Compulsory licensing is a legally sanctioned mechanism that allows a government to permit someone else to produce a patented product or process without the consent of the patent owner. It is primarily used in the context of public health, where it allows for the production and sale of generic versions of patented drugs, ensuring accessibility and affordability of essential medicines.

TRIPS Agreement Context: The Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement, administered by the World Trade Organization (WTO), sets down minimum standards for many forms of intellectual property (IP) regulation as applied to nationals of other WTO Members. Compulsory licensing is one of the flexibilities on patent protection included in the TRIPS Agreement.

Details under TRIPS:

  1. Grounds for Compulsory Licensing: While the TRIPS Agreement does not specifically list the reasons that might justify compulsory licensing, it is commonly used in situations of national emergency, other circumstances of extreme urgency, or in cases of public non-commercial use.
  2. Negotiations with the Patent Holder: Before a compulsory license is issued, the proposed user of the patent must have attempted to negotiate a voluntary license with the patent holder on reasonable commercial terms. However, in cases of national emergency or other circumstances of extreme urgency, this requirement can be waived.
  3. Adequate Remuneration: The patent holder must be paid adequate remuneration for the use of their patent, taking into account the economic value of the authorization.
  4. Limited Scope and Duration: The scope and duration of a compulsory license must be limited to the purpose for which it was authorized.
  5. Non-exclusive Use: The compulsory license is generally non-exclusive, meaning the patent holder can still use the patent or grant licenses to other parties.
  6. Primarily for Supply in the Domestic Market: The primary market for the product made under compulsory licensing should be the domestic market.

Doha Declaration (2001): The Doha Declaration on the TRIPS Agreement and Public Health reaffirmed the flexibility of TRIPS member states in circumventing patent rights for better access to essential medicines. It clarified that each member has the right to grant compulsory licenses and the freedom to determine the grounds upon which such licenses are granted.

Compulsory licensing under TRIPS is a critical tool for governments, particularly in developing countries, to ensure access to essential medicines, balance patent rights with public health needs, and promote the general welfare of the population.

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