A
compulsory license, also known as
statutory license or
mandatory collective management, provides that the owner of a
patent or
copyright licenses the use of their rights against payment either set by law or determined through some form of
arbitration.
In essence, under a compulsory license, an individual or company
seeking to use another's intellectual property can do so without seeking
the rights holder's consent, and pays the rights holder a set fee for
the license.
Copyright law
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The examples and perspective in this section deal primarily with the United States and do not represent a worldwide view of the subject. Please improve this article and discuss the issue on the talk page. (July 2009) |
In a number of countries copyright law provides for compulsory
licenses of copyrighted works for specific uses. In many cases the
remuneration or royalties received for a copyrighted work under
compulsory license are specified by local law, but may also be subject
to negotiation. Compulsory licensing may be established through
negotiating licenses that provide terms within the parameters of the
compulsory license.
[1]
Essentially compulsory licensing provide that copyright owners may only
exercise the exclusive rights granted to them under copyright law in a
certain way and through a certain system.
[2]
Berne Convention
Article 11bis(2) and Article 13(1) of the
Berne Convention for the Protection of Literary and Artistic Works
provide the legal basis for compulsory licensing at international
level. They specify under which conditions members to the Berne
Convention may determine or impose conditions under which exclusive
rights may be exercised, for example through compulsory licensing. The
Berne Convention states that member states are free to determine the
conditions under which certain exclusive rights may be exercised in
their national laws. They also provide for the minimum requirements to
be set when compulsory licenses are applied, such as that they must not
prejudice the author's right to fair compensation.
[3][4]
Article 11bis(2)states that:
"It shall be a matter for legislation in the country of the Union to
determine the conditions under which the rights mentioned in the
preceding paragraph may be exercised, but these conditions shall apply
only in the countries where they have been prescribed. They shall not in
any circumstances be prejudicial to the moral rights of the author, nor
to his right to obtain equitable remuneration which, in the absence of
agreement, shall be fixed by competent authority."[2]
The "preceding article" mentioned in Article 11bis(2) is Article 11bis(1), which establishes that:
"Authors of literary and artistic works shall enjoy the exclusive
right of authorising: (i) the broadcasting of their works or the
communication thereof to the public by any other means of wireless
diffusion of signs, sounds or images; (ii) any communication to the
public by wire or by rebroadcasting of the broadcast of the work, when
this communication is made by an organisation other than the original
one; (iii) the public communication by loudspeaker or any other
analogous instrument transmitting, by signs, sounds or images, the
broadcast of the work."[2]
Article 13(1) states that:
Each country of the Union may impose for itself reservations and
conditions on the exclusive right granted to the author of a music work
and to the author of any words, the recording of which together with the
music work has already been authorised by the latter, to authorise the
sound recording of that musical work, together with such words, if any;
but all such reservations and conditions shall apply only in the
countries which have imposed them and shall not, in any circumstances,
be prejudicial to the rights of these authors to obtain equitable
remuneration which, in the absence of agreement, shall be fixed by
competent authority."[2]
In addition to the exclusive rights mentioned in Article 11bis(1) and
13(1) the Berne Convention also provides that members may determine or
impose such conditions for the exercise of exclusive rights in cases
where an exclusive right is not provided as remuneration right and not
as an exclusive right of authorisation, for example in the case of the
resale right, or
droit de suite (Article 14ter), and the
so-called "Article 12 rights" of performers and producers of phonograms.
Members to the Berne Convention may also determine or impose such
conditions where the restriction of an exclusive right to the mere right
to remuneration is allowed, for example the right to reproduction
(Article 9(2)), and in the case of "residual rights", that is, a right
to remuneration, usually for authors or performers, that survives the
transfer of certain exclusive rights.
[5]
United States
There are several different compulsory license provisions in
United States copyright law, including for non-dramatic musical compositions,
[6] public broadcasting,
[7] retransmission by cable systems,
[8] subscription digital audio transmission,
[9] and non-subscription digital audio transmission such as
Internet radio.
[10] The compulsory license for non-dramatic musical compositions under Section 115 of the
Copyright Act of 1976[11]
allows a person to distribute a new sound recording of a musical work,
if that has been previously distributed to the public, by or under the
authority of the copyright owner.
[12]
There is no requirement that the new recording be identical to the
previous work, as the compulsory license includes the privilege of
rearranging the work to conform it to the recording artist's
interpretation. This does not allow the artist to change the basic
melody or fundamental character of the work.
[13]
In order to take advantage of this compulsory license the recording
artist must provide notice and pay a royalty. The notice must be sent to
the copyright owner, or if unable to determine the copyright owner, to
the
Copyright Office,
within thirty days of making the recording, but before distributing
physical copies. Failure to provide this notice would constitute
copyright infringement.
[14]
In addition to the notice to the copyright owner, the recording artist
must pay a royalty to the copyright owner. This royalty is set by three
copyright royalty judges.
[15]
Though the compulsory license allows one to make and distribute
physical copies of a song for a set royalty, the owner of the copyright
in the underlying musical composition can still control public
performance of the work or transmission over the radio.
[16] If the underlying musical work is well known, the work can be licensed for public performance through a
performance rights organization such as
ASCAP,
BMI, or
SESAC.
According to
Register of Copyrights Marybeth Peters, use of the section 115 license prior to the 1995 enactment of the
Digital Performance Right in Sound Recordings Act was extremely rare, with the
U.S. Copyright Office receiving fewer than 20 notices of such licenses per year.
[17] By 2003, that number had risen to 214, which, while higher, was not considered by the Register to be significant.
[17]
Patents
Many
patent law systems provide for the granting of compulsory licenses in a variety of situations. The
Paris Convention
of 1883 provides that each contracting State may take legislative
measures for the grant of compulsory licenses. Article 5A.(2) of the
Paris Convention reads:
- "Each country of the Union shall have the right to take
legislative measures providing for the grant of compulsory licenses to
prevent the abuses which might result from the exercise of the exclusive
rights conferred by the patent, for example, failure to work." [18] (See also Article 5A.(3) to (5) of the Paris Convention.)
According to historian Adrian Johns, the idea of compulsory licensing
"seems to have originated as a serious proposition in the 1830s,
although predecessors can be traced back into the eighteenth century,"
and it was popular in the British anti-patent movement of the 1850s and
1860s.
[19] More recently an area of fierce debate has been that of drugs for treating serious diseases such as
malaria,
HIV and
AIDS.
Such drugs are widely available in the western world and would help to
manage the epidemic of these diseases in developing countries. However,
such drugs are too expensive for developing countries and generally
protected by patents.
United States
In the United States, the U.S. Government and its contractors can
infringe patents, the only remedy available to patent holders being a
lawsuit in the Court of Federal Claims.
[20]
It is the policy of the U.S. Department of Defense to allow contractors
to infringe patents and to defend the contractor against patent
infringement claims at Government expense.
[21] Use of this provision by agencies other than DoD is rare.
India
In March 2012, India granted its first compulsory license ever. The
license was granted to Indian generic drug manufacturer Natco Pharma Ltd
for
Sorafenib tosylate, a cancer drug patented by
Bayer. Non-governmental groups reportedly welcomed the decision.
[22]
Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs)
The
Agreement on Trade-Related Aspects of Intellectual Property Rights
(TRIPs) also sets out specific provisions that shall be followed if a
compulsory license is issued, and the requirements of such licenses. All
significant patent systems comply with the requirements of TRIPs. The
principal requirement for the issue of a compulsory license is that
attempts to obtain a license under reasonable commercial terms must have
failed over a reasonable period of time. Specific situations in which
compulsory licenses may be issued are set out in the legislation of each
patent system and vary between systems. Some examples of situations in
which a compulsory license may be granted include lack of working over
an extended period in the territory of the patent, inventions funded by
the government, failure or inability of a patentee to meet a demand for a
patented product and where the refusal to grant a license leads to the
inability to exploit an important technological advance, or to exploit a
further patent. TRIPs also provides that the requirements for a
compulsory license may be waived in certain situations, in particular
cases of national emergency or extreme urgency or in cases of public
non-commercial use.
[23]
Article 31.f of TRIPS requires that compulsory licenses be used
"predominantly" for local markets, a requirement that complicates the
ability of countries to import drugs manufactured overseas.
Doha Declaration
This issue of compulsory licensing of drugs treating serious diseases was addressed by the
Doha Declaration
which recognized the problem and required the TRIPs council to find a
solution. On 17 May 2006 the European Commission's official journal
published Regulation 816/2006,
[24] which brings into force the provisions of the Doha Declaration.
[25]
This means that the declaration now has legal effect in the European
Union, and also in Canada who implemented it in 2005. The declaration
allows compulsory licenses to be issued in developed countries for the
manufacture of patented drugs, provided they are exported to certain
countries (principally, those on the UN's list of least-developed
countries and certain other countries having per-capita incomes of less
than US$745 a year).
