Legislative and Regulatory Takings of Intellectual Property: Early Stage Intervention Against a New Jurisprudential Virus

Abstract

During the past year various members of the United States Congress have introduced legislation intended to ameliorate the high cost of pharmaceuticals, as well as to stimulate innovation using alternative mechanisms to the traditional patent system model. Several of the legislative proposals would authorize third-party importation of prescription pharmaceutical products from one or more countries. One issue considered by drafters of these legislative proposals was whether to include amendment of the United States Patent Act to authorize importation of pharmaceutical products first put on the market under the authority of the patent owner outside the United States. In other words, whether to provide for international exhaustion of patent rights, at least as to pharmaceutical products. Consultations on these developments with Congressional staff revealed a novel concept of legislative takings pursued by the pharmaceutical industry. Takings doctrine was advanced as the basis for opposing modification of the US Patent Act to authorize international exhaustion. Because the Supreme Court ruled in favor of international exhaustion of patents and, in the course of doing so, it did not mention anything about takings, the question whether Congress might adopt international exhaustion of patents without triggering the takings issue is formally mooted. However, the question whether Congress is somehow constrained in modifying US patent law by the constitutional prohibition against takings of private property without just compensation remains important.

Keywords: Patents, Takings, Exhaustion, Parallel Imports, Pharmaceuticals, Constitutionality

JEL Classification: K11, K32, K33, K39, F13, H51, I18