European Council close to getting approval from EU Parliament for compulsory IP licensing powers in emergency situations

Photo by Christian Lue on Unsplash

The European Council this week approved a framework for compulsory licensing of patents (and other IP rights) in crisis situations.

The EC says the aim is to ensure the availability of critical products (such as vaccines and protective equipment) within the single market (the European Union) in the event of a crisis; obviously, COVID 19 was a major factor in the EC deciding the EU needed such powers. However, they could be used in other crisis situations.

The proposed regulation focuses first and foremost on negotiating voluntary agreements with rights holders; but if those negotiations take too long, compulsory licensing will be used as a last-resort measure.

The regulation has been the subject of much negotiation for the last few years, with the EC and the European Parliament hammering out a compromise in May this year. That compromise left gas, chips and defence products outside of the scope of the proposed regulation. Also, the EC agreed that there should be no obligation for a company to disclose trade secrets.

This week’s approval of the proposed regulation by the Council means the next and final step is to get approval from a plenary session of the European Parliament. Assuming this approval is given, then the regulation will be published in the Official Journal and will then come into force 20 days after that publication.

The provisional agreement includes guarantees that IP owners will be entitled to appropriate remuneration, with the amount and the timeframe for payment to be decided by the European Commission.

Licensees will be restricted by the terms of the emergency licences from, for example, producing more of a needed product than the amount in the licence. They will also be required to label products as being produced under a compulsory licence. The proposed agreement includes fines for licensees that breach the terms of an emergency licence of up to €300,000 (or €50,000 for SMEs).

The Council is stressing that voluntary agreements will always be “the most efficient tool for enabling the rapid manufacture of products covered by intellectual property rights, including during crises. However, in cases where such voluntary agreements are not possible or appropriate, compulsory licensing can provide a way to allow the rapid manufacturing of products needed during a crisis.”

As law firm Osborne Clarke points out in this post on the May 2025 negotiations, “the provisional agreement shows that the negotiating parties have tried to strike a balance between patentees' monopoly rights, the potential need for a compulsory licensing framework in times of crisis, and the rights any potential licensees would have.”