COMMISSION STAFF WORKING DOCUMENT Subsidiarity Grid Accompanying the document Proposal for a Regulation of the European Parliament and of the Council on compulsory licensing for crisis management and amending Regulation (EC) 816/2006
Date: 2023-04-27
Institutions: Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs, European Commission
Subjects: coronavirus disease, crisis management, epidemic, export monitoring, health aid, intellectual property, pharmaceutical product, rule under emergency powers, security of supply

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   EUROPEAN COMMISSION  Brussels, 27.4.2023  SWD(2023) 120 final  COMMISSION STAFF WORKING DOCUMENT Subsidiarity Grid Accompanying the document   Proposal for a Regulation of the European Parliament and of the Council on compulsory licensing for crisis management and amending Regulation (EC) 816/2006            {COM(2023) 224 final} - {SEC(2023) 173 final} - {SWD(2023) 121 final} - {SWD(2023) 122 final}  
 
 
1.  Can the Union act? What is the legal basis and competence of the Unions’ intended action? 

1.1 Which article(s) of the Treaty are used to support the legislative proposal or policy initiative? 

The proposed initiative will be based on Articles 114 and 207 of the Treaty on the Functioning of the 
EU (‘TFEU’).  
Article  114  TFEU  confers  on  the  EU  the  power  to  adopt  measures,  which  have  as  their  object  the 
establishment and functioning of the internal market and has provided legal basis for a wide range of 
EU  instruments  in  the  area  of  IP  rights.  Since  the  envisaged  initiative  aims  at  ensuring  that 
compulsory licensing is fit for purposes as regards the Single Market, this initiative should be based 
on Article 114 TFEU.  
Article 207 TFEU confers on the EU competence in the field of common commercial policy, including 
as regards IP rights. Regulation (EC) No 816/2006, relating to the compulsory licensing of medicines 
for export purposes to third countries, is based on Articles 95 and 133 of the TEC (i.e. Article 114 and 
207  of  the  TFEU).  Since  the  envisaged  initiative  would  have  an  impact  on  Regulation  (EC)  No 
816/2006, and on the possibility to export goods manufactured in the EU, the initiative should also 
take article 207 TFEU as a basis.  

1.2 Is the Union competence represented by this Treaty article exclusive, shared or supporting in 
nature? 

In the case of both Article 207 and Article 114 TFEU, the Union’s competence is shared.  

Subsidiarity does not apply for policy areas where the Union has exclusive competence as defined in 
Article  3  TFEU1.  It  is  the  specific  legal  basis  which  determines  whether  the  proposal  falls  under  the 
subsidiarity  control  mechanism.  Article  4  TFEU2  sets  out  the  areas  where  competence  is  shared 
between the Union and the Member States. Article 6 TFEU3 sets out the areas for which the Union has 
competence only to support the actions of the Member States. 

2.  Subsidiarity Principle: Why should the EU act? 

2.1 Does the proposal fulfil the procedural requirements of Protocol No. 24: 

-  Has there been a wide consultation before proposing the act? 
- 

Is there a detailed statement with qualitative and, where possible, quantitative indicators 
allowing an appraisal of whether the action can best be achieved at Union level? 

The Commission conducted a Call for evidence  between 1 April and 29 April 2022 to gather views, 
opinions and evidence from public and private sector stakeholders.  The European Commission also 
held  an  Open  Public  Consultation  from  7  July  2022  to  29  September  2022.  In  addition,  the 
Commission  launched the  study  ‘Compulsory  licensing  of  intellectual  property  rights’  [CEIPI(2023)]. 
The  objective  of  the  study  was  to  assist  the  Commission  in  defining  potential problems  as  regards 
compulsory  licensing  in  the  EU  as  well  as  identifying  and  assessing  policy  options  to  improve 
coherence and effectiveness in the field. To this end, the study aimed at collecting data through desk 
research, case studies, interviews with stakeholders as well as organising two workshops.  
Both  the  explanatory  memorandum  of  the  proposal  and  the  impact  assessment  report  contain  a 
section on the principle of subsidiarity. 

1 https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:12008E003&from=EN  
2 https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:12008E004&from=EN  
3 https://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:12008E006:EN:HTML  
4 https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:12016E/PRO/02&from=EN  

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2.2 Do the explanatory memoranda (and impact assessment) accompanying the Commission’s 
proposal contain an adequate justification regarding the conformity with the principle of 
subsidiarity? 

Yes,  subsidiarity  is  explained  in  section  3.2  of the  impact  assessment  as  well as  in  the  explanatory 
memorandum accompanying the proposal. 

2.3 Based on the answers to the questions below, can the objectives of the proposed action be 

achieved sufficiently by the Member States acting alone (necessity for EU action)? 

No,  the  objectives  of  the  proposed  action  cannot  be  achieved  sufficiently  by  the  Member  States 
alone. 
Action  at EU  level  is  justified  to ensure  a more  efficient  functioning of  the  Single  Market  in  crises. 
Currently, Member States can only act nationally meaning that they can grant a compulsory licence 
for their own territory. This can be sufficient for purely national crises, where both the crisis and the 
manufacturing capacities are in the same Member State. However, this will not be sufficient when a 
crisis has a cross-border dimension – the latter is highly probable due to prevalence of cross-border 
supply  chains.  The  incapacity  of  Member  States  to  properly  address  a  crisis  with  a  cross-border 
dimension  finds  its  origin  in  the  territoriality  of  national  compulsory  licensing  schemes  and  the 
divergent,  sometimes  sub-optimal,  compulsory  licensing  schemes  in  place  to  tackle  a  crisis.  The 
proposed EU action will act on these specific points by creating an EU-level compulsory licence with a 
streamlined procedure. Without action at EU level, Member States would remain vulnerable to crises 
with  a  cross-border  dimension.  In  contrast,  introducing  an  EU  compulsory  licensing  scheme  will 
contribute  to  building  a  more  resilient  EU  by  providing  an  additional  collective  tool  in  support  of 
other crisis instruments such as SMEI or the Emergency Framework Regulation. 

(a)  Are there significant/appreciable transnational/cross-border aspects to the problems being 

tackled? Have these been quantified? 

Yes.  The  average  number  of  Member  States  in  which  European  Patents  are  active  is  estimated  at 
around 5.2 (based on a selection of COVID-related products, as quantified in the impact assessment). 
This means that licensing of patent rights for a given product in the EU might require a coordinated 
action among four to five Member States. The number of patents active in several countries are not 
the only element  to be  considered. Additionally,  the Single Market  is based on complex multi-step 
cross-border supply chains, as products are increasingly manufactured across several Member States, 
as  illustrated  in  the  problem  definition  of  the  impact  assessment.  Yet,  current  EU  CL  rules  are 
characterised  by 
inadequate  territorial  architecture,  uncoordinated  national  procedures  and 
decision-making,  which  is  especially  problematic  in  view  of  cross-border  value  chains  increasingly 
predominant  in  the  EU  Single  Market.  This  results  from:  (1)  Divergent  national  schemes  on 
compulsory licensing, (2) Inadequate territorial reach of compulsory licensing (compulsory licensing 
in  the  EU  is  designed  to  exclusively  supply  national  territories,  meaning  that  there  is  currently  no 
Single Market and no free movement of goods for CL products), (3) No dedicated fora to deal with CL 
in support of EU resilience. 

(b)  Would national action or the absence of the EU level action conflict with core objectives of 

the Treaty5 or significantly damage the interests of other Member States? 

The absence of an EU level action would damage the ability of the EU and its Member States to rely 

5 https://europa.eu/european-union/about-eu/eu-in-brief_en  

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on  compulsory  licensing  to  tackle  a  crisis,  should  voluntary  agreements  not  be  available  nor 
adequate.  Without  action  at  EU  level,  Member  States’  action  would  be  limited  to  the  national 
territory, without the possibility to take advantage of the single market. 

(c)  To what extent do Member States have the ability or possibility to enact appropriate 

measures? 

Member  States’  action would  not  be  able to  enact  adequate  measures  on  compulsory  licensing  to 
address  EU-wide  or  cross-border  crises.  In  the  absence  of  an  EU  action,  compulsory  licensing 
schemes  for  crisis  management  would  remain  purely  national,  also  for  cross-border  or  EU-wide 
crises.  There  would  be  no  coordination  between  Member  States  and  compulsory  licensing  would 
remain mainly applicable to national territories. This would result in maintaining an inefficient tool 
for addressing crises in the Single Market, unfit for the cross-border nature of EU supply chains 

(d)  How does the problem and its causes (e.g. negative externalities, spill-over effects) vary 

across the national, regional and local levels of the EU? 

The current landscape of EU compulsory licensing is characterised by a fragmented landscape when 
it comes to compulsory licensing for crisis management, especially concerning the trigger, the scope, 
the  procedure  and  conditions  of  national  rules.  As  illustrated  in  the  impact  assessment,  not  all 
Member  States  provide  for  compulsory  licensing  for  crisis  management,  some  do  only  for  certain 
types  of  crises  (i.e.  health)  while  other  provide  for  general  basis,  differently  worded,  for  which 
uncertainty remains as to their concrete application to crisis. Many divergences exist across the EU in 
respect  of  the  scope  of  a  compulsory  licence,  which  has  a  direct  influence  on  the  ability  to  use 
compulsory  licensing  to  tackle  crises.  Differences  between  national  granting  authorities  and 
procedures  result  in  different  delays  applicable  to  grant  a  compulsory  licence  and  to  review  the 
granting  decision.  Member  States’  law  also  considerably  vary  when  it  comes  to  conditions  under 
which a compulsory licence can be granted. 

(e)  Is the problem widespread across the EU or limited to a few Member States? 

As  follows  from  the  information  provided  for  under  point  (d),  the  problem  results  from  great 
fragmentation of rules across the EU. 

(f)  Are Member States overstretched in achieving the objectives of the planned measure? 

No, as the proposed initiative would add to the existing national schemes. 

(g)  How do the views/preferred courses of action of national, regional and local authorities 

differ across the EU? 

In its resolution of November 20216, the European Parliament called on the Commission ‘to analyse 
and  explore  possible  options  for  ensuring  effectiveness  and  better  coordination  of  compulsory 
licensing  in  the  EU.  The  Council7  confirmed  that  the  EU  stood  ready  to  discuss  the  flexibilities  of 

6 The resolution on the intellectual property action plan to support the EU’s recovery and resilience 
(2021/2007(INI)). 
7 Council conclusions of 18 June 2021, available here.  

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compulsory  licensing  for  the  domestic  market  and  export  purposes  to  third  countries8.  It  also 
confirmed the need to explore possible IP tools and options to better coordinate the management of 
cross-border crises.   

2.4 Based on the answers to the questions below, can the objectives of the proposed action be 
better achieved at Union level by reason of scale or effects of that action (EU added value)? 

To  achieve  the  objectives  of  this  initiative  (i.e.  to  provide  the  EU  with  an  effective  compulsory 
licensing scheme for crisis management), national actions do not offer viable solutions.  

(a)  Are there clear benefits from EU level action?  

Yes. EU-level action would allow overcoming the limitations of national actions. The EU-level action 
will create a single procedure to grant an EU-level CL with adequate features to tackle a crisis. This 
would  ensure  that  conditions  are  the  same  across  the  EU  and  would  avoid  national  discrepancies 
likely  to  slow  down  or  prevent  an  efficient  CL  scheme  to  tackle  cross-border  crises.  This  single  CL 
would be applicable in all relevant territories, therefore covering cross-border situations. This would 
be the case for both the EU market and for export purposes. Coherence with EU crisis instruments 
would be ensured by the possibility to use their trigger and by reference to the (advisory) bodies set-
up by the EU crisis instruments to discuss an EU-level CL. 

(b)  Are there economies of scale? Can the objectives be met more efficiently at EU level (larger 

benefits per unit cost)? Will the functioning of the internal market be improved? 

Member  States  would  benefit  from  the  centralised  procedure,  as  costs  linked  to  the  negotiations 
with the patent owners and the manufacturers would be incurred solely at EU level (although costs 
of  participating  in  the  EU  level  negotiations  would  remain).  The  new  compulsory  licensing  rules 
would also strengthen EU bargaining position as 27 countries would run negotiations together and at 
once. 

(c)  What are the benefits in replacing different national policies and rules with a more 

homogenous policy approach? 

The  proposed  initiative  will  not  replace  national  policies  (which  cannot  provide  a  solution  for  EU-
wide  crisis)  but  rather  add  a  layer  to  allow  a  Union-level  compulsory  licence  for  EU-wide  crisis 
management. 

(d)  Do the benefits of EU-level action outweigh the loss of competence of the Member States 
and the local and regional authorities (beyond the costs and benefits of acting at national, 
regional and local levels)? 

Member States would not lose their competence to act at national level.     

(e)  Will there be improved legal clarity for those having to implement the legislation? 

8 Where reference is made hereinafter to exports to third countries, this refers to third countries covered by 
Regulation (EC) No 816/2006.  

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See above point.  

3.  Proportionality: How the EU should act 

3.1  Do the explanatory memoranda (and any impact assessment) accompanying the Commission’s 
proposals contain an adequate justification regarding the proportionality of the proposals and 
a statement allowing appraisal of the compliance of the proposals with the principle of 
proportionality? 

Yes. As stated in the explanatory memorandum, the adoption of a Regulation establishing an EU-level 
compulsory licensing scheme for crisis management does not go beyond what is necessary to achieve 
the identified objectives. It is limited to the aspects that Member States cannot achieve satisfactory 
on their own and where the Union can act more effectively, efficiently and with greater added value. 
The objective of the initiative is to build an EU-level compulsory licensing scheme able to tackle crises 
with a cross-border dimension, in addition to the existing compulsory licensing national schemes for 
grounds other than crises. The proposal is therefore limited to what is necessary to tackle crisis with 
a cross-border dimension, only when such action cannot be implemented at national level or when 
such implementation would be inefficient.  

3.2 Based on the answers to the questions below and information available from any impact 
assessment, the explanatory memoranda or other sources, is the proposed action an 
appropriate way to achieve the intended objectives? 

The proposed action is clearly an appropriate way to achieve the objectives. The EU-level compulsory 
licensing cannot be achieved at national level. 

(a)  Is the initiative limited to those aspects that Member States cannot achieve satisfactorily on 

their own, and where the Union can do better? 

Yes. The initiative leaves untouched compulsory licensing at national level. 

(b)  Is the form of Union action (choice of instrument) justified, as simple as possible, and 

coherent with the satisfactory achievement of, and ensuring compliance with the objectives 
pursued (e.g. choice between regulation, (framework) directive, recommendation, or 
alternative regulatory methods such as co-legislation, etc.)? 

The  chosen  instrument  is  a  Regulation  establishing  a  compulsory  licencing  system  for  crisis 
management at Union level with its own triggers, procedure and conditions. While leaving national 
compulsory  licencing  schemes  in  the  Member  States  untouched,  it  ensures  coherence  with  other 
crisis  and  emergency  instruments  at  Union  level  and  is  fully  compliant  with  the  international 
requirements  for  compulsory  licencing  laid  down  in  the  TRIPS  Agreement.  Alternative  regulatory 
methods  such  as  a  Directive  harmonising  national  compulsory  licencing  schemes  of  the  Member 
States are not considered appropriate, as explained in the explanatory memorandum. 

(c)  Does the Union action leave as much scope for national decision as possible while achieving 
satisfactorily the objectives set? (e.g. is it possible to limit the European action to minimum 
standards or use a less stringent policy instrument og approach?) 

Yes, action at national level is left to Member States.   

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(d)  Does the initiative create financial or administrative cost for the Union, national 

governments, regional or local authorities, economic operators or citizens? Are these costs 
commensurate with the objective to be achieved? 

The initiative does not create financial nor administrative cost for the Union, national governments, 
regional  or  local  authorities,  economic  operators  or  citizens.  Member  States  would  need  to  bear 
limited adjustments costs as the initiative would provide an EU-level CL, through a regulation, on top 
of existing  national  legislation. They would  face  some  enforcement  costs  in case of crisis, linked to 
the transparency obligation. Patent owners could face an incremental loss of control of their patent 
rights due to the broadened geographical scope of the Union-level compulsory licence, as compared 
to the status quo of a thicket of national CLs. 

(e)  While respecting the Union law, have special circumstances applying in individual Member 

States been taken into account? 

No as it was not needed. 

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