Home > IP Topics Index > The Policy and Legal Environment for Innovation > Compulsory Licensing: How to Gain Access to Patented Technology > Editor's Summary, Implications and Best Practices

Patented upstream technologies are sometimes blocking research by companies and public-sector institutions in developing countries. The Program for Appropriate Technology in Health (PATH), which is working to develop a malaria vaccine, had to spend a lot of time and money to obtain permission to use antigen MSP-1, an important candidate for the vaccine. While companies are undaunted by such serpentine procedures and high costs, the economics of malaria vaccines make investing in such cumbersome technology acquisitions, via licensing negotiations, difficult. Hence, if voluntary licensing negotiations are unsuccessful, then compulsory licensing may be the next option to consider.

A compulsory license is an authorization given by a national authority to a natural or legal person for the exploitation of the subject matter protected by a patent; the consent of the patent title holder is not necessary. Compulsory licenses may be required to import or produce a given product, or to use a patented technology for research. They are especially important when there are no close substitutes for a product or process and a research exception is not available or is too narrow. Compulsory licenses are granted in order to attain various public-policy objectives, such as: to address emergencies and public-health needs, to counteract anticompetitive business practices, or to permit the exploitation of a patent in cases of lack of working thereof.

After briefly considering humanitarian IP management, this chapter focuses on the usefulness of compulsory licensing to ensure that the research and development of drugs needed by people in developing countries is kept free from unnecessary entanglements in the global IP system. Compulsory licenses allow for the exploitation of patented subject matter without the consent of the patent title-holder. The right to use compulsory licenses was recognized in the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) by the WTO in 1994. In the U.S. such licenses have been employed for government uses and as part of settlements in antitrust cases. And several developing countries (such as Zimbabwe and Malaysia) have issued compulsory licenses to facilitate access to medicine or for government use.

Such licenses can also be sought by companies, non-governmental organizations, and research institutions. These may be needed when patents restrict the freedom to operate in a given research field. They require the prior negotiation of a voluntary license, except in the case of emergency, anti-competitive practices, and government use. It should be emphasized that universities often hold patents for research tools, which demonstrates very clearly why they should be encouraged to retain humanitarian-use rights in their licenses. This chapter provides a step-by-step guide to obtaining compulsory licenses, which those who are interested in obtaining should be sure to consult.

There are several ways to get around patented upstream technologies, but the compulsory license is especially powerful (but also presents extraordinary downsides). However, applicants need to be certain that they have the capacity to exploit the licenses and the financial ability to remunerate the patent holder or patent holders. Nonprofit research institutions may often find this particularly difficult because even with a compulsory license, commercial partners will need to be in place to produce and distribute products that were developed under compulsory licenses. This is one reason for further investments in capacity building and the establishment of strong institutional networks.

Key Implications and Best Practices

Given that IP management is heavily context specific, these Key Implications and Best Practices are intended as starting points to be adapted to specific needs and circumstances.

For Government Policymakers

• Pursuant to the TRIPS Agreement, compulsory licensing provisions might be statutory law. Compulsory licensing is one option for accessing patent rights controlling access to essential innovations in health and agriculture. But compulsory licensing entails drawbacks. For example, the technical information made available is limited to the patent disclosure, and does not include related trade secrets. Also, there will, most likely, be no technology transfer partnership with the patentee.

For Senior Management (university president, R&D manager, etc)

• Compulsory licensing involves a strict series of formal requirements. These include approaching the appropriate authority, establishing grounds for the applications, provisional attempts at good faith negotiations with the patentee, and finally the capacity to adequately remunerate the patentee.

For Scientists

• Compulsory licensing can be a lengthy and costly process, replete with delayed appeals. It would be better, in some circumstances, to identify appropriate alternative technologies in order to totally bypass the procedural inconveniences of compulsory licensing. As a scientist, you will likely be best positioned to identify such alternative technologies.

For Technology Transfer Officers

• Although compulsory licenses are a possible strategy for forcing access to essential technologies, they should only be used as a last resort. It is preferable, if at all possible, to negotiate equitable, voluntary licenses, ideally containing hybrid patent/trade secret provisions. This is how solid and sustainable technology transfer, R&D partnerships can be built.