ARBEJDSDOKUMENT FRA KOMMISSIONENS TJENESTEGRENE RESUMÉ AF RAPPORTEN OM KONSEKVENSANALYSEN Ledsagedokument til forslag til Europa-Parlamentets og Rådets forordning om udstedelse af tvangslicens med henblik på krisestyring og om ændring af forordning (EF) nr. 816/2006

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EUROPEAN
COMMISSION
Brussels, 27.4.2023
SWD(2023) 122 final
COMMISSION STAFF WORKING DOCUMENT
EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT REPORT
Accompanying the document
Proposal for a Regulation of the European Parliament and of the Council
on compulsory licensing for crisis management and amending Regulation (EC) 816/2006
{COM(2023) 224 final} - {SEC(2023) 173 final} - {SWD(2023) 120 final} -
{SWD(2023) 121 final}
Offentligt
KOM (2023) 0224 - SWD-dokument
Europaudvalget 2023
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Executive summary
Impact assessment on compulsory licensing for crisis management.
A. Need for action
Why? What is the problem being addressed?
In the context of the COVID-19 crisis the role of intellectual property (IP) rights in providing
access to vital products was debated. Although voices were raised to waive IP rights, the EU
considered that another solution was already available, should voluntary agreements fail.
The TRIPS Agreement provides the possibility to issue, in certain circumstances, compulsory
licensing. A compulsory licence of patents is an authorisation granted by a government to a
party other than the patent holder to use a patented invention without the consent of the patent
holder.
The Commission IP action plan1
of 2020 underlined ‘the need to ensure that effective systems
for issuing compulsory licences are in place’. In its resolution of November 20212
, the
European Parliament called on the Commission ‘to analyse and explore possible options for
ensuring effectiveness and better coordination of compulsory licensing in the EU’.
And the Council3
confirmed that the EU stood ready to discuss the flexibilities of compulsory
licensing for the domestic market and export purposes. In parallel, the Commission tabled
proposals to ensure the EU’s resilience and to guarantee well-functioning supply chains in the
single market and abroad4
. Against the backdrop of the increasing completion of the single
market for patents through the upcoming launch of the unitary patent, the initiative described
in this document situates itself at the intersection between the different EU crisis instruments
and the international obligations and discussions on IP rights and compulsory licensing.
Current EU compulsory licensing rules are characterised by inadequate territorial coverage
and uncoordinated national procedures and decision-making. This is especially problematic in
view of the cross-border value chains increasingly predominant in the EU single market.
This results from:
(1) Divergent national schemes on compulsory licensing: compulsory licensing is allowed
under different procedures and conditions in different EU member countries;
(2) Inadequate territorial reach of compulsory licensing: despite the flexibility that exists at
international level, compulsory licensing in the EU is designed to exclusively supply national
territories, meaning that there is currently no single market and no free movement of goods for
compulsory licence products;
(3) No dedicated forums to deal with compulsory licensing that could bolster EU resilience in
times of crisis: the current compulsory licensing system that could complement and support
the EU’s ability to tackle crises appears disconnected from EU crisis instruments.
1
IP action plan, COM(2020) 760 final, 25.11.2020.
2
The resolution on the IP action plan to support the EU’s recovery and resilience (2021/2007(INI)).
3
Council conclusions of 18 June 2021.
4
Proposal for a regulation of the European Parliament and of the Council establishing a Single Market
emergency instrument (SMEI) and repealing Council Regulation No (EC) 2679/98, Regulation (EU) 2022/2371
of 23 November 2022 on serious cross-border threats to health and repealing Decision No 1082/2013/EU and
Council Regulation (EU) 2022/2372 of 24 October 2022 on a framework of measures for ensuring the supply of
crisis-relevant medical countermeasures in the event of a public health emergency at Union level
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In addition, there is no coordination at EU level should several EU countries wish to
coordinate their measures for national compulsory licensing. Consequently, it would be
difficult for an EU country with manufacturing capacities to produce goods to help another
EU country or to issue a compulsory licensing covering a manufacturing process spanning
several EU countries.
What is this initiative expected to achieve?
The general objective is to enable the EU to respond to crisis situations in a timely manner
using the full potential of the single market and to ensure that in a crisis, critical products and
components can be made available across EU countries and supplied without delay to EU
citizens and firms or even to non-EU countries.
In connection with the general objectives and with the problems identified earlier, 3 specific
objectives have been defined:
(1) Improve the key features of compulsory licensing, such as the trigger, scope and
conditions for compulsory licensing, and make compulsory licensing a more consistent tool
for tackling a crisis in the EU.
(2) Ensure that the territorial reach of a compulsory licence, including for export purposes, can
accommodate the reality of cross-border value chains operating in the single market.
(3) Support EU resilience by improving coordination, streamlining decision making and
allowing compulsory licences to better complement EU action in crises, including for export
purposes to non-EU countries. This objective would also aim to ensure suitable consistency
between (national) compulsory licensing schemes and EU crisis instruments.
What is the value added of action at the EU level?
Action at EU level is justified to ensure the smooth functioning of the single market in crisis
situations.
Currently, EU countries can only act nationally (i.e. compulsory licensing for their own
territory). This might suffice for national crises. However, it will not be optimal when a crisis
has a cross-border dimension – and this is highly probable due to prevalence of supply chains
that span multiple countries in the single market.
B. Solutions
What legislative and non-legislative policy options have been considered? Is there a
preferred choice or not? Why?
 Option 0: No policy change.
 Option 1: Recommendation on compulsory licensing for crisis management. This
would identify (i) good national practices for compulsory licensing as part of crisis
management and (ii) good coordination practices, with a view to encourage their use in all
EU countries.
 Option 2: Harmonisation of national laws on compulsory licensing for crisis
management. The legislative initiative would align national laws as regards the grounds,
scope, procedure, and conditions for granting a compulsory licence for crisis management.
The compulsory licensing would remain in the remit of the EU country and have a
predominantly national effect.
 Option 3: Harmonisation plus a binding EU-level measure on compulsory licensing for
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crisis management. Compulsory licensing could be triggered:
(i) by an EU-level decision activating crisis mode or declaring an emergency under an
existing EU crisis instrument (e.g. activation of the emergency mode under the Single
Market Emergency Instrument (SMEI))
(ii) on a request made to the Commission by more than one EU country, in the event of a
crisis affecting multiple countries. The Commission, assisted by the relevant advisory
body, would adopt an activation measure requiring one or more EU countries to issue a
compulsory licence. This option would lead to several national compulsory licences, each
applicable to the territory of several EU countries or to the whole EU
 Option 4: EU-level compulsory licensing to complement existing EU crisis
instruments: The triggers would be the same as under option 3. However, the
Commission, assisted by the relevant advisory body, would adopt an activation measure
granting a compulsory licensing. This option would lead to the issuance, by the
Commission, of a single compulsory licence, with its own procedure and conditions and
applicable to the territory of several EU countries or the whole EU.
It appears that Option 4 would be the most effective and efficient way of achieving the
objectives of this initiative.
This option would create a single procedure to grant an EU-level compulsory licence with the
features required to tackle a crisis. The Commission activation measure would ensure that
conditions are the same across the EU and would avoid national discrepancies likely to slow
down or prevent an efficient compulsory licensing scheme from tackling cross-border crises.
This single compulsory licence would be applicable in all relevant territories, therefore
covering cross-border situations. This would be the case for both the EU market and for export
purposes. Consistency with EU crisis instruments would be ensured by the possibility to use
them to trigger the licence procedure and by reference to the (advisory) bodies set-up by those
instruments to discuss an EU-level compulsory licence.
Who supports which option?
The results of the public consultation show that a large majority (82%, N=61) of respondents
consider that public authorities should be entitled to allow production of critical goods through
a compulsory licence.
Respondents are usually less in favour of a decision-making role for European institutions
(28%, N= 21) compared to a coordinating role (36%, N=27). This can be explained by the fact
that businesses and industry representatives expressed low support in this respect, whereas
they were the dominant group of respondents to the consultation (54% of all participants).
That being said, the option of granting a compulsory licence at EU level is generally deemed
more positive by stakeholders as regards the EU’s ability to tackle crises (35%, N=26) than
the granting of compulsory licences at national level (respectively, 11%, N=8).
Stark contrast exists among stakeholders with again low support for the option among industry
representatives: a majority (around 50%) of companies and business associations consider that
the impact would be negative. In contrast, no respondent in other categories considers the
impact would be negative. A large majority (65%, N=22) rates it positive (4% thinks the
impact would be neutral and the rest did not reply).
C. Impacts of the preferred option
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What are the benefits of the preferred option (if any, otherwise main ones)?
The preferred option would fully address the three identified problems and objectives. It
would:
(i) entitle the Commission to directly grant a compulsory licence and specify the conditions
under which this licence is granted. These conditions would be the same for all territories
where the licence applies. This would ensure optimal clarity and consistency as regards the
conditions for the licence.
(ii) provide an optimal solution as regards the territorial scope of the licence. One single
compulsory licence would cover all EU countries affected by the crisis and all EU countries
with the relevant manufacturing capacities.
(iii) complement other EU crisis instruments: the activation of a crisis mode by an EU crisis
instrument, such as SMEI, can be the trigger leading to the granting of a compulsory licence.
Relying on the existing advisory body when the trigger originates in an EU crisis instrument
also ensures optimal consistency with EU crisis instruments.
Under the preferred option, patent owners would benefit from fewer costs and less legal
uncertainty, as negotiations would be limited to participation in a single EU-level procedure.
Potential licensees would benefit from the centralised procedure and the wide territorial scope
of the licence, bringing economies of scale.
Better sharing of information would also allow a reduction of costs for EU countries as it
could help identify best practice.
On enforcement costs, EU countries would benefit from the centralised procedure, as costs
linked to the negotiations with patent owners and manufacturers would be incurred solely at
EU level.
EU citizens would greatly benefit from the preferred option as it would improve the EU’s
ability to issue an effective and efficient compulsory licence for the whole EU, including in
the event of cross-border supply chain disruptions.
Non-EU countries would also benefit as the option would provide the possibility to rely on a
compulsory licence covering a cross-border supply chain.
Table 1: Positive impacts on stakeholders in the event of a cross-border crisis - Option 4 compared to the baseline
Patent owners (+ +) Lower costs of negotiations, due to a single procedure at EU level instead of multiple procedures in each EU
country concerned.
(+ +) More legal certainty (e.g. clarity on what level of remuneration may be expected), due to the single procedure at
EU level instead of multiple procedures in each country concerned.
Manufacturers –
potential licensees
(+ +) Lower costs of negotiations, due to the single procedure at EU level.
(+) Lower costs of adapting manufacturing facilities to the production of the item(s) covered by the licence, due to
economies of scale, if EU-level compulsory licensing leads to wider geographical scope.
EU countries (+ + +) Significantly lower costs of running the compulsory licensing procedure (no negotiations with the patent
holders or manufacturers), as EU countries will only implement a single decision made at EU level
(+) Better exchange of information about availabilities of product(s), in case of local shortages or cross-border value
chain disruptions.
(+) Better decision-making and cooperation in the context of compulsory licencing for export to non-EU countries.
The general public
(EU citizens)
(+ + +) Significantly lower risk of delays or unavailability of critical products during crisis, as rules are consistent
across all EU countries.
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Non-EU countries (+ + +) Increased legal certainty and administrative savings when accessing critical goods in case of cross-border
supply chains, due to direct coordination at EU level.
Note: (0) neutral impact; (+) minor positive impact; (++) positive impact; (+++) significant positive impact; (-) minor negative impact; (- -)
negative impact; (- - -) significant negative impact
What are the costs of the preferred option (if any, otherwise main ones)?
Patent owners could face an incremental loss of control of their patent rights if the impact of
the preferred option broadened the geographical scope of the compulsory licence, as compared
to the current situation with a thicket of national licences.
This greater territorial reach could also be produced by extending compulsory licensing for
export to a non-EU country. EU countries would need to bear limited adjustment costs as the
preferred option would provide an EU-level compulsory licence, through a regulation, on top
of existing national legislation.
They would also face some enforcement costs in the event of a crisis, linked to the
transparency obligation.
Table 2: Negative impacts on stakeholders in the event of a cross-border crisis - Option 4 compared to the baseline
Patent owners (- -) In the event of a broader geographical scope for the licence (= wider loss of control over patent rights).
EU countries (-) Cost of participating in the advisory committee assisting the single contact point.
(-) Cost of reporting to the European Commission on the implemented compulsory licence.
Note: (0) neutral impact; (+) minor positive impact; (++) positive impact; (+++) significant positive impact; (-) minor negative impact; (- -)
negative impact; (- - -) significant negative impact
How will businesses, SMEs and micro-enterprises be affected?
Impacts that may materialise as a result of the preferred option will mainly concern patent
holders, but the number of small/medium-sized enterprises that own IP rights in the EU is
relatively low.
Furthermore, apart from the fact that compulsory licensing is an extremely low probability
event, it can be assumed that small enterprises are more prone to enter into voluntary
agreements than larger firms, hence there could be no need to use the compulsory licensing at
all.
Furthermore, small/medium-sized enterprises are typically licensees, not licensors.
Will there be significant impacts on national budgets and administrations?
EU countries would bear limited adjustments costs as the preferred option would provide an
EU-level compulsory licence, through a regulation, on top of existing national legislation.
They would face some enforcement costs in the event of a crisis, linked to the transparency
obligation. However, the benefits of a centralised procedure at EU level would outweigh these
costs.
Will there be other significant impacts?
There are no other significant impacts expected.
D. Follow-up
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When will the policy be reviewed?
The first evaluation report should be done 5 years after the granting of the first EU-level
compulsory licence.