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Compulsory License

Definition - What does Compulsory License mean?

A compulsory license refers to the process of an individual or company being given authority to use another person's intellectual property in exchange for a set fee. Payment for the license is either set by law or determined through arbitration. Once payment is made by the individual or company seeking rights in the intellectual property, the rights holder then licenses the individual or company to use the intellectual property as the new rights holder wishes.

A compulsory license is also known as a technical license, a mechanical license, or a statutory license.

Justipedia explains Compulsory License

A compulsory license is usually granted for the use of copyrights and patents. There are many different compulsory license provisions in U.S. copyright law. These provisions include non-dramatic musical compositions, public broadcasting, retransmission by cable systems, subscription digital audio transmission, and non-subscription digital audio transmission. In the United States, a compulsory license for a patent usually involves pharmaceuticals.

The compulsory license is governed by U.S. copyright law and various laws contained in Title 17 of the U.S. Code.

Interestingly, it is the policy of the United States Department of Defense to allow its hired contractors to infringe on patents and to defend the contractor against patent infringement claims at the government's expense. The only available remedy for patent holders in this case is to bring suit in the Court of Federal Claims.

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