Abstract:
Compulsory licencing occurs when a government grants a license to regulate the enforcement of intellectual property, including patents and copyrighted works. Through compulsory licencing, a nation allows a third party to practice an idea covered by a patent, with no patent owner’s permission and requires that third party to pay a government specified royalty to the patent owner. The TRIPs agreement places limitations on the granting of compulsory licenses, providing that “members may provide limited exceptions to the exclusive rights conferred by a patent, with the condition that, considering the legitimate interests of third parties, such exceptions do not unfairly interfere with a normal exploitation of the patent or unfairly harm the legitimate interests of the patent owner. However, what constitutes the legitimate interests of the patent owner seems less clear.
The compulsory licencing has major impacts on the right to intellectual property of patent as compulsory licencing partially deprives patent owners of control over their rights. There is a need for stricter and more objective laws to regulate the practice of issuing mandatory licences. Licenses are necessary to ensure the balance between the consumers’ right to get their preferred products and the right of patent holders to get the income from their works.
The language of the TRIPS agreement will lead to various negative outcomes if it remains unchanged. If compulsory licenses are too readily available, funding for innovation will decrease. The ability of patent holding companies to acquire a monopoly over their patented products is what drives innovation. Hence, without this monopoly power, any future investment in the identified products will be seen as a risky prospect. Besides, the quality of products is expected to decrease as patent holding firms will be reluctant to launch new products in low-income countries. Additionally, without robust intellectual property safeguards, there will be a decrease in foreign investment leading to severe consequences for developing countries. Finally, the nation's economy will experience additional damage due to the significant industry that creates jobs, relying on robust protection of intellectual property rights
