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[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 3175 Introduced in Senate (IS)]

109th CONGRESS
  2d Session
                                S. 3175

  To amend title 35, United States Code, with respect to establishing 
 procedures for granting authority to the Under Secretary for Commerce 
  for Intellectual Property and Director of the Patent and Trademark 
   Office to grant compulsory patent licenses for exporting patented 
     pharmaceutical products to certain countries consistent with 
  international commitments made by the United States, and for other 
                               purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                              May 25, 2006

   Mr. Leahy introduced the following bill; which was read twice and 
               referred to the Committee on the Judiciary

_______________________________________________________________________

                                 A BILL

 
  To amend title 35, United States Code, with respect to establishing 
 procedures for granting authority to the Under Secretary for Commerce 
  for Intellectual Property and Director of the Patent and Trademark 
   Office to grant compulsory patent licenses for exporting patented 
     pharmaceutical products to certain countries consistent with 
  international commitments made by the United States, and for other 
                               purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Life-Saving Medicines Export Act of 
2006''.

SEC. 2. PURPOSES AND FINDINGS.

    (a) Purpose.--The purpose of this Act is to promote public health 
by permitting the export of life-saving pharmaceutical products and 
other medicines manufactured in the United States by compulsory license 
to residents of participating countries with insufficient or no 
manufacturing capability in the pharmaceutical sector for the product 
in question consistent with the General Council Decision of the World 
Trade Organization.
    (b) Findings.--Congress finds the following:
            (1) The United States Trade Representative recently 
        announced that it ``welcomes'' the World Trade Organization 
        amendment to ``allow countries to override patent rights when 
        necessary to export life-saving drugs to developing countries 
        that face public health crises but cannot produce drugs for 
        themselves.''. United States Ambassador Portman called this ``a 
        landmark achievement that we hope will help developing 
        countries.''.
            (2) Compulsory licensing of patents is a ``fixture in 
        almost all patent systems'' in the world as noted in the 
        Berkeley Technology Law Journal in 2003. By the end of the 
        1950s, for example, an estimated 40,000 to 50,000 compulsory 
        licenses were issued regarding patents in the United States. 
        (Access to Patented Medicine in Developing Countries, F.M. 
        Scherer, www.cmhealth.org/docswg4; World Health Organization). 
        Indeed, the WHO paper notes that the ``United States has led 
        the world in issuing compulsory licenses to restore competition 
        when violations of the antitrust laws have been found, or in 
        the negotiated settlement of antitrust cases before full 
        adjudication has occurred.''
            (3) The vast majority of people living in developing 
        countries or least developed nations have limited or no access 
        to many medicines that are saving and extending lives of those 
        in other, more developed nations. Since sales of the patented, 
        brand-name versions of such medicines are minimal or non-
        existent in many impoverished regions of the world providing 
        generic versions of those medicines under the WTO General 
        Council Decision will have minimal impact on the sales of 
        brand-name, patented versions in such regions.
            (4) The World Health Organization has estimated that \1/3\ 
        of the world's population lacks regular access to essential 
        medicines, including antiretroviral drugs, and that a number of 
        essential medicines are under patent.
            (5) Medicines and vaccines are needed throughout the world 
        to combat newly arising public health threats such as the avian 
        flu. A United States National Intelligence Estimate in January 
        2000 notes that ``New and emerging infectious diseases will 
        pose a rising global health threat...''.
            (6) Millions of people with HIV/AIDS in developing 
        countries need antiretroviral drugs. More than 40,000,000 
        people worldwide have HIV and 95 percent of them live in 
        developing countries. Malaria, tuberculosis, and other 
        infectious diseases kill millions of people a year in 
        developing nations.
            (7) Comprehensive reports of the World Health Organization 
        of the United Nations, in 2004 and 2005 detail the urgent need 
        for pharmaceutical products in developing countries and in 
        least developed nations.
            (8) The World Trade Organization decisions of August 30, 
        2003, on access to generic medicines is now being considered by 
        member nations of the World Trade Organization for ratification 
        as a permanent amendment to the WTO Agreement on Trade Related 
        Aspects of Intellectual Property Rights.

SEC. 3. EXPORTATION OF PHARMACEUTICAL PRODUCTS FOR PUBLIC HEALTH 
              PURPOSES.

    (a) In General.--Chapter 29 of title 35, United States Code, is 
amended by inserting after section 297 the following:
``Sec. 298. Exportation of pharmaceutical products for public health 
              purposes
    ``(a) Definitions.--In this section:
            ``(1) Eligible country.--The term `eligible country' means 
        a country that--
                    ``(A)(i) is designated by the United Nations as a 
                least developed country; or
                    ``(ii) if not so designated--
                            ``(I) has certified to the General Council 
                        that the country seeks to participate in the 
                        compulsory licensing system under this section 
                        as authorized by the General Council Decision; 
                        or
                            ``(II) has certified through an official 
                        government finding if not a member of the World 
                        Trade Organization, that the country does not 
                        possess sufficient manufacturing capacities to 
                        produce the pharmaceutical product that such 
                        country seeks to import under this section;
                    ``(B) has provided notice to the Director 
                describing such lack of sufficient manufacturing 
                capacities; and
                    ``(C) has not terminated that country's 
                participation in such compulsory licensing system by 
                certifying to the General Council or to the Director 
                that it no longer desires to participate in such a 
                system.
            ``(2) General council.--The term `General Council' means 
        the General Council of the WTO established by paragraph (2) of 
        Article IV of the Agreement Establishing the World Trade 
        Organization entered into on April 15, 1994.
            ``(3) General council decision.--The term `General Council 
        Decision' means the decision of the General Council of 30 
        August 2003 on the Implementation of Paragraph 6 of the Doha 
        Declaration on the TRIPS Agreement and Public Health and the 
        WTO General Council Chairman's statement accompanying the 
        Decision (JOB(03)/177, WT/GC/M/82) (collectively known as the 
        `TRIPS/health solution').
            ``(4) Generic manufacturer.--The term `generic 
        manufacturer' means, with respect to a pharmaceutical product, 
        a manufacturer that does not hold the patent to such 
        pharmaceutical product or is not otherwise authorized by the 
        patent holder to make use of the invention.
            ``(5) Pharmaceutical product.--The term `pharmaceutical 
        product' means any patented product, or pharmaceutical product, 
        including components of that product, manufactured through a 
        patented process, of the pharmaceutical sector including any 
        drug, active ingredient of a drug, diagnostic, or vaccine 
        needed to prevent or treat potentially life threatening public 
        health problems, including those listed in Paragraph 6 of the 
        Doha Declaration on the TRIPS Agreement and Public Health.
            ``(6) TRIPS agreement.--The term `TRIPS Agreement' means 
        the Agreement on Trade-Related Aspects of Intellectual Property 
        Rights (described in section 101(d)(15) of the Uruguay Round 
        Agreements Act (19 U.S.C. 3501 note)).
            ``(7) World trade organization.--The term `World Trade 
        Organization' means the organization established pursuant to 
        the WTO Agreement.
            ``(8) WTO agreement.--The term `WTO Agreement' means the 
        Agreement Establishing The World Trade Organization entered 
        into on April 15, 1994.
            ``(9) WTO.--The term `WTO' has the meaning given that term 
        in section 2 of the Uruguay Round Agreements Act (19 U.S.C. 
        3501).
            ``(10) Uruguay round agreements.--The term `Uruguay Round 
        Agreements' has the meaning given such term in section 2(7) of 
        the Uruguay Round Agreements Act (19 U.S.C. 3501(7)).
    ``(b) Issuance of Compulsory License.--Notwithstanding any other 
provision of part II or this part, and subject to subsections (c) and 
(d), the Director shall issue a compulsory license to a generic 
manufacturer of a pharmaceutical product or a patented product under 
this section consistent with the Life-Saving Medicines Export Act of 
2006 for the purposes of--
            ``(1) manufacturing and exporting to an eligible country, 
        (including using nongovernmental agencies to assist in handling 
        and distribution to eligible countries) such pharmaceutical 
        products, including exporting for the purpose of foreign 
        testing and certification and other activities reasonable 
        related to such manufacturing and exporting; and
            ``(2) such other purposes under that Act.
    ``(c) Application for Compulsory License.--
            ``(1) In general.--
                    ``(A) Submission.--Except as provided under 
                subsection (g), a generic manufacturer that seeks to 
                manufacture and export a pharmaceutical product to an 
                eligible country (including through the use of a 
                nongovernmental organization) shall submit to the 
                Director an application as developed by the Director 
                for a compulsory license as described in this section.
                    ``(B) Assistance.--The Director shall establish an 
                office within the Patent and Trademark Office to 
                assist--
                            ``(i) applicants under this section, 
                        including aiding persons in identifying what 
                        patents cover which pharmaceutical products and 
                        in providing other advice and guidance to 
                        facilitate the filing of complete applications; 
                        and
                            ``(ii) eligible countries, nongovernmental 
                        organizations, or nations likely to become 
                        eligible countries, identify companies in the 
                        United States which could provide 
                        pharmaceutical products under this section to 
                        such countries.
            ``(2) Content of application.--The Director shall approve 
        an application submitted under paragraph (1) if such 
        application contains--
                    ``(A) the name of the pharmaceutical product to be 
                manufactured and exported under the license;
                    ``(B) an estimate of the quantities of the 
                pharmaceutical product to be manufactured and exported 
                under the license and a stipulation that the amount 
                manufactured and exported shall not exceed the amount 
                necessary to meet the needs of the eligible country;
                    ``(C) for each patented invention to which the 
                application relates--
                            ``(i) the name of the patent holder and the 
                        applicable patent number; or
                            ``(ii) a statement by the applicant on 
                        information and belief of the name of the 
                        patent holder and applicable patent number;
                    ``(D) the name of the eligible country to which the 
                pharmaceutical product will be exported and the name of 
                any nongovernmental organization which will assist in 
                the effort;
                    ``(E)(i) copies of the notifications of the 
                eligible countries that are member countries of the 
                WTO, as defined in the General Council Decision, made 
                to the Council for TRIPS regarding notifications set 
                forth under 2(a) of such Decision; and
                    ``(ii) for eligible countries that are not member 
                countries of the WTO, a copy of the information 
                required by the notification as set forth under 2(a) of 
                such Decision published on a public website and the 
                address of such website;
                    ``(F) a copy of a written request for a voluntary 
                license sent by registered mail to each patent holder, 
                which shall have occurred during a period of at least 
                60 days before the submission of the application to the 
                Director, and a brief description of any subsequent 
                negotiations;
                    ``(G) copies of--
                            ``(i) notifications required under the 
                        General Counsel Decision;
                            ``(ii) the name of the authorized 
                        designated official of the eligible country, or 
                        a nongovernmental organization duly authorized 
                        to assist in the distribution of pharmaceutical 
                        products--
                                    ``(I) from whom the generic 
                                manufacturer has received a specific 
                                request for a pharmaceutical product 
                                and is taking steps to prepare such 
                                product or related products; or
                                    ``(II) with whom the generic 
                                manufacturer has reached an agreement 
                                to manufacture and export the 
                                pharmaceutical product; or
                            ``(iii) a copy of a valid license, other 
                        authorization, or communication issued by a 
                        potential eligible country permitting import of 
                        the pharmaceutical product from the United 
                        States; and
                    ``(H) an agreement or understanding entered into by 
                the applicant to comply with the conditions described 
                under subsection (d) and with the provisions of the 
                General Council Decisions; and
                    ``(I) any additional information reasonably 
                required by the Director, including information 
                necessary to ensure the identification of the product 
                that is the subject of the application.
            ``(3) Combined license applications.--The Director may--
                    ``(A) establish procedures to permit a combined 
                license application from more than 1 eligible country;
                    ``(B) issue a multi-country license if appropriate;
                    ``(C) issue rules based on the requirements of this 
                section relating to separate country applicants, in 
                consultation with the National Advisory Board on 
                Implementation of the General Council Decision 
                established under section 5 of the Life-Saving 
                Medicines Export Act of 2006, except for modifications 
                made to accommodate applying the rules for 1 country to 
                applications filed by more than 1 eligible country in 
                the same filing; and
                    ``(D) waive any record keeping, application, or 
                related provision of this subsection to the extent 
                necessary to implement this paragraph for any combined 
                application from multiple countries.
            ``(4) Action by director.--
                    ``(A) In general.--Not later than 60 days after the 
                submission of an application, the Director shall 
                approve or deny that application.
                    ``(B) Conditional denial.--The Director may deny an 
                application and request additional information or 
                evidence to be submitted within 30 days after making 
                the request. If additional information or evidence is 
                submitted within the 30-day period, the Director shall 
                make a final approval or denial of the application 
                within 60 days after the date of submission of the 
                additional information or evidence.
            ``(5) Appeal of denial.--An applicant may seek review of a 
        final adverse decision of the Director, including any adverse 
        decision based on failure to comply with any provision of 
        paragraph (2) in the United States Court of Appeals for the 
        Federal Circuit. The judgement of such court shall be subject 
        to final review by the Supreme Court upon certiorari in the 
        manner prescribed in section 1254 of title 28. The United 
        States Court of Appeals for the Federal Circuit shall decide 
        all relevant questions of law, provide appropriate orders, 
        relief, or judgments, and shall hold unlawful and set aside any 
        determination of the Director that the court finds to be--
                    ``(A) arbitrary, capricious, an abuse of 
                discretion, inconsistent with this section, or 
                otherwise not in accordance with law;
                    ``(B) contrary to constitutional right, power, 
                privilege, or immunity;
                    ``(C) in excess of statutory jurisdiction, 
                authority, or limitations, or in violation of a 
                statutory right; or
                    ``(D) without observance of procedure required by 
                law.
    ``(d) Conditions of License.--Under rules issued by the Director, 
the following conditions shall apply to a compulsory license issued 
under this section:
            ``(1) The pharmaceutical product--
                    ``(A) shall be a generic version of a patented 
                product approved as safe and efficacious by the World 
                Health Organization of the United Nations or the United 
                States Food and Drug Administration; and
                    ``(B) shall be manufactured solely for export to 
                the eligible country listed in the application under 
                subsection (c); and
                    ``(C) shall not be exported to any other country 
                except for nation parties to a regional trade agreement 
                as set forth in paragraph 6(i) of the General Council 
                Decision.
            ``(2) The pharmaceutical product, or the label or packaging 
        of the pharmaceutical product, for export shall be--
                    ``(A) clearly identified as being produced under 
                the system set out in the General Council Decision; and
                    ``(B) distinguished from the pharmaceutical product 
                or its label or packaging manufactured by the patent 
                holder through labeling, shaping, sizing, marking, 
                special packaging, or other means or combinations of 
                means, which shall be consistent with paragraph 
                2(b)(ii) of the General Council Decision and include--
                            ``(i) a statement that such pharmaceutical 
                        product has been manufactured solely for export 
                        to the specific eligible country or to nation 
                        parties to a regional trade agreement as 
                        provided for in paragraphs 6(i) and 6(ii) of 
                        the General Council Decision and is not 
                        approved for marketing in the United States;
                            ``(ii) a statement indicating that the 
                        pharmaceutical product is subject to a 
                        compulsory license issued to the generic 
                        manufacturer; and
                            ``(iii) any other markings determined 
                        appropriate by the Director to distinguish such 
                        pharmaceutical product from the patented 
                        pharmaceutical product, which may include a 
                        different trademark name or distinctive color 
                        or shaping, so long as--
                                    ``(I) such distinction is feasible 
                                and does not have a significant impact 
                                on price and will not undermine the 
                                humanitarian purposes of the Life-
                                Saving Medicines Export Act of 2006; 
                                and
                                    ``(II) the Director may temporarily 
                                waive the requirements of the 
                                distinguishing marks under urgent 
                                circumstances for limited quantities of 
                                such pharmaceutical products.
            ``(3) The term of such compulsory license shall expire on 
        the date that is the earliest of--
                    ``(A) 7 years after the date of issuance of the 
                license;
                    ``(B) the date the importing country is no longer 
                an eligible country; or
                    ``(C) on a petition from the original patent 
                holder, on the date that the Director, in consultation 
                with the National Advisory Board on Implementation of 
                the General Council Decision established under section 
                5 of the Life-Saving Medicines Export Act of 2006, 
                determines that the circumstances that have led to the 
                granting of the license cease to exist and it appears 
                probable that such circumstances will not reoccur.
            ``(4) The licensee shall keep accurate records of all 
        quantities of products manufactured and distributed under its 
        license and shall make such records available upon request to 
        an independent person agreed to by the parties, or otherwise 
        approved by the Director, for the sole purpose of ensuring 
        whether the terms of the license have been met.
            ``(5) A generic manufacturer issued a license under this 
        section may notify the Director if the estimated quantity of 
        the pharmaceutical product set forth in the application and 
        subsection (c)(2)(B) will be insufficient to meet the projected 
        need during the remainder of the license period. The Director 
        shall adjust the estimated quantity to the quantity proposed by 
        the licensee unless compelling evidence demonstrates that the 
        proposed quantity is excessive.
    ``(e) Compensation to Patent Holder.--
            ``(1) In general.--The holder of a compulsory license under 
        this section shall pay to the patent holder a royalty in an 
        amount and by a date determined by the Director that shall not 
        be--
                    ``(A) earlier than the date of each shipment for 
                export of the pharmaceutical product under the 
                compulsory license; or
                    ``(B) later than 45 days after the date of each 
                shipment.
            ``(2) Amount of royalty.--In consultation with the 
        Secretary of Health and Human Services, the Director of the 
        National Institutes of Health, the Director of the United 
        States Agency for International Development, and the Director 
        of the Centers of Disease Control, the Director, when 
        determining a royalty amount under paragraph (1), shall 
        consider the following:
                    ``(A) The provisions of paragraph 3 of the General 
                Council Decision and the need for the licensee under 
                this section to make a reasonable return sufficient to 
                sustain a continued participation in humanitarian 
                objectives.
                    ``(B) The humanitarian and noncommercial reasons 
                for issuing a compulsory license under this section.
                    ``(C) The economic value to the importing country 
                of the use that has been authorized by the Director.
                    ``(D) The need for low-cost pharmaceutical products 
                by persons in eligible countries.
                    ``(E) Whether the importing country has a patent 
                applicable to the pharmaceutical product sought to be 
                imported under this section.
                    ``(F) The ordinary levels of profitability in the 
                United States, of commercial agreements involving 
                pharmaceutical products, and any relevant international 
                trends in relevant prices as reported by the United 
                Nations or other appropriate humanitarian organizations 
                or agencies for the supply of such products for 
                humanitarian purposes.
            ``(3) Royalty rate formulas.--
                    ``(A) In general.--
                            ``(i) Factors.--Except as provided in 
                        subparagraph (B), the amount of the royalty 
                        payable to any patentee under this subsection--
                                    ``(I) shall be based on 
                                considerations under paragraph (2); and
                                    ``(II) shall not exceed the amount 
                                determined by multiplying the 
                                commercial value of the pharmaceutical 
                                product to be exported under the supply 
                                agreement by 4 percent.
                            ``(ii) Multiple patentees.--If more than 1 
                        patentee is due a royalty for a pharmaceutical 
                        product under this section, the amount of the 
                        royalty payable for the pharmaceutical product 
                        shall be divided by the number of patentees.
                    ``(B) Alternative royalty rate formula.--
                            ``(i) In general.--
                                    ``(I) Establishment and use.--
                                Subject to subclause (II), the Director 
                                may establish and use an alternative 
                                royalty rate formula under this 
                                subparagraph instead of the royalty 
                                rate formula under subparagraph (A), 
                                if--
                                            ``(aa) the Director makes a 
                                        determination that the 
                                        alternative royalty rate 
                                        formula is more appropriate or 
                                        efficient to employ; and
                                            ``(bb) the alternative 
                                        royalty rate formula is based 
                                        on the methodology described 
                                        under clauses (ii) through (v).
                                    ``(II) Limitation.--If the royalty 
                                amount determined under the alternative 
                                royalty rate formula under subclause 
                                (I) exceeds the dollar amount 
                                determined by multiplying the 
                                commercial value of the pharmaceutical 
                                product to be exported under the supply 
                                agreement by 4 percent the royalty 
                                amount shall be set at such dollar 
                                amount.
                            ``(ii) Human development index countries.--
                        If the name of the country to which a 
                        pharmaceutical product is to be delivered under 
                        this section is on the Human Development Index 
                        maintained by the United Nations Development 
                        Program, the rate for calculation of the 
                        royalty to be paid to any patentee shall be 
                        determined by--
                                    ``(I) adding 1 to the total number 
                                of countries listed on such Index;
                                    ``(II) subtracting from the sum 
                                determined under subclause (I) the 
                                numerical rank on the Index of the 
                                country to which the pharmaceutical 
                                product is to be exported;
                                    ``(III) dividing the difference 
                                determined under subclause (II) by the 
                                total number of countries listed on the 
                                Index; and
                                    ``(IV) multiplying the quotient 
                                determined under subclause (III) by 
                                0.04.
                            ``(iii) Single and multiple patentees.--For 
                        a country described under clause (ii), the 
                        amount of the royalty payable to any patentee 
                        shall be determined--
                                    ``(I) if there is only 1 patentee, 
                                by multiplying the total monetary value 
                                of the agreement pertaining to the 
                                pharmaceutical product to be exported 
                                under this section by the royalty rate 
                                determined in accordance with clause 
                                (ii); and
                                    ``(II) if there is more than 1 
                                patentee, by dividing the amount 
                                determined under subclause (I) by the 
                                number of patentees.
                            ``(iv) Countries not on human development 
                        index.--If the name of the country to which a 
                        pharmaceutical product is to be delivered under 
                        this section is not on the Human Development 
                        Index maintained by the United Nations 
                        Development Program, the Director shall--
                                    ``(I) determine if relevant 
                                circumstances in that country are 
                                reasonably similar to another country 
                                on that Human Development Index;
                                    ``(II) if determining a similar 
                                country under subclause (I), use the 
                                procedures under clause (ii) to 
                                determine a royalty payment using the 
                                numerical rank of that other country; 
                                and
                                    ``(III) if determining a royalty 
                                rate under subclause (II), state the 
                                reasons for making the determination 
                                that the country to which the product 
                                is to be exported was reasonably 
                                similar to the country on such Index 
                                used in the calculation.
                            ``(v) Regional trade agreements.--If the 
                        Director knows during review of an application 
                        that the pharmaceutical products are to be 
                        delivered under this section to parties to a 
                        regional trade agreement where re-exportation 
                        is allowed under paragraph 6(i) and (ii) of the 
                        General Council Decision, the Director shall--
                                    ``(I) determine if relevant 
                                circumstances in those countries are 
                                reasonably similar to a country on the 
                                Human Development Index;
                                    ``(II) if determining a similar 
                                country under subclause (I), use the 
                                procedures under clause (ii) to 
                                determine a royalty payment based on 
                                the numerical rank of that other 
                                country; and
                                    ``(III) if determining a royalty 
                                rate under subclause (III), shall state 
                                the reasons for making the 
                                determination that the countries to 
                                which the products are to be re-
                                exported under paragraph 6(i) and (ii) 
                                of such Decision were reasonably 
                                similar to the country selected on such 
                                Index.
            ``(4) Notice of shipments.--Before each shipment of any 
        product manufactured under this section, the manufacturer 
        shall, within 15 days before such product is exported, provide 
        notice through registered mail specifying the approximate 
        quantity to be exported to--
                    ``(A) the patentee;
                    ``(B) the purchaser of the product; and
                    ``(C) the Director.
    ``(f) Renewal of Compulsory License.--
            ``(1) In general.--A generic manufacturer that is the 
        holder of a compulsory license under this section may submit to 
        the Director an application to renew the compulsory license.
            ``(2) Content of renewal application.--An application under 
        paragraph (1) shall contain--
                    ``(A) an assurance that the quantities of the 
                pharmaceutical product authorized to be exported under 
                the renewal compulsory license will not be exported 
                before such original compulsory license ceases to be 
                valid;
                    ``(B) an assurance that the applicant has complied 
                with the terms, conditions, and royalty payment 
                required under this section; and
                    ``(C) any other information that the Director may 
                reasonably require.
            ``(3) Timing of renewal.--An application for renewal shall 
        be submitted to the Director not later than 45 days before the 
        expiration date of the compulsory license.
            ``(4) Term of renewal.--The term of a renewed compulsory 
        license shall not exceed the term of the original compulsory 
        license.
            ``(5) Limitation.--A compulsory license may not be renewed 
        more than once.
    ``(g) Effect of Section.--To the extent authorized in Article 31(b) 
of the TRIPS Agreement, nothing in this section shall be construed as 
requiring an effort to obtain a voluntary license in the event of--
            ``(1) a national emergency or other circumstances of 
        extreme urgency in the eligible country; or
            ``(2) a public noncommercial governmental use.
    ``(h) Emergencies and Circumstances of Extreme Urgency.--
            ``(1) Expedited approval.--
                    ``(A) In general.--The Director may provide 
                approval on an expedited basis for a limited period of 
                time to grant a compulsory license regarding a 
                pharmaceutical product to a generic manufacturer to 
                address a national emergency or other circumstances of 
                extreme urgency under such expedited procedures as the 
                Director determines appropriate.
                    ``(B) Procedures.--Procedures under this paragraph 
                may include--
                            ``(i) waiving any requirement to seek a 
                        voluntary license from the patent holder; and
                            ``(ii) delaying the determination of 
                        compensation until after an approval is made.
            ``(2) Waiver.--In carrying out expedited approvals under 
        this subsection, the Director may temporarily waive any 
        provision of this section.
    ``(i) Notification to WTO.--The Director shall notify the WTO of 
the issuance, termination, or renewal of a compulsory license under 
this section and of the name and address of the licensee, the product 
for which the license has been granted, the quantities for which it has 
been granted, and the countries to which the product is to be 
supplied.''.
    (b) Establishment of Procedures.--
            (1) In general.--The Under Secretary of Commerce for 
        Intellectual Property and Director of the United States Patent 
        and Trademark Office (referred to in this section as the 
        ``Director'') shall establish procedures for implementing this 
        Act and the amendments made by this Act.
            (2) Report.--The Director shall annually submit to the 
        Committee on the Judiciary of the Senate and the Committee on 
        the Judiciary of the House of Representatives a report that 
        describes the activities related to the implementation of this 
        Act and the amendments made by this Act.
            (3) Regulations.--The Director may issue such regulations 
        as are necessary and appropriate to carry out this Act and the 
        amendments made by this Act.
    (c) Technical and Conforming Amendment.--The table of sections for 
chapter 29 of title 35, United States Code, is amended by adding after 
the item relating to section 297 the following:

``298. Exportation of pharmaceutical products for public health 
                            purposes.''.

SEC. 4. NONINFRINGEMENT OF PATENT.

    Section 271 of title 35, United States Code, is amended--
            (1) by redesignating subsections (h) and (i) as subsections 
        (i) and (j), respectively; and
            (2) by inserting after subsection (g) the following:
    ``(h)(1) It shall not be an act of infringement to manufacture 
within the United States or for export outside the United States any 
patented invention relating to a pharmaceutical product (as defined 
under section 298) by any person that--
            ``(A) is issued a compulsory license to manufacture and 
        sell that drug under section 298; and
            ``(B) manufactures and exports that drug in compliance with 
        all conditions of that license.
    ``(2) Subsection (d) (4) or (5) shall not apply to any patent 
affected by a license described under paragraph (1) of this 
subsection.''.

SEC. 5. NATIONAL ADVISORY BOARD ON IMPLEMENTATION OF THE GENERAL 
              COUNCIL DECISION.

    (a) Definitions.--In this section:
            (1) Board.--The term ``Board'' means the National Advisory 
        Board on Implementation of the General Council Decision 
        established under this section.
            (2) Director.--The term ``Director'' means the Under 
        Secretary of Commerce for Intellectual Property and Director of 
        the United States Patent and Trademark Office.
            (3) Eligible country.--The term ``eligible country'' means 
        a country that--
                    (A)(i) is designated by the United Nations as a 
                least developed country; or
                    (ii) if not so designated, does not possess 
                sufficient manufacturing capacities to produce the 
                pharmaceutical product that such country seeks to 
                import under section 298 of title 35, United States 
                Code (as added by this Act); and
                    (B) has provided notice to the Director describing 
                such lack of sufficient manufacturing capacities.
            (4) General council.--The term ``General Council'' means 
        the General Council of the WTO established by paragraph (2) of 
        Article IV of the Agreement Establishing the World Trade 
        Organization entered into on April 15, 1994.
            (5) General council decision.--The term ``General Council 
        Decision'' means the decision of the General Council of 30 
        August 2003 on the Implementation of Paragraph 6 of the Doha 
        Declaration on the TRIPS Agreement and Public Health and the 
        WTO General Council Chairman's statement accompanying the 
        Decision (JOB(03)/177, WT/GC/M/82) (collectively known as the 
        ``TRIPS/health solution'').
            (6) Generic manufacturer.--The term ``generic 
        manufacturer'' means, with respect to a pharmaceutical product, 
        a manufacturer that does not hold the patent to such 
        pharmaceutical product or is not otherwise authorized by the 
        patent holder to make use of the invention.
            (7) Pharmaceutical product.--The term ``pharmaceutical 
        product'' means any patented pharmaceutical product, or 
        pharmaceutical product manufactured through a patented process, 
        including any drug, active ingredient of a drug, diagnostic, or 
        vaccine needed to prevent or treat public health problems.
            (8) TRIPS agreement.--The term ``TRIPS Agreement'' means 
        the Agreement on Trade-Related Aspects of Intellectual Property 
        Rights (described in section 101(d)(15) of the Uruguay Round 
        Agreements Act (19 U.S.C. 3501 note)).
            (9) World trade organization.--The term ``World Trade 
        Organization'' means the organization established pursuant to 
        the WTO Agreement.
            (10) WTO agreement.--The term ``WTO Agreement'' means the 
        Agreement Establishing The World Trade Organization entered 
        into on April 15, 1994.
            (11) WTO.--The term ``WTO'' has the meaning given that term 
        in section 2 of the Uruguay Round Agreements Act (19 U.S.C. 
        3501).
            (12) Uruguay round agreements.--The term ``Uruguay Round 
        Agreements'' has the meaning given such term in section 2(7) of 
        the Uruguay Round Agreements Act (19 U.S.C. 3501(7)).
    (b) Establishment.--The Director shall establish the National 
Advisory Board on Implementation of the General Council Decision in 
accordance with the Federal Advisory Committee Act (5 U.S.C. App.) to 
provide advice and guidance regarding the implementation and 
administration of the compulsory licensing program established under 
section 298 of title 35, United States Code (as added by this Act), 
including royalty amounts to be determined under that section.
    (c) Composition of the Board.--The Board shall be composed of 10 
members, of which--
            (1) 1 shall be an individual who is an academic expert on 
        the subject of pharmaceutical matters and patent law;
            (2) 2 shall be an individual with expertise relating to the 
        WTO, the TRIPS/health solution, and the General Council 
        Decision;
            (3) 2 shall be an individual with expertise relating to the 
        needs of persons living in least-developed and developing 
        nations with respect to access to low-cost patented 
        pharmaceutical products;
            (4) 2 shall be individuals who represent international 
        organizations, such as the United Nations, the World Bank, 
        international nongovernmental organizations, and religious 
        faiths, and who have expert knowledge regarding the General 
        Council Decision and the issues raised by that decision;
            (5) 1 shall be a physician with experience in treating 
        persons with HIV/AIDS, malaria, tuberculosis, or other 
        infectious diseases;
            (6) 1 shall be an individual representing major 
        pharmaceutical manufacturers in the United States; and
            (7) 1 shall be an individual representing major generic 
        manufacturers of pharmaceutical products in the United States.
    (d) Appointments.--Not later than 120 days after the date of 
enactment of this Act, the Director, in consultation with the Director 
of the National Institutes of Health (or a designee), the Director of 
the United States Agency for International Development (or a designee), 
and the Director of the Centers for Disease Control (or a designee) 
shall appoint--
            (1) the members of the Board described under subsection 
        (c)(1), (5), (6), and (7)--
                    (A) from nominations received from a request for 
                applications published in the Federal Register; and
                    (B) after engaging in other efforts to make 
                institutions of higher education within the United 
                States, international organizations, and groups 
                representing the medical profession aware of the 
                solicitation for nominations;
            (2) 1 member of the Board described under subsection 
        (c)(2), from recommendations of the Majority Leader of the 
        Senate;
            (3) 1 member of the Board described under subsection 
        (c)(2), from recommendations of the Minority Leader of the 
        Senate;
            (4) 1 member of the Board described under subsection (c)(3) 
        from recommendations of the Speaker of the House of 
        Representatives;
            (5) 1 member of the Board described under subsection (c)(3) 
        from recommendations of the Minority Leader of the House of 
        Representatives; and
            (6) 2 members of the Board described under subsection 
        (c)(4) from recommendations of the Secretary of State in 
        consultation with the United States Ambassador to the United 
        Nations.
    (e) Term.--A member of the Board shall serve for a term of 4 years, 
except that the Director shall appoint the original members of the 
Board for staggered terms of not more than 4 years. A member may not 
serve a consecutive term unless such member served an original term 
that was less than 4 years.
    (f) Meetings.--The Director shall convene--
            (1) a meeting of the Board not later than 60 days after the 
        appointment of its members;
            (2) subsequent meetings on a periodic basis; and
            (3) at least 2 meetings a year during the first 4 years 
        after the date of enactment of this Act.
    (g) Compensation and Expenses.--A member of the Board shall serve 
without compensation. While away from their homes or regular places of 
business on the business of the Board, members of the Board may be 
allowed travel expenses, including per diem in lieu of subsistence, as 
is authorized under section 5703 of title 5, United States Code, for 
persons employed intermittently in the Government service.
    (h) Chairperson.--The Board shall select a chairperson for the 
Board.
    (i) Quorum.--A majority of the members of the Board shall 
constitute a quorum for the purpose of conducting business.
    (j) Decisive Votes.--Two-thirds of the votes cast at a meeting of 
the Board at which a quorum is present shall be decisive of any motion.
    (k) Other Terms and Conditions.--The Director shall authorize the 
Board to hire a staff director and shall detail staff of the Patent and 
Trademark Office or allow for the hiring of other staff and may pay 
necessary expenses incurred by the Board in carrying out this section. 
The Director shall provide technical assistance, work space, 
facilities, and other amenities to facilitate the meetings and 
operations of the Board. The Director, or designated staff, may attend 
any such meetings and provide advice and guidance.
    (l) Responsibilities of Board.--
            (1) In general.--The Board shall provide recommendations to 
        the Director on the implementation of section 298 of title 35, 
        United States Code (as added by this Act), including the 
        appropriate royalty rates for compensating patent holders under 
        that section.
            (2) Technical advisory panels.--The Board may convene 
        technical advisory panels to provide scientific, legal, 
        international, economic, and other information to the Board.
    (m) Evaluation and Reports.--
            (1) In general.--The Board shall evaluate the 
        implementation and administration of section 298 of title 35, 
        United States Code (as added by this Act), and shall provide 
        periodic and special reports to the Director, the Secretary of 
        Health and Human Services, the National Institutes of Health, 
        the Director of the Centers for Disease Control, and to the 
        Committee on the Judiciary of the Senate and the Committee on 
        the Judiciary of the House of Representatives.
            (2) Duties.--If the Director uses the compensation method 
        under section 298(e)(3)(A) of title 35, United States Code (as 
        added by this Act), the Board shall--
                    (A) not later than 160 days after the date of 
                enactment of this Act, begin to gather information 
                regarding proposals for the compensation of patent 
                holders and shall carefully examine various 
                compensation options;
                    (B) not later than 240 days after the date of 
                enactment of this Act, submit preliminary 
                recommendations to the entities and officers described 
                under paragraph (1);
                    (C) advise the Director on various matters raised 
                by the Director;
                    (D) submit a report to the Director, the Committee 
                on the Judiciary of the Senate and the Committee on the 
                Judiciary of the House of Representatives at least once 
                each year on--
                            (i) recommendations for improving 
                        procedures or the administration of the program 
                        established under that section; and
                            (ii) other factual or policy matters which 
                        may provide guidance or assistance to those 
                        Committees; and
                    (E) submit a report to the Director and the 
                Committee on the Judiciary of the Senate and the 
                Committee on the Judiciary of the House of 
                Representatives on--
                            (i) the advantages and disadvantages which 
                        might result from allowing nongovernmental 
                        organizations to be able to apply to obtain a 
                        compulsory license under procedures similar to 
                        those set forth in that section for such 
                        countries where the national government 
                        declines to apply for such a license, including 
                        an analysis of whether World Trade Organization 
                        understandings would permit such an approach 
                        and how such an approach might be implemented; 
                        and
                            (ii) whether this Act provides sufficient 
                        economic incentives to generic companies for 
                        the research and development of new generic 
                        products.
    (n) Petitions.--The Board shall establish procedures under which 
persons may petition the Board for the purpose of evaluating various 
issues related to the implementation and administration of section 298 
of title 35, United States Code (as added by this Act).
    (o) Confidentiality.--Any confidential business information 
obtained by the Board in carrying out this section shall not be 
released to the public.
    (p) Appropriations.--
            (1) Amounts of appropriations.--There are appropriated out 
        of any money in the Treasury not otherwise appropriated to the 
        United States Patent and Trademark Office for purposes of 
        carrying out paragraph (2)--
                    (A) $1,500,000 for the fiscal year ending September 
                30, 2007;
                    (B) $1,500,000 for the fiscal year ending September 
                30, 2008;
                    (C) $1,300,000 for the fiscal year ending September 
                30, 2009;
                    (D) $1,100,000 for the fiscal year ending September 
                30, 2010; and
                    (E) $900,000 for the fiscal year ending September 
                30, 2011.
            (2) Use of appropriations.--Amounts appropriated under 
        paragraph (1) shall be used for the expenses and activities of 
        the Board under this section, except no more than $200,000 of 
        such amounts in each fiscal year may be used for the expenses 
        and activities of the Office established under section 
        298(c)(B) of title 35, United States Code (as added by this 
        Act). Such amounts not obligated in any fiscal year may be 
        carried over into subsequent fiscal years, except that any 
        amounts not obligated by September 30, 2011, shall be provided 
        to the Secretary of the Treasury to be returned to the United 
        States Treasury.
    (q) Termination.--The Board shall terminate on September 30, 2011.
                                 <all>
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