Source: EURLEX
Language: en
Format: md

**Council of the**
**European Union**

**Interinstitutional File:**

**2023/0129(COD)**

**COVER NOTE**

**Brussels, 2 May 2023**
**(OR. en)**

**8901/23**

**PI 58**
**PHARM 69**
**COMPET 387**
**MI 355**
**IND 209**
**IA 91**
**CODEC 751**

From: Secretary-General of the European Commission, signed by Ms Martine
DEPREZ, Director

date of receipt: 27 April 2023

To: Ms Thérèse BLANCHET, Secretary-General of the Council of the
European Union

No. Cion doc.: COM(2023) 224 final

Subject: Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND
OF THE COUNCIL on compulsory licensing for crisis management and
amending Regulation (EC) 816/2006

Delegations will find attached document COM(2023) 224 final.

Encl.: COM(2023) 224 final

8901/23 BM/ps
## COMPET.1 EN

EUROPEAN

COMMISSION

Brussels, 27.4.2023
COM(2023) 224 final

2023/0129 (COD)

Proposal for a

**REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL**

**on compulsory licensing for crisis management and amending Regulation (EC) 816/2006**

(Text with EEA relevance)

{SEC(2023) 173 final} - {SWD(2023) 120 final} - {SWD(2023) 121 final} 
{SWD(2023) 122 final}

# **EN EN**

**EXPLANATORY MEMORANDUM**

**1.** **CONTEXT** **OF** **THE** **PROPOSAL**

**•** **Reasons for and objectives of the proposal**

Intangible assets such as inventions, trade secrets and know-how are the cornerstone of the
EU economy and competitiveness. Patent rights, in particular, play a key role in supporting
EU innovation and creating the right environment for investment. For European innovation to
flourish, a solid, predictable, and flexible legal framework for intellectual property rights,
including patents, needs to be created. The Unitary Patent system helps further improve and
harmonise the EU legal framework on patents. Beyond this, the Commission action plan on
intellectual property rights has identified several areas of patent law that need to be further
improved and harmonised. One of these areas is compulsory licensing. The COVID-19 crisis
highlighted that an appropriate balance between patent rights and other rights and interests is
a staple of the patent system. During the COVID-19 crisis, the conflicting interests were
access to health products and preserving innovation incentives that are key to developing new
health products, such as vaccines and therapeutics. The pandemic added another element to
the discussion: the role intellectual property rights could and should play in a crisis. In other
words, the question became: how we can preserve the balance and incentives for innovation
while ensuring swift access to critical products and technologies in crises, even in the absence
of voluntary agreements. Patent law already provides a solution: compulsory licensing.

A compulsory licence is the possibility for a government to allow a third party to use a patent
without the authorisation of the rights-holder, subject to certain conditions. Compulsory
licensing can therefore complement current EU efforts to improve its resilience to crises. In
the aftermath of the COVID-19 crisis, the EU has tabled several EU crises instruments, such
as the Proposal for a Regulation establishing a Single Market Emergency Instrument (SMEI)
or Council Regulation (EU) 2022/2372 of 24 October 2022 on a framework of measures for
ensuring the supply of crisis-relevant medical countermeasures in the event of a public health
emergency at Union level. These instruments provide the EU with a means of ensuring access
to products needed to tackle a crisis in the Internal Market. The instruments focus on
voluntary approaches. As evidenced by the COVID-19 crisis, voluntary agreements remain
the most efficient tool to enable rapid manufacturing of patent-protected products, including
in crises. However, there may be cases where such voluntary agreements are not available or
appropriate. In such circumstances, compulsory licensing can provide a solution to allow the
rapid manufacturing of products needed to tackle a crisis. However, to guarantee that such
products can freely circulate within the Internal Market and reach all those in need, the
compulsory licensing shall be granted at EU level.

Compulsory licensing has a dual role, as it can incentivise the conclusion of voluntary
agreements and also enable the manufacturing of products needed to tackle a crisis in the
absence of (appropriate) voluntary agreements. However, for compulsory licensing to fulfil
this role, an efficient compulsory licensing scheme needs to be built in the EU, able to rely on
the Single Market, complementing EU crisis instruments and in line with the EU’s
international obligations.

The Agreement on Trade-Related Aspects of Intellectual Property Rights (‘TRIPS
Agreement’) sets the international legal framework on compulsory licensing. Article 31 of the
TRIPS Agreement provides the framework for compulsory licensing in relation to the
domestic market, while Article 31bis of the TRIPS Agreement provides the rules for

# EN 1 EN

compulsory licensing for the manufacturing and export of pharmaceutical products to
countries with public health problems.

There is currently no EU-wide harmonisation of compulsory licensing for the domestic
market, including as regards European patents with a unitary effect. Instead, there is a
patchwork of different national rules and procedures on compulsory licensing. National rules
have insufficient territorial reach, since products manufactured under a compulsory licence in
one Member State either cannot be supplied to another Member State, or can only be supplied
in limited quantities. National procedures are also different from each other, and decisionmaking is not coordinated at EU level. This limits the ability to rely on the Internal Market to
guarantee supplies across all the Union territory.

Against this background, this initiative aims to provide the Internal Market with an efficient
compulsory licensing scheme for crisis management. The initiative has therefore two main
objectives. First, it aims to enable the EU to rely on compulsory licensing in the context of the
EU crisis instruments. Second, it introduces an efficient compulsory licensing scheme, with
appropriate features, to allow a swift and appropriate response to crises, with a functioning
Internal Market, guaranteeing the supply and the free movement of crisis-critical products
subject to compulsory licencing in the internal market.

**•** **Consistency with existing policy provisions in the policy area**

In its intellectual property action plan, the Commission underlined ‘the need to ensure that
effective systems for issuing compulsory licences are in place’. The 2023 Commission work
programme announced the establishment of clear rules for the compulsory licensing of
patents. In the Council conclusions of 18 June 2021, the Council confirmed that the EU stood
ready to discuss the flexibilities of compulsory licensing for the domestic market and for
export purposes to third countries. It also confirmed the need to explore possible intellectual
property tools and options to better coordinate the management of cross-border crises. In its
resolution of November 2021, 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 TRIPS Agreement provides the international legal framework for compulsory licensing.
This initiative is strictly in line with the boundaries of the TRIPS Agreement. Although the
Unitary Patent system aims to further harmonise EU law on patents, it leaves the issue of
compulsory licensing to national legislation. There are currently three other pieces of EU
legislation that contain provisions on compulsory licensing:

    - Council Regulation (EC) No 2100/94 of 27 July 1994 on Community plant variety
rights: Article 29 of this Regulation provides for the possibility for the Community
Plant Variety Office to grant a compulsory licence on a community plant variety
right, on application by a Member State, by the Commission or by an organisation
set up at EU level;

    - Directive 98/44/EC of the European Parliament and of the Council of 6 July 1998 on
the legal protection of biotechnological inventions: Article 12 of this Directive
provides for the possibility to apply for a compulsory licence, where a plant breeder
cannot use a plant variety without infringing a patent or where the holder of a patent
concerning a biotechnological invention cannot exploit it without infringing a prior
plant variety right;

    - Regulation (EC) No 816/2006 of the European Parliament and of the Council of
17 May 2006 on compulsory licensing of patents relating to the manufacture of

# EN 2 EN

pharmaceutical products for export to countries with public health problems: This
Regulation sets out a procedure to grant compulsory licences in relation to patents
and supplementary protection certificates concerning the manufacture and sale of
pharmaceutical products, when such products are intended for export to eligible
importing countries that need these products to address public health problems.

The first two EU acts cited above are not impacted by this proposal. The proposal would
amend Regulation (EC) No 816/2006 in order to add the possibility, in the context of a crossborder manufacturing process, to rely on a compulsory licence granted by the Commission
and applicable in the territory of the Union.

Member States have implemented different compulsory licensing schemes in national
legislation, only applicable to their national territory. The proposal leaves these national
compulsory licensing systems untouched. The Union compulsory licensing system introduced
by this proposal does not aim at addressing purely national crises. The proposal instead aims
to address crises that have a cross-border dimension within the EU, which do not fall within
the scope of national compulsory licensing schemes.

This proposal is part of the EU patent package, which also provides for the introduction of a
system for Unitary Supplementary Protection Certificates and an initiative on standard
essential patents. The proposal complements the Unitary Patent system, which is a major step
towards the completion of the Single Market for patents. Against this backdrop of increasing
completion of the Single Market for patents, the initiative on compulsory licensing is
therefore at the crossroads between the different EU crisis instruments and the international
obligations and discussions on IP rights and compulsory licensing.

**•** **Consistency with other Union policies**

The Commission has recently tabled proposals to improve the EU’s resilience to crises and
better guarantee well-functioning supply chains in the Single Market. In that respect,
reference can be made to the following key EU legislations:

    - Proposal for a Regulation establishing a Single Market emergency instrument
(‘SMEI’);

    - Regulation (EU) 2022/2371 of the European Parliament and of the Council of 23
November 2022 on serious cross-border threats to health and repealing Decision No
1082/2013/EU (‘SCBTH’);

    - Council Regulation (EU) 2022/2372 of 24 October 2022 on a framework of
measures for ensuring the supply of crisis-relevant medical countermeasures in the
event of a public health emergency at Union level (‘Emergency Framework
Regulation’);

    - Proposal for a Regulation of the European Parliament and of the Council establishing
a framework of measures for strengthening Europe's semiconductor ecosystem
(‘Chips Act’).

These pieces of legislations can either qualify as crisis instruments or as containing a crisis
mechanism, setting up emergency mechanisms to ensure the supply of and access to critical
products in the Single Market. None of these EU crisis instruments explicitly includes the use
of compulsory licensing to address a crisis. This proposal makes compulsory licencing one of
the tools available to respond to a crisis within the respective emergency frameworks, by
closely linking compulsory licencing to EU crisis instruments.

The reform of the pharmaceutical legislation also provides for the suspension of regulatory
data and market protection where a compulsory licence has been granted for a patent relating

# EN 3 EN

to a medicinal product in order to address a public health emergency (see Article 80 para. 4 of
Directive (EU) XXX/XX [COM(2023)192]). This increases the effectiveness of a compulsory
licence, as rules on regulatory data and market protection can impede the authorisation of
generic medicinal products.

**2.** **LEGAL** **BASIS,** **SUBSIDIARITY** **AND** **PROPORTIONALITY**

**•** **Legal basis**

The proposal is based on Articles 114 and 207 of the Treaty on the Functioning of the EU
(‘TFEU’). Article 114 TFEU empowers the European Parliament and the Council to adopt
measures for the approximation of the provisions laid down by law, regulation or
administrative action in Member States, which have as their object the establishment and
functioning of the internal market. Article 207 TFEU confers on the EU competence in the
field of common commercial policy, including as regards IP rights which is relevant, since the
proposal has an impact on Regulation (EC) No 816/2006, relating to the compulsory licensing
of medicines for export purposes to third countries.

**•** **Subsidiarity (for non-exclusive competence)**

Action at EU level is justified to ensure the smooth 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 only. 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 – this is considered highly
probable due to the prevalence of cross-border supply chains. The inability of Member States
to properly address a crisis with a cross-border dimension originates 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 a Union compulsory licence with a streamlined procedure.
Without action at EU level, Member States would remain vulnerable to crises that have a
cross-border dimension. Introducing an EU compulsory licensing scheme will help build a
more resilient EU by providing an additional collective tool that supports other crisis
instruments such as SMEI or the Emergency Framework Regulation.

**•** **Proportionality**

The adoption of a Regulation establishing a Union 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 EU can act more effectively, efficiently and with greater added value. The initiative’s
objective is to build a Union compulsory licensing scheme able to tackle crises with a crossborder 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.

**•** **Choice of the instrument**

The chosen instrument is a Regulation establishing a compulsory licencing system for crisis
management at EU level with its own triggers, procedure and conditions. It leaves national
compulsory licencing schemes in the Member States untouched but ensures coherence with
other crisis and emergency instruments at EU level and is fully compliant with the
international requirements for compulsory licencing laid down in the TRIPS Agreement.

# EN 4 EN

Alternative regulatory methods such as a Directive harmonising national compulsory
licencing schemes of the Member States are not considered appropriate.

First, a Directive would only create a certain degree of harmonisation. While the
harmonisation of key aspects of compulsory licencing could help improve and clarify the
features of national schemes, Member States’ competent authorities would remain in charge
of determining whether a crisis exists and whether to grant a compulsory licence. Hence, there
would be a risk that the Directive would not be implemented and applied in a uniform manner
due to existing differences in national law proceedings and judicial traditions.

Second, a Directive would only improve the situation of cross-border supply of products to a
limited extent, as both the compulsory licence granted in the manufacturing country and those
granted in the importing country would be based on harmonised rules. However, the lack of
exhaustion of the patent right would still require several compulsory licences in all
manufacturing and importing Member States.

Other measures like the adoption of recommendations aiming to bring about more uniformity
of national laws would neither satisfactorily address the fragmentation of compulsory
licensing in the EU nor the insufficient territorial reach of a national compulsory licence and
coherence with existing and upcoming EU crisis instruments at EU level.

**3.** **RESULTS** **OF** **EX-POST** **EVALUATIONS,** **STAKEHOLDER**
**CONSULTATIONS** **AND** **IMPACT** **ASSESSMENTS**

**•** **Stakeholder consultations**

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. 57 stakeholders
submitted feedback.

The European Commission also held an open public consultation between 7 July 2022 and
29 September 2022. This public consultation aimed to collect views from all stakeholders on
how to build the most efficient compulsory licensing scheme in the EU and to ensure that it is
fit to tackle EU-wide and global crises. This consultation was available on the Commission’s
better regulation portal and open to everybody. The public consultation received 74 replies.
The results of the public consultation show that a large majority of respondents consider that
public authorities should be entitled to allow production of critical products through a
compulsory licence. Respondents are usually more in favour of a coordinating role for
European institutions than a decision-making role. This can be explained by the fact that
businesses and industry representatives expressed low levels of support for a decision-making
role, and they were the dominant group of respondents to the consultation. Stakeholders
generally consider the option of granting a compulsory licence at EU level, as proposed in this
initiative, more positively in relation to the EU’s ability to tackle crises than the granting of a
compulsory licence at national level. There is a clear difference between among stakeholder
views on this, with low support from industry representatives: a majority of companies and
business associations consider that the impact would be negative. In contrast, no respondent in
any other category considers the impact to be negative. A large majority considers it positive.

**•** **Collection and use of expertise**

In March 2022, the Commission launched the ‘Compulsory licensing of intellectual property
rights’ study [CEIPI(2023)]. The study’s objective was to assist the Commission in
identifying potential problems as regards compulsory licensing in the EU and identifying and
assessing policy options to improve coherence and effectiveness in the field. To this end, the
study aimed to collect data through desk research, case studies, interviews with stakeholders

# EN 5 EN

as well as organising two workshops. The study was conducted by the Centre for International
Intellectual Property Studies (CEIPI), the Université de Strasbourg (UNISTRA), the Impact
Licensing Initiative (ILI) and Ecorys Nederland BV (ECORYS).

During the study, Member State experts were asked to complete a questionnaire **.** The
questions focused on the national experiences with compulsory licensing, the scope of
application of compulsory licences and procedural aspects. In addition, a series of 25 semistructured interviews of national experts, academia, policy representatives and industry
experts were conducted. These interviews focused on gathering ‘non-published’ data on
national procedures and legal requirements of compulsory licensing.

Two workshops were held:

    - A first workshop on ‘information collection on specific compulsory licence cases
with exchange of views and experiences in the field of IPRs’ was held in Brussels on
28/29 April 2022;

    - A second workshop on ‘policy options for compulsory licensing in Europe in case of
a crisis’ was held in Brussels on 9/10 June 2022.

A total of 24 participants attended both workshops, representing patent attorneys from
multiple Member States, policy officials and representatives from different industries.

**•** **Impact assessment**

An impact assessment was carried out for the initiative, which received a positive opinion
with reservations from the Regulatory Scrutiny Board on 3 February 2023. The impact
assessment considered four policy options, in addition to the policy option consisting of no
policy change:

    - Option 1: Recommendation on compulsory licensing for crisis management. This
would identify good national practices on compulsory licensing for crisis
management and good coordination practices, with a view to increasing their uptake
in Member States. This option was deemed insufficient, as it would not have a
sufficient harmonising effect nor an appropriate territorial reach. In addition, it would
not fully embed compulsory licensing in the EU crisis instruments.

    - Option 2: Harmonisation of national laws on compulsory licensing for crisis
management. The legislative initiative would harmonise national laws on the
grounds, scope, procedure, and conditions for granting a compulsory licence for
crisis management. The compulsory licence would remain within the remit of
Member States and have predominantly a national effect. Although this option would
further harmonise national compulsory licensing schemes, the territorial reach and
coherence with EU crisis instruments of this option were still considered suboptimal.

    - Option 3: Harmonisation and EU level binding measure to grant a compulsory
licence for crisis management. The compulsory licence could be triggered: (i) by an
EU-level decision activating a crisis mode or declaring an emergency under an
existing EU crisis instrument (e.g. activation of the emergency mode under SMEI);
or (ii) upon a request made to the Commission by more than one Member State in
case of a cross-border crisis. The Commission, assisted by the relevant advisory
body, would adopt an activation measure requiring one or several Member States to
issue a compulsory licence. Option 3 would lead to several national compulsory
licences, each applying to the territory of several EU countries or the whole EU. This
option provided an appropriate territorial reach and ensured good coherence with EU
crisis instruments. In addition, it would provide increased harmonisation compared to

# EN 6 EN

Option 2. However, this harmonisation, and resulting coherence and efficiency of the
Union compulsory licence, was limited compared to the optimal solution provided
under Option 4.

    - Option 4: Union compulsory licence to complement existing EU crisis instruments.
The triggers would be the same as under Option 3. However, the Commission,
assisted by the relevant advisory body, would adopt an activation measure granting a
compulsory licence. This option would lead to the issuance, by the Commission, of
one compulsory licence, with its own procedure and conditions and applicable to the
territory of several EU countries or the whole EU.

According to the impact assessment, Option 4 would be the most effective and efficient to
achieve the initiative’s objectives. This preferred option would create a single procedure to
grant a Union compulsory licence with the necessary features to tackle a crisis. The
Commission activation measure would ensure that conditions are the same across the EU and
would avoid national discrepancies that are likely to slow down or prevent an efficient
compulsory licensing scheme to tackle cross-border crises. This single compulsory licence
would apply in all relevant territories, 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 a Union compulsory licence. The
proposed procedure would also cover crises with a cross-border dimension in the EU but
which do not reach the activation threshold for an EU crisis instrument (e.g. a crisis spreading
across several Member States). In the option described in the impact assessment, the
procedure could be also initiated by the Member State(s) affected. However, following
internal discussions within the Commission, the Member State right to initiate the procedure
was not included in the legislative proposal. (as a result, the proposal partially deviates from
Option 4 discussed in the impact assessment). Maintaining only the EU crisis instrument route
was judged to be more coherent with the remaining EU crisis preparedness policy tools and
more appropriate in terms of the exceptional nature of the proposed tool. The likely impacts
of this change would be an even simpler procedure of initiation and more confidence among
patent holders that the instrument would only be activated in case of major EU-wide crises.
The latter would also limit potential detrimental effects of the proposal on competitiveness.
No additional costs would be created by the change.

Under the preferred option, patent owners would see a reduction in costs and legal
uncertainty, as negotiations would be limited to participation in one EU-level procedure.
Potential licensees would benefit from the centralised procedure and the wide territorial scope
of the licence that can bring economies of scale. Better sharing of information would also
allow a reduction of costs for Member States as it could help identify best practices. On
enforcement costs, 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. EU residents would greatly benefit from this option as it would improve
the EU’s ability to issue an effective and efficient compulsory licence for the whole EU,
including where there are cross-border supply chain disruptions. Third countries would also
benefit from this option as this would provide the possibility of a compulsory licence covering
a cross-border supply chain.

Improved EU readiness to tackle a major crisis would bring positive social impacts, as it
would help limit various disruptions to everyday societal processes by curbing the crisis or
eliminating it altogether. Although societal disruption can be caused by a crisis in any area
(e.g. threats to the environment, national security, etc.), the recent COVID-19 pandemic
provided multiple examples of disruptions that could have been avoided with a more effective

# EN 7 EN

resilience tool. With regard to the environmental impact, the initiative’s positive impacts
could be decisive in increasing access to products and technologies that can tackle
environmental crises. Since no environmental legislation is affected by this proposal and its
principal objective is to streamline and harmonise compulsory licensing procedures in crossborder crises **,** no significant harm to the environment is expected under any of the options
analysed.

**•** **Regulatory fitness and simplification**

The proposal creates a compulsory licencing system centralised at EU level. In crises a
compulsory licence covering the whole EU can be granted by filing a single application and
using a single procedure under unitary procedural rules and conditions. This means that one
procedure can achieve what would otherwise only be achievable with the help of several
national compulsory licencing procedures before different competent authorities of the
Member States. If an unforeseen future crisis occurs, the compulsory licencing system
established by the proposal would lower the costs of participation in compulsory licencing
negotiations incurred by patent holders, manufacturers and Member States.

**•** **Fundamental rights**

The initiative would provide an additional tool to face crises. Through the improved supply of
critical products and services, the most fundamental needs and rights of people in the EU
(such as safety and health) would be more swiftly and efficiently catered for in a crisis setting.

This initiative impacts the right to intellectual property of patent and utility models owners

–
(Article 17(2) of the EU Charter of fundamental rights the ‘Charter’), as compulsory
licensing partially deprives patent owners of control over their rights. Intellectual property
rights are not absolute rights, and limitations on the exercise of these rights are allowed under
the Charter, provided that the proportionality principle is respected. In that respect, the
proposal provides that compulsory licensing would remain an exceptional mechanism, with a
scope limited to cross-border crises. In addition, compulsory licences would always be
granted on a non-exclusive basis and subject to a definite duration. Finally, patent owners
would be able to share their views on granting a compulsory licence and the conditions
surrounding it. An important aspect of the conditions relates to patent owners being able to
receive fair compensation for the limitation of their right. The proposal provides that patent
owners would always be entitled to receive appropriate remuneration in respect of each
compulsory licence granted under this initiative. This initiative may have a positive impact on
other fundamental rights, as it would provide an additional tool to face crises, including

–
health-related (right to health care Article 35 of the Charter) or environmental crises (right

–
to environmental protection Article 37 of the Charter).

**4.** **BUDGETARY** **IMPLICATIONS**

If an unforeseen future crisis occurs, the proposed initiative would lower the costs incurred by
patent holders, manufacturers and Member States of participating in compulsory licensing
negotiations. These costs could be lower by roughly 75% to 80% for firms, compared to the
_status quo_ scenario (see impact assessment). For Member States, if national compulsory
licensing negotiations were replaced by EU-level negotiations, the administrative costs are
expected to stay unchanged or fall, as the same effort would be shared among several
countries. The exact monetary value of cost savings for stakeholders is not possible to provide
due to the rarity of such events and because the type and scale of any such future crisis are
unknown. As the new instrument would only be used during major crisis affecting the EU, as
a measure of last resort, its expected frequency of use is very low.

# EN 8 EN

**5.** **OTHER** **ELEMENTS**

**•** **Implementation plans and monitoring, evaluation and reporting arrangements**

The proposed legislation includes a provision requiring an evaluation report no later than 3
years after the activation of a Union compulsory licence procedure. The preferred option
requires Member States to inform the European Commission when they are considering
granting and when they have granted a compulsory licence for crisis management, as well as
providing information on the compulsory licence (i.e. transparency over the subject matter of
the compulsory licence, the manufacturer, the conditions, etc.). Since recourse to compulsory
licensing is expected to be rare, the overall number of compulsory licences issued on the basis
of the proposed instrument is expected to be low. This means that monitoring of the basic
descriptive indicators is not expected to require additional systems for data collection and
monitoring (the collection and processing of information can be done manually).

**•** **Detailed explanation of the specific provisions of the proposal**

Article 1 specifies the subject matter of the proposal. It specifies that this proposal lays down
the procedure and conditions for granting a Union compulsory licence to address a crisis in
the EU.

Article 2 provides for the scope of the Union compulsory licence. To ensure the Union
compulsory licence functions effectively during crises, the scope of the compulsory licence
covers patents, published patent applications, supplementary protection certificates and utility
models.

Article 3 provides definitions of key elements of this proposal. The definitions are based on
existing definitions.

Article 4 provides the legal basis for the Commission to grant a Union compulsory licence for
the whole EU. Under this provision, the Commission is entitled to grant a Union compulsory
licence when a crisis mode or emergency mode is activated or declared at EU level. This aims
to complement EU crisis mechanisms by allowing compulsory licensing to be used as part of
such mechanisms.

Article 5 lays down the general conditions to be taken into account by the Commission when
granting a Union compulsory licence.

Article 6 sets out rules for the consultation of an advisory body that is meant to provide the
Commission with a non-binding opinion when considering a Union compulsory licence.

Article 7 sets out the procedure for granting a Union compulsory licence. The article states
that the Union compulsory licence is granted by means of an implementing act. It also
provides for sufficient participation by the rights-holder in order to guarantee their right to be
informed and to provide comments. Further, it sets out the Commission’s obligation to
identify relevant rights-holders with regards to the compulsory licence.

Article 8 lays down rules on the specifications of the Union compulsory licence. The article
further specifies the aspects the Commission should consider in its decision and the details
that need to be specified.

Article 9 obliges the licensee to pay appropriate remuneration to the rights-holder and lays
down criteria for the Commission to determine such remuneration.

# EN 9 EN

Article 10 provides for specific conditions of the Union compulsory licence, to be fulfilled by
the licensee. The article includes conditions limiting the use of the invention covered by the
Union compulsory licence.

Article 11 provides for an export ban on products manufactured under a Union compulsory
licence. These products cannot be exported outside the European Union.

Article 12 details the control measures undertaken by custom services, including as regards
the export ban.

Article 13 establishes the principle of good faith in the relationship between rights-holder and
licensee.

Article 14 entitles the Commission to modify, complement with additional measures or
terminate the compulsory licence under certain conditions.

Article 15 entitles the Commission to issue fines if any of the parties to the compulsory
licence do not comply with their obligations under this Regulation.

Article 16 entitles the Commission to issue periodic penalty payments if any of the parties to
the compulsory licence do not comply with their obligations under this Regulation.

Article 17 provides for the rules as regards the limitation period for the imposition of fines
and periodic penalty payments.

Article 18 provides for the rules as regards limitation period for the enforcement of fines and
periodic penalty payments

Article 19 provides for the rules as regards the right for the rights-holder and the licensee to
be heard and to access to the file in relation with the imposition of fines and periodic penalty
payments.

Article 20 requires that the Commission publish the decisions on the imposition of fines and
periodic penalty payments.

Article 21 provides that the Court of Justice of the European Union is entitled to review
decisions by which the Commission has imposed fines or periodic penalty payments.

Article 22 requires Member States to notify the Commission if a national compulsory licence
has been granted in order to address a crisis situation.

Article 23 amends existing Regulation (EC) No 816/2006 by Article 18a and Article 18b.
Article 18a lays down rules on the grant of a Union compulsory licence for purposes of
exporting medical products to third countries with public health problems. The article states
that the Union compulsory licence is granted by means of an implementing act.
Article 18b establishes a reference to the comitology committee as well as the reference to
Regulation (EU) No 182/2011.

Article 24 establishes a committee for comitology procedure as well as the reference to the
respective provisions in Regulation (EU) No 182/2011.

Article 25 requires the Commission to carry out a review where a Union compulsory licence
has been granted due to a cross-border crisis in the EU.

Article 26 sets out the date when the regulation enters into force.

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2023/0129 (COD)

Proposal for a

**REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL**

**on compulsory licensing for crisis management and amending Regulation (EC) 816/2006**

(Text with EEA relevance)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union, and in particular
Articles 114 and 207 thereof,

Having regard to the proposal from the European Commission,

After transmission of the draft legislative act to the national parliaments,

Having regard to the opinion of the European Economic and Social Committee [1],

Having regard to the opinion of the Committee of the Regions [2],

Acting in accordance with the ordinary legislative procedure,

Whereas:

(1) Crises require the setting-up of exceptional, swift, and adequate measures able to
provide means to address the consequences of the crisis. In this context, the use of
patented products or processes could prove indispensable to address the consequences
of a crisis. Voluntary licensing agreements usually suffice to licence the patent rights
on these products and allow their supply in the Union territory. Voluntary agreements
are the most adequate, quick, and efficient solution to allow the use of patented
products, including in crises. Nevertheless, voluntary agreements may not always be
available or only under inadequate conditions such as lengthy delivery times. In such
cases, compulsory licensing can provide a solution to allow access to patented
products, in particular products necessary to tackle the consequences of a crisis.

(2) In the context of the Union crisis or emergency mechanisms, the Union should
therefore have the possibility to rely on compulsory licensing. The activation of a
crisis or an emergency mode or the declaration of a crisis or a state of emergency
addresses obstacles to free movement of goods, services, and persons in crises and
shortages of crisis-relevant goods and services. In cases where access to crisis-relevant
products and processes protected by a patent cannot be achieved through voluntary
cooperation, compulsory licensing can help in lifting any patent-related barriers and
thus ensure the supply of products or services needed to confront an ongoing crisis or
emergency. It is therefore important that, in the context of said crisis mechanisms, the
Union can rely on an efficient and effective compulsory licensing scheme at Union
level, which is uniformly applicable within the Union. This would guarantee a
functioning internal market, ensuring the supply and the free movement of crisiscritical products subject to compulsory licencing in the internal market.

1 OJ C,, p. .
2 OJ C,, p. .

# EN 11 EN

(3) The possibility of using compulsory licences in situations of national emergency or
other circumstances of extreme urgency is explicitly envisaged under the Agreement
on Trade-Related Aspects of Intellectual Property Rights (‘TRIPS Agreement’) [3] .

(4) All Member States have implemented compulsory licensing frameworks for patents in
their national law. National laws usually allow compulsory licensing on the ground of
public interest or in the event of an emergency. However, divergences exist across
Member States, as regards the grounds, conditions, and procedures under which a
compulsory licence can be granted. This results in a fragmented, suboptimal, and
uncoordinated system preventing the Union from effectively relying on compulsory
licensing when addressing a cross-border crisis.

(5) National compulsory licensing systems only operate within the national territory. They
are designed to meet the needs of the population of the issuing Member State and to
satisfy the public interest of that Member State. This limited territorial reach of a
national compulsory licensing system is reinforced by the fact that there is no
exhaustion of the patent right regarding products manufactured under a compulsory
licence. Consequently, compulsory licensing schemes do not provide an adequate
solution for cross-border manufacturing processes, and therefore there is no
functioning internal market for product manufactured under a compulsory licence.
Apart from the fact that the issuance of multiple national compulsory licences is a high
hurdle for cross-border supply within the single market, it also bears the risk of
contradicting and incoherent decisions among Member States. Consequently, the
current compulsory licensing framework appears inadequate to address the realities of
the internal market and its inherent cross-border supply chains. This suboptimal
compulsory licensing framework prevents the Union from relying on an additional
instrument when facing crises, in particular when voluntary agreements are
unavailable or inadequate. At a time where the Union and its Member States are
striving to improve their resilience to crises, it is necessary to provide for an optimal
compulsory licensing system for crisis management that takes the full advantage of the
internal market and allows Member States to support one another in crises.

(6) Therefore, it is necessary to establish a compulsory licence for crisis or emergency
management at Union level. Under this system, the Commission should be empowered
to grant a compulsory licence that is valid throughout the Union and that allows the
manufacturing and distribution of products necessary to address a crisis or emergency
in the Union (‘Union compulsory licence’).

(7) In recent years, the European Union has adopted several crisis mechanisms to improve
its resilience to crises or emergencies affecting the Union. The recent mechanisms
include the Single Market Emergency Instrument (SMEI) established under
Regulation (EU) No XXX/XX [COM(2022) 459] and Regulation (EU) No 2022/2371
under which the Commission may recognise a public health emergency at Union level.
In the event of a public health emergency at Union level a framework of measures for
ensuring the supply of crisis-relevant medical countermeasures might be activated
under Regulation (EU) No 2022/2372. Furthermore, in case of a significant shortage
of semiconductors due to serious disruptions in their supply, the Commission may
activate a crisis stage by means of implementing acts under Regulation (EU) No
XXX/XX (Chips Act) [COM(2022) 46].

(8) These mechanisms provide for the activation of an emergency or crisis mode and aim
at providing the means to address Union emergencies. By allowing the Commission to

3 OJ L 336, 23.12.1994, p. 214

# EN 12 EN

grant a compulsory licence when a crisis or emergency mode has been activated by a
Union legal act, the necessary synergy between the existing crisis mechanisms and a
Union wide compulsory licencing scheme is achieved. In such a case, the
determination of the existence of a crisis or emergency depends solely on the Union
legal act underlying the crisis mechanism and the crisis definition included therein.
For the sake of legal certainty, the crisis mechanisms that qualify as Union emergency
or extreme urgency measures and that can trigger a Union compulsory licence should
be listed in an Annex to this Regulation.

(9) To ensure optimal efficiency of the Union compulsory licence as a tool to address
crises, it should be made available in respect of a granted patent or utility model, of a
published patent application or a supplementary protection certificate. The Union
compulsory licence should equally apply to a national patents, European patents and
European patents with unitary effect.

(10) Utility model systems protect new technical inventions that do not fulfil the
patentability requirements through the granting of an exclusive right to prevent others,
for a limited period of time, from commercially exploiting the protected inventions
without consent of the right holders. The definition of utility models varies from one
country to another, and not all Member States provide for utility model systems. In
general, utility models are suited for protecting inventions that make small
improvements to, or adaptations of, existing products, or that have a short commercial
life. However, similarly to patents, utility models can protect inventions that could
prove necessary to address a crisis and should therefore be included in the scope of the
Union compulsory licence.

(11) A Union compulsory licence for a patent should extend to the supplementary
protection certificate where such protection is granted when the patent expires during
the duration period of that compulsory licence. This would allow a compulsory licence
on a patent to produce its effect should the crisis-relevant products no longer be
protected by a patent while being protected through a supplementary protection
certificate after the expiration of the patent. It should also apply to a supplementary
protection certificate in isolation where the licence is granted after the expiry of the
patent.

(12) The Union compulsory licence should also apply to published patent applications for
national patents and for European patents. As the grant of a patent after the publishing
of the patent application can take years, targeting only inventions protected by a
granted patent could prevent an effective and timely crisis response. In crises,
solutions can derive from the latest state-of-the-art technology. Moreover, certain
national patent legislations, as well as the European Patent Convention, provide for
protection of patent applicants with regard to unconsented use of their inventions and
the corresponding possibility for such applicants to licence the use of their patent
application rights. In order to ensure that a Union compulsory licence on a published
patent application continues to keep its effects once the patent is granted, the Union
compulsory licence for published patent applications should extend to the patent once
granted to the extent that the crisis-relevant product still falls within the scope of the
patent claims.

(13) It should be clarified that this Regulation is without prejudice to Union law on
copyright and related rights, including Directives 96/9 [4], 2009/24 [5]

4 Directive 96/9/EC of the European Parliament and of the Council of 11 March 1996 on the legal
protection of databases (OJ L 77, 27.3.1996, p. 20)

# EN 13 EN

Directives 2001/29/EC [6], 2004/48/EC [7] and (EU) 2019/790 [8] of the European Parliament
and of the Council, which establish specific rules and procedures that should remain
unaffected.

(14) When a compulsory licence has been granted, regulatory data protection may, if still in
force, prevent the effective use of the compulsory licence as it impedes the
authorisation of generic medicinal products. This would result in serious negative
consequences for Union compulsory licences granted to tackle a crisis, as this could
hamper access to the medicinal products needed to address the crisis. For this reason,
Union pharmaceutical legislation (cf. Art. 80 para. 4 of Directive (EU) No XXX/XX

[COM(2023)192]) provides for the suspension of data exclusivity and market
protection when a compulsory licence has been issued to tackle a public health
emergency. Such suspension is allowed only in relation to the compulsory licence
granted and its beneficiary and must comply with the objectives, the territorial scope,
the duration, and the subject-matter of the granted compulsory licence. The suspension
means that the data exclusivity and market protection produce no effect in relation to
the licensee of the compulsory licence while that licence is in effect. When the
compulsory licence ends, the data exclusivity and market protection resume their
effect. The suspension should not result in an extension of the original duration of the
regulatory data protection.

(15) In order to ensure as much coherence as possible with existing crisis mechanisms and

                                             with other Union legislation, the definition of a ‘crisis relevant product’ should be
based on the definition adopted in the Single Market Emergency Instrument (SMEI)
but should be more general in order to cover products related to different kinds of
crises or emergencies.

(16) A Union compulsory licence authorises the use of a protected invention without the
consent of the rights-holder. Therefore, it must only be granted exceptionally and
under conditions that take into account the interests of the rights-holder. This includes
a clear determination of the scope, duration and territorial coverage of the licence. In
the context of a Union level crisis mechanism, the crisis mode or emergency mode is
activated or declared for a limited period of time. Where a Union compulsory licence
is granted within such framework, the duration of the licence shall not extend beyond
the duration of the activated or declared crisis or emergency mode. In order to ensure
that the compulsory licence fulfils its objective as well as its conditions, the use of the
invention should only be authorised to a qualified person able to manufacture the
crisis-relevant product and to pay a reasonable remuneration to the rights-holder.

(17) When considering the granting of a Union compulsory licence, the Commission
should, in order to be able to take a well-informed decision, be assisted by an advisory
body. The consultation of the advisory body should arise early in the discussions on
the need to issue a compulsory licence under the relevant instrument. Discussions on

5 Directive 2009/24/EC of the European Parliament and of the Council of 23 April 2009 on the legal
protection of computer programs (OJ L 111, 5.5.2009, p. 16)
6 Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the
harmonisation of certain aspects of copyright and related rights in the information society (OJ L 167,
22.6.2001, p. 10).
7 Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the
enforcement of intellectual property rights (OJ L 157, 30.4.2004, p. 45).
8 Directive (EU) 2019/790 of the European Parliament and of the Council of 17 April 2019 on copyright
and related rights in the Digital Single Market and amending Directives 96/9/EC and 2001/29/EC (OJ L
130, 17.5.2019, p. 92).

# EN 14 EN

whether there is a need for a Union compulsory licence will often start already in the
context of the work of the advisory body involved in the context of the relevant Union
crisis or emergency mechanisms. In such case, there is no need for the Commission to
convene the advisory body but rather to swiftly indicate that that body also has the
competence to assess the need for compulsory licensing at Union level, and the
conditions thereof. Clarification as regards the competence of the advisory body
should be given early in the process, as soon as concrete consideration of using
compulsory licensing at Union level is expressed by the Commission.

(18) The participation of an advisory body aims at guaranteeing a comprehensive,
thorough, and concrete assessment of the situation, taking into consideration the
individual merits of each situation. It is therefore important that the advisory body has
the right composition, expertise, and procedures to support the Commission when
deciding on whether to grant a Union compulsory licence and under what conditions.
Union crisis mechanisms usually include the setting-up of an advisory body ensuring
coordination of action of the Commission and relevant bodies and agencies, the
Council and the Member States. In this respect, an advisory group is set up under
SMEI. Regulation (EU) No 2022/2371 provides for a Health Crisis Board and under
Regulation (EU) No XXX/XX (Chips Act) [COM/2022) 46], the Commission relies
on the Semiconductor Board. Those advisory bodies have the right composition,
expertise, and procedures to address the crises and emergencies for which they have
been set-up. When compulsory licensing is being discussed in the context of such
crisis instrument, relying on the advisory body set-up for the specific instrument
allows the Commission to be adequately advised and avoid duplication of advisory
bodies, leading to incoherences between processes. The competent advisory bodies
shall be listed, together with the corresponding crisis mechanisms, in an Annex to this
Regulation. In case the Union crisis mechanism does not provide for an advisory body,
the Commission should set up an ad hoc advisory body for the granting of the Union
(the ‘ad hoc advisory body’).

(19) The role of the advisory body is to advise the Commission when discussions arise on
the need to rely on compulsory licensing at Union level. It should provide the
Commission with a non-binding opinion. Its main tasks include assisting of the
Commission in the determination of the necessity to rely on compulsory licensing at
Union level, and in the determination of the conditions for such licensing. When the
advisory body is already set up, its existing rules of procedure should apply. As
regards ad hoc advisory bodies, they should be composed of one representative of each
Member State in order to provide the Commission with information and input
concerning the situation on the national level, including information on manufacturing
capacities, potential licensees and, if applicable, proposals for voluntary solutions. In
addition, the advisory body should have the function of collecting and analysing
relevant data, as well as ensuring coherence and cooperation with other crisis relevant
bodies at Union and national level in order to ensure an adequate, coordinated and
coherent crisis reply at Union level.

(20) The Commission should grant the Union compulsory licence in the light of the nonbinding opinion of the advisory body. Persons, in particular the licensee and the rightsholder, whose interests may be affected by the Union compulsory licence should be
given the opportunity to submit their comments. These elements should enable the
Commission to consider the individual merits of the situation and determine, on that
basis, the adequate conditions of the licence, including an adequate remuneration to be
paid by the licensee to the rights-holder. To avoid overproduction of products

# EN 15 EN

manufactured under a Union compulsory licence, the Commission should also
consider any existing compulsory licences at national level.

(21) The Commission should guarantee that the rights-holder has the right to be heard
before the adoption of the Union compulsory licence. Therefore, the Commission
should inform the concerned rights-holder, where possible individually, without undue
delay that a Union compulsory licence might be granted. The involvement of the
rights-holder should be possible once there are ongoing advanced discussions in the
relevant advisory body as regards the granting of a Union compulsory licence.

(22) When informed of advanced discussions as regards the granting of a Union
compulsory licence, the rights-holder should have the possibility to propose a
voluntary agreement, should the circumstances of the Union crisis or emergency,
including the urgency of the situation, allow it. The rights-holder should also be given
the opportunity to comment on the need for a Union compulsory licence and on the
conditions of the licence, including remuneration, should it be granted. To this end, the
rights-holder should be allowed to provide the Commission with written or oral
comments and any information the rights-holder considers useful to allow the
Commission to make a fair, comprehensive, and thorough assessment of the situation.
The Commission should allow the rights-holder a reasonable period of time to provide
comments and information, considering the situation of the rights-holder and the
urgency of the situation. The comments of the rights-holder should, where relevant, be
transmitted by the Commission to the competent advisory body. In order for
confidential information to be shared with the Commission, the Commission shall
ensure a safe environment for the sharing of this information and should take measures
to preserve the confidentiality of the documents provided by the rights-holder in the
context of that procedure. Once a Union compulsory licence has been granted, the
Commission should notify the rights-holder as soon as reasonably practicable.

(23) The initiation of the compulsory licensing procedure should be publicised, by means
of a notice published in the Official Journal of the European Union. This notice should
include information on the discussions about the granting of a Union compulsory
licence in the context of a Union crisis or emergency mechanism. This notice should
also help the Commission in identifying the intellectual property rights concerned, the
rights-holders concerned as well as potential licensees.

(24) The Commission should, assisted by the advisory body, make its best efforts to
identify in its decision the patent, patent application, supplementary protection
certificate and utility model related to the crisis-relevant products, and the rightsholders of those intellectual property rights. In certain circumstances, the identification
of intellectual property rights and of their respective rights-holders may require
lengthy and complex investigations. In such cases, a complete identification of all
intellectual property rights and of their rights-holders may seriously undermine the
efficient use of the Union compulsory licence to swiftly tackle the crisis or the
emergency. Therefore, where the identification of all those intellectual property rights
or rights-holders would significantly delay the granting of the Union compulsory
licence, the Commission should be able to initially only indicate in the licence the
non-proprietary name of the product for which it is sought. The Commission should
nevertheless identify all applicable and relevant intellectual property rights and their
rights-holder as soon as possible and amend the implementing act accordingly. The
amended implementing act should also identify any necessary safeguards and
remuneration to be paid to each identified rights-holder.

# EN 16 EN

(25) Where the rights-holder or not all the rights-holders could be identified in a reasonable
period of time, the Commission should exceptionally be entitled to grant the Union
compulsory licence by referring only to the non-proprietary name of the crisis-relevant
product where it is absolutely necessary considering the urgency of the situation.
Nevertheless, after the granting of the Union compulsory licence, the Commission
should identify, notify and consult the concerned rights-holders as quickly as possible,
including by relying on publication measures and on national Intellectual Property
Offices.

(26) The Union compulsory licence should also include information allowing the
identification of the crisis-relevant product for which it is granted, as well as details on
the licensee to whom the Union compulsory licence is granted, including details about
the description, name or brand of the product; the commodity codes under which the
crisis-relevant products are classified, as defined in Council Regulation (EEC) No
2658/87; details on the licensees (and, where applicable, the manufacturers) to whom
the compulsory licence is granted, including their name, trade name or registered trade
mark, their contact details, their unique identification number in the country where
they are established and, where available, their Economic Operators Registration and
Identification (EORI) number. Where required under Union legislation, other
information should be included, such as a type, reference, model, batch or serial
number, or unique identifier of a product passport.

(27) The licensee should pay an adequate remuneration to the rights-holder as determined
by the Commission. The amount of the remuneration should be determined
considering the economic value of the exploitation authorised under the licence to the
licensee and to the Member States concerned by the crisis, any public support received
by the rights-holder to develop the invention, the degree to which development costs
have been amortized as well as humanitarian circumstances relating to the granting of
the Union compulsory licence. In addition, the Commission should consider the
comments made by the rights-holder and the assessment made by the advisory body
with regard to the amount of the remuneration. In any case, the remuneration should
not exceed 4 % of the total gross revenue generated by the licensee through the acts
under the Union compulsory licence. This percentage is the same as the one provided
for under Regulation 816/2006. In the event of a compulsory licence granted on the
basis of a published patent application that ultimately does not lead to the granting of a
patent, the rights-holder would have no ground to receive remuneration under the
compulsory licence, as the subject matter for the receipt of the remuneration has not
materialised. In such circumstances, the rights-holder should refund the remuneration
it received under the compulsory licence.

(28) It is imperative that products manufactured under a Union compulsory licence reach
only the internal market. The Union compulsory licence should therefore impose clear
conditions upon the licensee as regards the activities authorised under the licence,
including the territorial reach of those activities. The rights-holder should be able to
challenge actions and uses of the rights concerned by the Union compulsory licence
that do not comply with the conditions of the licence, as infringement of its intellectual
property rights in accordance with Directive 2004/48/EC of the European Parliament
and of the Council [9] . In order to facilitate monitoring of the distribution of products
manufactured under a Union compulsory licence, including controls by customs
authorities, the licensee should ensure that such products have special characteristics

9 Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the
enforcement of intellectual property rights (OJ L 157 30.4.2004, p. 45).

# EN 17 EN

that make them easily identifiable and distinguishable from the products marketed by
the rights-holder.

(29) A Union compulsory licence in the context of a Union crisis or emergency mechanism
should only be granted to supply the internal market with crisis-relevant products.
Therefore, it should be prohibited to export products manufactured under a Union
compulsory licence.

(30) Customs authorities should ensure, through a risk analysis approach, that products
manufactured under a Union compulsory license are not exported. To identify such
products, the main source of information to feed such customs risk-analysis should be
the Union compulsory license itself. Information on each implementing act granting or
modifying a Union compulsory license should thus be entered in the Electronic
Customs Risk Management System (CRMS) referred to in Article 36 of Commission
Implementing Regulation (EU) 2015/2447 [10] . When customs authorities identify a
product that is suspected not to comply with the export prohibition, they should
suspend the export of that product and notify the Commission immediately. The
Commission should reach a conclusion on the compliance with the export prohibition
within 10 working days, but should have the possibility of requiring the customs
authorities to maintain the suspension where necessary. To help its assessment the
Commission may consult the relevant rights-holder. Where the Commission concludes
that a product does not comply with the export prohibition, customs authorities should
refuse its export.

(31) The legal validity of the implementing act granting the Union compulsory license, or
any subsequent implementing act, should be subject to judicial review.

(32) The relation between the rights-holder and the licensee should be governed by the
principle of good faith. The rights-holder and licensee should work towards the
success of the Union compulsory licence and collaborate, where necessary, to ensure
that the Union compulsory licence effectively and efficiently fulfils its objective. The
Commission may act as an enabler in achieving the good-faith cooperation between
the rights-holder and the licensee, taking into account interests of all parties. In that
respect, the Commission should also be entitled to take additional measures in line
with Union law to ensure that the compulsory licence meets its objective and ensure
that necessary crisis-relevant goods can be made available in the Union. Such
additional measures may include requesting further information which is deemed
indispensable to achieve the objective of the compulsory licence. These measures
should always include adequate safeguards to ensure the protection of the legitimate
interests of all parties.

(33) In order to respond appropriately to the crisis situations, the Commission should be
authorised to review the conditions of the Union compulsory licence and adapt them to
changed circumstances. This should include the modification of the compulsory
licence to indicate the complete list of rights and rights-holders covered by the
compulsory licence, where this complete identification had not be done initially. This
should also include the termination of the licence if the circumstances which led to it
cease to exist and are unlikely to recur. When deciding on the revision of the Union
compulsory licence, the Commission may decide to consult the competent advisory
body for that purpose. If the Commission intends to change essential components of

10 Commission Implementing Regulation (EU) 2015/2447 of 24 November 2015 laying down detailed
rules for implementing certain provisions of Regulation (EU) No 952/2013 of the European Parliament
and of the Council laying down the Union Customs Code (OJ L 343, 29.12.2015, p. 558).

# EN 18 EN

the Union compulsory licence, such as its duration or remuneration or if the change
itself could be the subject of a separate compulsory licence, it should be required to
consult the advisory body.

(34) To prevent and stop any misuse of the Union compulsory licence, specific safeguards
should be in place to allow the Commission to take action. In addition to the
possibility to terminate the Union compulsory licence, the Commission should be
authorised to impose fines and periodic penalty payments on the rights-holder and the
licensee in order to enforce the obligations under this Regulation. The penalties should
be effective, proportionate and dissuasive.

(35) Compliance with the relevant obligations imposed under this Regulation should be
enforceable by means of fines and periodic penalty payments. To that end, appropriate
levels of fines and periodic penalty payments should be laid down and the imposition
of fines and periodic penalty payments should be subject to appropriate limitation
periods in accordance with the principles of proportionality and _ne bis in idem_ . All
decisions taken by the Commission under this Regulation are subject to review by
the Court of Justice of the European Union in accordance with the TFEU. The Court
of Justice of the European Union should have unlimited jurisdiction in respect of fines
and penalty payments in accordance with Article 261 TFEU.

(36) When a national compulsory licence has been granted for the purpose of addressing a
crisis, the Member State or its competent authority should be required to notify the
Commission of the granting of the licence, and of the specific conditions attached to it,
since it allows the Commission to get an overview of national compulsory licences in
the Member States and to take those compulsory licences into account when
considering a Union compulsory licence, and in particular when setting the conditions
for such licence.

(37) The possibility of a compulsory licence at Union level should not only be available for
the supply of the Union market but also under certain conditions for export purposes
concerning countries with public health problems, already regulated by Regulation
(EC) No 816/2006 of the European Parliament and of the Council [11] . Under that
Regulation, the granting of such compulsory licences is decided and performed
nationally by the competent authorities of the Member States that have received a
corresponding application from a person that intends to manufacture and sell
pharmaceutical products covered by a patent or a supplementary protection for export
to eligible third countries. Regulation (EC) No 816/2006 only allows compulsory
licensing covering the manufacturing of products across several Member States
through national procedures. In the context of a cross-border manufacturing process
different national compulsory licences would be needed. This can lead to a
burdensome and lengthy process as this would require the launch of different national
procedures with possibly different scope and conditions. In order to achieve the
synergies and efficient process as for the Union crisis mechanisms, a Union
compulsory licence should also be available, in the context of Regulation (EC) No
816/2006. This will facilitate manufacturing of the relevant products across several
Member States and provide Union-level solution in order to avoid a situation where
several compulsory licences for the same product in more than one Member States
would be required for licensees to manufacture and export the products as planned.

11 Regulation (EC) No 816/2006 of the European Parliament and of the Council of 17 May 2006 on
compulsory licensing of patents relating to the manufacture of pharmaceutical products for export to
countries with public health problems (OJ L 157, 9.6.2006, p. 1).

# EN 19 EN

Any person considering to apply for a compulsory licence under, for the purposes and
within the scope of Regulation (EC) No 816/2006 should have the possibility to
request, with a single application, a compulsory licence under that Regulation that is
valid throughout the Union, if that person, when relying on national compulsory
licencing schemes of the Member States, would otherwise need to apply for multiple
compulsory licences for the same crisis-relevant product in more than one Member
State in order to realise its intended activities of manufacture and sale for export under
Regulation (EC) No 816/2006. Therefore, Regulation (EC) No 816/2006 should be
amended accordingly.

(38) In order to ensure uniform conditions for the implementation of this Regulation,
implementing powers should be conferred on the Commission as regards the granting,
complementing, modification or termination of a Union compulsory license, the
determination of the remuneration to be paid to the rights-holder, the procedural rules
for the ad hoc advisory body and the characteristics allowing the identification of
products produced under a Union compulsory licence. Those powers should be
exercised in accordance with Regulation (EU) No 182/2011 of the European
Parliament and of the Council [12] . The advisory procedure should be used for the
adoption of implementing acts granting, complementing, modifying or terminating a
Union compulsory licence, and implementing acts determining the remuneration. The
choice of the advisory procedure is justified given that those implementing acts would
be adopted in the context of a procedure with considerable participation of the
Member States through the consultation of the advisory body. The examination
procedure should be used for the adoption of implementing acts establishing
procedural rules for the ad hoc advisory body and implementing acts establishing the
characteristics allowing the identification of products produced under a Union
compulsory licence.

(39) The Commission should adopt immediately applicable implementing acts where, in
duly justified cases relating to the granting, modification or termination of a Union
compulsory licence or the determination of the remuneration, imperative grounds of
urgency so require.

(40) Union compulsory licensing for crisis management is a tool that is only used in
exceptional circumstances. The evaluation should therefore be conducted only where a
Union compulsory licence has been granted by the Commission. The evaluation report
should be submitted by the last day of the third year following the granting of the
Union compulsory licence, to allow an adequate and substantiated assessment of this
Regulation.

(41) Since a period of time is required to ensure that the framework for the proper
functioning of the system for Union compulsory licencing is in place, the application
of this Regulation should be deferred.

12 Regulation (EU) No 182/2011 of the European Parliament and of the Council of 16 February 2011
laying down the rules and general principles concerning mechanisms for control by the Member States
of the Commission's exercise of implementing powers (OJ L 55, 28.2.2011, p. 13).

# EN 20 EN

HAVE ADOPTED THIS REGULATION:

_Article 1_

_Subject matter_

This Regulation has the objective to ensure that in crises the Union has access to crisisrelevant products. To this end, this Regulation lays down rules on the procedure and
conditions for the granting of a Union compulsory licence of intellectual property rights that
are necessary for the supply of crisis-relevant products to the Member States in the context of
a Union crisis or emergency mechanism.

_Article 2_

_Scope_

1. This Regulation establishes Union compulsory licensing of the following intellectual
property rights in force in one or more Member States:

(a) patents, including published patent applications;

(b) utility models; or

(c) supplementary protection certificates;

2. This Regulation is without prejudice to the rules laid down by other Union legal acts
regulating copyright and related rights, including Directive 2001/29, Directive
2009/24 and the _sui generis_ rights granted by Directive 96/9/EC on the legal
protection of databases.

_Article 3_

_Definitions_

For the purposes of this Regulation, the following definitions shall apply:

(a) ‘crisis-relevant products’ means products or processes that are indispensable for
responding to a crisis or emergency or for addressing the impacts of a crisis or
emergency in the Union;

(b) ‘relevant activities’ means the acts of making, using, offering for sale, selling or
importing.

(c) ‘rights-holder’ means a holder of any of the intellectual property rights referred to in
Article 2(1);

(d) ‘protected invention’ means any invention protected by any of the intellectual
property rights referred to in Article 2(1);

(e) ‘Union compulsory licence’ means a compulsory licence granted by the Commission
to exploit a protected invention of crisis-relevant products for any of the relevant
activities in the Union;

# EN 21 EN

(f) ‘customs authorities’ means customs authorities as defined in Article 5, point (1), of
Regulation (EU) No 952/2013 of the European Parliament and of the Council [13] ;

_Article 4_

_Union compulsory licence_

The Commission may grant a Union compulsory licence where a crisis mode or an emergency
mode listed in the Annex to this Regulation has been activated or declared in accordance with
one of the Union acts listed in that Annex.

_Article 5_

_General conditions of a Union compulsory licence_

1. The Union compulsory licence shall

(a) be non-exclusive and non-assignable, except with that part of the enterprise or
goodwill which enjoys such compulsory licence;

(b) have a scope and duration that is limited to the purpose for which the
compulsory licence is granted and limited to the scope and duration of the
crisis or emergency mode in the framework of which it is granted;

(c) be strictly limited to the relevant activities of crisis-relevant products in the
Union;

(d) only be granted against payment of an adequate remuneration to the rightsholder;

(e) be limited to the territory of the Union;

(f) only be granted to a person deemed to be in a position to exploit the protected
invention in a manner that permits the proper carry out of the relevant activities
of the crisis-relevant products and in accordance with the obligations referred
to in Article 10.

2. A Union compulsory licence for an invention protected by a published patent
application shall cover a patent granted based on that application, provided that the
granting of that patent takes place while the Union compulsory licence is valid.

3. A Union compulsory licence for an invention protected by a patent shall cover a
supplementary protection certificate issued with reference to that patent, provided
that the transition from patent protection to protection conferred by a supplementary
protection certificate takes place while the Union compulsory licence is valid.

_Article 6_

_Advisory body_

1. When the Commission considers the granting of a Union compulsory licence, it shall
without undue delay consult an advisory body.

13 Regulation (EU) No 952/2013 of the European Parliament and of the Council of 9 October 2013 laying
down the Union Customs Code (OJ L 269, 10.10.2013, p. 1).

# EN 22 EN

2. The advisory body referred to in paragraph 1 shall be the advisory body competent
for the Union crisis or emergency mechanism as listed in Annex I to this Regulation
(the ‘competent advisory body’). For the purposes of the present Regulation, the
competent advisory body shall assist and advise the Commission as regards the
following tasks:

(a) the gathering of crisis-relevant information, market intelligence and the
analysis of those data;

(b) the analysis of the crisis-relevant information gathered by Member States or
the Commission and aggregated data received by other crisis-relevant bodies at
Union and international level;

(c) the facilitation of exchanges and sharing of information with other relevant
bodies and other crisis-relevant bodies at Union and national level, as well as at
international level, where appropriate;

(d) the identification of the rights protecting the crisis-relevant product;

(e) the establishment of whether there is a need to grant a Union compulsory
licence;

(f) the identification and consultation of the representatives of right holders or
their representatives as well as potential licensees and consulting other
economic operators, and the industry;

(g) the establishment, if relevant, of whether the criteria for termination or
modification of the Union compulsory licence set out in Article 15 have been
fulfilled.

3. The advisory body shall cooperate and coordinate closely, where appropriate, with
other relevant crisis-related bodies and with intellectual property offices at Union and
national level.

4. For the purpose of the present Regulation, the Commission:

(a) shall ensure participation and invite representatives of other crisis-relevant
bodies at Union level as observers to the relevant meetings of the advisory
body in order to ensure coherence with the measures implemented through
other Union mechanisms; and

(b) may invite representatives of the European Parliament, representatives of
economic operators, right holders, potential licensees, stakeholder
organisations, social partners and experts to attend meetings of the advisory
body as observers.

5. In the absence of any existing competent advisory body, the tasks referred to in
paragraph 2 shall be performed by an ad hoc advisory body set up by the
Commission (the ‘ad hoc advisory body’). The Commission shall chair the ad hoc
advisory body and ensure its secretariat. Each Member State shall have the right to
be represented in the ad hoc advisory body.

6. The Commission shall adopt an implementing act laying down the rules of procedure
for the ad hoc advisory body referred to in paragraph 5. The rules of procedure shall
specify that the ad hoc advisory body shall not be set up for a period exceeding the
duration of the crisis or emergency. That implementing act shall be adopted in
accordance with the examination procedure referred to in Article 24 (3).

# EN 23 EN

_Article 7_

_Procedure for granting a Union compulsory licence_

1. The competent or, where relevant ad hoc, advisory body referred to in Article 6 shall
provide the Commission with an opinion without undue delay. That opinion shall be
issued in accordance with the rules of procedure of the advisory body and shall
contain an assessment of the need for a Union compulsory licence and the conditions
for such licence. The opinion shall take account of the following:

(a) the nature of the crisis or emergency;

(b) the scope of the crisis or emergency and how it is expected to evolve;

(c) the shortage of crisis-relevant products and the existence of other means than a
Union compulsory licence that could adequately and swiftly remedy such
shortage.

2. The opinion of the advisory body shall not be binding on the Commission. The
Commission may set a time limit for the advisory body to submit its opinion. The
time limit shall be reasonable and appropriate to the circumstances of the situation,
taking particular account of the urgency of the matter.

3. Before the granting of a Union compulsory licence, the Commission shall give the
rights-holder and the licensee an opportunity to comment on the following:

(a) the possibility to reach a voluntary licensing agreement with manufacturers on
intellectual property rights for the purpose of manufacturing, using and
distributing the crisis-relevant products;

(b) the need to grant the Union compulsory licence;

(c) the conditions under which the Commission intends to grant the Union
compulsory licence, including the amount of the remuneration.

4. The Commission shall notify the rights-holder and the licensee as soon as possible of
the fact that a Union compulsory licence may be granted. Wherever the identification
of the rights-holders is possible and does not cause significant delay, the Commission
shall notify them individually.

5. When the Commission considers the granting of a Union compulsory licence, it shall
without undue delay publish a notice to inform the public about the initiation of the
procedure under this article. This notice shall also include, where already available
and relevant, information on the subject of the compulsory licence and an invitation
to submit comments in accordance with paragraph 3. The notice shall be published in
the Official Journal of the European Union.

6. When assessing whether a Union compulsory licence is to be granted, the
Commission shall consider the following:

(a) the opinion referred to in paragraph 2;

(b) the rights and interests of the rights-holder and the licensee;

(c) existing national compulsory licences reported to the Commission in
accordance with Article 22.

7. Where the Commission finds that the requirements for a Union compulsory licence
are met, the Commission shall grant it by means of an implementing act. The

# EN 24 EN

implementing act shall be adopted in accordance with the advisory procedure
referred to in Article 24(2). On duly justified imperative grounds of urgency relating
to the impacts of the crisis, the Commission shall adopt immediately applicable
implementing acts in accordance with the procedure referred to in Article 24(4). In
case of procedure under Article 24(4), the implementing act shall remain in force for
a period not exceeding 12 months.

8. When adopting the implementing act, the Commission shall ensure the protection of
confidential information. While respecting the confidentiality of the information, the
Commission shall ensure that any information relied on for the purpose of its
decision is disclosed to an extent that allows to understand the facts and
considerations that led up to the adoption of the implementing act.

_Article 8_

_Content of the Union compulsory licence_

1. The Union compulsory licence shall specify the following:

(a) the patent, patent application, supplementary protection certificate or utility
model for which the licence is granted or, where the identification of those
rights would significantly delay the granting of the licence, the non-proprietary
name of the products which are to be manufactured under the licence;

(b) the right-holder, provided they can be identified with reasonable efforts having
regard to the circumstances, including the urgency of the situation;

(c) the licensee, in particular the following information:

(1) name, trade name and registered trade mark;

(2) contact details;

(3) unique identification number in the country where the licensee is
established;

(4) where available, the Economic Operators Registration and Identification
(EORI) number;

(d) the duration for which the Union compulsory licence is granted;

(e) the remuneration to be paid to the rights-holder determined in accordance with
Article 9;

(f) the non-proprietary name of the crisis-relevant product which is to be
manufactured under the Union compulsory licence and its commodity code
(CN code) under which the crisis-relevant product is classified, as defined in
Council Regulation (EEC) No 2658/87;

(g) the details referred to in Article 10(1)(c), (d) and (e) allowing the identification
of the crisis-relevant product manufactured under the Union compulsory
licence and, where applicable, any other specific requirement under Union
legislation applicable to the crisis-relevant products and allowing its
identification.

(h) measures complementing the compulsory licence, which are necessary to
achieve the objective of the compulsory licence.

# EN 25 EN

2. By way of derogation from paragraph 1, point (e), the Commission may determine
the remuneration after the granting of the licence, by way of an implementing act,
where that determination requires, further investigation and consultation. This
implementing act shall be adopted in accordance with the rules referred to in Article
7(6) (a) and (b), 7(7) and 7(8).

_Article 9_

_Remuneration_

1. The licensee shall pay an adequate remuneration to the rights-holder. The amount of
the remuneration shall be determined by the Commission and specified in the Union
compulsory licence.

2. The remuneration shall not exceed 4 % of total gross revenue generated by the
licensee through the relevant activities under the Union compulsory licence.

3. When determining the remuneration, the Commission shall consider the following:

(a) the economic value of the relevant activities authorised under the Union
compulsory licence.

(b) whether the rights-holder has received public support to develop the invention.

(c) the degree to which development costs have been amortized by the rightsholder.

(d) where relevant, the humanitarian circumstances relating to the granting of the
Union compulsory licence.

4. If the published patent application for which a compulsory licence has been granted
does not subsequently lead to the granting of a patent, the rights-holder shall refund
the remuneration paid under this article to the licensee.

_Article 10_

_Obligations to be fulfilled by the licensee_

1. The licensee shall be authorised to exploit the protected invention covered by the
Union compulsory license only under the following obligations:

(a) the number of crisis-relevant products manufactured under the Union
compulsory licence does not exceed what is necessary to meet the needs of the
Union;

(b) the relevant activities are carried out solely for the supply of the crisis-relevant
products in the Union market;

(c) the products manufactured under the Union compulsory licence are clearly
identified, through specific labelling or marking, as being manufactured and
marketed pursuant to this Regulation.

(d) the products manufactured under the Union compulsory licence can be
distinguished from products manufactured and marketed by the rights-holder or
under a voluntary licence granted by the rights-holder by way of special
packaging, colouring or shaping, provided that such distinction is feasible and
does not have a significant impact on the price of the products;

# EN 26 EN

(e) the packaging of the products manufactured under the Union compulsory
licence and any associated marking or leaflet indicate that the products are
subject to a Union compulsory licence under this Regulation and specify
clearly that the products are exclusively for distribution in the Union and are
not to be exported.

(f) before the marketing of the products manufactured under the Union
compulsory licence, the licensee shall make available on a website the
following information:

(1) the quantities of the products manufactured under the Union compulsory
licence per Member State of manufacturing;

(2) the quantities of the products supplied under the Union compulsory
licence per Member State of supply;

(3) the distinguishing features of the products under the Union compulsory
licence.

The address of the website shall be communicated to the Commission. The Commission shall

communicate the address of the website to the Member States.

2. In the event of a failure by the licensee to fulfil the obligations laid down in
paragraph 1 of this Article the Commission may:

(a) terminate the Union compulsory licence in accordance with Article 14(3); or

(b) impose fines or periodic penalties on the licensee in accordance with Articles
15 and 16.

3. The European Anti-Fraud Office (OLAF) in cooperation with the relevant national
authorities of the Member States may, at the request of the rights-holder or on its
own initiative, request access to books and records kept by the licensee, for the
purpose of checking whether the content and the conditions of the Union compulsory
licence, and in general the provisions of this Regulation, have been complied with.

4. The Commission is empowered to adopt implementing acts establishing rules for the
specific labelling or marking referred to in paragraph 1, point (c), and for the
packaging, colouring and shaping referred to in point (d) as well as rules for their use
and, where relevant, their positioning on the product. Those implementing acts shall
be adopted in accordance with the examination procedure referred to in Article 24(2).

_Article 11_

_Prohibition of export_

The export of products manufactured under a Union compulsory licence is prohibited.

# EN 27 EN

_Article 12_

_Customs control_

1. The application of this article is without prejudice to other Union legal acts
governing the export of products, in particular Articles 46, 47 and 267 of Regulation
(EU) No 952/2013 [14] .

2. Customs authorities shall rely on the Union compulsory license and modifications
thereof to identify products that may fall under the prohibition laid down in Article
11. For that purpose, risk information as regards each Union compulsory licence and
any modification thereof shall be entered in the relevant customs risk management
system. Customs authorities shall take such risk information into consideration when
they carry out controls on products placed under the customs procedure ‘export’ in
accordance with Articles 46 and 47 of Regulation (EU) No 952/2013.

3. Where customs authorities identify a product that may fall under the prohibition laid
down in Article 11, they shall suspend its export. Customs authorities shall
immediately notify the Commission of the suspension and provide it with all relevant
information to enable it to establish whether the product was manufactured under a
Union compulsory license. To assess whether the suspended products correspond to
the Union compulsory license, the Commission may consult the relevant rightsholder.

4. Where the export of a product has been suspended in accordance with paragraph 3,
the product shall be released for export provided that all the other requirements and
formalities under Union or national law relating to such export have been fulfilled,
and either of the following conditions is fulfilled:

(a) the Commission has not requested the customs authorities to maintain the
suspension within 10 working days after it was notified thereof;

(b) the Commission has informed the customs authorities that the product is not
manufactured under a Union compulsory licence.

5. Where the Commission concludes that a product manufactured under a Union
compulsory licence does not comply with the prohibition laid down in Article 11,
customs authorities shall not authorise its release for export. The Commission shall
inform the concerned rights-holder of such non-compliance.

6. Where the release for export of a product has not been authorised:

(a) where appropriate in view of the crisis or emergency context, the Commission
may require customs authorities to oblige the exporter to take specific actions
at their own costs, including supplying them to designated Member States, if
need be, after rendering them compliant with Union law.

(b) in all other cases, customs authorities may take any necessary measure to
ensure that the product concerned is disposed of in accordance with national
law consistent with Union law. Articles 197 and 198 of Regulation (EU) No
952/2013 shall apply accordingly.

14 REGULATION (EU) No 952/2013 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL
of 9 October 2013 laying down the Union Customs Code.

# EN 28 EN

_Article 13_

_Relations between rights-holder and licensee_

1. The relations between the rights-holder and the licensee who has been granted a
Union compulsory license shall act and cooperate with each other in good faith when
performing rights and obligations under this Regulation.

2. In compliance with the good faith obligation, the rights-holder and the licensee shall
make their best efforts to fulfil the objective of the Union compulsory licence, taking
into account each other's interests.

_Article 14_

_Review and termination of the Union compulsory licence_

1. The Commission shall review the Union compulsory licence upon reasoned request
by the rights-holder or the licensee or on its own initiative and shall, where needed,
modify the specifications referred to in Article 8 by means of an implementing act.
Where necessary, the Union compulsory licence shall be modified to indicate the
complete list of rights and rights-holders covered by the compulsory licence.

2. Where necessary, the Commission shall decide upon reasoned request by the rightsholder or the licensee or on its own initiative on additional measures complementing
the Union compulsory licence to ensure it achieves its objective as well as to
facilitate and ensure the good collaboration between the rights-holder and the
licensee.

3. A Union compulsory licence may be terminated by the Commission by means of an
implementing act where the circumstances which led to it cease to exist and are
unlikely to recur or where the licensee fails to comply with the obligations laid down
in this Regulation.

4. When the Commission considers modifying, adopting additional measures as
referred to in paragraph 2, or terminating the Union compulsory licence, it may
consult the advisory body referred to in Article 6.

5. When terminating the Union compulsory licence, the Commission may require that
the licensee, within a reasonable period of time, arrange for any goods in its
possession, custody, power or control to be redirected or otherwise disposed of in the
manner determined by the Commission in consultation with the rights-holder and at
the expense of the licensee.

6. The implementing acts referred to in paragraph 1, 2 and 3 shall be adopted in
accordance with the rules referred to in Article 7(6) (a) and (b), 7(7) and 7(8).

_Article 15_

_Fines_

1. The Commission may by decision impose on the licensee or the rights-holder fines
not exceeding 6 % of their respective total turnover in the preceding business year
where, intentionally or negligently:

# EN 29 EN

(a) the licensee fails to comply with its obligations under Article 9(1) or Article
10(1);

(b) the rights-holder or the licensee fail to comply with the principle of good faith
and cooperation referred to in Article 13; or

(c) the rights-holder or the licensee fail to comply with any obligation resulting
from the additional measures complementing the Union compulsory licence as
referred to in Articles 8(1)(h) and 14(2), as specified in the relevant
implementing act.

2. In fixing the amount of the fine, regard shall be had to the gravity, to the recurrence
of the infringement and to the duration of the infringement.

_Article 16_

_Periodic penalty payments_

1. The Commission may, by decision, impose on the licensee or the rights-holder
periodic penalty payments not exceeding 5 % of their respective average daily
turnover in the preceding business year per day and calculated from the date
appointed by the decision, in order to compel:

(a) the licensee to put an end to an infringement of its obligations under Article
10(1);

(b) the licensee and the rights-holder to put an end to the infringement of Article
13; or

(c) the rights-holder or the licensee to comply with any obligation resulting from
the additional measures complementing the Union compulsory licence as
referred to in Articles 8(1)(h) and 14(2), as specified in the relevant
implementing act.

2. Where the licensee or the rights-holder have satisfied the obligation which the
periodic penalty payment was intended to enforce, the Commission may fix the
definitive amount of the periodic penalty payment at a figure lower than that which
would arise under the original decision.

_Article 17_

_Limitation period for the imposition of fines and periodic penalty payments_

1. The powers conferred on the Commission by Articles 15 and 16 shall be subject to a
limitation period of five years.

2. Time shall begin to run on the day on which the infringement is committed.
However, in the case of continuing or repeated infringements, time shall begin to run
on the day on which the infringement ceases.

3. Any action taken by the Commission or by a competent authority of the Member
States for the purpose of the investigation or proceedings in respect of an
infringement shall interrupt the limitation period for the imposition of fines or
periodic penalty payments.

# EN 30 EN

4. Each interruption shall start time running afresh. However, the limitation period for
the imposition of fines or periodic penalty payments shall expire at the latest on the
day on which a period equal to twice the limitation period has elapsed without the
Commission having imposed a fine or a periodic penalty payment. That period shall
be extended by the time during which the limitation period has been suspended
pursuant to paragraph 5.

5. The limitation period for the imposition of fines or periodic penalty payments shall
be suspended for as long as the decision of the Commission is the subject of
proceedings pending before the Court of Justice of the European Union.

_Article 18_

_Limitation period for the enforcement of fines and periodic penalty payments_

1. The power of the Commission to enforce decisions taken pursuant to Articles 15 and
16 shall be subject to a limitation period of five years.

2. Time shall begin to run on the day on which the decision becomes final.

3. The limitation period for the enforcement of penalties shall be interrupted:

(a) by notification of a decision varying the original amount of the fine or periodic
penalty payment or refusing an application for variation;

(b) by any action of the Commission, or of a Member State acting at the request of
the Commission, designed to enforce payment of the fine or periodic penalty
payment.

4. Each interruption shall start time running afresh.

5. The limitation period for the enforcement of penalties shall be suspended for so long

as:

(a) time to pay is allowed;

(b) enforcement of payment is suspended pursuant to a decision of the Court of
Justice of the European Union or to a decision of a national court.

_Article 19_

_Right to be heard and access to the file_

1. Before adopting a decision pursuant to Article 15 or 16, the Commission shall give
the licensee or the rights-holder the opportunity of being heard on the alleged
infringement which is to be made subject to a fine or periodic penalty payments.

2. The licensee or the rights-holder may submit its observations on the alleged
infringement within a reasonable period set by the Commission, which may not be
less than 14 days.

3. The Commission shall base its decisions only on objections on which the parties
concerned have been able to comment.

4. The rights of defence of the parties concerned shall be fully respected in the
proceedings. They shall be entitled to have access to the Commission's file under the
terms of a negotiated disclosure, subject to the legitimate interest of the licensee or

# EN 31 EN

the rights-holder or other person concerned in the protection of their commercially
sensitive information and trade secrets. The Commission shall have the power to
adopt decisions setting out such terms of disclosure in case of disagreement between
the parties. The right of access to the file of the Commission shall not extend to
confidential information and internal documents of the Commission, other competent
authorities or other public authorities of the Member States. In particular, the right of
access shall not extend to correspondence between the Commission and those
authorities. Nothing in this paragraph shall prevent the Commission from disclosing
and using information necessary to prove an infringement.

5. If the Commission considers it necessary, it may also hear other natural or legal
persons. Applications to be heard on the part of such persons shall, where they show
a sufficient interest, be granted.

_Article 20_

_Publication of decisions_

1. The Commission shall publish the decisions it adopts pursuant to Article 15 and
Articles 16. Such publication shall state the names of the parties and the main content
of the decision, including any fines or penalties imposed.

2. The publication shall have regard to the rights and legitimate interests of the licensee,
the rights-holder or any third parties in the protection of their confidential
information.

_Article 21_

_Review by the Court of Justice of the European Union_

In accordance with Article 261 TFEU, the Court of Justice of the European Union has
unlimited jurisdiction to review decisions by which the Commission has imposed fines or
periodic penalty payments. It may cancel, reduce or increase the fine or periodic penalty
payment imposed.

_Article 22_

_Reporting on national compulsory licences_

When a national compulsory licence has been granted for the purpose of addressing a national
crisis or emergency, the Member State shall notify the Commission of the granting of the
licence and of the specific conditions attached to it. The information provided shall include
the following:

(a) the purpose of the national compulsory licence and its legal basis in national law;

(b) the name and address of the licensee;

(c) the products concerned and, to the extent possible, the concerned intellectual
property rights and rights-holders;

(d) the remuneration to be paid to the rights-holder;

(e) the quantity of products to be supplied under the licence;

# EN 32 EN

(f) the duration of the licence.

_Article 23_

_Amendments to Regulation (EC) No 816/2006_

Regulation (EC) No 816/2006 is amended as follows:

(a) The following Article 18a is inserted:

“Article 18a

Union compulsory licence

1. The Commission may grant a compulsory licence where the activities of manufacture and
sale for export spread across different Member States and would therefore require compulsory
licences for the same product in more than one Member State.

2. Any person may submit an application for a compulsory licence under paragraph 1. The
application shall fulfil the requirements laid down in Article 6 (3) and shall specify the
Member States to be covered by the compulsory licence.

3. The compulsory licence granted in accordance with paragraph 1 shall be subject to the
conditions set out in Article 10 and shall specify that it is applicable to the whole territory of
the Union.

4. In the event of an application referred to in paragraph 2 under this Article, the competent
authority referred to in Articles 1 to 11, 16 and 17 shall be the Commission.

5. The Commission is empowered to adopt implementing acts in order to:

(a) grant a compulsory licence;

(b) reject the application for a compulsory licence;

(c) amend or terminate the compulsory licence.

Those implementing acts shall be adopted in accordance with the advisory procedure referred
to in Article 18b (2). On duly justified imperative grounds of urgency relating to the impacts
of the public health problems, the Commission shall adopt immediately applicable
implementing acts in accordance with the procedure referred to in Article 18b (3).”

(b) The following Article 18b is inserted:

_“Article 18b_

_Committee Procedure_

1. The Commission shall be assisted by a committee (‘the Compulsory Licensing
Committee’). That committee shall be a committee within the meaning of Regulation (EU)
No 182/2011.

2. Where reference is made to this paragraph, Article 4 of Regulation (EU) No 182/2011 shall
apply.

3. Where reference is made to this paragraph, Article 8 of Regulation (EU) No 182/2011, in
conjunction with Article 4 thereof, shall apply.”

# EN 33 EN

_Article 24_

_Committee Procedure_

1. The Commission shall be assisted by a committee. That committee shall be a
committee within the meaning of Regulation (EU) No 182/2011.

2. Where reference is made to this paragraph, Article 4 of Regulation (EU) No
182/2011 shall apply.

3. Where reference is made to this paragraph, Article 5 of Regulation (EU) No
182/2011 shall apply.

4. Where reference is made to this paragraph, Article 8 of Regulation (EU) No
182/2011, in conjunction with Article 4 thereof, shall apply.

_Article 25_

_Evaluation_

The Commission shall, by the last day of the third year following the granting of the Union
compulsory licence in accordance with Article 7, present an evaluation report to the Council,
the European Parliament and the European Economic and Social Committee on the
application of this Regulation.

_Article 26_

_Entry into force_

This Regulation shall enter into force on the day following that of its publication in the
_Official Journal of the European Union_ .

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels,

_For the European Parliament_ _For the Council_
_The President_ _The President_

# EN 34 EN