The term "compulsory license" refers to the grant of permission for an enterprise seeking to use another's intellectual property to do so without the consent of its proprietor. The grant of a compulsory patent license typically requires the sanction of a governmental entity and provides for compensation to the patent owner. In the patent system, compulsory licenses most often relate to pharmaceuticals and other inventions pertaining to public health, but they potentially apply to information technologies, manufacturing methods, and any other sort of patented invention. Two notable multilateral international agreements address compulsory patent licenses. The first, the Convention of Paris for the Protection of Industrial Property, has been joined by 175 countries including the United States. The conditions for compulsory licensing within the TRIPS Agreement involve a number of ambiguities. In addition to the TRIPS Agreement and Paris Convention, the United States has entered into a number of free trade agreements that also address compulsory patent licenses. For example, the Free Trade Agreement between the United States and Australia provides:
A Party shall not permit the use of the subject matter of a patent without the authorisation of the right holder except in the following circumstances:
(a) to remedy a practice determined after judicial or administrative process to be anticompetitive under the Party's laws relating to prevention of anti-competitive practices; or
(b) in cases of public non-commercial use, or of national emergency, or other circumstances of extreme urgency, provided that:
(i) the Party shall limit such use to use by the government or third persons authorised by the government;
(ii) the Party shall ensure that the patent owner is provided with reasonable compensation for such use; and 
(iii) the Party may not require the patent owner to provide undisclosed information or technical know-how related to a patented invention that has been authorised for use in accordance with this paragraph. Compulsory Licenses Under U.S. Law

In contrast to the patent statutes of many nations, the U.S. patent code does not include a general compulsory licensing provision. In addition, circumstances that are arguably akin to a compulsory license may occur through antitrust enforcement, judicial determinations in patent infringement litigation, and activities of the federal government. Plainly, none of these provisions have been frequently employed in the past. This step is arguably akin to the grant of a compulsory license. Following the eBay decision, courts most often award an injunction to the prevailing patentee. Compulsory Licenses Abroad

The patent statutes of many U.S. trading partners include general provisions that allow for the award of compulsory licenses under specified conditions. This paper reviews a number of notable incidents with respect to compulsory licenses on patented inventions, focusing on Brazil, India, South Africa, and Thailand. On the other hand, some commentators believe that the grant of compulsory licenses diminishes incentives for enterprises to undertake research and development. In determining the reasonableness of remuneration for use of a patent, the Secretary of Health and Human Services may consider—
(1) evidence of the risks and costs associated with the invention claimed in the patent and the commercial development of products that use the invention;
(2) evidence of the efficacy and innovative nature and importance to the public health of the invention or products using that invention;
(3) the degree to which the invention benefitted from publicly funded research;
(4) the need for adequate incentives for the creation and commercialization of new inventions;
(5) the interests of the public as patients and payers for health care services;
(6) the public health benefits of expanded access to the invention;
(7) the benefits of making the invention available to working families and retired persons;
(8) the need to correct anti-competitive practices; and
(9) other public interest considerations. This legislation was not enacted. Congress may also wish to continue to monitor the activity of U.S. trade partners with respect to compulsory patent licenses.
The term "compulsory license" refers to the grant of permission for an enterprise seeking to use another's intellectual property without the consent of its proprietor. The grant of a compulsory patent license typically requires the sanction of a governmental entity and provides for compensation to the patent owner. Compulsory licenses in the patent system most often relate to pharmaceuticals and other inventions pertaining to public health, but they potentially apply to any patented invention.
U.S. law allows for the issuance of compulsory licenses in a number of circumstances, and also allows for circumstances that are arguably akin to a compulsory license. The Atomic Energy Act, Clean Air Act, and Plant Variety Protection Act provide for compulsory licensing, although these provisions have been used infrequently at best. The Bayh-Dole Act offers the federal government "march-in rights," although these have not been invoked in the three decades since that legislation has been enacted. 28 U.S.C. Section 1498 provides the U.S. government with broad ability to use inventions patented by others. Compulsory licenses have also been awarded as a remedy for antitrust violations. Finally, a court may decline to award an injunction in favor of a prevailing patent owner during infringement litigation, an outcome that some observers believe is akin to the grant of a compulsory license.
A number of international agreements to which the United States and its trading partners are signatories, including the Paris Convention for the Protection of Industrial Property, World Trade Organization agreements, and certain free trade agreements, address compulsory licensing. In contrast to the United States, the patent statutes of many other nations include general provisions that allow for the award of compulsory licenses under specified conditions. A number of U.S. trading partners, including Brazil, South Africa, and Thailand, have invoked these provisions. The March 9, 2012, decision of the Indian government to grant a compulsory license on the chemotherapy drug sorafenib has attracted controversy.
Some commentators have expressed concern that compulsory licenses substantially diminish incentives for firms to conduct research and development. Others support the grant of such licenses under certain conditions, noting that many patent-granting states suffer from poverty, dire health needs, and a lack of access to patented technologies.
Congress has previously monitored the issuance of compulsory patent licenses by U.S. trading partners and may wish to continue to do so. Legislation dating from the 109th Congress would have allowed the Secretary of Health and Human Services to declare a compulsory license on a patented invention that was needed to address a public health emergency. This legislation was not enacted and has not been reintroduced.