Compulsory License

A compulsory license (also called a 'compulsory use authorization' or 'non-voluntary license') is a government-granted right to use a patented invention without the patent owner's consent, in exchange for compensation. Unlike a voluntary license — where both parties negotiate and agree — a compulsory license is imposed by law or by a government order, overriding the patent holder's exclusive right. The patent is not taken away: it remains valid, the holder still owns it and can still license it to others; the compulsory license simply adds an authorized user the holder cannot block. Grounds vary by country but commonly include: public health emergencies or national emergencies (where speed is paramount and voluntary negotiation is not feasible); government use or use by contractors working for the government; competition-law remedies when a patent holder's refusal to license amounts to abuse of a dominant position; failure to 'work' the patent commercially in the country within a required period; and dependent-patent situations where a later patent cannot be practiced without infringing a blocking earlier patent. The international legal framework governing compulsory licenses is TRIPS Agreement Article 31 (and the related Article 31bis for export to least-developed countries). Every WTO member must implement compulsory licensing provisions. Compulsory licenses have been most visible in the pharmaceutical sector — for HIV/AIDS antiretrovirals in Africa, COVID-19 vaccines and treatments, and hepatitis C drugs — but also arise in technology sectors (standard-essential patents), aerospace, defense, and agriculture.

TRIPS Agreement Article 31 is the core international provision governing compulsory licensing in WTO member countries. It permits compulsory licensing but sets procedural conditions: (1) Each authorization must be considered on its individual merits — not blanket authorizations. (2) The applicant must first have tried to obtain a voluntary license from the patent holder on reasonable commercial terms, and failed within a reasonable time. This requirement can be waived in national emergencies, extreme urgency, or public non-commercial use. (3) The license must be non-exclusive and non-assignable. (4) Use must be predominantly for domestic supply (the Article 31(f) condition that proved problematic for countries without manufacturing capacity). (5) The license must be limited in scope and duration, and terminable when the grounds no longer apply. (6) The patent holder must receive adequate remuneration given the economic value of the authorization. (7) The legal validity of the decision can be challenged, and remuneration determinations can be reviewed. The 2001 Doha Declaration on TRIPS and Public Health, adopted at a WTO Ministerial Conference, clarified that WTO members have the right to grant compulsory licenses and the freedom to determine grounds, and that TRIPS does not and should not prevent members from taking measures to protect public health. The 2005 Article 31bis amendment (which entered into force in 2017) added a specific mechanism allowing countries to export compulsory-licensed generic medicines to least-developed countries and countries without adequate manufacturing capacity, addressing the gap the Article 31(f) predominantly-domestic-supply condition created.

Yes. The U.S. government has broad rights to practice any patent without the patent holder's consent, under 28 U.S.C. § 1498. The government or any contractor working for it can make, use, or sell a patented invention for government purposes, and the patent owner's only remedy is a suit for 'reasonable and entire compensation' in the Court of Federal Claims — not an injunction and not treble damages. This is a form of compulsory licensing built into federal statute. The remedy is exclusively against the government (in the Court of Federal Claims), not against the contractor. Section 1498 has been invoked for military applications, defense contracting, and has been proposed (but rarely formally invoked) for pharmaceuticals. During the COVID-19 pandemic there were calls to invoke § 1498 to compel production of vaccines and treatments without negotiating licenses. Separately from § 1498, the Bayh-Dole Act (35 U.S.C. §§ 200–212) gives the federal government 'march-in rights' over patents that arise from federally funded research: if the patent holder fails to take effective steps to achieve practical application of the invention, fails to satisfy health or safety needs, or fails to meet public-use requirements, the government can require licensing to responsible applicants, or license the patent itself. March-in rights have never been successfully invoked as of 2024, though the Biden administration proposed frameworks and rulemaking to expand their use on pricing grounds — a significant policy shift from previous administrations that had declined all petitions.

FRAND (Fair, Reasonable, and Non-Discriminatory) licensing commitments and compulsory licensing share the same underlying tension — balancing patent holders' exclusivity against access — but they arise in different legal frameworks. FRAND commitments are voluntary contractual obligations: when a patent is declared essential to an industry standard (a standard-essential patent, or SEP), the patent holder typically promises the standard-setting organization (SSO) to license that patent to any implementer on FRAND terms. This is not government-mandated; it arises from the patent holder's own commitment in exchange for inclusion in the standard. If a SEP holder refuses to negotiate or demands excessive royalties (often called 'hold-up'), courts and competition authorities can impose a FRAND rate, effectively functioning as a compulsory license determined by the court rather than the parties. The EU, in particular, has treated refusal to license SEPs on FRAND terms as a potential abuse of dominant position under competition law, with the Huawei v. ZTE (ECJ 2015) decision setting a procedural framework. In jurisdictions like Germany and the UK, courts regularly set FRAND rates when parties cannot agree. Compulsory licensing under TRIPS Article 31, by contrast, is a statutory government authorization unconnected to standard-setting; it addresses public health, emergencies, competition remedies, and non-use. But the rate-setting exercise is similar — both FRAND royalty determinations and compulsory license remuneration determinations require valuing a patent's economic contribution in a world where competition would otherwise prevail.

The COVID-19 pandemic was the most high-profile stress test of the global compulsory licensing framework in decades. Key events and outcomes: (1) TRIPS Waiver Proposal: In October 2020, India and South Africa proposed a broad waiver of all TRIPS IP obligations (not just compulsory licensing, but patents, trade secrets, copyright, and more) for COVID-19 tools for the duration of the pandemic. The U.S. initially opposed but reversed in May 2021 to support a narrower waiver specifically for vaccine patents. After two years of negotiation, WTO members agreed in June 2022 to a limited Ministerial Decision — narrower than the original proposal — that clarified and streamlined compulsory licensing for COVID-19 vaccines specifically (similar to Article 31bis), with a future decision on diagnostics and therapeutics. (2) Country-level compulsory licenses: Several countries issued or prepared compulsory licenses for COVID-19 antivirals and treatments, including Canada (enabling generic production of patented medicines), Hungary (for remdesivir), Israel (remdesivir), and others. Canada's Access to Medicines Regime, already amended post-Doha, was further updated to permit emergency licensing. (3) March-in rights pressure: In the U.S., advocates called for invoking 28 U.S.C. § 1498 to enable generic production of Pfizer's Paxlovid (for which the government had paid for development) and Moderna's vaccine (developed with substantial NIH funding). The Biden administration did not formally invoke § 1498 but pushed voluntary licensing agreements. The pandemic reinforced that global access to essential technologies and national patent exclusivity exist in deep tension, and the post-COVID period has seen renewed debate about pharmaceutical pricing, government rights to federally funded inventions, and whether the TRIPS compulsory licensing framework is sufficient for future health emergencies.