HIGH COURT

Allen And Hanburys Ltd And Glaxo Group Ltd v Controller Of Patents, Designs And Trademarks And Clonmel Healthcare Ltd 

1995 No 526 SP 

26 July 1996 

Carroll J 

This is an appeal under Section 75 of the Patents Act, 1964 against an Order of the Controller of Patents, Designs and Trademarks (the Controller) made on the 2 June, 1995. The Order provided for compulsory licences in respect of two patents for the life of the patents to come into force with effect from the date they were executed by the parties. 

The Plaintiffs applied for and obtained on the 21 February, 1996 an Order for the hearing of a point of law by way of preliminary issue. 

The preliminary issue of law is in the following terms:- 

1. Do the provisions of the Agreement on Trade Related Aspects of Intellectual Property Rights oblige the Controller of Patents or the Court to refuse the grant of compulsory licences pursuant to Section 42 of the Patents Act, 1964 to the second named Defendant on any date after the aforementioned agreement became known to this date? 

2. In the event that the Controller had jurisdiction to grant such licences, can the licences have any validity after the date of application of the aforesaid agreement to the State? 

The facts on which the case is based are as follows:- 

On the 8 November, 1991 and the 13 February, 1992 respectively the second Defendants ("Clonmel") applied under Section 42 of the Patents Act, 1964 (the 1964 Act) for patent licences in respect of Patent Licence No: 45456 and Patent Licence No: 51604 owned respectively by the first Plaintiff and the second Plaintiff. 

The Patents Act, 1992 (the 1992 Act) was enacted on the 27 February, 1992 and came into force on the 1 August, 1992. Section 5 repealed the Patents Act 1964 subject to the provisions of the First Schedule. Provision 13 of the First Schedule provided that any application for a licence under Section 42 of the 1964 Act which was pending at the commencement of the 1992 Act should be decided under the provisions of the 1964 Act. 

On the 15 December, 1993 the final version of the World Trade Organisation Agreement (the WTO Agreement) was agreed. Annex 1C thereto included the final version of the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS). 

On the 15 April, 1994 the WTO Agreement (including TRIPS) was formally signed at Marrakesh on behalf of the State. 

The Controller of Patents heard the application for compulsory licences on the 28 and 29 July and the 2O and 21 September, 1994. 

On the 15 November, 1994 the State ratified the WTO Agreement (including TRIPS). The ratification was signed on behalf of the State at Geneva. On the same day the European Court of Justice delivered its advisory opinion (No 1/94) on the competence of the European Union (EU) to conclude the WTO Agreement (including TRIPS). The Court decided that the EU had joint competence with Member States to conclude the TRIPS Agreement. 

On the 22 December, 1994 there was a Council decision (94/900/EEC) to ratify the WTO Agreement (including TRIPS). 

On the 30 December, 1994 the European Union, Ireland and other Member States deposited instruments of ratification of the WTO Agreement in Geneva. 

On the 1 January, 1995 the WTO Agreement (including TRIPS) entered into force, Ireland became a member of the World Trade Organisation on the 1 January, 1995. 

Submissions were made to the Controller in relation to TRIPS in February, 1995. 

On the 22 June, 1995 the Controller made an order granting compulsory licences to Clonmel. The written grounds for his decision were delivered on the 3 July, 1995. He held that TRIPS had no application in the internal legal system of the State as it had not been enacted into domestic law. 

On the 1 January, 1996 the transitional year provided for by Article 65(1) of TRIPS expired. 

The Plaintiffs' submissions dealt with:- 

(a) The direct effect of the TRIPS Agreement as a matter of community Law. 

(b) The meaning and effect of Section 46(3) of the Patents Act 1964. 

(c) The obligations under international law undertaken by the State and the requirement to act in good faith and not contrary to public policy. 

I propose to deal with Section 46(3) first. 

Section 46(3) provides:- 

"No order shall be made in pursuance of any application under Sections 39 to 43 of this Act which would be at variance with any treaty, convention, arrangement or engagement applying to the State and any convention country." 

The Plaintiff submits that TRIPS is a treaty, convention, arrangement or engagement applying to the State and any convention country and that the subsection is in accordance with Article 29.6 of the Constitution. This provides:- 

"No international agreement shall be part of the domestic law of the State save as may be determined by the Oireachtas." 

"Any convention country" is defined by Section 93 of the Patents Act 1964 which enables the government by order to declare that any country specified in the order is a convention country for the purposes of the Act and that the country shall be a convention country for the purposes of the Act while the order remains in force with respect to that country. 

At the time of Clonmel's application there were two extant Statutory Instruments made under Section 93. These were SI 314 of 1976 and SI 223 of 1987. Under SI 314 of 1976 (the Patents Act, 1964 (Section 93) (Declaration) Order 1976) India was declared a convention country. Under SI 223 of 1987 (the Patents, Designs and Trademarks (International Arrangements) Order, 1987) the State declared each country specified in the schedule to the Order to be a "convention country" for the purposes of the 1964 Act. All of the member countries of the EU are convention countries under this statutory instrument as well as many others. 

Both statutory instruments were revoked on the 30 January, 1996 which was one month after the expiration of the transitional year provided for in Article 65(1) of TRIPS. SI 314 of 1976 was revoked by SI 38 of 1996 (Patents International Arrangements Order 1996) and SI 223 of 1987 was revoked by SI 37 of 1996, (Designs and Trademarks (International Arrangements) (Amendment) Order, 1996). 

The Plaintiffs submitted that the clear intention of Section 46(3) of the Patents Act 1964 was to ensure that in relation to Sections 39 to 43 the Controller did not act inconsistently with any obligation undertaken then or in the future by the State pursuant to international agreements and further that the terms of international agreements with convention countries should be complied with by the Controller when granting licences under the 1964 Act. See Parke Davis & Co v Comptroller of Patents, Designs and Trademarks [1954] AC 321 where the House of Lords held that an almost identical subsection (S 45(3) of the English Patents Act, 1949, from which Section 46(3) derives its origin) had no application because the grant of a compulsory licence for food or medicine was not forbidden by the relevant convention. It seems that if the relevant convention had forbidden the grant, then it could not have been made. 

The Plaintiffs refer to Article 27(1) of TRIPS which provides that no discrimination as to field of technology is permitted in respect of enjoyment of patent rights. They submit that Section 42 of the Patents Act 1964 which was applied by the Controller is predicated on a specific discrimination in favour of licences in the fields of medicine and foodstuffs. 

Article 27(1) of TRIPS provides:- "Subject to the provisions of paragraphs 2 and 3 (which are not applicable to this case)', patents shall be available for any inventions whether products or processes, in all fields of technology, provided that they are new, involve an inventive step and are capable of industrial application. Subject to paragraph 4 of Article 65, paragraph 8 of Article 70 and paragraph 3 of this Article, '(none of which have relevance to this application)' patents should be available and patent rights enjoyable without discrimination as to the place of invention, the field of technology and whether products are imported or locally produced". 

Section 42(1) of the Patents Act 1964 provides:- 

"(1) Without prejudice to the foregoing provisions of this Act, where a patent is in force in respect of -- 

(a) a substance capable of being used as food or medicine or in the production of food or medicine; or 

(b) a process for producing such a substance as aforesaid; or 

(c) any invention capable of being used as, or as part of a medical, surgical or other remedial device, 

the Controller shall, on application made to him by any person interested, order the grant to the applicant of a licence under the patent on such terms as he thinks fit, unless it appears to him that having regard to the desirability of encouraging inventors and the growth and development of industry and to such other matters as he considers relevant, there are good reasons for refusing the application." 

The Plaintiffs submit that the derogation from Article 27(1) of TRIPS contained in Article 70(6) of TRIPS ceased to apply on the 15 December, 1993 which was the date on which the final version of TRIPS was agreed, whereas the Controller did not make his decision until June 1995. 

Article 70(6) provides:- 

"Members shall not be required to apply Article 31 or the requirement in paragraph 1 of Article 27 that patent rights shall be enjoyable without discrimination as to the field of technology, to use without the authorisation of the right holder where authorisation for such use was granted by the Government before the date this agreement became known." 

The Plaintiffs submit that under Article 70(6) licences in breach of Article 27(1) could not be granted by the Controller after the date the agreement became known (ie 15 December 1993, the date when the final version was agreed). Alternatively, where a licence had been granted after this date it could not continue in effect after the 1 January, 1996 (ie the end of the transitional year provided for by Article 65(1) of TRIPS). 

Another relevant article is Article 65 paragraphs (1) and (6) which provide:- "(1) Subject to the provisions of paragraphs (2)), (3) and (4) (which are not relevant to this application) no member shall be obliged to apply the provisions of this agreement before the expiry of a general period of one year following the date of entry into force of the WTO Agreement." 

(6) A member availing itself of a transitional period under paragraphs (1), (2), (3) or (4) shall ensure that any changes in its laws, regulations and practice made during that period do not result in a lesser degree of consistency with the provisions of this agreement." 

The Plaintiffs submit that since the compulsory licences were the only ones granted since the Patents Act 1964 was enacted therefore this was a new practice contrary to Article 65(5). 

Article 70(1) provides: 

"This Agreement does not give rise to obligations in respect of acts which occurred before the date of application of the Agreement for the Member in question." 

The Plaintiffs submit that this refers to acts of infringement by third parties before the date of application. There are three different dates referred to within this Article, date of application [in para (1)], date of acceptance [in para (4)] and date before the Agreement became known [in para (6)]. The Plaintiffs submit that the date of application is the 1 January, 1995 not the end of the transitional year, January, 1996. They submit that acceptance is the same as ratification and the deposit of the instrument of ratification is the date of acceptance ie 30 December, 1994. The date when the Agreement became known is the date of the adoption of the final Act on the 15 December, 1993. Alternatively, if the date of the adoption of the final Act is not the date the Agreement became known, it must be the 15 April, 1994 which was the date the WTO Agreement was signed. 

I will deal with the issues raised by those arguments in turn. 

The first issue is whether TRIPS is a treaty, convention, arrangement or engagement applying to the State and any convention country. It was not argued that the WTO Agreement including TRIPS was not a treaty or convention, etc applying to the State but it was argued by Clonmel:- 

1. that it applied only to bilateral treaties ie the State and any convention country 

2. that there are no longer any convention countries since the repeal of SI 314 of 1976 by SI 38 of 1996 and SI 223 of 1987 by SI 37 of 1996, therefore there can be no treaty between the State and a convention country. 

The first argument cannot succeed by virtue of the Interpretation Act, 1937. Section 11 of that Act provides that the singular includes the plural unless a contrary intention appears -- which it does not. The second argument also fails by virtue of Section 22 of the same Act. Subsection 1(c) and (e) provide that unless the contrary appears which it does not, the revocation of a statutory instrument should not affect any right, privilege, obligation or liability acquired, accrued or incurred under the revoked instrument or prejudice any legal proceedings pending. Subsection (2) provides that any legal proceedings civil or criminal in respect of any right, privilege, obligation or liability acquired, accrued or incurred under the revoked Statutory Instrument may be instituted, continued or enforced as if the statutory instrument had not been revoked. 

If Section 46(3) conferred a right on the Plaintiffs not to have a compulsory licence granted because this would be in breach of a treaty between the State and any convention country, then the revocation of the statutory instruments does not affect the issue. The proceedings must be continued as if they had not been revoked. 

The Controller argued that the Application for compulsory licences under Section 43 made on the 8 November 1991 and the 13 February 1992 predated the agreement on TRIPS and that Section 46(3) cannot be read as facilitating summary termination of a property right. However, any right under Section 42 was always subject to the infirmity that it could be affected by a treaty and it would be necessary for the Defendants to look to the transitional provisions of the Treaty to ascertain their rights. 

The next issue is how Section 46(3) of the Patents Act 1964 is to be interpreted with particular reference to Art 29.6 of the Constitution namely "No international agreement shall be part of the domestic law of the State, save as may be determined by the Oireachtas". The arguments were all directed to a constitutional interpretation of the subsection and no constitutional challenge was mounted to S 46(3) and the Attorney General was not a party. 

The Controller argues that it must be presumed that the Oireachtas did not intend to abdicate its responsibility under Article 15.2.1 for making laws. Section 46(3) cannot be read as envisaging a situation whereby the provision of a treaty which is not part of the domestic law of the State renders a provision of the 1964 Act a dead letter. Section 46 assumes jurisdiction continues, therefore it cannot be read so that a treaty would set Section 42 at nought. It cannot be read so that Article 27 of TRIPS is given effect, because this would allow the Government to legislate for the State. It would amount to the repeal of an act of the Oireachtas by virtue of an international treaty which was not part of domestic law. 

Clonmel argued that the transitional provisions of the 1992 Act which continued Section 42 in existence for pending applications was enacted after the Dunkel Draft (the first draft of TRIPS) became known on the 20 December 1991. This is in all material respects identical to the final text of TRIPS. Therefore, the legislators knew of it and therefore they must have intended that the existence of TRIPS would not prevent the grant of a Section 42 licence. It would be illogical for the Oireachtas to include provision for the continuation of applications for licences under Section 42 of the Patents Act 1964, in the knowledge that an international treaty would soon be signed which would prevent the grant of any licence under Section 42. 

Clonmel did not attempt to interpret what exactly was meant by Section 46(3). The Controller submitted that at most, Section 46(3) should be taken as saying that in exercising his functions, the Controller must have regard to any treaty, etc and where he has a choice or discretion, he should not make an Order inconsistent with the provisions of a treaty capable of guiding, informing or defining the exercise of functions under Sections 39 to 43 while ultimately leaving the relevant portions of the 1964 Act intact. 

In interpreting S 46(3) the first thing to note is that it is prohibitory. No Order can be made by the Controller if the subsection applies. It overrides the mandatory provision in s 42 requiring the Controller to grant a licence unless there are good reasons for refusing. Also, it applies whether it is invoked or not. Both the Controller and Clonmel criticised the Plaintiffs because they did not raise this subsection in their submissions. It is regrettable that they did not but that does not prevent them raising the argument in this Court. 

The next thing to note is that the subsection has a very limited application. It deals with two specific areas, the compulsory grant of a licence or compulsory endorsement of a licence where there has been an abuse of monopoly rights (Sections 39 to 41 and Section 43) and the compulsory grant of a licence in the area of food and medicine (Section 42). 

In interpreting the section the Court is obliged to give effect to plain and unambiguous words. The primary meaning is to be followed (see Howard v Commissioners of Public Works [1994] 1 IR 101). 

In my opinion, the Oireachtas were saying in Section 46(3) that in relation to these two limited areas, if the State entered into a treaty at variance with Sections 39 to 43, the Controller was prohibited from making an Order. The subsection must be interpreted as referring to treaties which could only comply with the section some time in the future because there were no convention countries when the Act was passed. These could only come into existence by order under S 93. The Oireachtas therefore, in this subsection were intending to confer in the future the status of domestic law on the provisions of any treaty with a convention country which was at variance with applications under Sections 39 to 43. The effect of conferring the status of domestic law would be that the Treaty would override the provisions of Sections 39 to 43. The Act delegated to the Government the power to enter into a treaty with limited effect in domestic law without reverting back to the Oireachtas. It is not a question of the Government repealing a section of the Act. The Oireachtas provided that in a certain event (ie, a treaty with a convention country), then Section 42 (inter alia) would not apply. The clear words of the subsection do not allow for the interpretation contended for by the Controller. In the absence of a constitutional challenge the subsection has the benefit of the presumption of constitutionality and is in accordance with the provisions of Articles 29.6 of the Constitution. 

As to Clonmel's argument that because the Oireachtas continued Section 42 in existence for pending applications after they knew the import of TRIPS via the Dunkel Draft, they must have intended that TRIPS would not prevent the grant of a Section 42 licence, this argument cannot be sustained. All the Oireachtas did in paragraph 13 of the First Schedule was to say that any pending applications under Section 42 should be decided under the provisions of the Patents Act 1964 Act and the 1964 Act included Section 46(3). The 1992 Act was enacted on the 27 February, 1992. It is not correct to say that the Oireachtas must have known then that a treaty would soon be signed. The final version of the WTO Agreement was not agreed until the 15 December 1993. Right up to that time there was no guarantee that any agreement would be achieved. 

It is not contested that Section 42 does permit discrimination as to the field of technology in respect of enjoyment of patent rights contrary to Article 27(1) of TRIPS. What is in issue is whether Article 27(1) applied at the time of the Controller's decision so as to prevent a grant of licences under Section 42 or alternatively whether it applies now. There are a number of issues arising here:- 

1. Does Article 70(6) apply ie was authorisation for use permitting discrimination contrary to Article 27(1) granted by the Government after the date the agreement became known. This raises two questions 

(i) whether the government includes the Controller. 

(ii) what is the date the agreement became known. 

Alternatively, 

2. Does Article 70(1) apply, ie was the order of the Controller an "act" which occurred before the date of application to the member in question. This raises the questions 

(i) whether the Order/Grant of a licence is an "act" 

(ii) what is the date of application. 

Alternatively, 

3. Is Article 70(6) an exception to Article 70(1). 

4. Does Article 65(1) mean that TRIPS is not applicable before the expiry of one year following the entry into force of the Treaty ie the 1 January 1966. 

Alternatively, 

5. Does Article 65(6) mean that the grant of compulsory licences during 1965 is a change in "practice" during the transitional year. 

In relation to dates, it appears to me that the dates mentioned in TRIPS occur in the following sequence: 

The date it became known 

The date of acceptance 

The date of entry into force and 

The date of application. 

Under Article 65(1), it is clear that entry into force is used in a different sense to date of application and comes before it. Therefore the date of entry into force must be 1 January, 1995 and the date of application must be 1 January, 1996. 

In Article 70, three dates are referred to, date of application (subsection 1), date of acceptance (subsection 4) and date the agreement became known (subsection 6). It is clear that the date TRIPS became known is different to the date of acceptance and the date of application and must of necessity predate them. 

Clonmel says the date TRIPS became known was the date the Dunkel Draft was published (20 December 1991). The draft could have been changed at any time but as a matter of fact, it became known in 1991 and some years later was ratified in that form. Clonmel submits there is nothing to be said for the selection of the date of the 15 December, 1993 which was the date the final version of TRIPS was agreed and which the Plaintiffs put forward as the appropriate date. 

On one view, it is possible that the date TRIPS became known was the date of the Dunkel Draft since Clonmel applied after that date for one of the compulsory licenses presumably in the knowledge that the law in relation to compulsory licenses would change. Also the Patents Act 1992 which did change the law was passed on 27 February, 1992 and presumably this also affected the decision to apply. On another view, the date the final version was agreed would be more logical as up to then anything could be changed. The date the Controller made the Order was the 3 July, 1995 which was not only after the Dunkel Draft and the approval of the final version but was also after the signing of the Treaty on the 15 April, 1994. Therefore in so far as Article 70(6) is concerned the Controller's order was made long after TRIPS became known and it is not necessary for me to decide whether the date it was made known was 20 December, 1991 or 15 December, 1993. 

The date of signing was 15 April, 1994 and the date of deposit of the instrument of ratification was 31 December, 1994. On one view, until the instrument was deposited, the process of acceptance was not complete. But on the other hand why mention the date of acceptance as distinct from the date of entry into force if they are separated by only one day. To have some relevance they must be dates separated by some time. Taking that rationale it seems to me that the date of first signing, 15 April, 1994 was the date of acceptance. 

The real question here is whether the Order made by the Controller can be equated to an authorisation for use permitting discrimination contrary to Article 27(1) by the Government. 

The Controller argues that the Order of the 2 June, 1995 cannot be regarded as having been granted by the Government. Section 63(3) of the Patents Act 1992 provides that he is independent in discharge of his functions conferred on him by the 1992 Act "or any other enactment" which must include the residual functions under the 1964 Act. 

I am afraid that I do not accept this argument. Under the Patents Act 1964, section 77(2) provides that the Controller should act under the general superintendence and direction of the Minister. In deciding this appeal under the transitional provisions of the 1992 Act, paragraph 13 of the First Schedule specifically says that applications pending at the commencement of the 1992 Act should be decided under the provisions of the 1964 Act. Therefore, it is the 1964 Act alone which is relevant. 

The Controller also submits that in Article 31 there is reference to both the government and the competent authority. Since the Controller is the competent authority, therefore he cannot be the Government. However, in Article 31, the Article was dealing with use by the Government under compulsory licences (inter alia) and was providing safeguards to be respected, among which were provisions for the competent authority 

(a) to review the continued existence of circumstances which led to such use, and 

(b) to have authority to refuse termination of authorisation if and when conditions which led to such authorisation are likely to recur. 

In such cases it is appropriate that a competent authority would be referred to as distinct from a government. It has not been proved that the Controller is or would be the competent authority referred to in Article 31. It seems to me that the purpose of Article 70(6) was to prevent a rush of grants of licences in breach of Article 27(1) by a Government after that Government knew there would be a provision in TRIPS to prevent such grants after it entered into force. "Government" obviously does not apply to someone over whom the Government have no control but it seems to me that if the Government have control over the person who granted the authorisation, such authorisation can be described as having been granted by the Government. 

In relation to Article 70(1) it does not appear to me to be necessary to decide whether "act" includes the grant of a licence or not. Article 70(6) is a derogation from Article 27(1). This derogation ceased to apply at the latest on the 31 December, 1993. There would be no point in having a derogation from Article 27(1) which had ceased before the date TRIPS was accepted, if no obligations arose until the date of application. According to Article 65(1), no member is obliged to apply TRIPS before the expiration of one year following the date of entry into force of the WTO Agreement. In order to give a sensible interpretation to Article 65(1) and Article 70(1) and (6), it seems to me that regardless of what the word "acts" means in Article 70 (1), it is subservient to the provisions of Article 70(6) and the controller being under the direct control of the Minister could not grant licences under Section 42 in breach of Article 27(1) after the date TRIPS became known. He granted them not only after the drafts were known (ie the Dunkel Draft and the final Act) but it was even after the date of signing which was the 15 April, 1995. Since he could not grant them after the draft became known, Art 65(1) is subservient and does not apply and Art 65(6) is irrelevant. Therefore, the answer to question 1 of the preliminary issue of law is "yes" and the second question does not arise. 

Since the Plaintiffs succeed on the interpretation of S 46(3) it is not necessary to deal with the further arguments raised by the Plaintiffs.