USG Position on Compulsory Licensing of Patents

[James Love <love@cptech.org>]

The document below was prepared by the US Government
(USG) as talking points for a presentation to a March
26, 1999 meeting in Geneva on compulsory licensing of
essential medicines.  (See 
http://www.cptech.org/march99-cl).  The USG position
was presented by Lois Boland from the United States
Patent and Trademark Office.  Ms. Boland indicated
during the meeting that the document, which had been
faxed by the US government to some Americans attending
the meeting, was cleared as official US policy on the
issue of compulsory licensing, although it had not been
formatted for public release.  However, Ms Boland did
indicate that it was the USG position on this issue,
and it was a public document. 

     Jamie Love <love@cptech.org>
     http://www.cptech.org


  <-------------begin USG position paper----------->
                                
                                
   USG Position on Compulsory Licensing of Patents
                                
                                
- The USG does not generally support the compulsory
licensing of Patent. Further, the USG regards
compulsory licensing as unnecessary.

- Compulsory licensing diminishes the exclusivity of
the patent grant and undermines the incentive for
innovation and investment that is a critical component
of technological progress.

- Licensing should more properly take place as a result
of arms-length bargaining among interested parties in
the patent market place. That market provides the best
environment in which to ensure that appropriate
licensing arrangements occur. Only where the market
fails, i.e., where there is a violation of competition
laws, is it appropriate for a government to resort to
compulsory licensing.

- A declared national emergency may also give rise to
the need for patent compulsory licensing.

- The USG takes the above position in many bilateral
discussions. The fact that this view is not reflected
in the TRIPs agreement, in the multilateral context, is
fully acknowledged. In our bilateral discussions, we
continue to regard the TRIPs agreement as an agreement
that establishes minimum standards for protection and,
in certain situations, we may, and often do, ask for
commitments that go beyond those found in the TRIPs
agreement.

- So, at an absolute minimum, if compulsory licensing
is to be permitted, all of the conditions imposed by
Article 31 of the TRIPs agreement must be respected.
The conditions were carefully crafted to permit
unauthorized use under exceptional circumstances, while
keeping the interests of the right holder in mind.

- Importantly, a compulsory licensing provision in a
given law that would affect certain categories of
inventions, such as pharmaceutical, would not be
consistent with paragraph (a) of Article 31 which
requires that "authorization... shall be considered on
its individual merits."

- Pharmaceutical patents should not be scapegoated and
regarded as obstacles to access to drugs. In many
cases, the drugs in issue, like most essential drugs,
are not under patent. In many other cases, access
problems are unrelated to patent protection; they are
caused by a lack of political will and/or an inadequate
health care infrastructure. In still other situations,
the access issue is solely one of price; this economic
issue may have solely economic solutions - the
manufacturer may reduce the price of a given drug or
funds may be available through governmental or
international organizations to defray the cost of a
given drug. Compulsory licensing of pharmaceutical
should not be regarded as the solution to access
concerns.

- In conclusion, most pharmaceutical, whether essential
drugs or not, have their origins in countries with
strong patent systems. Those strong patent systems have
certain features in common, one of which is minimal,if
any, compulsory licensing. Compulsory licensing, on a
scale that is called for by some, will undermine those
systems and will amount to "killing the goose that lays
the golden egg" of those drugs. Access issues can be
solved without destroying patent systems.
 
 <-------------end USG position paper----------->