Pandemics, crises & co.: EU committees agree on exceptions to patent protection
The EU Council and Parliament have agreed on a regulation on compulsory licenses for crisis management. It also applies to patent-protected chips.
(Image: Feng Yu/Shutterstock.com)
A new regulation is to create an EU-wide framework for the efficient issuing of compulsory licenses in cross-border crisis or emergency situations such as pandemics or natural disasters. Negotiators from the EU Parliament, the Council of Ministers and the Commission agreed on a joint draft on Wednesday evening. The initiative should ensure "the availability of crisis-relevant products such as vaccines or computer chips" in an emergency, MEPs announced. The EU will thus be able to grant special authorizations for the production of patented goods in cross-border emergencies without the consent of the rights holder being required.
For a clearly defined admission situation
Such a step would enable the immediate production of medicinal products, for example, by companies other than the patent holder, the Parliament explained. The Commission could only grant this special authorization in the form of a compulsory license in clearly defined emergencies such as a cross-border health crisis or a predicament on the internal market with a defined scope, territorial coverage and duration. Previously, during the coronavirus pandemic in 2021, the elected representatives had appealed to the Brussels government institution in a resolution to explore the option of such an instrument at EU level. The executive body then made a legislative proposal as part of a larger patent package in 2023.
A compulsory license will only be used as a last resort and only in cases where no voluntary agreement can be reached between the rights holder and licensee, the bodies involved emphasize. This applies, for example, if a company with relevant patents refuses to license a medicinal product or demands prohibitive prices for usage rights. In addition, the requirement of urgency must be met. In order to avoid endless negotiations, the EU states state that the preferred voluntary agreements must be "concluded within a reasonable timeframe".
Defense sector remains excluded
The agreed regulation does not apply to products in the defense sector. As part of the compulsory licensing procedure, the Commission must identify all related intellectual property rights and their owners. Rights holders are also entitled to appropriate remuneration for the use of their patents. The amount and period of payment is to be determined by the Commission. Companies do not have to disclose trade secrets. An advisory body must assess the necessity of granting an EU compulsory license; however, its opinion is not binding.
The new rules are also linked to obligations for licensees. For example, they may not manufacture more products under a compulsory license than a specified maximum quantity and must label them. The Commission can impose a fine of up to 300,000 euros for infringements such as illegal exports, and up to 50,000 euros for small and medium-sized enterprises.
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Buschmann deplores "form of expropriation"
At present, EU countries can only issue compulsory licenses on their own. According to observers, the fragmentation associated with this leads to uncertainty and procedural delays in EU-wide crises in which rapid and coordinated action would be necessary. Former Federal Minister of Justice Marco Buschmann (FDP) criticized the instrument as a "form of expropriation". In the dispute over the release of vaccine patents, there were repeated calls for compulsory licenses. This would mean a "sword of Damocles" hanging over investments in industrial property rights and thus also over innovations.
The parliamentary rapporteur, Adrián Vázquez Lázara from the conservative European People's Party (EPP), disagrees: The compromise strikes a balance between protecting intellectual property rights and ensuring "that important technologies and products can be made available quickly throughout the Union in times of crisis". Parliament and the Council still have to approve the draft, which is considered a formality. The regulation will then enter into force one day after its publication in the Official Journal of the EU.
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