In 1977, F.M. Scherer conducted a major study of antitrust, consent-
related compulsory licenses. His study focused on nearly seven hundred
companies, forty-two of which had been subject to compulsory licenses.
102 Scherer calculated the ratio of each company’s R&D expenditures
to its sales for the year 1975, and compared ratios between companies
that had been subject to significant compulsory licensing decrees and
those that had not. Scherer further modeled the relationship between compulsory
licensing and R&D, and found a slight positive correlation between
licensing and high R&D-to-sales ratios. On average, companies
subjected to compulsory licensing actually spent more on R&D than similar
firms in their industry that had not been subjected to compulsory licenses.
103 This was true for all industries, including pharmaceuticals. Because
Scherer only had data from one year, he was not able to determine
whether the R&D expenditures of the firms affected by compulsory licensing
had fallen from previously higher levels.104 Nevertheless, he concluded
that compulsory licensing had not forced firms to invest in R&D at
a level below the norms in their industries
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