Subordinate Patent Compulsory Licensing

If people can use a resource but are not required to maintain it, most people would over-use the resource without maintaining. As a result, the resource will be exhausted and no one can continue to use it. Establishing rights and duties for using resources is known to resolve the tragedy of the commons because private owners are more inclined towards proper use and maintenance of the owned resource based on their own interests. The patent law is a countermeasure to the tragedy of the commons in science and technology. However, excessive dividing of the rights and duties among patentees and users can cause problems, e.g., the costs of trading under the established trading rules will be higher than the profits, which will stop the trading from happening. This is known as the tragedy of the anticommons, which means in some situations a patentee's rights impede the popularization of the new technology. The use of patent rights in this manner is an abuse against the patent law. The results of such abuse are called patent thickets.Compulsory licensing is a solution to balancing the interests of the patentee and others. Compulsory licensing for dependent patents is proposed for two purposes:(1) prevent foreign companies from manipulating patent rights and blocking the access to the technology so that domestic companies cannot have the technology; (2) prevent domestic companies from relying on foreign patents and thus not pursuing progress in technology. Compulsory licensing, also known as involuntary licensing, means that if certain conditions are met, the national patent administration authority can grant users permissions to use a patent without the consent of the patentee. China has set up a system for compulsory licensing when issuing the first patent law, but this system failed to draw enough attention and had not been in use in a long time. Not until China signed the TRIPs agreement, was compulsory licensing widely discussed by the international society, because TRIPs has imposed strict regulations and specifications on compulsory licensing apart from the fact that the application of compulsory licensing was equivocal and inconsistent world-widely. The patent system has been an important factor to scientific and technological progress, but sometimes abusing patent rights obstructs the goal of the patent system. In this paper, we first introduce the value and mechanism of the patent system, and then discuss the definition of compulsory licensing, the regulations in positive laws, China's legislation, country conditions, and strategies that should be considered. Lastly, we suggest on how to implement compulsory licensing for dependent patents.This paper has three parts:introduction, main body, and conclusion. There are four chapters in the main body:The 1st chapter states the causes of patent thickets and several solutions. It starts out reviewing the causes of patent thickets, and then discusses the definitions, merits and shortcomings of cross-patent licensing, patent pool, package licensing, standardization and compulsory licensing.The 2nd chapter states briefly the history of patent system in different countries and their attitude to compulsory licensing; it then analyzes China's country conditions and points out that it is necessary to put compulsory licensing to use.The 3rd chapter states the definition of compulsory licensing for dependent patents and regulations in international laws and China's domestic laws, as well as legislative and administrative operations. It starts out discussing relevant regulations in international laws, followed by the legislative changes of compulsory licensing for dependent patents in China, and reviews Chinese courts'attitude to compulsory licensing for dependent patents and how it has been implemented by administration departments.The last chapter suggests on the vesting conditions of compulsory licensing for dependent patents and calculations of the license fee. It first points out that the most valuable systems are the ones that are put to use, but China's compulsory licensing system has not been used since it was issued, which is the main problem of this system. The patent department should be more open about moving forward with it. This chapter then states that the vesting conditions include'Important technical advance'and'Considerable economic significance', explains the two conditions in details, and also proposes possible reasons for not vesting a license. Next, it discusses what the license fee is based on and how to calculate it. Lastly, it discusses applying compulsory licensing to multiple basic patents and using cross-patent licensing.The conclusion of this paper is that the proper use of compulsory licensing under dependent patents can lead to a big leap in technology. China should be alert at pressures from developed countries, not give in on compulsory licensing issues, and avoid repeating Japan's mistake.