By Richard Milchior (ECTA Patent Committee member, Herald Avocats, France) (*)

The new Regulation (EU) 2025/2645 on compulsory licensing for crisis management is the first one stemming from the so-called patent package launched by the EU Commission a few years ago.

According to its title and to recitals 1 to 3, the Regulation is intended to address potential crisis which may happen (being reminded that the thinking and the draft for this regulation were inspired by the Covid crisis) when voluntary agreements are not feasible, and to do so in accordance with the TRIPS Agreement. The recital reminds that compulsory licensing possibilities already exist at the national level but that this system now creates a licence granted at the Union level.

This new regulation is linked to the recent crisis solution system, which has been implemented at the Union level, notably in relation to health crises (Regulation (EU) 2022/2371, Council Regulation (EU) 2022/2372 and Regulation (EU) 2024/2747) - those are the crisis situations listed in the recitals and in the Annex to the regulation. A granting of a compulsory license may be requested only after a crisis or emergency mode has been declared under a Union legal act, such as the one mentioned in the Annex.

This compulsory licence may concern published patent applications and patents, published utility models and utility model applications and SPCs. However, a big limitation to the potential effect of this system comes from the fact that recital 13 states that ‘nothing in this Regulation should be interpreted as imposing any obligation to disclose undisclosed know-how, business information or technological information protected by trade secrets as defined by Directive (EU) 2016/943’. A caveat to this is the fact that the articles of the regulation, which are the only binding part, mention a limitation in relation to trade secrets in article 2.3 but this article does not include the term know-how.

The regulation defines the objective and the scope of the rights for which a compulsory license may be granted and specifies that it cannot concern defence-related products.

Its article 4 states the conditions to be met for the granting of a compulsory license, meaning:
- the declaration of a status of emergency crisis, 
- and the needs for the protected invention, being acknowledged that no voluntary agreement was possible, 
- and that the right holder may have had the possibility to submit before the granting of a licence comments to the Commission and to a relevant competent advisory body mentioned by the Regulation.

The regulation specifies that the licence is non-exclusive, non-assignable, limited in time and scope and subject to the payment of royalties, that the goods produced cannot be exported outside of the Union and that it should only be granted to someone having the capacity to exploit it. The royalties will have to be refunded if the published patent or published utility model applications are not granted.

To allow the implementation of the system, a competent advisory body is created and should assist the Commission at different stages of the implementation of the system, starting with an assessment of the need to grant such a licence and advising upon the content of the licence agreement.

The licensing process starts with information made by the Commission with a notice that it considers granting a compulsory licence by publishing a notice on its website allowing to present observations.

The content of the license will be subject to an exam by the advisory body, nevertheless article 8 states a certain number of items which must be included in the license, including, for instance, the maximum quantity of products which may be manufactured under license. In addition, article 10 titled Obligations of the licensee completes what has to be respected by the future licensee under the risk of a termination of the license.

It is interesting to note that Customs will be used to enforce this regulation, notably in relation to potential exports of licensed products outside the EU.

The compulsory license will be different from a usual one, since its contents may be reviewed or modified or terminated by a third party (the Commission), if requested to do so and this after advice of the advisory body.

It is also different from a normal license, since it non-respect may lead to fines of up to 300,000 euros (50,000 euros for SME) to the licensee who does not respect the compulsory licence agreement and, in addition, daily penalties (computed only by working days) for noncompliance with the decision which notices a non-respect of the license agreement may be given. They can go up to 1.5% of the turnover of the licensee (0.5% for SME) but let’s be clear, the text does not say turnover made with the license but turnover of the entity.

Fines and penalties can only be applied after having followed a procedure described in the regulations, which includes the right of the licensee to be heard, and this is under the control of the Court of Justice of the EU.

Finally, in addition to the advisory body already mentioned, a committee ‘within the meaning of Regulation (EU) No 182/2011’ (the ‘Comitology regulation’) will assist the Commission.

A specific part of this regulation modifies Regulation (EC) No 816/2006, which concerns compulsory licensing of patents relating to the manufacture of pharmaceutical products for export to countries with public health problems, and allows to grant a compulsory union license where several national compulsory licenses may be needed. However, this licence will have to follow the rules of the new compulsory licence (explained above) and cannot concern Northern Ireland.

Let’s finish with a question and a comment.

A compulsory licence cannot concern trade secrets and perhaps know how. However, the regulation also states in article 13: ‘When exercising the rights or performing the obligations laid down in this Regulation, the right holder and the licensee shall refrain from any actions or omissions that could undermine the Union compulsory licensing process.’ Since a patent is sometimes difficult or impossible to use without the relevant know how, will it be possible for the licensee to rely on this article to obtain it?

Finally, the scope of the crisis for which the system may be applied is limited to the type of crisis situation mentioned in the Annex. However, this Annex may be assessed and modified for the first time before 31 December 2027. In the actual and uncertain trade war, this may become a powerful tool for the Commission to fight any limitation or interdiction of export to the EU made by third parties.

The text will officially enter into force on 18 January 2026, but it will in practice not be applicable until the adoption of the implementation regulation creating an advisory body.

(*) This first presentation does not pretend to have examined all the potential issues created by this new regulation.

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