New draft law on compulsory patent licenses: extension of the authority’s powers and grounds for issuing such licenses

A federal executive body authorized by the Russian Government would have the right to approve a list of the Patents that are not being used or are not being adequately used in Russia in its area of responsibility and which are potentially needed to address problems in the areas of national security, defence, the protection of public life and health or national economic development (the latter basis did not previously exist in the law in effect).

The federal executive body would publish the list on its official website and send it to Rospatent (the Russia Patent Office), which would in turn create a national list of unused or inadequately used Patents which are potentially needed to address problems in the areas of national security, defence, the protection of public life and health or national economic development.

The patent holder would have the right to file a petition with the federal executive body for the Patent to be excluded from the list. However, this would not suspend the effect of the list or the consequences of the Patent’s inclusion in it. The petition must be accompanied by evidence that the Patent is already used to an adequate degree in the territory of Russia.

After the list has been published, any Russian legal entity meeting the requirements established by the Russian Government may submit an application to use a Patent included in the list to the federal executive body which published the relevant list.

On receiving such an application, the federal executive body would notify the patent holder and propose that it conclude a license agreement with the applicant. The time limit for concluding a license agreement would be 90 days from the date of such notification.

Should the patent holder refuse to conclude a license agreement or duly perform a license agreement that has been concluded, the federal executive body would send copies of the submitted application to Rospatent, the Federal Anti-Monopoly Service and certain other government bodies specified in the Bill for consideration. Based on the outcome of this consideration, the federal executive body would decide whether to issue or refuse to issue a compulsory license.

The federal executive body would notify Rospatent about its decision (for the purposes of registering the right to use the Patent) and to the patent holder.

A compulsory license would have force for the entire term of the patent. The amount of the patent holder’s fee would be determined in accordance with the methodology approved by the Russian Government; however, the patent holder and the applicant may conclude an agreement on the determination of the amount of the fee.

The processes of notifying the patent holder of the submission of a compulsory license application, its consideration by the authorized bodies and giving notice of the issuance of a compulsory license would not take place where the use of the Patent is connected with the interests of defence or national security and in other cases specified by the Russian Government. However, a fee still must be paid for the use of such a Patent.

A decision to issue a compulsory license may be cancelled if (1) the patent holder arranges for the Patent to be used in the territory of Russia or (2) the applicant fails to exercise its right to use the Patent within 3 years as of obtaining a license.

The compulsory licensing system provided for in the Bill essentially applies to any Patents that are not used / are inadequately used in Russia, irrespective of whether the patent holder is a Russian person or a “friendly” or “unfriendly” foreign person. It follows that the range of patent holders whose rights could be affected by a compulsory license is essentially unlimited.

Under the current wording of Article 1360 of the Russian Civil Code, only the Russian Government is authorized to issue compulsory licenses, i.e., compulsory licensing is in a certain sense a limited instrument. The Bill, however, proposes to confer powers to issue compulsory licenses on a potentially unlimited number of federal executive bodies, which potentially could result in a large number of abuses.

The Bill does not grant patent holders the right to challenge the inclusion of a Patent in a federal executive body’s list through the courts. The decision on whether or not a Patent should or should not be included in a federal executive body’s list, or whether it should be excluded from that list, is made exclusively by the federal executive body within whose area of responsibility the Patent falls.