Case Summary (G.R. No. 147192)
Patent Ownership and Licensing Request
Parke, Davis & Company owns a patent covering chloramphenicol, a chemical compound used as an antibiotic. Doctors’ Pharmaceutical requested a voluntary license to produce medicinal preparations containing chloramphenicol in the Philippines, citing a provision in Philippine law permitting license applications after three years from patent grant. Parke, Davis & Company demanded details about manufacturing plans, to which Doctors’ Pharmaceutical responded that it did not intend to manufacture chloramphenicol itself, but to use it in its own branded products. Due to reluctance from Parke, Davis & Company to grant the license voluntarily, Doctors’ Pharmaceutical filed a petition for a compulsory license.
Grounds for Compulsory License Petition
Doctors’ Pharmaceutical based its petition on four main claims: (1) the patented invention concerned medicine necessary for public health and safety; (2) petitioner’s unwillingness to grant a voluntary license resulted in undue restraint manifesting in a monopoly; (3) the public demand for chloramphenicol was not met adequately or at reasonable prices; and (4) the patented invention was not commercially worked in the Philippines. The respondent prayed for authority to manufacture, use, and sell medicinal preparations containing chloramphenicol under its own trademark.
Opposition by Patent Owner and Hearing Developments
Parke, Davis & Company opposed the petition, arguing that (1) compulsory licenses required the licensee to “work” the patent, which Doctors’ Pharmaceutical did not intend to do; (2) no proper license request to work the patent was made; (3) respondent lacked competence to manufacture chloramphenicol; (4) granting the license would serve only respondent's monetary interests and contradict public interest; and (5) the invention was not necessary for public health or safety. At the hearing, Doctors’ Pharmaceutical limited its grounds solely to the patented invention relating to medicine necessary for public health and safety.
Decision of the Director of Patents
After thorough consideration of oral and documentary evidence and memoranda, the Director of Patents granted the compulsory license, ordering Parke, Davis & Company to grant one under Letters Patent No. 50. The Director allowed the parties to propose terms for the licensing agreement and reserved the power to fix terms if no agreement was reached.
Issues on Appeal and Legal Framework
Parke, Davis & Company appealed, asserting eleven errors focused on whether the Director abused discretion in granting the compulsory license under Section 34(d) of Republic Act No. 165. The relevant law (Sections 34 to 36, Chapter VIII, RA 165) permits compulsory licenses to be granted after three years from patent grant under grounds including non-working of the patent (a), inadequate supply or unreasonable conditions (b)(c), and invention relating to food/medicine or necessary for public health or safety (d). Notably, these grounds are disjunctive, and any one suffices for granting a license.
The Three-Year Requirement and Applicability to Medicine Patents
Given that chloramphenicol is undisputedly a medicine and that more than three years had elapsed since the patent's grant (1950 to 1960), the statutory requirement for applying for a compulsory license was met. The Court upheld the Director’s finding that no error was made in recognizing this as a valid basis for granting the license.
Interpretation of “Necessary for Public Health and Safety”
The Court clarified that under Section 34(d), it is sufficient that the invention relates to medicine; it need not be strictly or indispensably “necessary” for public health and safety. The petitioner’s narrow interpretation of “necessary” as “indispensable” was rejected. The Court cited authorities explaining that necessity may include conveniences and lesser degrees of requirement. Expert testimony confirmed chloramphenicol’s role as an effective antibiotic important in treating serious diseases like gastroenteritis and shigella dysentery, prevalent public health concerns.
Requirement to “Work” the Patent and Licensee Competence
The Court held that the requirement to “work” a patent under Sections 34(a), (b), and (c) does not extend to Section 34(d) involving medicines or public health inventions. Therefore, the license applicant need not itself manufacture the patented substance to qualify for a compulsory license under this ground. Furthermore, the respondent demonstrated sufficient capacity and competence in pharmaceutical preparation, laboratory facilities, and quality testing to manufacture medicinal products containing chloramphenicol.
Patent Owner’s Working of the Invention and Monopoly Considerations
The Court ruled that the petitioner’s claim of exclusive rights for 17 years does not preclude compulsory licensing after three years, especially where misuse or monopoly risks exist. The law’s express purpose includes preventing monopolistic conditions by allowing others to supply the public adequately and reasonably, thus balancing patent rights with public interest.
Public Interest and Alleged Adverse Impacts
The patent owner’s argument that the license would harm local employment, technology, and existing supply was dismissed since the respondent intended to supplement supply by importing chlorampheni
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Parties and Background
- Petitioner, Parke, Davis & Company, is a foreign corporation incorporated under Michigan laws, USA, with its principal office in Detroit.
- Parke, Davis owns Letters Patent No. 50, granted by the Philippine Patent Office on February 9, 1950, covering a process for manufacturing antibiotics, specifically chloramphenicol.
- The patent includes ten claims: nine process claims and a product claim for chloramphenicol.
- Respondent, Doctors' Pharmaceuticals, Inc., is a Philippine domestic corporation with principal office in Caloocan City.
- In 1959, Doctors' Pharmaceuticals requested from petitioner a voluntary license to manufacture and sell medicines containing chloramphenicol under reasonable, mutually acceptable terms.
- Petitioner sought details on respondent's manufacturing plans; respondent clarified that it did not intend to manufacture chloramphenicol itself but to use it in its branded medicinal products.
- Respondent's request for voluntary license was based on a Philippine law provision allowing compulsory licensing after three years from patent grant.
Petition for Compulsory License
- Following the apparent refusal of petitioner to grant voluntary license, Doctors' Pharmaceuticals filed a petition on March 11, 1960, to the Director of Patents for a compulsory license under Letters Patent No. 50.
- Grounds cited for compulsory license included:
- The patented invention is a medicine necessary for public health and safety.
- Petitioner’s unwillingness to grant a voluntary license has resulted in undue restraint on production, creating a monopoly.
- Demand for chloramphenicol-containing medicine is unmet or inadequately satisfied at reasonable prices.
- The patented invention is not being worked commercially within the Philippines.
- Respondent prayed for authority to manufacture, use, and sell its own products containing chloramphenicol and to choose its own trademark.
Petitioner's Opposition
- Parke, Davis interposed a written opposition alleging:
- Compulsory licenses can only be granted to those intending to work the patent, whereas respondent intends only to import the drug.
- Respondent did not request a license to work the patent domestically.
- Respondent lacked competence to work, manufacture, or sell chloramphenicol.
- Granting license would serve respondent's monetary interests rather than public interest.
- The patented invention is not necessary for public health or safety.
Procedural History and Director of Patents’ Decision
- At hearing in November 1962, respondent abandoned some grounds, relying solely on the patented invention relating to medicine and its necessity for public health.
- Both parties presented oral and documentary evidence and submitted memoranda.
- On November 15, 1963, Director of Patents granted the compulsory license to respondent, ordering:
- The patentee (petitioner) to grant a license to the petitioner (respondent).
- Parties to submit a licensing agreement within 30 days or propose terms.
- If no agreement arises, the Director will fix just and reasonable terms and conditio