Compulsory licenses allow the use of copyrighted or patented material without consent, but a government-set fee must be paid. They are granted when protected information would benefit the public and the owner doesn’t use it appropriately. They are used for generic drugs in developing countries and public radio/TV access. Mechanisms must be in place to compensate owners.
A compulsory license is the permission granted by a government to use copyrighted or patented material without the consent of the party that owns the copyright or patent. When compulsory licenses are granted, the person using the material must pay a government-set license fee in exchange for using the material. Compulsory licensing is used to address market failures, where demand for a product exceeds the supply that can realistically be produced by the manufacturer.
Governments don’t have the ability to issue a compulsory license to everything. Specific rules must be followed. As a general rule, such licenses are granted when it is determined that normally protected information, technology, and ideas would benefit the public, and the person holding the patent or copyright does not use them appropriately. The government carefully evaluates cases where compulsory licenses are required to determine whether or not the license would be appropriate, and the patent or copyright owner has the opportunity to appeal.
A classic situation where a compulsory license can arise is in the manufacture of generic versions of expensive patented drugs for use in developing countries. There is general agreement in the international community that people should not be deprived of access to life-saving medicines. People with conditions like AIDS and tuberculosis, who need patented drugs, may not be able to afford them. Therefore, manufacturers can ship to developing countries in limited quantities because their drugs are not affordable and as a result there is a small market.
A pharmaceutical company in a developing nation can apply for a compulsory license that will allow it to produce generic versions of patented drugs for distribution only in its home country. If it can prove that the patented version isn’t accessible to people who need the drug, the government will grant the license and the company can start making affordable generics. This makes important medical care available to people who need it.
Compulsory licensing is also used to provide public radio and television stations with access to creative material and in a variety of other situations where it would be a public benefit to license copyrighted or patented material. The law in each country on compulsory licensing varies in terms of the types of material that can be subject to compulsory licensing and how the licenses work. In all cases, mechanisms must be in place to pay license fees and royalties, compensating the copyright or patent owner for use of the material. It is possible to waive these taxes as an act of charity.
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