International Trade-related Patent Compulsory Licensing Study

As an important regime balancing patent protection, compulsory patent licensing is a vital tool to transfer and disseminate patented technology. It is a necessary way to realize the social goals relating to patented technology. In history, the patent rights were originated from the privilege conferred by the kings or lairds, and the ancestor of compulsory licensing was revocation of patent. The Paris Convention and TRIPS Agreement are intended to harmonize the patent regime in the international level. The results of 2001 Doha Declaration, 2003 General Council Decision and 2005 amendment of TRIPS Amendment in respect of public health embodied the requirement of enforcing technology transfer through compulsory patent licensing. Many developed countries such as the United States and Germany and developing countries and regions including Brazil and India have established the legal regime of compulsory licensing by either common laws or legislations.Transaction cost theory of institutional economics is applicable for us to understand the technology transfer related to patent rights. Patent protection can enhance transfer of technology mainly because it can reduce the transaction cost, but it may also harm the relationship of competition as the side effect. Compulsory licensing can further reduce transaction cost so that it is vital with this goal to effectively enforce the legal regime for transform the protection of private rights such as patent rights to realize social values in the background of international trade.Compulsory licensing should be used to eliminate the barriers of international trade on technologies and goods, especially overcome technical barriers concerning standardization. Technical standards play an important role in international trade, and are adopted broadly. The patented technical standards could result in limiting positive function of standards to promote international trade. Many Standard-Setting Organizations (SSOs) have promulgated their patent policies. Domestic law of many countries are made regarding the antitrust and issues of patented technical standards, and in particular, regarding the compulsory licensing as legal remedy to prevent practices such as fraud, monopoly and patent holdup. The enforcement of compulsory licensing should figure out the disclosure duty of patent holder, establishing the patent policy of ex ante negotiation, specifying the duty of patent owner after it's withdraw from SSOs, and establishing the reasonable royalties.The function of patent in the field of public health has two sides, including the enhancement of pharmaceutical technology and development of new drugs, while possibly harming the availability of research tools and blocking the public accessibility to have new drugs. Patent regime plays the role to encourage more scientific innovation and dissemination, but it can also have negative effect on the technology transfer, in particular, for public health. In the case of no solutions by either patent pools or experimental exempt, the compulsory patent licensing could be taken. Some WTO Members such as Canada, Brazil, Thailand and Chinese Taipei have issued compulsory licensing to provide public with accessible pharmaceutical products, which can be exported to least developed Members in accordance with the 2003 General Council Decision on TRIPS Agreement. Developing countries face many difficulties in compulsory patent licensing, including the limitation imposed by multilateral or bilateral treaties, the disqualification of intellectual property administration and management regime, the negative effective on the foreign direct investment and the lack of capability of technology and economy. These problems could be solved through the reducing of limitation imposed by the international regulation, the enhancement of international and regional cooperation and the adoption of effective regime.Chinese Patent Law provided compulsory licensing provisions in 1984, which was amended in 1992, 2000 and 2008 respectively. The Implementing Regulations of the Patent Law and administration regulations specified the compulsory licensing provisions. The rule of Chinese compulsory licensing regime is essentially taken in accordance with the requirement of reduction of transaction cost. For example, it adopts the rule of prior negotiation instead of non-working rule. However, this article has been modified in 2008 amendment. The legislation of antitrust law provides the legal basis of compulsory patent licensing in this regime. The rules of qualification of petitioner, the transference of compulsory licensing rights, the royalties, the judicial review of compulsory licensing decision are generally reasonable, but require further specification and rectification. China should overcome political, economic and culture negative factors to implement compulsory patent licensing and make more efforts. China should promote the application of compulsory licensing in the enforcement of TRIPS Amendment and overcome the barriers to trade of patent in technical standards.In summary, the positive effects of compulsory licensing lie in the reduction of transaction cost based on the patent regime, and promotion of the function to transform patent right from focusing protection for private rights to realizing technology transfer and social value. The function of compulsory licensing should not be limited in the balancing of interests in stead of facilitating transaction of technology, and of realizing its social effect efficiently.