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Compulsory Patent Licences Under The Spanish Patent Act. A cargo de Sara Villalta Alarcón

AD 186/2021

COMPULSORY PATENT LICENCES UNDER THE SPANISH PATENT ACT

 

ABSTRACT: The main aim of this work is to analyse the legal tools that the Spanish Patent Act 24/2015, of 24 July, of Patents, enables the state to grant compulsory licences on a patent or patent application -subject to five legal situations, with specific requirements for the application and granting procedure-. Even though this mechanism has been never granted by the Spanish Patent and Trademark Office, this article explores all the options that the Spanish legal regulation offers to deal with an extraordinary situation of non-use or non-exploitation of a patented product or process.

RESUMEN: La finalidad de este trabajo es analizar las herramientas legales que la Ley 24/2015, de 24 de julio, de Patentes, ofrece al estado para la concesión de licencias obligatorias sobre una patente o una solicitud de patente -siendo posible cinco situaciones legales con requerimientos específicos sobre solicitud y concesión-. A pesar de que la Oficina Española de Patentes y Marcas nunca ha concedido una licencia obligatoria, este artículo explora las opciones que ofrece la legislación española para hacer frente a situaciones extraordinarias de no producción o no explotación de un producto o proceso patentado.

 

 KEYWORDS: Spanish Patent Act – compulsory patent licensing – licence – public interest – Spanish Patent and Trademark Office – TRIPS Agreement – dependent patents –application procedure– Competition Law – exploitation –patent –pharmaceutical products – exportations.

PALABRAS CLAVE: Ley de patentes – licencias obligatorias de patentes– licencia – interés público – Oficina Española de Patentes y Marcas – Acuerdo sobre los ADPIC – patentes dependientes –procedimiento de solicitud– Ley de Competencia – explotación –patente –productos farmacéuticos – exportaciones.

SUMMARY

  1. Introduction
  2. General features and conditions of compulsory licences under the Spanish Patent Act.
  3. Application procedure to get a compulsory patent licence
  4. Five legal situations foresee by the Spanish Patent Act. 1. Lack or insufficiency of exploitation of a patent (Article 92 Spanish PA). – 4.2. Dependency between patents, or between patents and plant varieties (Article 93 Spanish PA). – 4.3. Terminate practices that have been declared contrary to Competition Law by a final administrative or judicial decision (Article 94 Spanish PA). – 4.4. Public interest (Article 95 Spanish PA). – 4.5. Manufacture of pharmaceutical products for export to countries with public health problems (Article 96 Spanish PA).
  5. Conclusion.
  6. Bibliography

I.-INTRODUCTION

The reality behind a pharmaceutical, technological, mechanical patent or a patented process is, on one hand, huge investments –that in some cases they might not be materialized because the companies- as developers- or the countries -as the final clients- are lack of budget or inversion-, and on the other hand, the uncertainty about the real effectivity or acceptance of the patent in the market. Investment, effectiveness, and acceptance are three of the elements which might determine that a pharmaceutical, technological, mechanical patent, or patented process could be a risky gamble.

Despite these elements, a large number of states had already enacted in their legislation about mechanisms, in which the state is enabled to take the initiative to patent or authorise a third party to take that initiative on behalf of the state, in case of extraordinary situations determined by law.

A compulsory patent licence is an authorisation given by a national authority -Minister or National Patent Office, principally- that allows someone else the production, use and exploitation of a patented product or process without the consent of the patent holder. Compulsory licensing is an exception to the main principle of patent law -the patent holder has the exclusive right to authorise the use of the invention- included in the Trade-Related Aspect of Intellectual Property Rights Agreement (hereinafter “TRIPS Agreement”). [1]

The Spanish Act 24/2015, of 24 July, of Patents[2] (hereinafter «Spanish PA»), provides regulation for compulsory patent licensing in Articles 91 and subsequent Articles thereof. This regulation is developed in the Spanish Royal Decree 316/2017, of 31 March[3], that develops the Spanish PA in Article 86 and ff.

 

II.- GENERAL FEATURES AND CONDITIONS OF COMPULSORY LICENCES UNDER THE SPANISH PATENT ACT.

Compulsory patent licensing has its origin in the Paris Convention for the Protection of the Industrial Property, adopted in 1883 and effective since 1884, and more in particular in its Article 5 (hereinafter “Paris Convention”) and in TRIPS Agreement, adopted in 1993 and effective since 1994, in particular in the Annex 1C of the Marrakesh Agreement. This unusual legal concept is a temporary suspension of the patentee, is a limit to this exclusive right traditionally related to the obligation to exploit the invention under the rules of good law.

It must be mentioned that a situation of compulsory patent licensing has never happened in Spain. The Spanish Patent and Trademark Office (hereinafter “Spanish PTO”) has published statistics for compulsory licensing between 1986 and 2010[4]. Six applications for compulsory patent licensing were reported during that period, and all of them were denied or archived.

Nevertheless, Article 91 Spanish PA foresees five legal situations to grant compulsory licences:

  1. Lack or insufficiency of exploitation of a patent within four years of the publication of its application, or within three years of the publication of its granting in the Official Industrial Property Bulletin (Article 92 Spanish PA).
  2. Dependence between patents, or between patents and plant varieties, without undermining prior rights (Article 93 Spanish PA).
  3. Terminate practices that have been declared contrary to National or Community Competition Law by a final administrative or judicial decision (Article 94 Spanish PA).
  4. Public interest (Article 95 Spanish PA).
  5. Manufacture of pharmaceutical products for export to countries with public health problems, according to Regulation (EC) No. 816/2006 of the European Parliament and of the Council, of 17 May 2006 (Article 96 Spanish PA).

Articles 100 and 101 of the Spanish PA, on the other hand, foresee the following general conditions and rules of compulsory patent licensing:

  • Non- exclusive.
  • Proper compensation to the patent owner according to the circumstances of the case, given the economic relevance of the invention.
  • The relationship between the patent owner and the licensee is based on the principle of good faith. This includes but is not limited to the obligation of the patent owner to make available to the licensee the technical knowledge in his/her possession that might be necessary for the proper commercial exploitation of the licenced invention. It includes the disclosure of the know-how if it is necessary for the adequate exploitation of the patent.
  • Coverage of the licenced patent and any supplementary protection certificate (hereinafter «SPC»), where the basic patent is the licenced patent, including both the SPCs granted at the time of the licence or later.
  • Only if the whole business or business unit in charge of its exploitation is transmitted to the licensee, the licence assignment would be valid. In the case of dependent patents, it is also necessary that the dependent patent is assigned together with the prior right of the first patent.
  • Sub-licensing by the licensee is prohibited and will be deemed null and without legal effects.

 

III.- APPLICATION PROCEDURE TO GET A COMPULSORY PATENT LICENCE.

In general, before the initiation of the procedure to request a compulsory patent licence before the Spanish PTO, the interested party shall have tried to reach an agreement with the patentee, but this is not required in some cases foreseen in Article 97 Spanish PA: national emergency, other circumstances of extreme urgency or public non-commercial use.

Nevertheless, the attempt of an agreement with the patentee is not the only fact that the interested party must prove to obtain the compulsory patent licence. The applicant must also prove that has the necessary capacity to exploit the patent.

If an agreement with the patentee is not possible, or the patent is under one of the exceptions mentioned above, the applicant must provide reliable proof to the Spanish PTO that “has the sufficient means and guarantees to carry out a real and effective exploitation of the patented invention in accordance with the purpose of the licence”, pursuant to Article 98 Spanish PA.

Article 99 Spanish PA gives the patentee one month to provide an answer to the application. If after one month fails to reply, the Spanish PTO shall grant the compulsory licence and will unilaterally determine the conditions regarding the scope of the licence, its duration, the guarantees that may be requested from the licensee, and any other relevant clauses.

However, if the patentee answers and the Spanish PTO considers that the conditions for granting the compulsory licence are fulfilled, the Spanish PTO shall invite the parties to designate a common mediator or each one could designate its own mediator who, with a third expert designated by the Spanish PTO, shall determinate the conditions of the compulsory licence within two months. In case of dispute in the designation of the mediator or in the conditions of the licence, the Spanish PTO would decide about the grant of the licence and its conditions. General rules on licensing apply to fill in any possible gaps.

The decision reached is appealable at an administrative level before the Spanish PTO and subsequently before the contentious-administrative courts, first to the High Court of Justice –Tribunal Superior de Justicia-, then to the Contentious-Administrative Chamber of the Supreme Court –Sala de lo Contencioso-Administrativo del Tribunal Supremo-. The appeal will be heard by the Supreme Court only if it deems the case to have an interest in the formation of new Spanish case law.[5]

Pursuant to Article 101 Spanish PA, the parties may request the Spanish PTO for the amendment of the terms of the compulsory licence, in case new facts had happened, that could justify that amendment and, in particular, if the patentee has granted -after the grant of the compulsory licence- licences to third parties under terms that are unjustifiably more favourable.

Nevertheless, the Spanish PTO may cancel the compulsory patent licence -ex officio or at the request of the interested party- in case that the licensee incurs in material or repeated breach of the terms of the compulsory licence, after hearing the licensee.

 

IV.- FIVE LEGAL SITUATIONS FORESEE BY THE SPANISH PATENT ACT.

The Spanish PA foresees five legal grounds in which a compulsory patent licence could be granted.

4.1.- Lack or insufficiency of exploitation of a patent (Article 92 Spanish PA).

After four years from the filing date of the patent application or after three years from the publication of its granting in the Official Industrial Property Bulletin- pursuant to Article 92 in relation with Article 90 Spanish PA-, anyone may request the grant of a compulsory patent licence.

This application for compulsory licensing is constrained at the time of the request if there is not any legitimate exception under Article 92 Spanish PA to the fact that the exploitation of the patent had not begun, or that such exploitation has been interrupted for more than one year. The only legal exceptions considered in such Article are objective difficulties, of a legal technical nature beyond the will, control, and circumstances of the patentee, which make it impossible to exploit the invention, or which prevent such exploitation from being bigger than it was.

The requirement mentioned in the Spanish PA is that the invention is put in practice in any member state of the World Trade Organization (hereinafter «WTO») in a sufficient amount to satisfy the demand of the Spanish market. The patent could be put in practice by the patentee or by a third party to whom the patentee granted a licence.

4.2.- Dependency between patents, or between patents and plant varieties (Article 93 Spanish PA).

In this case, when the exploitation of the right of the dependent patent or plant variety is not possible without the undermining of prior rights, the patentee of the second invention may request for a compulsory licence for the exploitation of the prior right, upon the payment of an appropriate royalty.

The patentee of the second invention must provide evidence that the dependent patent involves «a significant technical progress of considerable economic importance» and, moreover, shall prove that the negotiation period with the holder of the first patent was unsuccessful- according to Article 97.1 Spanish PA.

Moreover, in the case where the grant of a compulsory licence for dependency is appropriate, the patentee of the prior patent or prior plan variety right may also request the granting – on reasonable terms-, of a licence to use the invention or plant variety protected by the second patent or plant variety right.

Compulsory patent licensing by dependency shall be only granted with the necessary content to enable the exploitation of the second invention and shall cease to have an effect upon the declaration of cancellation or invalidity of any of the dependency rights.

4.3.- Terminate practices that have been declared contrary to Competition Law by a final administrative or judicial decision (Article 94 Spanish PA).

This prospect is based on the classical case law that patents and Competition Law have the aim of improving the welfare state. The ownership of a patent is not contrary to Competition Law: is the way of putting into practice the patent what could be against Competition Law – abuse of the dominant position, excessive prices of the patented product, misleading information or the unjustified negative to grant licences to third parties-.

In cases where the action of the patentee has been declared contrary to the Competition Law -national or international- competition authorities shall notify the Spanish PTO of the infringement. Moreover, if the resolution issues the transformation of the patent into a compulsory licence – to restore competition-, the Spanish PTO shall publish it in the Official Industrial Property Bulletin and grant the compulsory licence pursuant to Articles 98 and 99 Spanish PA.

Proof of a previous negotiation period between the patentee and the applicant of the compulsory licence is not required. Nevertheless, the need to correct anti-competitive practices may be taken into account in determining the licence royalty.

It could also be the case in where the Government considers that there is a public interest into finish anti-competitive practices. In this particular scenario, the granting of the compulsory patent licence may be agreed by Royal Decree pursuant to Article 95 Spanish PA.

4.4.- Public interest (Article 95 Spanish PA).

The Spanish PA explicitly establishes that the public interest includes, in any event, the following cases:

  1. Initiation, increase or generalisation of the exploitation of the invention, or the improvement of the conditions under which such exploitation takes place, is of primary importance for public health or national defence.
  2. Lack of exploitation or insufficiency in quality or quantity of the exploitation carried out would seriously harm the economic or technological development of the country.
  3. National supply needs demand it.

It must be bear in mind that the procedure for granting a compulsory patent licence due to the public interest is not the same as in the other cases. In case of public interest, the Government might, at any time, submit a patent application or a patent already granted to the system of compulsory licence due to the public interest. This shall be approved in a Royal Decree of the Government at the proposal of the Ministry of Industry, Energy and Tourism jointly with the Ministry of Health or the Ministery of Defence (in case that affects health or defence).

The Royal Decree shall establish the scope, duration and the royalty, or refer the setting of such conditions to the appropriate procedure before the Spanish PTO. Since the Royal Decree is in force, the Spanish PTO will publish a mention to it in the Intellectual Property Gazette and, since then, any interested party may request the compulsory licence according to the Royal Decree before the Spanish PTO. There is an administrative procedure for this purpose which is regulated in Article 95 of the Spanish PA and Articles 86 and 87 of the Royal Decree 326/2017 that develops the Spanish PA.

4.5.- Manufacture of pharmaceutical products for export to countries with public health problems (Article 96 Spanish PA).

This compulsory patent licence shall be granted in accordance with 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, and the application shall be addressed to the Spanish PTO in the standard forms for this effect.

Nonetheless, a clarification must be done. This compulsory licence refers to exportations from Spain to countries with public health problems or with drug manufacturing problems, not to importations to Spain. Such compulsory licence to export to another member state in the European Union could be only granted on-demand on the member stare when there is a shortage of a drug in its national territory. Demand can be met by parallel imports -it must be seen whether this is possible, as there are many barriers to export drugs by other countries-.

V.- Conclusion

Compulsory patent licensing is an exceptional legal figure under the Spanish PA that could only be applied for, and granted, in certain situations if specific conditions happened. This legal mechanism is an exception to the exclusive right, given to the patent holder, of using the patented product or process.

It must bear in mind that a situation of compulsory patent licensing has never happened in Spain. Only six applications were reported since 1986 and, all of them were denied or archived.

In a nutshell, compulsory patent licensing is the legal mechanism that assures the exploitation and use of a patented product or process, in case the patent holder could not achieve its exploitation. Nevertheless, statistics show compulsory patent licences are far from coming to practice from the legal precepts under the Spanish PA.

VI.- BIBLIOGRAPHY.

  1. European Patent Office: Compulsory licensing in Europe. A country-by-country overview. Munich, 2018; pp. 38. Available online on: http://documents.epo.org/projects/babylon/eponot.nsf/0/8509F913B768D063C125 8382004FC677/$File/compulsory_ licensing_in_europe_en.pdf
  2. Spanish Act 24/2015, of 24 July, of Patents. Available online on:  https://www.boe.es/buscar/pdf /2015/ BOE- A-2015-8328-consolidado.pdf
  3. Spanish Patent and Trademark Office- Support Unit General Direction, Service of Statistics and Studies: “National patent applications and compulsory licensing decisions; New Law” (2010). Available online on: https://www.oepm.es/export/ sites/oepm/comun/documentos_ relacionados/Memorias_de_Actividades_y_ Estadisticas/licencias_nueva_ley/licencias_ obligatorias_CIP.pdf
  4. Spanish Royal Decree 316/2017, of 31 March. Available online on: https://www.boe.es/eli/es/rd/2017/03/31/316/ dof/spa/pdf
  5. World Trade Organization: Compulsory licensing of pharmaceuticals and TRIPS. Available online on: https://www.wto.org/english/tratop_e/trips_e/ public_health_faq_e.htm

Sara Villalta Alarcón

21 de diciembre de 2021


Sara Villalta Alarcón

Abogada especializada en Derecho de Propiedad Intelectual, Industrial y Nuevas Tecnologías.

Experiencia en el ámbito de patentes, marcas, competencia desleal, secretos empresariales, derecho de propiedad intelectual y ámbito tecnológico.

Graduada en Derecho y Ciencias Políticas por la Universidad Carlos III de Madrid, Máster de Acceso a la Profesión de Abogado y Máster en Derecho de Propiedad Intelectual, Industrial y Nuevas Tecnologías, por la Universidad Autónoma de Madrid.


[1] World Trade Organization: Compulsory licensing of pharmaceuticals and TRIPS. Available online on: https://www.wto.org/english/tratop_e/trips_e/public_health_faq_e.htm

[2] Spanish Act 24/2015, of 24 July, of Patents. Available online on:   https://www.boe.es/buscar/pdf /2015/ BOE- A-2015-8328-consolidado.pdf

[3] Spanish Royal Decree 316/2017, of 31 March. Available online on: https://www.boe.es/eli/es/rd/2017/03/31/316/ dof/spa/pdf

[4] Spanish Patent and Trademark Office- Support Unit General Direction, Service of Statistics and Studies: “National patent applications and compulsory licensing decisions; New Law” (2010). Available online on: https://www.oepm.es/export/sites/oepm/comun/documentos_relacionados/Memorias_de_Actividades_y_ Estadisticas/licencias_nueva_ley/licencias_obligatorias_CIP.pdf

[5] European Patent Office: Compulsory licensing in Europe. A country-by-country overview. Munich, 2018; pp. 38. Available online on: http://documents.epo.org/projects/babylon/eponot.nsf/0/ 8509F913B768D063C12583 82004FC677/$File/compulsory_licensing_in_europe_en.pdf

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