“Access Licensing”: A COVID-19 Refresh for Compulsory Licensing

In these extraordinary times of the pandemic, unusual steps must be taken to protect the public interest. On March 25, 2020, the Government of Canada’s sweeping COVID-19 Emergency Response Act received royal assent. Among its many measures is a compulsory licensing clause for patents that enables the Government “to make, construct, use and sell a patented invention to the extent necessary to respond to a public health emergency that is a matter of national concern.” This suspension of patent rights is not to be without recompense for the patent holder, but that, too, was framed in unusual ways on behalf of the public interest: “The Government of Canada… shall pay the patentee any amount that the Commissioner [of Patents] considers to be adequate remuneration in the circumstances, taking into account the economic value of the authorization and the extent to which they make, construct, use and sell the patented invention.”

A number of analysts have pointed out that the Canadian Government already has compulsory licensing statutes that it might employ, These new powers, however, enable an immediate licensing of a vaccine or drug without consulting the patent holders, while only later determining “adequate” compensation for its use. This extraordinary power can only be exercised within a six-month period that expires September 30, 2020 (although it can always be extended by Parliament).

It turns out that resorting to this extreme form of compulsory licensing is endorsed internationally by the World Trade Organization, through its 2001 Doha Declaration on the TRIPS (Trade Related Aspects of Intellectual Property Rights) Agreement and Public Health. Hilary Wong, Berkeley law professor sums up the rationale for the Doha Declaration this way: “While the rewards of patent protection are necessary to support continual innovation, the compulsory licensing exception exists for public health emergencies such as the current COVID-19 crisis.”

Now that the patent section of the emergency response act is about to lapse (as are various other parts), I want to put a word in on the special value of compulsory licensing more generally. This legal strategy is bound to be raised, in the consideration given to extending this part of the act, especially by the pharmaceutical industry lobby groups. Certainly, the resurgence of COVID-19 cases in a number of parts of Canada, and the promising phase-three clinical trials underway, argue in favor of another six-month extension of the Government’s powers.

Compulsory licensing’s emergency standing, in this case, is part of this measure’s larger reputation for being the intellectual property exception, if not a measure of last resort. It is regarded as a spoiler of free market forces in areas of supply and pricing; it is thought to violate property rights. These common arguments trouble me as a mischaracterization of both market and property.

Take compulsory licensing’s supposed disruption of the free market. In fact, the entire trade in intellectual property, whether in drugs, books, or phones, is a government-regulated monopoly from the outset. Businesses are granted exclusive rights to their intellectual property assets for limited terms (subject to periodical extensions in the case of copyright). Monopolies can lead to the aggressive commercialization of public goods in health care and scholarly publishing, to take two examples of relevance to this current medical emergency. In such cases, monopolies have resulted in constant price increases and high profit margins. Yet there’s also been a failure to serve and supply all communities in need, signalled most clearly by the example of the Gates Foundation stepping in to fund the pointedly named PLOS Neglected Tropical Diseases journal.

This is only to say that compulsory licensing may at times do a better job of bringing about public benefit because it increases access to the public benefit, against the exclusivity tendencies of intellectual property monopolies, at a fair price, whether at the Ministry’s discretion or through public hearings. Yet there’s something decidedly adverse about the name. Things that are compulsory are certainly harder to like, be they compulsory courses, tax audits, or training. And what is compelled, in the case of compulsory licensing, is the granting of a license to anyone who applies, which may not be as important as what is curtailed, which is the monopoly right to exclude by such means as pricing.

That is, it might be time for a brand refresh or renaming. For example, “monopoly-reduction licensing” is no less accurate, and might appeal to all parties. Reducing monopoly effects makes for a freer market, while increasing public access at a fair price. But perhaps “access licensing” is the more direct moniker. This puts the public benefit up front, while still identifying the privilege that licensing bestows to the intellectual property right holder.

“Access licensing” seems just the thing for the Government of Canada to announce has been extended for another six months for pharmaceutical patents in response to the continuing health crisis. Although given the extent of public investment in pharmaceutical development and testing, as well as in research and scholarship more generally, the case can be made for applying access licensing to both medications and research as a new national standard. Among the details that would need to be worked out to make access licensing work, outside of such emergencies, is a price-setting process that both reflects and can attract public and private investment. I hope it is neither too early nor ultimately naive to begin considering what part of this pandemic experience we want to bring forward into a post-COVID world. Access licensing would seem an ideal candidate for such a world.