Brussels (Brussels Morning) – The EU Council has embraced its negotiating mandate on the regulation of compulsory licensing for crisis management. A compulsory license is an opportunity for a government to allow a third party to utilise an intellectual property right without the permission of the rights-holder.
How Will the EU’s Compulsory Licensing Regulation Work?
The EU Council’s position clarifies the content of the regulation, redefines the decision-making process, reinforces the rights of rights-holders, and determines the number of legislative acts that can trigger the crisis or emergency mode under which a union-required license can be issued.
In situations (i.e. a pandemic or a natural disaster), compulsory licensing can support and provide access to key products and technologies, when, for instance, the holder of a patent cannot deliver the necessary amounts of a key product, and a voluntary arrangement is not available or feasible.
What Triggers Compulsory Licensing Under EU’s New Regulation?
Compulsory licensing mechanisms are handled only at the national level, which could result in a fragmented system in cases of cross-border crises or troubles and does not consider the cross-border supply chains intrinsic to the internal market. For this reason, it was essential to set up a compulsory licensing mechanism at the EU level (‘Union compulsory licence’).
The EU Commission’s proposal sought to allow the EU to rely on a compulsory licensing framework for emergency management applicable in the whole territory of the EU. The Union’s compulsory licence would be closely related to crisis instruments, such as the Internal Market Emergency and Resilience Act (IMERA, known before as Single Market Emergency Instrument or SMEI).
The proposal made certain that the Union’s compulsory licence would only be given after the activation of an emergency or trouble mode at the EU level. The determination of the existence of a crisis or emergency is thus not defined by the regulation on compulsory licensing but rather by the applicable EU crisis instrument. The Union’s compulsory licensing agent will serve as an alternative in situations when voluntary agreements are not known, and it will ensure an applicable territorial reach of compulsory licensing to protect cross-border supply chains. The proposed regulation included a list of EU crisis instruments that can trigger a Union compulsory license.
How Will Rights-Holders Be Protected in EU Licensing?
The EU Council’s negotiating franchise restructures the procedure of giving a compulsory licence at the EU level to defend the rights of the intellectual property rights-holders and assures that they are better informed throughout the procedure. The functions of the advisory body and the national intellectual property professionals are also strengthened in the decision-making process.
Furthermore, the negotiating mandate demonstrates that, when a license is granted to a licensee during a crisis, the rights-holder must be reimbursed. In the Council’s negotiating mandate, this remuneration, to be specified by the Commission on a case-by-case basis, can go beyond the cap of 4% of the total revenue rendered by the licensee, as proposed by the Commission. The EU Council’s position highlights the ‘last resort’ nature of any compulsory licensing decision, suggesting that it should only be used when voluntary arrangements are not available or adequate.
