HR 2927, Rep. Sherrod Brown's bill on compulsory licensing

[James Love <love@cptech.org>]

Here is the text of Representative Sherrod Brown's bill on compulsory
licensing of health care patents.  

Jamie

http://thomas.loc.gov/cgi-bin/query/z?c106:H.R.2927:

HR 2927 IH 

                      106th CONGRESS
                        1st Session

                         H. R. 2927

To amend title 35, United States Code, to provide for compulsory
licensing of certain patented inventions relating to health. 

        IN THE HOUSE OF REPRESENTATIVES

                                            September 23, 1999

  Mr. BROWN of Ohio (for himself, Mr. BERRY, Mr. STARK, Mr. ALLEN, Ms.
SCHAKOWSKY, Mr. SANDERS, Mr. KUCINICH, Mr. STRICKLAND, Mr. BARRETT of
Wisconsin, and Mr. WYNN) introduced the following bill; which was
referred to the Committee on the Judiciary, and in addition to the
Committee on Commerce, for a period to be subsequently determined by the
Speaker, in each case for consideration of such provisions as fall
within the jurisdiction of the committee concerned 



                        A BILL

To amend title 35, United States Code, to provide for compulsory
licensing of certain patented inventions relating to health. 

     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 `Affordable Prescription Drugs Act'.

SEC. 2. COMPULSORY LICENSING OF CERTAIN PATENTED MEDICAL INVENTIONS.

     (a) IN GENERAL- Chapter 14 of title 35, United States Code, is
amended by adding at the end the following:

`Sec. 158. Compulsory licensing

     `(a) COMPULSORY LICENSING OF CERTAIN PATENTED MEDICAL INVENTIONS-
In the case of any subject invention relating to health in which a
patent holder, contractor, exclusive licensee, or assignee has 
acquired title under this title, the Secretary of Health and Human
Services shall have the right to establish other use of the subject
matter of the patent without authorization of the right holder if the 
Secretary makes the determination described in subsection (b).

     `(b) DETERMINATION- The determination of the Secretary of Health
and Human Services referred to in subsection (a) is a determination
that--

         `(1) the patent holder, contractor, licensee, or assignee
referred to in subsection (a) has not taken, or is not expected to take
within a reasonable time, effective steps to achieve practical 
application of the subject invention in a field of use;

         `(2) such compulsory license is necessary to alleviate health
or safety needs which are not adequately satisfied by the patent holder,
contractor, licensee, or assignee; or

         `(3) the patented material is priced higher than may be
reasonably expected based on criteria developed by the Secretary of
Commerce.

     `(c) FACTORS IN AUTHORIZING OTHER USE- In exercising the right
under subsection (a) to authorize other use of the subject matter of a
patent, the following shall apply:

         `(1) Authorization of such use shall be considered on its
individual merits.

         `(2) Such use may only be permitted if, prior to such use, the
proposed user has made efforts to obtain authorization from the right
holder on reasonable commercial terms and conditions and that such 
efforts have not been successful within a reasonable period of time. 
This requirement may be waived in the case of a national emergency or 
other circumstances of extreme urgency or in cases of public
noncommercial use. In situations of national emergency or other
circumstances of extreme urgency, the right holder shall,
nevertheless,   
be notified as soon as reasonably practicable. In the case of public 
noncommercial use, where the Government or (if applicable) a contractor 
of the Government, without making a patent search, knows or has 
demonstrable grounds to know that a valid patent is or will be used 
by or for the Government, the right holder shall be informed promptly.

         `(3) Such use shall be nonexclusive.

         `(4) Such use shall be nonassignable, except with that part of
the enterprise or goodwill which enjoys such use.

         `(5) Authorization for such use shall be liable, subject to
adequate protection of the legitimate interests of the persons so
authorized, to be terminated if and when the circumstances which led 
to it cease to exist and are unlikely to recur. The competent authority 
shall have the authority to review, upon appropriate request, the 
ontinued existence of such circumstances.

         `(6) The right holder shall be paid adequate remuneration in
the circumstances of each case, taking into account the economic value
of the authorization.

         `(7) The legal validity of any decision relating to the
authorization of such use shall be subject to judicial review or other
independent review by a distinct Federal authority.

         `(8) Any decision relating to the remuneration provided in
respect of such use shall be subject to judicial review or other
independent review by a distinct Federal authority.

         `(9) The condition set forth in paragraph (2) is not applicable
where such use is permitted to remedy a practice determined after
judicial or administrative process to be anticompetitive. The need to
correct anticompetitive practices may be taken into account in
determining the amount of remuneration in such cases. The competent
authorities shall have the authority to refuse termination of
authorization if and when the conditions which led to such authorization
are likely to recur.

         `(10) Where such use is authorized to permit the exploitation
of a patent (`the 2nd patent') which cannot be exploited without
infringing another patent (`the 1st patent'), the  following additional
conditions shall apply:

              `(A) The invention claimed in the 2nd patent shall involve
an important technical advance of considerable economic significance in
relation to the invention claimed in the 1st patent.

              `(B) The owner of the 1st patent shall be entitled to a
cross-license on reasonable terms to use the invention claimed in the
2nd patent.

              `(C) The use authorized in respect of the 1st patent shall
be nonassignable except with the assignment of the 2nd patent.

     `(d) CONSISTENCY WITH TRIPS- Regulations adopted under subsection
(a) shall be consistent with provisions of the Agreement on
Trade-Related Aspects of Intellectual Property Rights referred to in
section 101(d)(15) of the Uruguay Round Agreements Act.'.

     (b) CONFORMING AMENDMENT- the table of contents for chapter 14 of
title 35, United States Code, is amended by adding at the end the
following new item:

         `158. Compulsory licensing.'.

SEC. 3. REPORT ON PHARMACEUTICAL COSTS AND SALES.

     (a) REPORT REQUIREMENT- Any person engaged in the manufacture and
sale of any drug approved under section 505 or 512 of the Federal Food,
Drug, and Cosmetic Act (21 U.S.C. 355, 360b) for which a patent is 
still in effect shall report to the Congress annually an audit of all 
financial information relevant to the pricing of that drug nationally 
and internationally, including the costs of research and development, 
sufficient to assess the reasonableness of that pricing, in accordance 
with specifications developed by the Secretary of Commerce in 
consultation with the Commissioner of Food and Drugs.

     (b) DISQUALIFICATION FROM PARTICIPATION IN FEDERAL PROGRAMS AS
PENALTY FOR NONCOMPLIANCE- In the case of a person who the Secretary of
Commerce determines has failed to submit a report required under
subsection (a) on a timely basis, the person shall be ineligible to
receive payment from the Federal Government or under any Federal program 
(including under the medicare and medicaid programs) for any
prescription 
drug or biologic it manufactures or sells until the date the Secretary 
determines that such failure has ceased.

--------------------
James Love, Consumer Project on Technology
love@cptech.org, http://www.cptech.org
P.O. Box 19367, Washington, DC 20036
v. 202.387.8030, f. 202.234.5176