Non-Voluntary Licensing of Patented Inventions : Historical Perspective, Legal Framework under TRIPS, and an Overview of the Practice in Canada and the United States of America
UNCTAD-ICTSD Project on IPRs and Sustainable Development Series • Issue Paper 5
The present paper dealing with Non-voluntary Licensing of Patented Inventions: Historical Perspective, Legal Framework under TRIPS, and an Overview of the Practice in Canada and the United States of America is one contribution of the joint UNCTAD-ICTSD Project on IPRs and Sustainable Development to the ongoing debate on the impact and relevance of intellectual property to development. It is divided into three broad parts. The first part clarifies some key terms and provides an historical overview of the use of non-voluntary licensing as a means to address the local non-working of patented inventions. It also discusses the rules on non-voluntary licensing under the TRIPS Agreement and the Doha Declaration on TRIPS and Public Health. Both instruments grant WTO Members considerable discretion with respect to the grounds on which nonvoluntary licenses may be issued. However, they do not provide a viable solution for those countries that, due to a lack of domestic manufacturing capacities in the pharmaceutical sector, cannot make effective use of such options. In addition, there is considerable controversy over the continued legitimacy of local working requirements under the TRIPS Agreement.
The second part of the study sheds some light on the Canadian and the US experience concerning the use of non-voluntary licenses. Even though the legal situation in those countries differed considerably in this respect, both Canada and the US had extensive recourse to compulsory licenses. Canada pursued this strategy almost exclusively in the area of pharmaceuticals and foods, as well as for the failure to work a patent locally, and thus established a generic medicine industry resulting in low consumer drug prices. The US, on the other hand, has made far less use of non-voluntary licensing on public interest grounds, but has always relied heavily on this instrument for the facilitation of non-commercial government uses, in particular with respect to national defence.
Finally, the third part of the study draws some general conclusions and recommendations as to the development implications of non-voluntary licensing. The authors caution against excessive recourse to this instrument for legal, economic and political reasons. In particular, ill-considered resort to non-voluntary licensing could discourage technology transfer and foreign investment by making other economic environments more attractive to firms in technology-exporting countries. The authors therefore come to the conclusion that on balance, policymakers should view nonvoluntary licensing of patented inventions as but one item in an arsenal of tools that may be used to promote national systems of innovation.
Intellectual property rights (IPRs) have never been more economically and politically important or controversial than they are today. Patents, copyrights, trademarks, industrial designs, integrated circuits and geographical indications are frequently mentioned in discussions and debates on such diverse topics as public health, food security, education, trade, industrial policy, traditional knowledge, biodiversity, biotechnology, the Internet, the entertainment and media industries. In a knowledge-based economy, there is no doubt that an understanding of IPRs is indispensable to informed policy making in all areas of human development.
Intellectual Property was until recently the domain of specialists and producers of intellectual property rights. The TRIPS Agreement concluded during the Uruguay Round negotiations has signalled a major shift in this regard. The incorporation of intellectual property rights into the multilateral trading system and its relationship with a wide area of key public policy issues has elicited great concern over its pervasive role in people’s lives and in society in general.
Developing country members of the World Trade Organization (WTO) no longer have the policy options and flexibilities developed countries had in using IPRs to support their national development. But, TRIPS is not the end of the story. Significant new developments are taking place at the international, regional and bilateral level that build on and strengthen the minimum TRIPS standards through the progressive harmonisation of policies along standards of technologically advanced countries. The challenges ahead in designing and implementing IP-policy at the national and international levels are considerable.
Empirical evidence on the role of IP protection in promoting innovation and growth in general remains limited and inconclusive. Conflicting views also persist on the impacts of IPRs in the development prospects. Some point out that, in a modern economy, the minimum standards laid down in TRIPS, will bring benefits to developing countries by creating the incentive structure necessary for knowledge generation and diffusion, technology transfer and private investment flows. Others stress that intellectual property, especially some of its elements, such as the patenting regime, will adversely affect the pursuit of sustainable development strategies by raising the prices of essential drugs to levels that are too high for the poor to afford; limiting the availability of educational materials for developing country school and university students; legitimising the piracy of traditional knowledge; and undermining the self-reliance of resourcepoor farmers.
It is urgent, therefore, to ask the question: How can developing countries use IP tools to advance their development strategy? What are the key concerns surrounding the issues of IPR for developing countries? What are the specific difficulties they face in intellectual property negotiations? Is intellectual property directly relevant to sustainable development and to the achievement of agreed international development goals? Do they have the capacity, especially the least developed among them, to formulate their negotiating positions and become well-informed negotiating partners? These are essential questions that policy makers need to address in order to design IPR laws and policies that best meet the needs of their people and negotiate effectively in future agreements.
It is to address some of these questions that the joint UNCTAD-ICTSD Project on Intellectual Property and Sustainable Development was launched in July 2001. One central objective has been to facilitate the emergence of a critical mass of well-informed stakeholders in developing countries - including decision makers, negotiators but also the private sector and civil society - who will be able to define their own sustainable human development objectives in the field of IPRs and effectively advance them at the national and international levels.