The team is joined by: GuestKats Mirko Brüß, Rosie Burbidge, Nedim Malovic, Frantzeska Papadopoulou, Mathilde Pavis, and Eibhlin Vardy; by InternKats Ieva Giedrimaite, Rose Hughes, and Cecilia Sbrolli; and by Verónica Rodríguez Arguijo (TechieKat), Hayleigh Bosher (Book Review Editor), and Tian Lu (Asia Correspondent).

Wednesday, 30 September 2009

Compulsory licences for all? Latest Community patent plans ...

Does nothing miss the eagle eye of the IPKat's friend and guru Axel H. Horns, the German patent attorney and blogger whose IP::JUR weblog has provided a valuable and welcome education for so many of us? Today Axel has posted a piece here entitled "Yet Another Revised Proposal For A Council Regulation On The Community Patent". This post reveals the existence of Document 13706/09, bearing yesterday's date, which the General Secretariat of the EU Council has prepared for the benefit of the Working Party on Intellectual Property (Patents) when it holds its next session next week. This document is 28 pages in length.

Recital 6 of the proposed Regulation will generate some debate:

"(6) Negative effects of an exclusive right created by a Community patent should be mitigable through a system of compulsory licences. This is without prejudice to the application of Community competition law by the Commission or national authorities. The [European and Community Patents Court] Court (hereafter: Court) should be entrusted with the grant of compulsory licences in situations not falling under Community competition law".
The extent to which this fits in with existing Paris Convention and TRIPs provisions relating to compulsory licensing will no doubt launch a few PhD theses, not to mention a smattering of heart attacks.

Articles 21 and 22 are worth reproducing in full:
"Article 21: Grant of compulsory licences
1. The Court may grant a compulsory licence for lack or insufficiency of exploitation of a Community patent to any person filing an application four years or later after the patent application was filed and three years or later after the patent was granted if the patent proprietor has not exploited the patent in the Community on reasonable terms or has not made effective and serious preparations to do so, unless he/she provides legitimate reasons to justify his/her inaction, and on the condition that the grant of the compulsory licence is required in the public interest. In determining the lack or insufficiency of exploitation of the patent, no distinction shall be made between products originating within the Community and products imported to the Community from a member of the World Trade Organization.
2. On request, the Court may grant a compulsory licence in respect of a Community patent (first patent) to the proprietor of a national or Community patent (second patent) or […] plant variety right who cannot exploit his/her second patent or […] plant variety right without infringing […] the first patent, valid for the territory of the second patent or plant variety right, provided that the invention or new plant variety claimed in the second patent or plant variety right involves an important technical advance of considerable economic significance in relation to the invention claimed in the first patent. […] The owner of the first patent shall be entitled to a cross-licence on reasonable terms to exploit the second patented invention or protected plant variety.
Where on the corresponding conditions as above in this paragraph a proprietor of a
Community patent is granted a compulsory licence in respect of a first national patent or national or Community plant variety right, the owner of the first patent or plant variety right shall be entitled to a cross-licence on reasonable terms to use the patented invention of the dependent Community patent for the territory of the first patent or plant variety right.
3. The Court may grant a compulsory license under the conditions set out in the 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.
4. In times of national emergency or in other situations of extreme urgency, including those relating to a public interest of extreme importance, the Court may authorise at the request of a Member State the exploitation of a Community patent.
5 In the case of semi-conductor technology, exploitation shall be possible without the authorisation of the right holder only in the situations set out in paragraph 4.
6 A licence or exploitation set out in paragraphs 1 and 2 may be granted only if the proposed user has made efforts to obtain authorization from the patent holder on reasonable commercial terms and conditions, and if such efforts have not been successful within a reasonable period of time. However, the authority granting the licence may derogate from this condition in the situations set out in paragraph 4. In these situations, the right holder shall be informed as soon as reasonably possible.
7 The detailed rules of application and the procedures to be used for applying the principles set out in this Article shall be laid down in the Agreement on, and the Statute and the Rules of Procedure of the Court.
Article 22: Conditions applicable to compulsory licences
When granting the compulsory licence under Article 21, the Court shall specify the type of use covered and the conditions to be met. The following conditions shall apply:
(a) the scope and duration of the exploitation shall be limited to the purpose for which it was authorized;
(b) the exploitation shall be non-exclusive;
(c) the exploitation shall be non-assignable, except with that part of the enterprise or goodwill which enjoys such use;
(d) the exploitation shall be authorized predominantly for the supply of the internal market of the Community;
(e) the Court may, on reasoned request of the patent holder, the holder of a contractual license or the holder of the compulsory license, change the conditions set by the authorisation or decide to cancel the authorization, subject to adequate protection of the legitimate interests of the persons so authorized, if and when the circumstances which led to it either change or cease to exist and are unlikely to recur;
(f) the licence holder shall pay the right holder adequate remuneration in the circumstances of each individual case, taking into account the economic value of the authorization;
(g) in the case of a compulsory licence in respect of a dependent patent or a plant variety right, the exploitation authorized in respect of the first patent shall be non-assignable except with the assignment of the second patent or plant variety right".
The IPKat looks forward to the chance to read this document carefully and draw some conclusions. He suspects, however, that some of his patent-proficient readers will beat him to the draw. Merpel says, I do hope they make up their mind how to spell licence/license. Tufty's theory is that the variations of spelling are an indication that the drafting has been in the hands of more than one draftsman.


Japser said...

Compulsory licence four years or later after filing or three years or later after grant? Considering that a licence requires a grant, this will for certain patent granting authorities surely almost always be upon granting of the patent. Perhaps the addition of the words "whichever term is the longest" may have been wise here.

Fortunately, there is a provision on efforts of the potential licensee to first ask for a licence under RAND T&Cs.

I also find the addition of WTO member states interesting. What interest is there for the EU to add this, why not make it "from the rest of the world"? To force as much countries as possible to join WTO and impose the WTO and TRIPs requirements on them?

And in general: why not agree on a community patent first... Or is this another effort to hide the fact that the real preparations for the actual community patent is still taking place from the trenches between countries that are willing to give up their national pride on languages and those that that have traded it for something better? (like my home country during the preparations for the EPC)

Anonymous said...

Compulsory licences have long been in the Community patent regulation. See this text from 2004:

Ara said...

As long as the proposal does not require the patentees to prove exploitation of their patents on a year basis or otherwise in the relevant countries I am fine with it.

On a separate note, I always wonder why "semi-conductor technology" is always set apart, could anyone please enlighten.

Anonymous said...

Better lobbyists.

Joeri said...

@21(1): Maybe not such a bad idea. If you want to uphold the idea that patents are a means for stimulating technical progress, this might be a useful measure.

@21(2): I don't like that one. It should be the owner of the patent who decides to license an idea or not. With such a law you can force your competitor to license an invention by just adding something not very useful (but inventive) to the invention you want to use.

@21(3): I agree

@21(4): Quite vague. What is extreme urgency?

@21(5): What is so special about semi-conductors? Do they use different lobbyists?

Anonymous said...

Ara: TRIPs article 31(c) limits compulsory licences this way for semi-conductors.

Japser said...

@ Ara:
As far as I know, the semiconductor is set apart as a result from provisions in TRIPs. And why it ended up in there... Probably as a result of good lobbying of Intel, Qualcomm, Texas Instruments, Motorola, IBM, ...

Having worked a couple of year as in-house IP counsel in the semiconductor industry, I actually have no clue why this industry would have such a special position. Possibly because R&D is so very expensive. Then again, the exception given here will most probably never arise.

No licensing in this industry (and keeping technology exclusive) for the majority of patents will immediately stop all R&D. Almost all (large) companies license (or do not assert). So compulsory licences will not be required - except when patents end up with "non-practicing entities". And as far as I can see, that is JUST the scenario these articles aim to address.

So paragraph 5 of Article 21 above takes away the most important measure to prevent a potential halt of R&D in the semiconductor industry these days.

And the only way to resolve this is probably by amending TRIPs.

Anonymous said...

Yes, but just how broad is "semi-conductor technology"? Does this include lithography apparatus too? How about special gloves for handling silicon wafers?

Subscribe to the IPKat's posts by email here

Just pop your email address into the box and click 'Subscribe':