Background of Compulsory Background of Compulsory Licensing in North America Licensing in North America

M. ANDREA RYANIMMEDIATE PAST PRESIDENT, AIPLAASSISTANT GENERAL COUNSEL, PATENTSWYETH/U.S.A.

What is a Compulsory License?

“Compulsory licensing takes place when a government allows a third party to produce a patented product or use a patented process without the consent of the patent owner.” WHO and WTO Joint Report

Term does not appear in TRIPS Agreement TRIPS Article 31- “….use without authorization of the

right holder”

North American Perspective

Mexico - compulsory licenses can be granted

Canada- limited use of compulsory licenses

USA- no compulsory licenses

Mexico

Compulsory Licenses can be granted:

If granted patentee gets an additional 1 year to exploit after notice of license is given

no working for three years

- non-working is unjustified by patentee

-applicant is technically capable of making

Will not be granted if patentee was importing the patented product or a product obtained from a patented process (ie import from USA)

Canada

Significant statutory changes in October,1996

Liberal grant of compulsory licenses for pharmaceuticals was removed from law

What Remains in Canada ?

Three years from grant application for license may be made to Commissioner if there has been “abuse” of the exclusive rights

If satisfied that abuse of rights has been established, compulsory license can be granted by Commissioner

“Abuse of Rights in Canada”

Demand in Canada for patented product is not being adequately met on reasonable terms

Trade or industry in Canada is unfairly prejudiced by the lack of a license or a variety of other acts

Very few compulsory licenses have been granted since 1996

USA

1910 - reasonable compensation for U.S. Government use of patented inventions

1917 - US Government war effort to create a patent pool for essential aircraft patents

USA

1948 - US enacted 28 U.S.C. Sec. 1498 - no license is needed by the U.S. Government or contractors

In protecting competition in mergers, licensing may be required

28 U.S.C. 1498

Whenever an invention described in and covered by a patent of the U.S. is used or manufactured by or for the U.S. without license of the owner thereof…, the owner’s remedy shall be by action against the U.S…. for the recovery of his reasonable and entire compensation for such use and manufacture.

Carter-Wallace v. U.S.

Sometime cited 496 F.2d 535 (U.S. Ct. Cl. 1974) Meprobamate (tranquilizer) Compulsory license was not a litigated

issue Patent was found invalid

Compensation not Compulsory License

The US Government does not get a license

They use the patented invention without a license

They pay compensation in the form of lost profits or reasonable royalty

Source Material

Treating the Legal Side Effects of CIPRO: A Reevaluation of Compensation Rules For Government Taking of Patent Rights, Daniel R.Cahoy, 40 Am.Bus.L.J.(Forthcoming 2002) has a detail discussion of the US system of compensation