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The American Journal of Bioethics 2.3 (2002) 43-44

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Open Peer Commentaries

Life, Death, and Monopoly Rights in a Democratic Society

Simon J. Smith
Osborne Clarke (London)

As an English intellectual property and antitrust lawyer I read the piece by David Resnik and Kenneth De Ville (2002) with both interest and surprise. It is startling to suggest that a country with the democratic credentials of the United States should, as a matter of public policy and indeed on apparently "moral" grounds, prefer private monopoly rights to the lives and welfare of its citizens.

The authors appear shocked that the U.S. patent system contains provision for the government to access patented inventions without the licence of the patentee, but we have to remember that the basic principle (which the authors acknowledge but do not discuss) of any patent system is that it is in essence a bargain between the state and the inventor; as remuneration for the inventor agreeing to publicize the details of his invention through the patent system (and thus contribute to the nation's stock of intellectual property) the state grants monopoly rights for a considerable period—20 years, which, in the case of pharmaceutical patents, can be extended in certain circumstances.

In an economic system based on free competition, monopoly rights are generally a bad thing—hence the plethora of antitrust legislation in most of the developed world. Yet it must be acknowledged, as the authors do, that without offering some incentive in the way of monopoly rights to inventors, then a nation's stock of intellectual property may suffer. What is therefore required is a balance between these opposing forces—the need for a free economy balanced against the need to stimulate innovation. That is why the patent system exists but is constrained in ways designed to prevent it from doing harm to the public good. What the "public good" is at any one time is a matter for democratically elected representatives to sort out; it is dangerous to try to do this by reference to a series of rigid rules.

Outside the immediate field of compulsory licensing [End Page 43] by the state, the monopoly granted by intellectual property rights is already subject to other pressures reflecting the "public good," in particular antitrust law. Hence intellectual property cannot be used in a way that amounts to an abuse of a dominant market position, as in the European case of Magill.1 It is surely right that the greater good that is represented by a free market takes precedence over a patent right, and so should it also be with issues of public health.

Resnik and De Ville acknowledge the right of the United States to compulsorily license a patent—whether that right is based on the American doctrine of eminent domain, the permissive words of the U.S. Constitution (which gives Congress the power to create a patent system but does not prevent restrictions being imposed on that system), or simply on the nature of the bargain between the inventor and the state (the patent is granted on the basis of public policy, and so arguably it should be constrained on the same basis)—but argue that it should now be restricted.

In support of their case the authors mention the Trade-Related Aspects of Intellectual Property (TRIPS) agreement, claiming that it is more restrictive in the circumstances in which state compulsory licensing is to be permitted, but they do not take account of the Doha Declaration (2001). Here the member states of the World Trade Organization expressly acknowledge that each member has the right to grant compulsory licences and the freedom to determine the grounds upon which such licences are granted. It is hard to see how this interpretation of TRIPS is more restrictive than the right granted to the United States under existing federal law.

Nonetheless the authors insist that five stringent conditions must be satisfied before the state can compulsorily license. Let's take them in turn:

National emergency. How do you define a national emergency...


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pp. 43-44
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Archived 2005
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