Calculating Compensation for Government Expropriation

Under Section 19 of the Patent Act the Federal or any Provincial Government of Canada can apply for a compulsory license to any patent. This section has been in force for over 16 years but never used. Today the Canadian Intellectual Property Office announced a consultation on S. 19 to consider the mechanism by which compulsory licenses would be compensated. Details of the consultation process are available here.

One reason why Section 19 has not been used previously may be the existence of the Patented Medicine Price Review Board. The PMPRB currently oversees patented medicines and the prices that the patent holder can charge to the respective provincial governments. Because of the PMPRB the prices paid by Canadian Provincial Governments are often significantly lower than corresponding prices in the US, thereby reducing the economic incentive to seek a compulsory license.

While no compulsory licenses have been requested in the past, the Federal Government has indicated that it might seek a compulsory license in the event of a national health emergency. The push to produce sufficient H1N1 vaccine last year may be the factor which brought this issue back to CIPO's attention.

Any Patentee or applicant who may be subject to a compulsory license by the Federal or a Provincial Government should consider making a submission on this point before the November 8, 2010 deadline. Should you be interested in this, please contact Ariadni Athanassiadis.

By James Wagner