KUALA LUMPUR (Feb 8): Malaysia dropped four spots to 23rd place in the sixth annual US Chamber International Intellectual Property (IP) Index following an episode of compulsory licensing relating to a medicine in 2017, which was seen as a negative development for its IP landscape.

Malaysia was among 50 countries ranked in the latest index by the chamber's Global Innovation Policy Centre, with 19.47 points out of 40 indicators benchmarking patent, trademark, copyright, and trade secrets protection for an overall score of 48.7%.

Malaysia ranked 19th in the 5th edition — which involved 45 countries and 35 indicators — with an overall score of 49.1% (17.19 out of 35). The country, according to the report, posed a mixed performance in the five new indicators.

"The issuing of a compulsory licence in 2017 has greatly damaged Malaysia's national IP environment and risks undermining much of the progress made since 2004, the last time the government issued a similar licence," said the report.

Particularly, Malaysia instigated a Rights of Government — which allows it to issue a compulsory licence — for 'sofosbuvir', a medicine to treat Hepatitis C developed by Gilead Sciences Inc. The Malaysian government last instigated a similar action in 2003 for anti-retroviral drugs to treat HIV infection.

Holders of a compulsory licence can produce a patented product without the consent of the patent owner. The health ministry had said in September 2017 that the decision was made after its efforts to be included in the UN-backed Medicine Patent Pool and price negotiations with the drug's patent holder were unsuccessful.

According to the report, cost is not a relevant justification or basis for compulsory licensing under the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement, a legal agreement between World Trade Organisation members which sets a minimum standard for multiple IP regulations.

"In addition, Article 31 and the Doha Declaration [on the TRIPS Agreement] suggest that compulsory licensing represents a 'measure of last resort' — intended primarily for public health and humanitarian emergencies such as pandemics, and to be used only after all other options for negotiating pricing and supply have been exhausted," the report argued.

Issuing of a compulsory licence as a basis for price negotiation with a "research-based manufacturer", it added, is "unlikely" to help advance Malaysia's ambitions to "transform its economy to focus on high-tech industries and innovation".

A statement by the Malaysian AIDS Council in September indicated a full hepatitis C treatment via direct acting antivirals such as sofosbuvir would cost a patient up to RM300,000. Other accounts have indicated that the health ministry wants to bring this down to RM1,000.

Also dragging Malaysia's latest ranking was the suspension of IP provisions of the defunct Trans-Pacific Partnership (TPP) treaty and suspension of the IP chapter in the ex-US version of the treaty — Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

On the other hand, the report said Malaysian policymakers are increasingly recognising IP as an economic asset, with multiple programmes held to further build and encourage the commercial use and dissemination of IP as an asset.

While Malaysia lacks a specific technology transfer law akin to the US Bayh-Dole framework, it said that technology transfer at universities and public research institutions is steered by internal guidelines often co-developed with the government and two government regulations namely the 1999 Government Circular and the 2009 Intellectual Property Policy.

The latter, said the report, vests ownership with the recipient of the relevant funding. "Under this policy, publicly funded innovators and creators are able to retain ownership of their creations.

"Some evidence suggests that patenting rates by Malaysian universities has increased since the introduction of the 2009 Intellectual Property Policy," it added.