A licence is a contract whereby the holder of an industrial property right (patent, trademark, design or model) cedes to a third party, in whole or in part, the enjoyment of the right to its working, free of charge, or in return for payment of fees or royalties.
Governments may issue a compulsory licence to allow the use of an invention (e.g. a patented drug) without the consent of the patent holder on grounds of public interest. Under the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), a voluntary licence should normally be requested before a compulsory licence is issued and the patent holder must be paid adequate remuneration, even under compulsory licence conditions. A compulsory licence may be issued without prior request for a voluntary licence in cases such as national emergency, extreme urgency, or for public, non-commercial use.
Compulsory licensing has been used by the public sector to introduce price-lowering competition and to ensure the availability of needed medicines. Many countries now provide for compulsory licensing through national legislation.
In the health sector, the term “licensing” is used to refer to requirements that must be met before providers and health professionals can begin to deliver services. In some cases, there may be different licensing/registration requirements on private and public providers and health professionals. There are, of course, calls for most of these requirements, particularly with health professionals, to move to systems that demand the same standards and requirements of both public and private providers.
Licensing is also relevant to products and goods. For example, countries should have licensing requirements for the manufacture, importation, and marketing of pharmaceutical products. There are also drug registration requirements that must be met before drugs can be marketed or prescribed in local markets.