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Questioning the Frequency and Wisdom of Compulsory Licensing for Pharmaceutical Patents

24 Pages Posted: 20 Aug 2010 Last revised: 3 Jun 2011

Richard A. Epstein

New York University School of Law; Stanford University - Hoover Institution on War, Revolution and Peace; University of Chicago - Law School

F. Scott Kieff

George Washington University - Law School; Stanford University - Hoover Institution on War, Revolution and Peace

Date Written: September 28, 2010

Abstract

Many advocates for using compulsory licensing (“CL”) for pharmaceutical patents in developing countries like Thailand rest their case in part on the purported use of CL in the United States. In this paper we take issue with that proposition on several grounds. As a theoretical matter, we argue that the basic presumption in favor of voluntary licenses for IP should apply in the international arena, in addition to the domestic one. In the international context, voluntary licenses are of special importance because they strengthen the supply chain for distributing pharmaceuticals and ease the government enforcement of safety standards. Next, this paper analyzes several of the key illustrations of purported CL for drug patents in the United States and shows that the use of CL elsewhere deviates in material ways from the standard U.S. practices. These are the compulsory copyright licenses for music; the award of damages instead of injunctions after eBay v. MercExchange, and the use of compulsory licenses in antitrust settlements. Whatever the ultimate desirability of these American doctrines, none of them seeks to reduce the payment on licenses to the marginal cost of the licensed goods. Any need to help poor people gain access should not rely on CL, but instead should rely on tools precisely aimed at that purpose, including direct government purchases of patented drugs from their manufacturers at negotiated prices.

Keywords: patent, intellectual property

Suggested Citation

Epstein, Richard A. and Kieff, F. Scott, Questioning the Frequency and Wisdom of Compulsory Licensing for Pharmaceutical Patents (September 28, 2010). University of Chicago Law Review, Vol. 78, p. 71, 2011; U of Chicago Law & Economics, Olin Working Paper No. 527; NYU Law and Economics Research Paper No. 10-48; GWU Legal Studies Research Paper No. 567; GWU Law School Public Law Research Paper No. 567. Available at SSRN: https://ssrn.com/abstract=1660702 or http://dx.doi.org/10.2139/ssrn.1660702

Richard A. Epstein (Contact Author)

New York University School of Law ( email )

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Stanford University - Hoover Institution on War, Revolution and Peace

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University of Chicago - Law School ( email )

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F. Scott Kieff

George Washington University - Law School ( email )

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United States
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Stanford University - Hoover Institution on War, Revolution and Peace ( email )

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United States
650-723-3678 (Phone)

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