when reasonable commercial negotiations fail. Such an
interpretation, however, reads any patent right of exclusivity granted to
the patent holder out of the TRIPS Agreement,2 04 because "[t]he essence
of the patent right is to say 'no' to third parties,"205 Remedying market
failure cannot extend this far without reaching the "manifestly absurd or
unreasonable",206 result of eviscerating the primary purpose of patents and
depriving them of substantially all value. Article 8, for example, limits
200. Id. art. 31(b).

201. Id.; see also DEERE, supra note 1, at 82; Ho, supra note 13, at 400.
202. TRIPS art. 3 1(b).
203. See id. arts. 7-8; supra Part III(C). For similar reasons, compulsory licensing is also
permissible to remedy commercial practices judicially or administratively determined to be
anti-competitive. TRIPS art. 31(k); see also Taubman, supra note 25, at 931-32.
204. TRIPS art. 28.1(a) ("A patent shall confer on its owner the following exclusive
rights: where the subject matter of a patent is a product, to prevent third parties not having the
owner's consent from the acts of: making, using, offering for sale, selling, or importing for
these purposes that product.").
205. CARVALHO, supra note 191, 1 31.4, 31.8 (also stating that with regard to licensing
intellectual property, "there is no sounder business practice than refusing to engage in com-
mercial deals with competitors").
206. See VCLT, supra note 175, art. 32(b).
the use of TRIPS-consistent flexibilities to situations when they are nec-

essary to protect public health or to promote public interest in a sector of
vital importance. 207 This does not require, however, that compulsory li-
censing occur only in "exceptional" circumstances.208 A WTO panel
would likely give a Member considerable leeway in determining neces-
*209
sity.
Also, a state may issue a compulsory license without prior negotia-
tion with the patent holder during a national emergency or other
210
circumstance of extreme urgency.21 Within a public health context, Arti-
cle 31(b) recognizes that complicated international negotiations between
governments and the pharmaceutical industry will likely result in harm-
ful delays and lost lives when medicines are urgently needed. 21' Article
31 (b) is primarily concerned with notice to the patent owner under these
circumstances.2 12
Article 31 does not invade Members' spheres of sovereignty by pre-
scribing limits on situations that constitute emergencies or circumstances
of extreme urgency. Neither does it establish necessary subject matter
grounds for issuing compulsory licenses. Rather, it permits flexibility for
circumstances unforeseen during the Uruguay Round negotiations:
"Each Member has the right to determine what constitutes a national
emergency or other circumstances of extreme urgency."21' Thus, TRIPS
207. TRIPS art. 8.1; CARVALHO, supra note 191, 11 8.5-7; STOLL, supra note 191, at
197.
208. Contra CARVALHO, supra note 191, 31.4 (maintaining that compulsory licensing
is so exceptional as to be irrelevant in addressing public health issues); Cass, supra note 147
("The WTO rules make clear that compulsory licensing is to be used only in exceptional cir-
cumstances.").
209. WTO panels appear reluctant to intrude on a Member's sovereignty without a clear
violation of treaty obligations, suggesting that amorphous terms and vague obligations may
work in the favor of an accused nation. See, e.g., China Panel Report, supra note 164,
17.395, 7.681 (upholding China's internal criminal thresholds and the majority of China's
customs measures because the United States did not establish textual inconsistency with vague
TRIPS obligations).
210. TRIPS art. 3 1(b).
211. See CARVALHO, supra note 191, 9H 31.13-.14 ("[T]he obligation of previously seek-
ing a voluntary license is excused when circumstances lead to the conclusion that spending
time with undertaking such negotiations would necessarily impair the desired outcome of the
compulsory license-in other words, that the patented product would not arrive in time to
remedy the situation.").
212. TRIPS art. 3 1(b) (requiring that when no prior negotiations are needed, "the right
holder shall, nevertheless, be notified as soon as reasonably practicable," and that "the right
holder shall be informed promptly").
213. See Doha Declaration, supra note 8, 5(c) ("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"); Implications of
the Doha Declaration, supra note 36, at 13, 15 ("[T]he TRIPS Agreement has left room for
flexibility at the national level . . . Though Article 31 refers to some of the possible ground
386 MichiganJournal of InternationalLaw [Vol. 32:347
creates a procedure designed to allow Members to react to exigent cir-

cumstances for any reason necessary to protect public health, letting the
harmonization and mutual benefit goals delineate limits on compulsory
214
licensing under such circumstances.
Compulsory licensing in national emergencies or other circum-
stances of extreme urgency carries few restrictions. This is not to say,
however, that a Member may declare any situation a national emergency
and issue compulsory licenses with impunity: the harmonization goals,
the notions of mutual advantage for producers and users, and the TRIPS
Article 8 necessity restriction all apply here. Finding support for expan-
sive compulsory licensing practices within "national emergency or other
circumstances of extreme urgency" appears difficult because doing so
reads "national emergency" and "extreme urgency" out of this very re-
striction. 215
IV. COMPULSORY LICENSING FOR PUBLIC

NON-COMMERCIAL USE
Because nations likely cannot plausibly invent a national emergency

every time they desire to issue a compulsory license, the public non-
commercial use restriction has acquired increasing importance. Indeed,
scholars increasingly suggest that public non-commercial use could be a
gateway for expansive use of compulsory licenses under normal circum-
216
stances. One branch of this trend finds an expansive justification for
compulsory licensing in the vagueness of the "public non-commercial"
(such as emergency and anti-competitive practices) for issuing compulsory licenses, it leaves
Members full freedom to stipulate other grounds.").
214. See TRIPS pmbl., arts. 7-8; CARVALHO, supra note 191, 1 8.5-8.7; STOLL, supra
note 191, at 197.
215. TRIPS does not specify the magnitude an emergency must reach to attain "na-
tional" scale, but such a clarification is beyond the scope of this Note. Engaging in a similarly
impossible interpretation, the Panel in China-MeasuresAffecting the Protection and En-
forcement of Intellectual Property Rights labored for forty-five paragraphs to resolve a similar
question of magnitude in determining the point at which infringement of IP rights under
TRIPS art. 61 occurs "on a commercial scale." China PanelReport, supra note 164, 1 7.532-
.577. The Panel reached a not-so-conclusive interpretation that "counterfeiting or piracy 'on a
commercial scale' refers to counterfeiting or piracy carried on at the magnitude or extent of
typical or usual commercial 'activity with respect to a given product in a given market." Id.
7.577. Thus, determining whether an event or series of events has created an "emergency,"
and whether that emergency has reached a "national" level is likely to result in a similarly
unsatisfactory answer. The China Panel found, probably with relief, that "the United States
had [not established] a prima facie case with respect to impact on the commercial market-
place." Id. 17.661.
216. See CIPIH REPORT, supra note 22, at 20; Gold & Lam, supra note 19, at 25-26, 30;
Ho, supra note 13, at 402-04; Reichmann, supra note 21, at 256.
language itself.2 17 Another view restricts public non-commercial use to

"government use," but concludes that governmental use compulsory li-
censing for pharmaceuticals similarly enables expansive compulsory
licensing practices.218 Either interpretation entices the interpreter to find
pharmaceutical compulsory licensing for government health care pro-
grams per se valid because it appears to comply with TRIPS Article
31.219
A proper VCLT interpretation of "public non-commercial use" re-
veals that such expansive readings are misleading. A proper textual
interpretation, however, is not necessarily harmful to developing-country
or public-health interests. The China Panel, adhering closely to the
TRIPS text and upholding the vast majority of the Chinese customs and
criminal measures, illustrated that adherence provides predictability and
that WTO panels are reluctant to invade Member sovereignty without
strong textual reason.2 Accordingly, a WTO panel would likely grant
considerable leeway to an accused nation in determining whether a pub-
lic non-commercial complies with TRIPS obligations, including whether
it is necessary to protect public health.
A. Defining Public Non-Commercial Use

Defining "public non-commercial use" is by far the most difficult in-
terpretation exercise of TRIPS Article 31(b): it is facially vague, it has no
standard meaning in patent law, and no WTO panel has attempted to de-
fine the term.22 ' Reading "public non-commercial use" in isolation, the
term appears open-ended. Improperly resorting to a dictionary, combin-
ing separate definitions of "public" and "commercial," and failing to
proceed much further generates this result.222 Using a dictionary in this
manner, public non-commercial use appears to include any use that is
not for business, or perhaps not for profit, which relates in some way to a
nation's citizens.223
However, having established a careful balance of IP rights and obli-
gations as a means of achieving mutual benefit,224 it is unfaithful to the
text to construe the Article 31(b) permissible situations for compulsory
221
licensing to read: (1) when reasonable commercial negotiations have
217. See, e.g., Gold & Lam, supra note 19, at 25-26, 30; Ho, supra note 13, at 402-04.
218. See, e.g., Reichmann, supra note 21, at 256.
219. See, e.g., Ho, supra note 13, at 402-04, 431-32; Reichmann, supra note 21, at 256.
220. China Panel Report, supra note 164, 8.1.
221. See Ho, supra note 13, at 402-03.
222. See Gold & Lam, supra note 19, at 25-30; Ho, supra note 13, at 402-04.
223. See Gold & Lam, supra note 19, at 25-26; Ho, supra note 13, at 403.
224. See TRIPS arts. 7-8; supra text accompanying notes 180-192.
225. Compulsory licensing is permitted, as clarified earlier, (1) if "the proposed user has
made efforts to obtain authorization from the right holder on reasonable commercial terms
failed; (2) without prior negotiation when a national emergency or other

circumstance of extreme urgency has arisen; or (3) "for any use relating
in some way to a nation's citizens that is not for business or profit-
related purposes."22 This broad interpretation of public non-commercial
use reads any true restriction out of Article 31(b), swallowing the "na-
tional emergency or other circumstances of extreme urgency" language,
rendering it effectively superfluous, and frustrating the carefully con-
127
structed balance of mutual advantage. To avoid such manifestly absurd
results, WTO judicial bodies may only conclusively rely on a dictionary
when the ordinary meaning is readily apparent and uncontroversial.228
For example, the China Panel used the dictionary to define "commer-
cial" and "scale" separately, but rather than merely combining those
definitions, it analyzed the objectives, purpose, and negotiating history
of TRIPS for forty-five paragraphs to reach an appropriate definition of
"commercial scale." 29 Here, simply combining the separate dictionary
definitions of "public" and "commercial" similarly fails to consider the
phrase "public non-commercial use" within its proper context.23
A simple internal reference to the rest of TRIPS Article 31(b) clari-
fies. Through inclusion in a list of restrictions including "national
emergency" and "other circumstances of extreme urgency," "public non-
commercial use" should be far more than an illusory restriction under
the doctrine of noscitur a sociis. 231' Further, when describing the notifica-
[over] a reasonable period of time;" (2) under a national emergency or other circumstance of
extreme urgency; or (3) for public non-commercial use. See supra text accompanying note
201.
226. See Gold & Lam, supra note 19, at 25, 29 (finding the plain meaning of "public
non-commercial use" unambiguous after cobbling together separate definitions of "public"
and "commercial," obviating the need to resort to the negotiating history of the text). The
authors reason that because "the term 'public non-commercial use' is not defined in TRIPS,
Member States would normally be free to interpret this term as they wish, subject only to
respecting the rights and obligations contained in the Agreement," which they seem to find
negligible. Id. at 26. Cynthia Ho takes the more reasonable stand of suggesting that "each
nation may define the term, unless and until such definition is clarified in a WTO dispute
settlement proceeding," which is what this Note attempts to anticipate. See Ho, supra note 13,
at 404.
227. See TRIPS pmbl., arts. 7, 8.
228. See, e.g., China Panel Report, supra note 164, U 7.533-.535. As the China Panel
noted, "dictionaries are a useful starting point for the analysis of ordinary meaning of a treaty
term, but they are not necessarily dispositive ... [T]he ordinary meaning of a treaty term must
be seen in the light of the intention of the parties as expressed in the words used by them
against the light of the surrounding circumstances." Id. 7.559 (internal quotation marks omit-
ted).
229. China Panel Report, supra note 164, $17.533-.577.
230. See VCLT, supra note 175, arts. 31, 32.
231. BLACK'S LAw DICTIONARY 1087 (8th ed. 2004) (defining noscitur a sociis as a
canon of construction suggesting that "the meaning of an unclear word or phrase should be
determined by the words immediately surrounding it"-literally-"it is known by its associ-
ates").
tion process, Article 31(b) states that "[i]n the case of public non-
commercial use, where the government or contractor, without making a
patent search, knows or has demonstrable grounds to know that a valid
patent is or will be used by or for the government, the right holder shall
be informed promptly."'32 Because Article 31(b) itself describes public
non-commercial use as use by "the government or contractor," not
merely suggesting government use as one possible type of public non-
commercial use, the plain language of Article 31(b) establishes that
public non-commercial use is best defined approximately as "use by the
government" or "government use." 23 3 Such a reading, aside from best
comporting with the text itself, also creates a restriction more on par
with national emergencies and other situations of extreme urgency.
Consulting the TRIPS preparatory materials also supports an inter-
pretation closely limited to government use.234 Unfortunately, the
Brussels Draft of TRIPS described "public non-commercial use" as
"public non-commercial use."2 The later Draft of July 23, 1990, how-
ever, represented the U.S. negotiating position and advocated
minimizing compulsory licensing, providing explicit grounds for com-
pulsory licensing for "the possibility of exploitation of the patented
invention by the government, or by third persons authorized by it,"
which suggests a governmental exploitation for a public non-commercial
use compulsory license.236 This language appears in the first paragraph of
TRIPS Article 31, which includes "use by the government or third par-
ties authorized by the government."237 Yet within Article 31(b), "public
non-commercial use" appears in one draft but not an earlier draft that
strongly limited compulsory licensing, leaving the analysis incomplete.
232. TRIPS art. 31(b).

233. Id. (emphasis added); see also BLAKENEY, supra note 21, at 91-92.
234. See VCLT, supra note 175, T 32. This is a standard interpretation move within the
WTO dispute resolution process. See ChinaPanel Report, supra note 164, 17.500 (noting that
Articles 31 and 32 of the Vienna Convention "have attained the status of rules of customary or
general international law"). The China Panel indeed resolved ambiguity in its decision "by
reference to the records of the negotiation of the TRIPS Agreement." Id. 7.260 (referring in
note 252 to Article 32 of the Vienna Convention).
235. GATT Trade Negotiations Committee, Draft FinalAct Embodying the Results of the
Uruguay Round of Multilateral Trade Negotiations: Revision (Brussels Draft) art. 34(o),
MTN.TNC/W/35/Rev.1 (Dec. 3, 1990), reprintedin GERVAIs, supra note 26, at 247.
236. GATT Negotiating Group on Trade-Related Aspects of Intellectual Property Rights,
Including Trade in Counterfeit Goods, Status of Work in the Negotiating Group: Chairman's
Report to the GNG art. 5A.2.2c, MTN/GNG/NGll/W/l6 (July 23, 1990), reprinted in GER-
VAIS, supra note 26, art. IA.2.2c, at 248. The other grounds were strictly limited to a "declared
national emergency,' and "public interest concerning national security, or critical peril to life
of the general public or body thereof," making an intended expansive definition of "exploita-
tion of the patented invention by the government" very unlikely. See id. at 248-50.
237. TRIPS art. 31.
One American individual intimately involved in the TRIPS negotia-

tions asserts that the phrase "public non-commercial use" was coined to
reflect United States "government use" practice under 28 U.S.C. 1498."
A last minute addition to the TRIPS Agreement supports this reading.
The semiconductor industry, concerned that South Korea might consider
its growing semiconductor sector a sector of "vital importance""' and
issue compulsory licenses for Intel chips if unable to obtain licenses for
them, successfully lobbied for an exception to compulsory licensing
under Article 31(c) for semiconductor technology except for public
non-commercial use.240 The industry clearly intended to exclude semi-
conductor technology from compulsory licensing altogether except for
situations of use by the government itself or a government contractor:
"[i]f it's a time of war and they need a chip for a missile, that's one
thing."24 1 Indeed, "[i]t was probably fitting for the US that of all the areas
of technological knowledge that TRIPS locked up, chip-making, which
lay at the heart of so many military and civilian technologies, was locked
the tightest."242 By comparison, an expansive definition of public non-
commercial use locks up nothing. To be clear, the term "public non-
commercial use" was selected over any suggested "government use"
term, and any definition must reflect that choice. However, the earlier
TRIPS drafts, the negotiating history, and the eleventh-hour semiconduc-
tor exception suggests that public non-commercial use should be defined
within close proximity to "government use." This reading comports with
the internal analysis of Article 31(b), providing a restriction reasonably
238. JACQUES GORLIN, AN ANALYSIS OF THE PHARMACEUTICAL RELATED PROVISIONS

OF THE WTO-TRIPS INTELLECTUAL PROPERTY AGREEMENT 34 (1999). Under U.S. law, the
government may use or manufacture patented inventions, with the patentee retaining the abil-
ity to sue for "reasonable and entire compensation." 28 U.S.C. § 1498 (2006). The definition
of government use includes use or manufacture by "a contractor, a subcontractor, or any per-
son, firm, or corporation for the Government and with the authorization or consent of the
Government." Id.
239. See TRIPS art. 8.
240. TRIPS art. 31(c) ("[T]he scope and duration of [compulsory licensing] shall be
limited to the purpose for which it was authorized, and in the case of semi-conductor technol-
ogy shall only be for public non-commercial use or to remedy a [non-competitive practice]."
(emphasis added)); DRAHOS WITH BRAITHWAITE, supra note 7, at 147-49 (detailing the last-
minute semiconductor amendment to TRIPS); Implications of Intellectual Property Rights,
supra note 181, at 31 (noting that TRIPS included restrictions on "compulsory licenses, the
treatment of innocent infringement, and the protection of designs" regarding semiconductor
products, which had caused strong disagreement in earlier treaty negotiations).
241. DRAHOS WITH BRAITHWAITE, supra note 7, at 148-49 (noting that this last-minute
amendment had paramount importance: the semiconductor industry's "message must have
clarified for US trade negotiators the last-minute changes they absolutely had to have in the
draft TRIPS text and those they could give up" (emphasis added)); see also Implications of
Intellectual Property Rights, supra note 181, at 31 (noting that semiconductor technology
constituted a "main battlefield" at the time).
242. DRAHOS WITH BRAITHWAITE, supra note 7, at 149.
on par with the accompanying terms "national emergency" and "other

circumstances of extreme urgency."
B. Government-Run Health Care and Non-Discrimination

Even with public non-commercial use closely cabined to govern-
ment use, however, reading Article 31(b) in isolation suggests that any
compulsory license issued for pharmaceutical drugs by a government
health care program is valid. Indeed, Thailand issued its recent compul-
sory licenses under Section 51 of the Thai Patent Act, whereby "any
ministry, bureau and department of government may, by themselves or
through others" issue a compulsory license without engaging in prior
negotiations.243 Such a statute is entirely consistent with TRIPS Article
31(b), because this situation falls neatly within the situation where a
compulsory license does not require prior negotiation if the patent sub-
ject matter is used for a public non-commercial use.244 The Thai Patent
Act would survive a China-like facial challenge.
If TRIPS only required compliance with Article 31(b) for compul-
sory licensing, a government-run universal, single-payer 245 health care
system could issue a compulsory license for any patented drug it desires
to use. Such use appears "public" because the government distributes the
drugs to its citizens through its health care program, and such use ap-
pears "non-commercial" because a single-payer system delivers its drugs
to the public without charge. 24 However, similar to how a default system
of issuing compulsory licenses in instances of failed negotiations would
be inconsistent with the exclusivity rights granted to IP owners under
Article 28.1,247 a default or widespread practice of issuing compulsory
licenses for pharmaceutical products begins to run afoul of the Article
27.1 prohibition on discrimination as to fields of technology, even if the
Article 31(b) public non-commercial use restriction is satisfied. 248 The
243. Patent Act B.E. 2522, § 51 (1979), amended by Patent Act (No.3) B.E. 2542 (1999)
(Thai.), reprintedin THAI WHITE PAPER, supra note 2, at 30.
244. See TRIPS art. 31(b).
245. A health care provider in a single-payer governmental health care system, like Can-
ada's health program or Medicare in the United States, "has only one entity to bill: the
government." KAO-PING CHUA, Am. MED. STUDENT Assoc., SINGLE PAYER 101, at 1 (2010).
246. See CARVALHO, supra note 191, 31.16 (noting, within a strongly restrictive inter-
pretation of compulsory licensing, that "[t]he non-commercial nature of the use relates to the
end-use of the invention, for example, the gratuitous distribution of medicaments to the
poor"); CHUA, supra note 245, at 1; CIPIH REPORT, supra note 22, at 20 ("It seems indisput-
able that ... the purchase of anti-retroviral medicines for distribution through public hospitals
without commercial profit would come within scope of the term.").
247. See supra text accompanying notes 202-205.
248. See TRIPS art. 27.1 ("[P]atents shall be available and patent rights enjoyable with-
out discrimination as to the place of invention, the field of technology and whether products
are imported or locally produced."). A Member issuing compulsory licenses for a broad range
Panel in Canada-PatentProtection of PharmaceuticalProducts noted

that it is an "acknowledged fact that the Article 31 exception for compul-
sory licences and government use is understood to be subject to the
non-discrimination rule of Article 27.1."24
The WTO dispute resolution system has long-recognized the doc-
trine of de facto discrimination in international trade law. 250 Thus, a
compulsory licensing regime that facially makes no reference to phar-
maceutical products, but in effect substantially weakens IP rights in the
pharmaceutical sector compared to another fields of technology, may
still be discriminatory and violate TRIPS Article 27.1. Indeed, a WTO
Panel has proved willing to address de facto discrimination as to field of
technology under TRIPS Article 27.1 if a complainant can show "that
the adverse effects [of a facially-neutral law] were limited to the phar-
maceutical industry."251 In that particular case, however, the Panel
ultimately did not issue a ruling because the complaining party did not
satisfactorily raise a prima facie claim of defacto discrimination.252
A WTO panel, however, would likely be lenient when considering
whether compulsory licenses issued were "necessary to protect public
health," and would likely be reluctant to invade a Member's sovereignty
to find discrimination unless a clear pattern of abuse was demon-
strated.253 Panels should not find compulsory licenses discriminatory
simply because certain fields of technology are more likely than others
to be required to be utilized to address public health concerns under the
restrictions specified in TRIPS Article 31.254 Thus, should a Member is-
sue a wide array of compulsory licenses for HIV/AIDS medications to
of pharmaceutical products may also begin to discriminate as to the place of invention, since
only a handful of developed countries have an innovative pharmaceutical industry, although
this Note will focus on discrimination as to the field of technology.
249. Canada-PatentProtection,supra note 154,1 7.91.
250. Where discrimination arises from explicitly differential treatment, it is de jure dis-
crimination. Where discrimination occurs as a result of facially neutral treatment, it is defacto
discrimination. Id. 7.94; see also CARVALHO, supra note 191, 27.8; Lothar Ehring, De
Facto Discrimination in World Trade Law: National and Most-Favoured-Nation Treatment-
or Equal Treatment?, 36 J. WORLD TRADE 921, 922-23 (2002). For example, a law applying
varying tax rates to various types of alcoholic beverages, even if making no explicit distinction
between imported and domestic beverages, may be de facto discriminatory if the majority of
domestic drinks fall under low tax rates while a disproportionately high number of imported
beverages fall under high tax rates. See, e.g., Report of the Panel, Japan-Customs Duties,
Taxes and Labeling Practices on Imported Wines and Alcoholic Beverages, 5.13, [16216
(Nov. 10, 1987), GATT B.I.S.D. (34th Supp.) at 83 (1988).
251. Canada-PatentProtection,supra note 154, 7.105.
252. Id.
253. See supra text accompanying note 220.
254. See Canada-PatentProtection, supra note 154, 7.92 ("Article 27 does not pro-
hibit bona fide exceptions to deal with problems that may exist only in certain product
areas.").
Winter 201l] "Public Non-Commercial Use" 393
combat a domestic epidemic, that exclusive use should be sufficiently

tailored to avoid a finding of discrimination. For this reason, a panel
would likely not find Thailand's HIV/AIDS compulsory licenses dis-
criminatory. The single compulsory license for Plavix is also highly
unlikely to trip the discrimination prohibition without a broader pattern
of issuing compulsory licenses for pharmaceutical products. A series of
compulsory licenses for Thailand's remaining wish list of essential
drugs, perhaps building on the 2008 compulsory licenses for anticancer
drugs, however, would appear to eviscerate the patentability of pharma-
ceutical drugs in Thailand in violation of Article 27.1, notwithstanding
facial compliance with the Article 31 restrictions. 25 6 Compulsory licens-
ing for public non-commercial use need not address an emergency or
"exceptional" situation, but neither is it a gateway for issuing compul-
sory licenses with near impunity.
CONCLUSION
In light of the evolving pharmaceutical marketplace, a developing in-

ternationally-recognized right to health care, and the proliferation of
universal health care programs, this Note has suggested that expansive
compulsory licensing may represent both a growing threat to future
pharmaceutical R&D and a correspondingly tempting option to control
health care costs. With the developing world assuming a larger role in
the global pharmaceutical marketplace, compulsory licensing poses a
tried-and-true method of keeping health care costs low despite the dam-
aging impact it may have on the economic returns of pharmaceutical
R&D. Further, with developed countries addressing health care budget
problems and sometimes capping expenditures, compulsory licensing
255. See id. However, the Panel additionally noted:

[T]o the extent the prohibition of discrimination does limit the ability to target cer-
tain products in dealing with certain of the important national policies referred to in
Articles 7 and 8.1, that fact may well constitute a deliberate limitation rather than a
frustration of purpose ... in order to ensure that governments do not succumb to
domestic pressures to limit exceptions to areas where right holders tend to be for-
eign producers.
Id.
256. Because only a handful of developed countries have innovative pharmaceutical
industries, see supra note 115 and accompanying text, such broad compulsory licensing prac-
tices also appear to discriminate with regard to country of origin. See TRIPS art. 27.1
("[P]atents shall be available and patent rights enjoyable without discrimination as to the place
of invention ... and whether products are imported or locally produced."); Canada-Patent
Protection, supra note 154, 7.92 (warning that governments may act discriminatorily when
"succumb[ing] to domestic pressures to limit exceptions to areas where right holders tend to
be foreign producers").
394 Michigan Journal of InternationalLaw [Vol. 32:347
may eventually pose as attractive an option for developed nations as it

does for developing nations. Thus, this clarifying analysis of public non-
commercial use, which represents the vanguard of compulsory licensing
activity, may help to alleviate current uncertainty.
Under such an analysis, restraining the apparently open-ended plain
language of public non-commercial use best balances the interests of
users and producers of pharmaceutical products, and best comports with
the language and context of TRIPS. Nearly limitless justification for
compulsory licensing under the public non-commercial use restriction is
incompatible with the harmonizing goals of TRIPS, particularly the
principle of non-discrimination as to field of technology. Such a reading
also renders superfluous the other restrictive Article 31(b) "national
emergency" and "circumstances of extreme urgency" terms.
Adhering closely to the TRIPS text is also the best way to provide
predictability and to balance WTO Members' concerns about addressing
public health care problems in light of a growing fundamental right to
human health. WTO panels have respected national sovereignty by inter-
fering only when there is explicit textual justification for doing so,
providing leeway for nations to determine the necessity of utilizing com-
pulsory licensing to address public health concerns. By clarifying
permissible applications of public non-commercial use, pharmaceutical
researchers can better anticipate market returns on research, nations can
better identify acceptable methods of improving access to health care,
and transaction costs for IP-related transactions will be lower due to in-
creased harmonization. In addition, the current chill on compulsory
licensing may thaw, permitting states to utilize compulsory licensing to
address public health concerns in conclusively permissible circum-
stances.

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INTRODUCTION .............................................. ........ 348

Suppose a relatively prosperous nation with universal public health

I. Broadly defined, a compulsory license may be issued by a government to permit a

compulsory license, which must be issued by a government, revokes a

generic production of Plavix, a heart disease drug. 7 In 2008, Thailand

justification for compulsory licensing.22 By utilizing "public non-

other drastic reform proposals, pragmatically attempting to discern lim-

I. THE EMERGENCE OF COMPULSORY LICENSING UNDER TRIPS

A. NationalEmergency Compulsory Licensing

ensure availability of essential medicines, which appeared illegal under

of some countries to issue [compulsory licenses]."" The New York Times

The South Africa confrontation permanently altered the TRIPS flex-

for generic HIV/AIDS drugs. 53 Threats of compulsory licensing in nego-

B. The Emergence of Public Non-Commercial

and I have nothing to lose," Thailand's health minister, Dr. Mongkol,

AIDS epidemic, when its incidence is a little over 1%-and countries

compulsorily licensed drugs only to those who cannot afford them,

II. NEW COMPULSORY LICENSING CONCERNS PRESENTED

The idea of a human right to health care and the implementation of

paying for pharmaceutical drugs may be beginning to shrink. Mean-

A. Health Care as a Human Right and Government Health Care

http://www.yogyakartaprinciples.org/principles-en.pdf (Principle 17: "The Right to the High-

When health care is a government-run and government-funded en-

B. The PharmaceuticalDevelopment Outlook"

development, which is funded both by purchasers of pharmaceutical

R&D therefore usually targets drugs that have an expected return

108. See id.

patent protection prior to TRIPS." 4 As a result, today only a handful of

114. DEERE, supra note 1,at 39.

expenditures.123 Limiting economic returns on pharmaceutical R&D

C. The Fading Wisdom of Relying on the Developed World

for a disproportionately large share of pharmaceutical sales worldwide,

As a rare holdout from extensive health care regulation in the devel-

opment of more effective drugs, which also benefit patients in

III. THE TRIPS CONTEXT FOR PUBLIC NON-COMMERCIAL

Despite the developed world's deteriorating reliability as the exclu-

harmonizing legal structure, prescribing a reasonable middle ground be-

A. Changing Winds: The Likelihood of a WTO Panel

to such provisions: Colombia, having publicly declared that a FTA with

2007, available at http://www.ustr.gov/sites/default/files/uploads/agreements/fta/panama/

compliant with minimum TRIPS standards. 6 Indeed, the WTO Panel

B. The Standardfor Interpreting TRIPS

under VCLT Article 31 "leaves the meaning ambiguous or obscure; or

C. Relevant Context Under the Vienna Convention:

By aiming to reduce distortions and impediments to international

179. Id. art. 32.

domestic implementation of laws and regulations in order to enable them

182. TRIPS pmbl.

The Article 8 "Principles" similarly emphasize a balance of rights

2. Appropriate measures, provided that they are consistent with

D. Article 31: Compulsory Licensing

190. TRIPS art. 8.

under certain circumstances to achieve those goals.193 Members have so-

Member in the case of a national emergency or other circum-

200. Id. art. 31(b).

the use of TRIPS-consistent flexibilities to situations when they are nec-

creates a procedure designed to allow Members to react to exigent cir-