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Background of Compulsory Licensing in North America

Background of Compulsory Licensing in North America . M. ANDREA RYAN IMMEDIATE PAST PRESIDENT, AIPLA ASSISTANT GENERAL COUNSEL, PATENTS WYETH/U.S.A. What is a Compulsory License?.

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Background of Compulsory Licensing in North America

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  1. Background of Compulsory Licensing in North America M. ANDREA RYAN IMMEDIATE PAST PRESIDENT, AIPLA ASSISTANT GENERAL COUNSEL, PATENTS WYETH/U.S.A.

  2. 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”

  3. North American Perspective • Mexico - compulsory licenses can be granted • Canada- limited use of compulsory licenses • USA- no compulsory licenses

  4. 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)

  5. Canada • Significant statutory changes in October,1996 • Liberal grant of compulsory licenses for pharmaceuticals was removed from law

  6. 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

  7. “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

  8. 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

  9. 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

  10. 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.

  11. 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

  12. 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

  13. 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

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