On 21 May 2025, the European Parliament and Council reached a provisional agreement on a new Regulation which establishes an EU-level framework on compulsory licensing of patents for any crisis emergency-related products in the EU, including medicinal products. The draft legislation, published in 2023, must now be endorsed and formally adopted by both the Parliament and the Council, expected in the coming months.
Background
Compulsory licensing is a mechanism by which governments or other competent authorities can grant companies and individuals a licence to exploit patented inventions without the patent owner's authorisation.
While the WTO's Agreement on TRIPS (Trade-Related Aspects of Intellectual Property Rights) sets out the international legal framework for compulsory licensing, the position is not yet harmonised at EU level. The COVID-19 pandemic put a spotlight on this lack of coherence and, though the Commission accepted that voluntary agreements are the most efficient tool to enable rapid manufacturing of patent-protected products, including in crises, it also acknowledged that there were cases where these might not be available or appropriate. Consequently, in April 2023, the European Commission sought to address the lack of harmonisation by proposing an EU-wide initiative on compulsory licensing for crisis management. Its aims were (1) to enable the EU to rely on compulsory licensing itself rather than relying on national procedure, and (2) to introduce an efficient compulsory licensing scheme allowing a swift and appropriate response to crises.
EU-wide compulsory licensing for crisis management
Two years since the initiative was proposed, the European Parliament and Council have finally reached a provisional agreement on how compulsory licensing will operate. The draft legislation sets out that the Commission may only grant a compulsory licence in a clearly defined cross-border crisis or emergency situations as a measure of last resort, with voluntary agreements to be given priority. Accordingly, a compulsory licence will only be granted if negotiations for voluntary agreements between the rights-holder and licensee fail. Nevertheless, voluntary agreements must be concluded within a reasonable timeframe, otherwise a compulsory licence can be granted. A compulsory licence would also only be granted with specified scope, territorial coverage and duration. The new rules, once adopted, will also ensure that patent holders are not required to disclose their trade secrets, except when strictly necessary in order to achieve the purpose of the compulsory licence. In addition, rights-holders will be remunerated by the licensee for the use of their patent, although the amount and timeframe will be for the Commission to determine.
Following the negotiations, the European Parliament's rapporteur, Adrian Vazquez MEP, has expressed his views in favour of the draft legislation, describing it as "a crucial balance between protecting intellectual property rights and ensuring that, in times of crisis, essential technologies and products can be made available swiftly across the Union".
Comment
Now that the negotiators have come to a provisional agreement on the new rules, we are one step closer to having an EU-wide compulsory licensing regime in place. Pharmaceutical and medical device companies involved in the development and manufacturing of products that may be deemed useful or essential in health emergencies should monitor the draft Regulation as it progresses, as it will clearly bolster the Commission's negotiating power in future public health emergencies.
As regards next steps, the provisional agreement must be formally approved by the European Parliament and Council, after which the Regulation will be published in the Official Journal of the European Union and come into force on the day of its publication. Although there is currently no official indication as to when this might happen, we expect the legislation to come into force in the coming months, and possibly by the end of this year.
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