Compulsory licensing: MEPs ensure EU access to strategic products in crises

Special EU permission to use patent to ensure supply of crisis-relevant products such as medicines or chips

Experts to help Commission decide if the compulsory license is necessary

Rights-holders to be compensated for the emergency use of their patents

On Wednesday, Parliament adopted its first reading position on the new crisis rules ensuring EU´s access to key patented products in times of crises.

With 484 votes for, 121 against and 20 abstentions, MEPs adopted their position on compulsory licensing making the EU ready for future crises by ensuring availability of relevant products, such as vaccines or chips, in emergency situations. The EU should now be able to issue a special permission with specified scope, territorial coverage and duration for the use of patent without authorisation of the rights-holder in cross-border emergencies. Its aim would be to ensure the EU receives the necessary supply of crisis-relevant products protected by patents and certificates and the national and EU levels.

Topic-relevant advisory body

The permission could be issued by the European Commission in clearly defined emergencies such as cross-border health crisis, gas-supply crisis or single market emergencies, in case of lack of voluntary agreement between the rights-holder and the licensee within one month. Before launching the procedure, the Commission would have to identify all related intellectual property rights and their holders. Decision about compulsory licensing should also be recommended by topic-relevant advisory body composed of representatives of national institutions granting national compulsory licenses and it should decide only after receiving comments from rights-holders and licensees. Before compulsory license is terminated, the Commission should also consult the rights-holder and licensee and put in place an adequate transitional period.

Right to compensation and fines for breaches

The rights-holder would also be entitled to appropriate remuneration for the use of their patent and to adequate compensation in case a compulsory license requires disclosure of a trade secret. According to draft rules, only strictly necessary information should be disclosed and the Commission should determine the remuneration depending on the total gross revenue generated by the licensee through activities related to the compulsory license. Draft report also contains a set of obligations for both rights-holders and licensees, e.g. need to disclose information necessary for the compulsory license for the rights-holder or obligation to label products manufactured under compulsory license for licensee. In case these obligations are breached, the Commission can impose a fine not exceeding 6 % of the company’s total turnover in the previous year.

Quote

Following the plenary vote, chair of the Legal Affairs Committee and lead MEP Adrián Vázquez Lázara (Renew, ES) said: “This legislation contributes to our commitment to emerge stronger from the COVID crisis. It enhances our ability to manage patents and licenses, striking a balance between the public interest of European citizens and the innovation capacity of our industry. With structured and effective mechanisms in place, we are better prepared to swiftly reach voluntary agreements during future crises."

Next steps

Report adopted by the plenary now constitutes the 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

The European Commission presented its proposal on compulsory licensing in April 2023, as part of the EU patent package focusing on completion of the Single Market for patents. It was its reaction to the European Parliament resolution of November 2021, where it called on the Commission to analyse the possibility of compulsory licensing at the EU level.