Compulsory licensing of patents and its effect on competition

Various countries have engaged in serious re-examinations of the legal regimes they use to support innovation in recent times. This is partly due to the establishment of the World Trade Organization and its adoption of the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement. TRIPS made it necessary for revision of most national intellectual property laws. Patentable subject matter is defined in such a manner that protection cannot be granted for “Discoveries”. For eg. Advances such as any abstract principles of science, the fundamental relationship between energy and mass, any living organism, etc. An application for a patent must involve an “invention”. Competition law, on the other hand, aims at promoting competition as a means of market response and consumer preference so as to ensure effective and efficient allocation of resources and to create an incentive for the economy for innovation. The cost and availability of patented drugs is a key development issue, directly impacted by various government policies that affect the degree of competition. A compulsory license provides that the owner of a patent licenses the use of their rights against payment either set by law or determined through some form of adjudication or arbitration. This might be a solution to balance the two competing interests between intellectual property rights and competition law. This article will be especially useful to legal practitioners as well as pharmaceutical companies. These companies need to be aware of the laws of the land while manufacturing and marketing their drugs. They also need to be mindful of the exceptions existing in the law relating to pharmaceutical patents. This article will also be useful to Competition Lawyers in various jurisdictions.