Note on Art 31(f)
(By N. B. Zaveri, Advocate)
12th November 2002

Technical note on legal aspects

Art 31(f) does not prohibit exports by licensee. Reading Art 31(f), as required by established rules of interpretation of international treaties and also by Doha Declaration, it will be observed that: -

  1. Art 31(f) does not prohibit exports. In fact, it provides for limited exports.

  2. In their communication dt. 18th June 2002 (Para 3), to the TRIPS Council, referring to Art 31(f) expression – “predominantly supply the domestic market” even EC has confirmed that: - “This does nevertheless allow a non-predominant part of the products concerned to be destined to supply foreign markets (except under the circumstances addressed by Article 31(k))”.

  3. Art 28, which is specific in respect of the exclusive rights to be granted to patent holder, does not include exclusive right to export. Likewise, Art 41(1) remedy is restricted to importation omitting exports.

  4. Art 31(f) cannot be read or applied to create or confer on patent holder any new right to prevent or prohibit exports. His right is only to receive remuneration as per Art 31(h).

  5. Patent rights being statutory monopoly resulting in corresponding denial of other citizens’ rights, cannot be created by, or assumed from such vague expressions as in Art 31(f), and has to be created by specific words as in Art 28.

Art 31(f) is intended as a protection for domestic consumers and to discourage tendency to neglect domestic demand giving preference to profitable exports. Therefore, right to object (or to waive it) to exports by licensees without satisfying the requirement of pre-dominant domestic supply, would be with the government and consumers and patent owner cannot object.

Art 31(f) is flexible treated as such by USA, France, UK and others –

Art 31(f) is flexible and the requirement of ‘predominantly for supply of the domestic market’ is optional and may not be insisted upon.

Most of the important WTO Member Countries have, in their patent laws, treated Art 31 and its different requirements, including Art 31(f) – as flexible, or optional.

In this context, reference can be made to US statute – 28 USC 1498, French Patent Law Art (l) 613-16 ‘Crown Use’ provisions of UK Patent Act 1977 etc., (even after 1999 amendment for TRIPS compliance), and others, each of which is ex-facie non-compliant with or violative of Art 31 requirements. Such references apart from providing confirmation of flexibility of Art 31 provisions, also show that such other countries cannot object to other Member countries treating Art 31, and particularly Art 31(f) as flexible, not as a mandatory obligation. It cannot be said that these countries can treat Art 31 as flexible for their own patent laws, but as mandatory for other countries.

Reading Art 31(f) as prohibiting exports by licensee

Even on the assumptions that the patent owner has the right to prevent exports and Art 31(f) bars exports by licences, further options – independent of each other - are available. Based on the considerations any or more of the matters namely, -

The exercise of any such exclusive right i.e. remedy of patentee, for any infringement can be regulated and controlled to allow its enjoyment by payment of adequate compensation or reasonable remuneration, rather than by actual stoppage of production, exports, supplies, distribution or sale of such products.

  1. Owners’ remedies even as per TRIPS -
    1. TRIPS itself by Art 41(1) requires that remedies for infringement shall be ‘applied in such a manner as to avoid the creation of barriers to legitimate trade and to provide for safeguards against their abuse’.
    2. By an overriding provision, Art 44(2) specifically empowers Members to ‘limit the remedies available against such use to payment of remuneration in accordance with sub-paragraph (h) of Article 31’ in cases which satisfy Art 31 requirements.
    3. Art 44(2) thus allows Members to adopt a flexible approach by limiting the remedies to payment of remuneration. For other cases, while accepting that national laws could be having remedies, which are inconsistent with TRIPS provisions, Art 44(2) only requires provision to be made for declaratory judgement and adequate compensation. In most countries, including USA (35 USC 283) and UK (Sec 61(6)), granting of relief’s for infringement is a matter of discretion vested in courts, and courts are empowered not to grant preventive injunctions for infringement of patent rights on consideration of other national or public interest matters.
    4. In most countries including US, grant of permanent injunctions is governed by equitable considerations including balancing the relative hardships to the parties and public interests. Courts would also have discretion to refuse to grant relief of permanent prohibitory injunction on considerations of public interests, more so, when grant of such injunction would deny access to affordable medicines and expose large populations to risks of deaths or suffering from infectious diseases.

  2. Principle of Jus Cogens -

    1. Jus Cogens applicability - Doha Declaration requires TRIPS provisions to be interpreted and implemented applying the customary rules of interpretation of international treaties - also codified in of Vienna Convention on Law of Treaties (VCT). Art 53 of VCT requires principles of Jus Cogens to be followed for such interpretation. Art 53 provides guidance for implementing treaty provisions conflicting or inconsistent with obligations under other international treaties, and stipulates that the more fundamental obligation, i.e., the peremptory norm or the right from which no derogation is permissible - prevails over the other, and has to be respected. Both the treaties on ICCPR & ICESCR under both the treaties human rights are regarded as peremptory norms from which no derogation is permissible.

    2. Relevance of Jus Cogens in the context of Art 31(f) - Art 31(f), if its prevalent interpretation is accepted, would prohibit exports of the patented products by third parties authorised under Art 31. This would conflict with the WTO objective of removing trade barriers, and in case of drug patents, by preventing exports, and consequently access to medicines by people requiring such drugs in countries not having generic production facilities. Such conflict would arise between Art31(f) (as per prevalent view) and the following provisions: -
      1. The objectives of WTO and TRIPS Agreements are to remove trade barriers - and promote and facilitate trade across borders. Art 31(f) cannot be interpreted or applied to run counter to this basic objective and scheme.
      2. Human rights obligations as per UN Charter, Universal Declaration of Human Rights and related treaties, etc., are more fundamental and prevail over private commercial rights as per TRIPS Agreement.
      3. Doha Declaration also requires primacy to be given to healthcare and with the object of providing ‘access to medicines for all’.
      4. Art 8(1) objective of TRIPS also empowers Members to adopt measures necessary to protect public healthcare and nutrition.

    3. In case of patents relating to healthcare products, the urgency and the need to protect life and provide better healthcare receive primacy over trade related IPR.

    4. Relative to Art 31(f) requirement (which is only an incidental requirement for CL provisions), the obligations - to remove trade barriers as per WTO Agreement, and respecting fundamental human rights as required by UN Charter, Universal Declaration of Human Rights etc., - are more fundamental and have to be given priority and respected.

    5. Therefore, Art 31(f) requirement, even if treated as mandatory, must yield to the higher obligations of removing trade barriers and supporting right to life.

Extracts from Supreme Court Judgements -

People’s Union for Civil Liberties v. Union of India
(1997) 3 SCC 433
At Para 8, cites from the AP High Court decision in the Challo Ramkonda Reddy v. State of A.P. with approval the following –

“In our opinion, the right to life and liberty guaranteed by Article 21 is so fundamental and basic that no compromise is possible with this right. It is ‘non-negotiable’. … The State has no right to take any action which will deprive a citizen of the enjoyment of this basic right except in accordance with a law which is reasonable, fair and just.”

At Para 9

“True it is that Constitution must be read as an integrated whole; but since the right guaranteed by Article 21 is too fundamental and basic to admit of any compromise, we are not prepared to read any exception into it by a process of interpretation.”

In Paschim Banga Khet Mazdoor Samity v. State of W.B.:
 (SCC pp. 43-44 & 48, paras 9 & 16)

“The Constitution envisages the establishment of a welfare State at the federal level as well as at the State level. In a welfare State the primary duty of the Government is to secure the welfare of the people.”

Providing adequate medical facilities for the people is an essential part of the obligations undertaken by the Government in a welfare State.

“Failure on the part of a government hospital to provide timely medical treatment to a person in need of such treatment results in violation of his right to life guaranteed under Article 21.”(Para 10)

LIC of India vs. Consumer Education & Research Centre
(1995) 5 SCC 482

“The authorities or private persons or industry are bound by the directives contained in Part IV, Part III and the Preamble of the Constitution.

“The Preamble, the arch of the Constitution, assures socio-economic justice to all the Indian Citizens in matters of equality of status and of opportunity with assurance to dignity of the individual. Article 14 provides equality before law and its equal protection. Article 19 assures freedoms with right to residence and settlement in any part of the country and Article 21 by receiving expansive interpretation of right to life extends to right to livelihood. Article 38 in the Chapter of Directive principles enjoins the State to promote the welfare of the people by securing and protecting effective social order in which socio-economic justice shall inform status, to provide facilitates and opportunities among the individuals and groups of the people living in any part of the country and engaged in any avocation. Article 39assures to secure the right to livelihood, health and strength of workers, men and women and the children of tender age. The material resources of the community are required to be so distributed as best to subserve the common good. Social security has been assured under Article 41 and Article 47 imposes a positive duty on the State to raise the standard of living and to improve public health.” (Para. 14) “Article 25 of the Universal Declaration of Human Rights envisages that every one has the right to standard of living adequate for the health and well-being of himself and of his family including food, clothing, housing and medical care and necessary social services and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in the circumstances beyond his control. Article 7 of the International Covenant on Economic and Social Rights equally assures right to every one to the enjoyment of just and favourable conditions of work which ensures not only adequate remuneration and fair wages but also decent living to the workers for themselves and their families in accordance with provisions of the Covenant. Covenant on Right to Development enjoins the State to provide facilities and opportunities to make rights a reality and truism, so as to make these rights meaningful. (Para. 15)

“The basic framework of the Constitution is to provides a decent standard of living to the working people and especially provides security from the cradle to the grave. Every State action whenever taken must be directed and be so interpreted as to take society one step towards the goal of establishing a socialist welfare society. While examining the constitutional validity of legislative/administrative action, the touchstone of the Directive Principles of State Policy in the light of the Preamble provides yardstick to hold one way or the other .(Para.16)

“It would thus be well-settled law that the Preamble, Chapter of Fundamental Rights and Directive Principles accord right to livelihood as a meaningful life, social security and disablement benefits are integral schemes of socio-economic justice to the people, in particular to the middle class and lower middle class and all affordable people.” (Para 18)

AIR 1995 SC 922

“Therefore, it must be held that the right to health and medical care is a fundamental right under Art. 21 read with Article 39(c), 41 and 43 of the Constitution and make the life of the workman meaningful and purposeful with dignity of person. Right to life includes protection of the health and strength of the worker is a minimum requirement to enable a person to live with dignity. The State, be it Union or State Government or an industry, public or private is enjoined to take all such action which will promote health, strength and vigour of the workman during the period of employment and leisure and health and happiness. The health and strength of the worker is an integral facet of right to life. Denial thereof denudes the workman the finer facets of life violating Art.21.”

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