Alice Xie is an IPilogue Writer and a 1L JD Candidate at Western University’s Faculty of Law.

Do you remember contemplating whether you liked a trending pop song enough to spend $4.99? With the rise of online streaming services like Spotify and YouTube over the last two decades, listening to music has arguably changed for the better. However, with the convenience of streaming music through these digital platforms, the music industry has also had to deal with a wide range of copyright issues, including online copyright infringement. A look at streaming giant Spotify’s recent significant copyright battles provides some insight into the issue of on online streaming platforms.

Spotify’s Recent Significant Battles

Spotify has encountered its fair share of copyright infringement lawsuits filed by music artists, record labels, and publishers. In 2015, guitarist David Bowery filed a lawsuit against Spotify USA, a Spotify subsidiary, for streaming songs without first , which are the standard payment for reproducing or distributing a song. Spotify settled the lawsuit with . In 2017, music publishing company Wixen also filed a against Spotify USA, seeking $1.6 billion. Wixen claimed that Spotify from its represented artists, which resulted in the artists and publishers not receiving royalties when customers streamed their work. Spotify and Wixen mutually agreed to in 2018. In 2020, two entertainment companies filed against Spotify and other streaming services for not receiving royalties for their streams. The issue of inadequate artist compensation is not unique to Spotify, but applies to all streaming services.

New Copyright Law: A Solution for Spotify

The relevant US copyright law is , which states that a person or entity seeking to distribute a musical work must first obtain a compulsory license. One can obtain a compulsory license by filing a notice of intention (“NOI”).  In 2018, the US Congress passed a law called the (“MMA”), which seeks to alter the licensing system for the better and take charge of the compensation process. Title 1 of the MMA is especially relevant, as it establishes a for digital music providers. The blanket licensing system covers all musical works available for compulsory licensing, which means that streaming services will no longer need to file an NOI for each song or work. The MMA also established the Mechanical Licensing Collective (“MLC”), which administers the blanket licenses and more notably, maintains a containing information on the musical works and their copyright owners, if known. The law was set to .

Inadequate artist compensation may be partly explained by the difficulty of accurately identifying the rightsholders of each work, given the volume of music works. Digital service providers cannot locate the recipients of royalties. Lesser-known music artists are even more vulnerable to copyright infringements in this way. The MMA ideally solves this difficulty through the public database, which centralizes all information relating to musical works into one place. This provides parties like streaming services seeking compulsory licenses with a recognized source of rightsholders from which to draw. Additionally, the database validates artists’ possession over their works that will not be easily taken. If correctly implemented, the MMA can advance the collective goal of creating a digital music ecosystem where streaming services grow their platforms by legally acquiring distribution rights and artists, publishers, and record labels are rightfully compensated for their work. We may look to future copyright infringement cases to inform the �ѲѴ�’s effectiveness.

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Canada has notably faced challenges in its ability to procure vaccines, quickly falling behind other countries in our vaccination campaigns despite contracting to receive more than enough vaccines for the population. While Canada’s vaccine rollout has increased in recent weeks, still of our population has been fully vaccinated as of March 14^th, 2021. This is compared to and a staggering

One proposed mechanism for increasing the availability of vaccines worldwide is to loosen patent protections held by vaccine makers over their products. Some countries, including South Africa and India, have sought a waiver under the Trade-Related Aspects of Intellectual Property, or TRIPS, agreement from the World Trade Organization, which would temporarily suspend global intellectual property protections for COVID-19 vaccines during the pandemic. While attempts to secure a waiver have thus far been unsuccessful, another potentially useful tool available under TRIPS is compulsory licensing.

refers to the circumstance where a government permits a third party to produce a patented product without the patent holder’s consent. While compulsory licensing typically requires the user to make an effort to obtain the patent holder’s consent to produce the product, this during a “national emergency”, of which the pandemic would qualify according to Article 31(b) of TRIPS.

Canada has a history of using compulsory licensing, including to support the availability of more affordable pharmaceuticals. For instance, in June 1969, Parliament amended the to allow companies to produce generic copies of pharmaceutical products that were still under patent protection. Recent amendments to the Patent Act under Canada’s COVID-19 have strengthened the Federal Government’s ability to address vaccine shortages through the use of compulsory licenses. Specifically, the are aimed at allowing the Federal Government to permit the “construct[ion], use, and [sale of] a patented invention to the extent necessary to respond to a public health emergency that is a matter of national concern”. The Government must still provide notice and pay royalties to the patent holder; however, the government has no further obligations to negotiate with patent holders.

While compulsory licensing is an attractive potential tool to increase the availability of vaccines, if Canada pursues these licenses, it must first address domestic vaccine production capacity. Unfortunately, similar to the Federal Government’s , Canada’s vaccine manufacturing capacity is also deficient. If Canada commits to increasing its domestic vaccine production capacity, whether through the construction of new facilities or by fitting existing industrial facilities to be capable of producing vaccines, then the use of compulsory licensing could be a future tool to produce generic COVID-19 vaccines or boosters in Canada. These efforts will be particularly important given recent concern that and in the future to control the spread of COVID-19.

Regardless of the strategy employed, Canada clearly needs to improve its approach to secure vaccines for Canadians, and the domestic production of generic vaccines through compulsory licensing should be considered as a potential strategy moving forward.

Claire La Mantia is a 2023 JD Candidate at Osgoode Hall Law School interested in intellectual property, privacy, and health law.

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While health activists, generic manufacturers and several academics lauded the decision, the multinational pharmaceutical industry was up in arms.

The facts of the case are thus:

In August 2011, Natco, an Indian generic manufactured applied for a compulsory licence in respect of Bayer’s patent covering an anticancer drug, Sorefanib Tosylate, meant for patients with advanced kidney and liver cancer.

Underlying the Indian Patents Act is the philosophy that if an intellectual property owner abuses her statutorily granted monopoly by engaging in prohibitive pricing (where a patented drug is priced out of the reach of the average consumer) or by failing to supply adequate quantities of the IP good to the public, a compulsory licence will issue (after three years from the date of grant of the patent).

Constituting what many regard as a for compulsory licensing, the Controller General of Patents, PH Kurian found that all the grounds prescribed in section 84 of the Indian Patents Act for the issuance of a compulsory licence had been met, namely:

1. Bayer supplied the drug to hardly 2% of the total patient population of approximately 8000 patients that required the drug. Therefore, the reasonable requirements of the public with respect to the patented drug (Nexavar) were clearly not met.

2. Bayer’s pricing of the drug was excessive and did not constitute a "reasonably affordable" price. It charged Rs 2.8 lakhs for a months' supply of the drug, whereas Natco was willing to supply the same quantity at Rs 8800 per month.

3. Since Bayer did not manufacture reasonable quantities of the drug in India, but merely imported it, it could not be said to have complied with the “working” requirement under the Indian Patents Act. The Controller held in pertinent part that “'worked in the territory of India" under section 84 meant manufactured to a reasonable extent in India."

The Controller then proceeded to issue the licence, stating that Natco ought to pay 6% of its net sales to Bayer as royalty.

Local Working:

The Controllers decision on “local working” is likely to prove controversial, since almost 90% of MNC drugs are not manufactured in India, and therefore susceptible to compulsory licences. However, a close reading of the decision suggests that it is backed by cogent reasons and tenable under the law.

For one, Section 83 of the Act makes clear that patents are not granted only for the purpose of “importation” of the patented product. Secondly, the Indian Patents Act uses the terms "working" and "importation" quite distinctly throughout the Act, making it evident that "working" as used in the Act cannot include "importation".

Some argue that a “local working” provision contravenes the mandate under Article 27 to not “discriminate” between locally produced and imported patented products. Given the fact that in the WTO Canada case, the panel stated that discrimination meant “unjustified differentiation”, one could argue that “local working” is a “justified” differentiation. For one, the Paris Convention clearly stated that “importation” would not amount to working of  a patent, and that if a patent wasn’t worked, this could be treated as an  “abuse”. Secondly, TRIPS is premised on the promise of technology transfer to developing countries. And a local working provision is geared towards encouraging such technology transfer. By forcing patentees to “work” their patents in India, the regime encourages local use/transfer of the said technology. A similar provision on “local working” in Brazil’s regime was challenged by the US—however, the case was later withdrawn and there was no ruling.

This decision of the Indian Patent Office is particularly important since it is not a “government” licence stricto sensu, where the government itself issues and works the licence (sometimes referred to as “government use”), as was the case in Brazil and Thailand. Rather this licence was triggered by the application of a private party (Natco) and the government issued this licence in its capacity as a quasi-judicial authority. In other words, the licence was not issued at the “discretion” of the government, but upon the satisfaction of certain pre-requisites, which when fulfilled, entitled a third party such as Natco to demand a licence.

It bears noting that the licence is very legal in nature and scope and helps temper the excesses of a patent monopoly to achieve public health ends. It is also perfectly compatible with TRIPS, notwithstanding the U.S. Commerce Secretary John Bryson’s that this licence amounted to a “dilution of the international patent regime”

Compulsory Licences and Incentives to  Innovate

The key question now is: Would such licences decrease incentives to innovate? Thus far, there is no empirical work demonstrating that licences stultify the rate of innovation. The few studies available indicate that licences do not have any significant demonstrable effects on the rate and pace of innovation. Illustratively, empirically tests the rates of patenting and other measures of inventive activity before and after six compulsory licences over drug patents issued in the 1980s and 1990s. She observed no uniform decline in innovation by companies affected by compulsory licences and found very little evidence of a negative impact.

More importantly, one needs to ask whether all countries in the world need to contribute equally to Bayer’s R&D efforts. Or whether countries such as India with significant numbers of poor patients can devise policies to induce lower priced drugs in the market, without worrying excessively about Bayers’ incentives to innovate, given that such incentives are more than adequately provided by western markets such as the US and EU. After all, some of the biggest innovators today benefitted from lax IP regimes in the past. Illustratively, Switzerland, which houses some of the world’s leading refused to introduce product patents till 1977 and it was only after considerable pressure and bullying from Germany that it finally yielded.  (See Dominique S. Ritter, y, 14 Fordham Intell. Prop. Media & Ent. L.J. 463 (2004).

Lastly, it must be borne in mind that a compulsory licence is not an evisceration of the patent, as is sometimes made out to be in media reports. Rather, it embodies what in their seminal piece describe as a “liability” rule, where the patentee continues to hold the patent and is entitled to a reasonable royalty from every new player entering the market. This advantage (in terms of compensation through royalties) cannot be understated, particularly in a market like India, where the consumer market is highly differentiated in terms of purchasing power. Drug originators typically cater to very high-income consumers, while generics are able to tap into middle and low-income consumer segments as well. Consequently, the possibility of a new generic entrant entering a market segment hitherto untapped by the originator, rather than simply displacing the patentee’s existing customer base is high. To this extent, a compulsory licence may permit an innovator to profit from newer untapped markets.

Shamnad Basheer is the Ministry of HRD Professor of IP Law at the National University of Juridical Sciences (NUJS), Kolkata and founder of Indian IP blog, SpicyIP. He has written on this licensing order at and in an editorial for the . His earlier writings on this theme (including a) were relied on by the Controller General in his order. 

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