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Frequently asked questions about compulsory licenses
Frequently asked questions about compulsory licenses
version 1.0a
January 20, 1999
1. What is a compulsory license.
Compulsory licenses are licensees that are granted by a
government to use patents, copyrighted works or other types of
intellectual property. The United States government has several
specific statutes for compulsory licensing covering a wide range
of topics, as well as more general authority for compulsory
licensing under antitrust and eminent domain laws. Other
countries have their own approaches to compulsory licensing.
Compulsory licenses are an essential government instrument
to intervene in the market and limit patent and other
intellectual property rights in order to correct market failures.
The authority to issue a compulsory license is important, even
when the right isn't exercised, because it may temper the
exercise of market power or the abuse of a patent.
2. Why do governments issue licenses to use intellectual
property?
Governments issue compulsory licenses to broaden access to
technologies and information in order to achieve a number of
public purposes. For example, National Public Radio (NPR)
recently was granted compulsory licenses for noncommercial
educational broadcasting use of the repertoires of the American
Society of Composers, Authors and Publishers (ASCAP) and
Broadcast Music, Inc. (BMI). The Clean Air Act provides for
compulsory licensing of patents related to air pollution.
Antitrust authorities seek compulsory licenses as remedies for
problems of monopoly or anticompetitive practices. The National
Institutes of Health is examining compulsory licenses in order to
facilitate broader dissemination of biotechnology "research
tools." Many countries have provisions in laws for compulsory
licensing if the patent owner refused to make the invention
available (failure to "work" the patent), for dependent patents,
or for various public interest reasons, such as to correct cases
where pharmaceuticals are "available to the public in
insufficient quantity or at abnormally high prices." (France).
Patents and other intellectual property rights are creations
of government policy. In writing about a German compulsory
license related to the development of interferon, Michael Kern
wrote: "One should not forget that patents represent a
interventionist instrument, ultimately for the sake of community
welfare. Thus intervention to restrict some of the effects of
patents may be required, when the community welfare is [no]
longer served."
3. What is the status of compulsory licenses under
International Law?
Nations currently have the right to issue compulsory
licenses on patents and copyrights. The Paris Convention for the
Protection of Industrial Property plainly states "each country of
the Union shall have the right to take legislative measures
providing for the grant of compulsory licenses to prevent the
abuses which might result from the exercise of the exclusive
rights conferred by the patent, for example, failure to work."
The World Trade Organization provisions on intellectual
property are contained in the agreement on trade related aspects
of intellectual property, known as TRIPS. The TRIPS provides for
compulsory licenses of patents in Article 31, but also provides a
number of restrictions on the use of compulsory licenses. The
North American Free Trade Agreement (NAFTA) has its own
provisions for compulsory licensing of patents, which are
somewhat more restrictive than those in the TRIPS. In earlier
drafts of the OECD's proposal for a Multinational Agreement on
Investments (MAI), there was language to limit compulsory
licensing of patents much more severely. Compulsory licenses
would only be used "to remedy an alleged violation of competition
laws." After broad opposition to the MAI, negotiations were
suspended.
4. What are the disputes over compulsory licensing?
The Pharmaceutical Research and Manufacturers Association
(PhRMA) and the International Federation of Pharmaceutical
Manufacturers Associations (IFPMA) are actively lobbying the
United States and the European Union trade officials to support
international treaties and policies that would ban or restrict
the use of compulsory licensing for medicines.
The United States uses considerable bilateral pressure to
stop developing countries from using compulsory licensing for
pharmaceuticals. For example, the US is actively pressuring
South Africa and Thailand against the use of compulsory licenses
of pharmaceuticals to treat AIDS or tropical diseases.
It is anticipated that disputes concerning compulsory
licensing will eventually come before the WTO in the dispute
resolution framework. Pubic health organizations want the WTO to
recognize the primacy of public health concerns in the resolution
of these disputes, and for the WTO to consult with the World
Health Organization (WHO). PhRMA and the IFPMA want these
disputes to be framed as commercial disputes, and they oppose the
involvement of the WHO.
5. What medical technologies will be affected by compulsory
licensing?
Each country will have its own priorities for compulsory
licensing. In the United States and Europe, there is much
interest in compulsory licensing for broad biotechnology patents,
research tools, dependent patents, and as a remedy for
unreasonable prices. In developing countries there is much
interest in the use of compulsory licensing to obtain lower
prices pharmacueticals for AIDS, tropical illnesses, various
vaccines and other essential medicines.
James Love, CPT
To learn a lot more about compulsory licenses, see:
http://www.cptech.org/ip/health/cl
The most recent version of this document is on the web at
http://www.cptech.org/ip/health/cl/faq.html
--
James Love, Consumer Project on Technology
P.O. Box 19367, Washington, DC 20036
202.387.8030; f 202.234.5176
http://www.cptech.org, mailto:love@cptech.org