Congressional interest in the patent system has been demonstrated by the recent enactment of the Leahy-Smith America Invents Act (AIA), arguably the most significant amendments to the patent laws since 1952. Subsequent to the enactment of the AIA, Members of Congress have expressed criticism with respect to the grant of compulsory licenses on patented inventions by the trading partners of the United States. Compulsory patent licenses have in fact been a longstanding source of tension between the United States and other nations. However, U.S. law also provides for compulsory licensing of patented inventions under certain circumstances. 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. For some observers, compulsory patent licenses present an unwise derogation from the exclusive rights awarded to patent owners. In their view, the routine grant of compulsory licenses will diminish incentives for innovation. On the other hand, other observers believe that compulsory licenses may serve important national interests such as public health and technology transfer. This report provides an overview of compulsory licenses on patented inventions. It begins with a brief introduction of the patent system and the concept of compulsory patent licenses, including limitations imposed upon World Trade Organization members by the Agreement on Trade-Related Aspects of Intellectual Property Rights (the "TRIPS" Agreement). The report next reviews the availability of compulsory licenses under U.S. law. The report next considers the practice of compulsory licensing on patented inventions abroad. The report closes with a discussion of the role of compulsory licenses in innovation policy and a review of possible congressional options. The patent system is grounded in Article I, Section 8, Clause 8 of the U.S. Constitution, which states that "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...." U.S. patent rights do not arise automatically. Inventors must prepare and submit applications to the U.S. Patent and Trademark Office (USPTO) if they wish to obtain patent protection. USPTO officials known as examiners then assess whether the application merits the award of a patent. In deciding whether to approve a patent application, a USPTO examiner will consider whether the submitted application fully discloses and distinctly claims the invention. In addition, the application must disclose the "best mode," or preferred way, that the applicant knows to practice the invention. The examiner will also determine whether the invention itself fulfills certain substantive standards set by the patent statute. To be patentable, an invention must consist of a process, machine, manufacture, or composition of matter that is useful, novel, and nonobvious. The requirement of usefulness, or utility, is satisfied if the invention is operable and provides a tangible benefit. To be judged novel, the invention must not be fully anticipated by a prior patent, publication, or other state-of-the-art knowledge that is collectively termed the "prior art." A nonobvious invention must not have been readily within the ordinary skills of a competent artisan at the time the invention was made. If the USPTO allows the patent to issue, the patent proprietor obtains the right to exclude others from making, using, selling, offering to sell, or importing into the United States the patented invention. Those who engage in these acts without the permission of the patentee during the term of the patent can be held liable for infringement. Adjudicated infringers may be enjoined from further infringing acts. The patent statute also provides for the award of damages "adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer." The maximum term of patent protection is ordinarily set at 20 years from the date the application is filed. At the end of that period, others may employ that invention without regard to the expired patent. Patent rights are not self-enforcing. Patentees who wish to compel others to observe their rights must commence enforcement proceedings, which most commonly consist of litigation in the federal courts. Although issued patents enjoy a presumption of validity, accused infringers may assert that a patent is invalid or unenforceable on a number of grounds. The U.S. Court of Appeals for the Federal Circuit (Federal Circuit) possesses national jurisdiction over most patent appeals from the district courts. The U.S. Supreme Court enjoys discretionary authority to review cases decided by the Federal Circuit. As noted, patents afford their owners the right to exclude others from practicing the patented invention. Patent owners may decline to enforce their exclusionary rights and allow another entity to use their proprietary technology, however. This permission is typically granted in exchange for the payment of a royalty or other consideration. This private contractual arrangement is termed a "license." In addition to a voluntary license, patents may be subject to a compulsory license. Although no universally accepted definition exists, the term "compulsory license" implies that anyone who meets certain statutory criteria may use the patented invention. The permission of the patent owner is not required. Depending upon particular national laws, the grounds for government award of a compulsory license may include: Circumstances of national emergency or extreme urgency. Where the invention serves vital public health needs. A strong societal interest has arisen in access to the patented invention. The patent owner has failed to practice the patented invention in the jurisdiction that granted the patent within a reasonable period of time. The patent owner has abused its economic power in such a manner as to violate the antitrust laws. In circumstances where multiple patents held by different owners cover a particular technology. For example, combination therapies—such as triple antiretroviral drugs—may be subject to more than one patent. In such cases, if one patent owner refuses to license, then the technology may not be marketed absent a compulsory licensing. These statutes typically require an interested party formally to request the compulsory license from a foreign government. Competent authorities then decide whether to grant the license as well as the terms of any granted license. While some accounts suggest that formal compulsory licenses are awarded infrequently, the mere existence of a compulsory licensing statute may do much to encourage bargaining between a patentee and an interested manufacturer, on terms favorable to the manufacturer. 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 Paris Convention states that its member states "have the right to take legislative measures providing for the grant of compulsory licenses to prevent the abuses which might result from the exercise of the exclusive rights conferred by the patent, for example, failure to work." Paris Convention member states have agreed that a compulsory license "may not be applied for on the ground of failure to work or insufficient working before the expiration of a period of four years from the date of filing of the patent application or three years from the date of the grant of the patent, whichever period expires last; it shall be refused if the patentee justifies his inaction by legitimate reasons." The other significant multilateral agreement that speaks to compulsory patent licensing, a component of the international agreements forming the World Trade Organization (WTO), is the Agreement on Trade-Related Aspects of Intellectual Property Rights. The so-called "TRIPS Agreement" places further limitations upon the ability of WTO member states to award compulsory licenses for the use of another's patented invention. Among the most detailed provisions of the TRIPS Agreement, Article 31 imposes in part the following restrictions upon the issuance of compulsory licenses: Each application for a compulsory license must be considered on its individual merits. The proposed user must have made efforts to obtain authorization from the patent owner on reasonable commercial terms and conditions and such efforts have not been successful within a reasonable period of time. However, this requirement may be waived in the case of national emergency or other circumstances of extreme urgency. The scope and duration of the compulsory license is limited to the purpose for which it was authorized. The compulsory license must be nonexclusive—that is to say, the patent owner and possibly other licensed parties may also practice the patented invention. Any such use shall be authorized predominantly for the supply of the domestic market of the Member authorizing such use. The compulsory license must be revocable if and when its motivating circumstances cease to exist and are unlikely to recur. The patent owner must be paid adequate remuneration in the circumstances of each case, taking into account the economic value of the authorization. The legal validity of any decision relating to the authorization of such use shall be subject to judicial or other independent review. Article 31(k) of the TRIPS Agreement waives some of these requirements when use of a patented invention "is permitted to remedy a practice determined after judicial or administrative practice to be anti-competitive." In addition, Article 31(l) allows for a compulsory license to issue to allow holders of improvement patents to make use of dominant patents that would otherwise bar the commercialization of an important technical advance. In November 2001, WTO signatories adopted the Doha Declaration on the TRIPS Agreement and Public Health. The Doha Declaration stated that the TRIPS Agreement "can and should be interpreted and implemented in a manner supportive of WTO Members' right to protect public health and, in particular, to promote access to medicines for all." The Doha Declaration granted broad discretion with regard to compulsory licensing, asserting that WTO signatories have "the right to grant compulsory licences [sic] and the freedom to determine the grounds upon which such licences [sic] can be granted."