Posts Tagged: "compulsory license"

Rep. Lloyd Doggett (D-TX) recently introduced the Medicare Negotiation and Competitive Licensing Act of 2018. Lest the title confuse you, by “competitive licensing” Rep. Doggett means compulsory licensing anytime a company declines to sell their drug for whatever price the Secretary of Health and Human Services  cares to offer during “Medicare negotiations” where the government holds all the cards. Past attempts to impose artificial “reasonable pricing” requirements on developers of government supported inventions did not result in cheaper drugs. A study titled Compulsory Licensing Often Did Not Produce Lower Prices For Antiretrovirals Compared to International Procurement found that resulting drug prices were often higher than they would have been under a more cooperative approach.

A collection of trade organizations representing music publishers and songwriters recently released a joint statement in which all announced unconditional support for S.2823, the Music Modernization Act (MMA). These organizations include SESAC, the National Music Publishers’ Association (NMPA), the Nashville Songwriters Association International (NSAI) and the Songwriters of North America (SONA). The support of the bill from these collective entities comes after an amendment to the act designed to improve private competition in the market for music licensing after a contentious period of negotiating that amendment.

The experts in attendance reminded us of the insanity of the compulsory licensing system that now pervades the U.S. patent marketplace, which when explained in terms of real estate is obviously absurd. A man came home from work one day to find a strange family living in his dining room. He wanted to have them evicted but was told he would have to spend five years and millions of dollars proving in court that he owned the room where the invaders had pitched their tent. A judge finally found that indeed he owned his dining room. But instead of ordering the family’s eviction she ordered the invaders to pay rent to the homeowner in an amount hypothetically determined by calculating what he and the squatters would have agreed to before his unwelcome visitors moved-in.

Activist Supreme Court decisions in the last decade have been principally responsible for these changes, stimulated by aggressive technology company incumbent lobbying. The combination of these decisions has had a far greater effect on the patent system and the economy than the Court originally intended. The U.S. is now in a compulsory licensing regime in which large technology incumbents that control at least 80% of collective market share employ an “efficient infringement” model of ignoring patents and forcing patent holders to enforce patent rights in the courts.

A recent trend towards compulsory licensing has also raised red flags for many. In March 2012, the Indian Patent Office granted the country’s first compulsory license to a domestic pharmaceutical company for a cancer drug developed by Bayer AG. At a time when India’s economy is climbing to new heights and foreign investors are interested in entering the market, some find the fact that the Indian government would essentially commandeer foreign IP to be threatening.