Compulsory licensing only available in EU emergency and should be recommended by experts

Guarantee of appropriate remuneration for patent holder

Fines can be imposed on non-compliant rights-holders and licensees

Draft legislation aims to prepare the EU for future cross-border crises by ensuring supply of relevant patented products in emergency situations.

To ensure availability of the crisis-relevant products in the EU, such as vaccines or chips, members of the Legal Affairs Committee approved their position on the draft regulation laying down the conditions for the EU compulsory licence with 17 votes for, 6 against and no abstentions. Compulsory licence, or a special permission to use a patent without authorisation by its holder aims to ensure that in crises and emergencies, all EU countries will receive the necessary supply of needed products protected by national and EU patents and certificates.

Use of compulsory license to be recommended by experts

New legislation should provide an effective EU-wide solution to cross-border crises, such as the COVID-19 pandemics, without affecting existing national regimes. EU compulsory licence would be issued by the European Commission in an emergency with specification of its scope, duration and territorial coverage. MEPs want a list of situations, when crisis or emergency mode could be launched linked to existing EU crisis mechanism such as single market emergency, cross-border health crisis or gas supply crisis. The compulsory license should only be issued in case there is no voluntary agreement between the rights-holder and the licensee within one month. When considering the use of compulsory EU licensing, the Commission would be assisted by relevant topic experts through an advisory body. In case a new ad-hoc body is created, MEPs want it to be composed of representatives of the national institutions granting national compulsory licences. The rights-holder and licensee would have the possibility to submit comments before decision on the compulsory licensing is reached. Commission would determine the appropriate remuneration for the use of patent the amount of which, according to MEPs, should depend on the total gross revenue generated by the licensee through activities related to compulsory license.

Fines for non-compliance

MEPs insist that the Commission must identify all related intellectual property rights before launching compulsory licensing procedure. In case a compulsory license requires disclosure of a trade secret, this should be limited to what is strictly necessary and should be adequately compensated. In case the rights-holder or licensee fails to comply with their obligations, the Commission can impose a fine not exceeding 6 % of their respective total turnover in the previous year. Yet, the MEPs insist they must have the right to be heard before being fined and the Commission should respond to their observations within 7 days. Commission would also be able to terminate the use of EU compulsory license, but before doing so, rights-holders and licensees should be consulted and a transitional period should be put in place.

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Following the commitee vote, rapporteur Adrián Vázquez Lázara (Renew, ES) said: “This legislation is part of that pledge to come out stronger of the COVID crisis: we now have a better crisis toolkit for managing patents and licences, balancing out public interest of European citizens with the capacity of our industry to keep innovating in the EU. We now have structured and effective mechanisms and measures of last resort to ensure fruitful and fast voluntary agreements to face the next crisis prepared.”

Next steps

The draft report will now be put to a vote at an upcoming plenary session in March and will constitute Parliament´s position at first reading.The file will be followed up by the new Parliament after the European elections on 6-9 June.

Background

In its resolution of November 2021, the European Parliament called on the Commission to analyse the possibility of compulsory licencing at the EU level. The proposal, presented by the European Commission in April 2023, is part of the EU patent package focusing on completion of the Single Market for patents.