Letter from Rep. Sherrod Brown to Members of Congress on the US-Singapore FTA and its Effect on Compulsory Licenses


Protect Technological Dissemination
Oppose the Singapore FTA

July 23, 2003

Dear Colleague:

I would like to draw your attention to important and little debated provisions in the Singapore Free Trade Agreement (FTA) that deal with patent rights. A key provision in the Singapore FTA agreement reads as follows:

6. Neither Party shall permit the use [10] of the subject matter of a patent without the authorization 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 competition laws of the Party;

(b) in the case of public non-commercial use or in the case of a national emergency or other circumstances of extreme urgency, provided that:

(i) such use is limited to use by the government or third parties authorized by the government;

(ii) the patent owner is provided with reasonable and entire compensation for such use and manufacture; and,

(iii) Parties shall not require the patent owner to transfer undisclosed information or technical "know how" related to a patented invention that has been subjected to involuntary use authorization.

In a nutshell, this limits Congress' ability to enact "compulsory licensing" statutes which require that the owners of patented technology with potential for public good make their technology available to the market at reasonable prices. The result of compulsory licensing laws in the US and worldwide has not been government appropriation of patent rights, but the encouragement of reasonable and timely agreements for the voluntary license of promising patented technologies.

The US government's compulsory licensing authority would be limited under the Singapore FTA to only three cases -- violations of competition laws, public non-commercial use, or national emergencies. This provision overturns at least two current US laws, while severely limiting what the US can do in the future to address emerging patent problems. The US currently has two technology-specific compulsory licensing statutes -- one under the US Clean Air Act (42 USC Section 7608: Air Pollution Prevention and Control Mandatory licensing), and one concerning civilian atomic energy (42 USC Section 2183). Both laws are intended to make the most modern and efficient technologies available to automobile manufactures and nuclear power plant operators. Both programs will be illegal under the Singapore FTA.

The Clean Air Act's compulsory licensing provision offers an example of the value lost under the Singapore FTA. The Act requires that some areas with poor air quality use cleaner reformulated gasoline. In recent years a motor fuels company called UNOCAL has been engaged a bitter dispute over its aggressive licensing of a patented clean fuel technology used to blend reformulated gas. UNOCAL's patent practices cost consumers in some states more than 5 a gallon at the pump. If we were considering a 5 a gallon gas tax, the Singapore FTA would be dead on arrival in this House. But if the Singapore FTA passes, Congress would lose a useful tool that could be used to make clean air technologies available to US consumers at affordable prices.

The new challenges facing our nation may give rise to new needs for specialized compulsory licensing laws. The United States may have to consider compulsory licensing in cases where broad patents create barriers to medical research and development. The European Union recently adopted a mandatory compulsory licensing program for patents on genetically modified crops, where unlimited patents would stifle innovation. There are growing concerns over opportunistic and harmful activities by patent owners in such diverse areas as Internet protocols and clean fuel standards, and one remedy may be greater use of compulsory licensing. Finally, the compensation rules for emergency or non-commercial use contained in the Singapore agreement will tie the US to the highest standards for compensation, deterring government action necessary to address future emergencies, such as those relating to Anthrax, SARS or other potential threats.

The Singapore FTA hamstrings Congress' authority to promote the rapid market penetration of useful new technologies for environmental protection and electric power production. It also limits Congress' ability to ensure rapid and flexible responses to challenges ranging from unforeseen computer innovations to emerging public health threats.

We should reject the Singapore FTA and develop an agreement that preserves Congress' authority to encourage the quick, effective, and fair dissemination of technologies with broad public purposes.

Sincerely,
/s/
SHERROD BROWN
Member of Congress


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