Compulsory Licenses: Why U.S. Patent Law Needs an Upgrade

By: Caleb Sugg

Intellectual property law in the U.S. stems from a number of ideas and policies. Specifically, intellectual property law finds its roots in the foundation of all law in the U.S. Article I, Section 8, Clause 8 of the Constitution reads as follows: “The Congress shall have power . . . to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries . . .”[1] Otherwise known as the “Copyright Clause”, Article 1, Section 8, Clause 8 “strikes a compromise between the producer and the consumer . . .”[2] This is because the producer-inventor wants a monopoly in order to get the most profit out of his or her invention.[3] Yet, the U.S. patent system does not include compulsory licenses.

Compulsory licenses are “involuntary contract[s] between an unwilling patent holder and a willing licensee, imposed and enforced by the state.”[4] Compulsory licenses allow limitations to be placed on the exclusivity rights of patent holders. In effect, compulsory licenses strip a patent holder of his rights for a number of reasons—including if a particular invention is not being used—and then gives limited rights to other individuals to use the invention.  The primary purpose of this is to promote the public good.

Given the overlap between the purpose of compulsory licenses—promote public good—and the principles behind U.S. patent law—also promote public good—it is shocking that the U.S. has not adopted a compulsory licensing system. On the other hand, Costa Rica and a large number of Central and South American countries have adopted a compulsory licensing system for patents.[5] In Costa Rica, specifically, a compulsory license may be requested only if the invention has not been used within three years from the date the patent was granted or four years from the filing date of the patent application.

Although the U.S. has not adopted a compulsory licensing system for patents, the U.S. does have a compulsory license for copyrights. The Copyright Act provides for compulsory licenses, but limits their use to phonorecords: “material objects in which sounds, other than those accompanying a motion picture or other audiovisual work, are fixed.”[6]

For present purposes, ignore the individualized differences between patent law and copyright law. They are vastly different; yet, the focus here should be on the underlying principles of the two areas of law. Both patent law and copyright law are rooted in the U.S. Constitution—Article 1, Section 8, Clause 8. Therefore, because neither are real property, the Constitutional protection is rooted in public good economics.[7] Patents and copyrights are issued because they are non-excludable and non-rival.[8] Accordingly, the underlying principles are the same.

Due to that fact, it is likely a compulsory licensing system in patent law would be preferable to current systems. This is especially true given the possibility that as of now, the America Invents Act (AIA) may have a prejudicial effect on small time inventors and start-up companies.[9] Establishing a compulsory licensing system would reinstate the incentive for inventors. Assume that the AIA, in fact, discourages the so-called little guys. If true, image the impact that could have. For starters, the impact “is injurious to the morals, the health, or the good order in society.”[10] Instead of simply the particulars of intellectual property law being discussed, the very purpose for intellectual property protection is now in question—should there even be such a system at all?

Intellectual property, patents specifically, encourage innovation. In order to continue succeeding and thriving in a competing world, the U.S. must progress; a compulsory license system for patents would be a positive trajectory. If you consider the international scheme, a large number of countries have adopted a compulsory licensing system.[11] Brazil, Canada, Costa Rica, El Salvador, Granada, Guatemala, Guyana, Mexico, Paraguay, Uruguay, and more have all adopted a compulsory licensing system.[12]

The sheer number of countries speaks to the workings of the system. It is noted that these countries and the U.S. have vast differences politically. Still, the U.S. must protect property rights. Therefore, in an effort to support the principles on which patent protection was founded—incentivize innovation in order to benefit society—the U.S. should follow suit of a large number of other countries and adopt a compulsory license system.


[1] U.S. Const. art. I, § 8, clause 8.

[2] Terence Lau and Lisa Johnson, The Legal and Ethical Environment of Business, Chapter 9 (Andy Schmitz, ed., 2012) available at:

[3] Id.

[4] John M. Wechkin, Drug Price Regulation and Compulsory Licensing for Pharmaceutical patents: the new zealand connection, 5 Pac. Rim L. & Pol’y J. 237, 239

[5][5] Intellectual Property Systems and Investment stimulation: the rating of systems in eighteen developing countries, 37 IDEA 261, 261 (1997).

[6] 17 U.S.C.§ 101.

[7] See Christopher S. Yoo, Public Good Economics and Standard Essential Patents, University of Pennsylvania Law School Legal Scholarship Repository (2014),

[8] Id.

[9] See Paul Morinville, How the America Invents Act Harmed Inventors (September 10, 2016) (last visited March 24, 2017).

[10] Bedford v. Hunt, 3 F. Cas. 37, 37 (C.C.D. Mass. 1817) (emphasis in original).

[11] A Transnational Patent Convention for the Acquisition and Enforcement of International Patent Rights, 88 J Pat. & Trademark Off. Soc’y 958, 958 (November 2006).

[12] Id.

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