Posts Tagged: "compulsory licensing"

Trying to rationally address hot button issues in an election year is always a dangerous proposition. That’s particularly true as we approach what promises to be one of the nastiest political years in history. Because so much time will be taken up campaigning, for legislation to pass it needs to get moving soon. It shouldn’t be long before we know whether anything meaningful will happen with attempts to reduce the costs of drugs, where intellectual property rights are in the crosshairs. Let’s keep our fingers crossed that, if action is taken, it’s based on careful consideration of all the related issues rather than raw emotion. While this may be wishful thinking, several thoughtful new articles contain important warnings against jumping down some of the beckoning gopher holes. Critics of the Bayh-Dole Act, which provides the incentives of the patent ownership to commercialize federally funded inventions, claim that the government is developing drugs from its R&D and giving them to companies that then make “obscene profits.”Despite numerous rebuttals, this red herring is continually deployed as the justification for the government setting the price of drugs coming out of public/private sector partnerships.

Our music copyright law is out of tune in several ways. The recent multi-million-dollar jury verdict this summer against Katy Perry and Capitol Records illustrates a lack of harmony between music creation and the copyright law that is designed to “protect” it. According to a California jury, Perry’s runaway smash hit “Dark Horse” infringed a Christian rap “Joyful Noise” by the rapper, Flame. The jury awarded Flame nearly $2.8 million in damages. If that verdict withstands an appeal, it will be a dark day for the music industry. I fear the clouds are already brewing. The verdict exposes some major structural problems with how our music copyright law works.  

With the next Supreme Court term beginning in a few weeks we all need to come to terms with the fact that the U.S. has a compulsory licensing system, which is truly ironic. Trade missions, trade representatives, and governmental organizations travel the world preaching about the importance of a strong intellectual property system and how that starts with strong patent rights that are not subject to the whims and fancy of compulsory licensing. America should practice what it preaches. For some time, the United States hasn’t had a property rights-based patent system. That was merely confirmed in Oil States with the Supreme Court calling patents a government franchise, but the seeds were sown over 12 years ago when the Court decided eBay and removed exclusivity from the patent bargain.

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.

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.

If the UN Secretary General and the members of his “High Level Panel on Access to Medicines” thought the State Department was bluffing when it warned against their attempt to make intellectual property the fall guy for the lack of health care in poor countries, they were rudely awakened Friday afternoon. Disdaining diplomatic niceties, less than two days after the UN report issued, State bluntly replied in a statement titled “U.S. Disappointed Over Fundamentally Flawed Report of the UN Secretary-General’s High-Level Panel on Access to Medicines.” Compounding the pain, the same day five prominent university associations issued a joint paper taking the report apart. Being directly and publicly rebuked in this manner is a new experience for the Secretary General and his minions– but one they richly deserve.

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.