PHA-Exch> what is a compulsory license?

[Claudio Schuftan]

From: Alicia Yamin ayamin at law.harvard.edu

   *From:* Ellen Shaffer [mailto:ershaffer at gmail.com]

http://www.cptech.org/ip/health/cl/faq.html

 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.  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. 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
pharmaceuticals for AIDS, tropical illnesses, various vaccines and other
essential medicines.


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