Compulsory licensing in Austria

  1.  What is the definition of compulsory licensing?
  2. What are the applicable sources of law relating to compulsory licensing?
  3. What type(s) of products or technologies do compulsory licensing applies to? 
  4. Who can apply for a compulsory licence? Are foreigners or foreign companies allowed to apply for a compulsory licence? 
  5. What are the legal grounds to grant a compulsory licence under the local laws of your jurisdiction and any applicable international treaties?
  6. Are there any preconditions to apply for a compulsory licence?
  7. Are there any limits on the number of compulsory licensees?
  8. Will there be any limitation on the scope of the compulsory licence, for example limitations on the time and the territory? 
  9. Which authority has the competency to grant a compulsory licence?
  10. What are the application procedures to get a compulsory licence?
  11. Can the competent authority grant a compulsory licence without hearings under an urgent situation?
  12. Can a compulsory licence be revoked/terminated or automatically revoked/terminated? 
  13. Does the compulsory licensee have to pay a royalty to the right holder? 
  14. Are there any legal remedies for the party who is not satisfied with the compulsory licensing decision of the competent authority?
  15. In order to implement the compulsory licence, for example, to manufacture the licenced product, is the right holder required to provide necessary support, such as know-how and training as in a voluntary agreed licence agreement? 
  16. Is the compulsory licensee subject to any confidentiality obligation? 
  17. Is the compulsory licensee allowed to export their products under the compulsory licence? 
  18. Have the laws on compulsory licensing been used in previous health emergencies and/or in the present COVID-19 pandemic in your jurisdiction?
  19. Is it possible for third parties to use the current laws on compulsory licensing in your jurisdiction to facilitate the treatment of patients infected by COVID-19?
  20. Are there any recent major regulatory exemptions and/or amendments made following COVID-19 to regulations governing compulsory licensing?
  21. Can a compulsory licence be transferred or assigned?
  22. Does the issuance of a compulsory licence have any impact on the previously agreed licence?
  23. Is there any special labelling requirement for the products made under the compulsory licence?
  24. Is there any special distribution channel requirement for the products made under the compulsory licence?
  25. Is there any price requirement for the products made under the compulsory licence?

1. What is the definition of compulsory licensing?

A compulsory licence is a restriction of the effect of a patent right. The consequence of such a limitation is that the owner of the right cannot or can only to a limited extent assert his privileges from it.

2. What are the applicable sources of law relating to compulsory licensing?

Sections 36 - 38 of the Austrian Patent Act, Sec 6 of the Austrian Plant Variety Protection Act.

3. What type(s) of products or technologies do compulsory licensing applies to? 

In principle, compulsory licences are possible for all patented inventions, but are only granted if the conditions set out in one of the Subsections of Sec 36 are fulfilled (see later). In Sec 36 and 37 of the Austrian Patent Act, plant variety rights and biotechnological inventions are explicitly mentioned (implementation of the Biotechnology Directive), as well as semiconductors. In Austria, compulsory licences can be granted in case of public interest. In connection with COVID-19, compulsory licences were therefore mentioned in connection with vaccines.

3.1 Has any compulsory licence ever been issued in your jurisdiction? If yes, on what type of technology? 

Compulsory licences may be recorded in the patent registry, but there is no obligation to record them and it is also not possible to search for them in the registry in a structured way. Because of this it is not possible to say with certainty if compulsory licences have ever been granted in Austria, but we have not found any indications of that in publicly available sources.

4. Who can apply for a compulsory licence? Are foreigners or foreign companies allowed to apply for a compulsory licence? 

Compulsory licences in the public interest or because of non-use are open to everyone for use in his business; the Federal Administration can request a compulsory licence in the public interest irrespective of any use in a business. Compulsory licences that are based on other grounds have more specific requirements, which are addressed in question 5. Foreigners or foreign companies are generally not excluded.

  1. If a patented invention cannot be commercialised without infringing an invention patented with a higher seniority (earlier patent), the owner of the later patent is entitled to a compulsory licence to the older patent if the invention protected by the later patent represents significant technical progress of considerable economic importance compared to the invention protected by the earlier patent. In case of granting a licence, the owner of the earlier patent is also entitled to a compulsory licence to the later patent.
  2. If a plant breeder cannot obtain or commercialise a right to a plant variety without infringing an invention patented with a higher priority (earlier patent), he shall be entitled to a compulsory licence to the patent, provided that the plant variety represents significant technical progress of considerable economic interest compared with the invention protected by the patent and provided that this licence is necessary for commercialisation of the plant variety to be protected.
  3. If the holder of a patent for a biotechnological invention is granted a compulsory licence for a plant variety protected by a plant-variety right granted with a higher priority (earlier plant-variety right) because he cannot commercialise the biotechnological invention without infringing an earlier plant-variety right, the holder of the earlier plant-variety right shall be entitled to a compulsory licence to the later patent for the exploitation of the protected invention.
  4. If a patented invention is not adequately exercised in Austria, whereby the exercise may also be effected by importing, and if the patent owner has not taken all steps necessary for such an exercise, any person shall be entitled to a compulsory licence to the patent for his business, unless the patent owner proves that the exercise of the invention in Austria is not reasonable or not reasonable to a greater extent than has been the case because of the difficulties involved in the exercise.
  5. If the granting of a licence in respect to a patented invention is required for the public interest, any person shall be entitled to a compulsory licence in respect to the invention for his business. However, the claim of the Federal Administration in this respect is not bound to any business.

6. Are there any preconditions to apply for a compulsory licence?

Yes.

6.1 Any negotiation required between the applicant and the right holder before applying for a compulsory licence? 

The licensee must make every effort within a reasonable period of time to obtain a licence from the patent owner with reasonable terms and conditions customary in the business. If he is not successful, he can file an application with the Patent Office for the grant of a compulsory licence.

6.2 Any urgent situation required in order to grant a compulsory licence?

An urgent situation is not required to grant a compulsory licence.

6.3 Any minimum number of years required for the patent to be granted and/or implemented in order to be subject to compulsory licensing?

A compulsory licence because of non-use may only be granted after four years from the application date or three years from the publication of the grant of the patent, whichever is later. For other compulsory licences, no such requirements apply.

7. Are there any limits on the number of compulsory licensees?

No.

8. Will there be any limitation on the scope of the compulsory licence, for example limitations on the time and the territory? 

Scope and duration are determined by the Austrian Patent Office and shall primarily enable supply of the Austrian market; in addition, scope and duration must be limited in accordance with the purpose for which the compulsory licence is granted.

9. Which authority has the competency to grant a compulsory licence?

The Austrian Patent Office.

10. What are the application procedures to get a compulsory licence?

At first, the licence applicant must attempt to reach an agreement with the patent owner. If this is not possible, the Austrian Patent Office decides on the grant of the licence and determines an appropriate remuneration.

10.1 What materials need to be submitted to the competent authority?

There are no specific formal requirements. The general requirements for invalidity proceedings apply, i.e. the application must include a summary of the main facts, a sufficiently substantiated request as well as an account of the evidence to support the request.

10.2 How long will it take to get a compulsory licence?

Likely several months (in first instance), but there is an accelerated procedure available for urgent matters.

11. Can the competent authority grant a compulsory licence without hearings under an urgent situation?

In case of a national emergency or in an extremely urgent situation a compulsory licence may be granted without the need to have unsuccessfully tried to obtain the approval of the patent owner prior to filing the application. In this case, the Patent Office can only grant a preliminary approval to use the invention. Austrian law does not specify whether or not an oral hearing would take place in such proceedings and to our knowledge there is no precedent. However, from the fact that the applicant does not have to contact the patent owner to obtain approval and the preliminary nature of the decision, we would conclude that a hearing does not have to take place.

12. Can a compulsory licence be revoked/terminated or automatically revoked/terminated? 

A compulsory licence may terminate automatically if its duration is limited. In addition, the Austrian Patent Office may order the termination of the licence upon request by the patent owner.

12.1 What are the conditions for the revocation/termination of a compulsory licence? 

The Austrian Patent Office has to order the termination of the compulsory licence if the conditions that led to its grant have ceased to exist and are likely not to occur again. In deciding upon a request for termination, the Patent Office has to take into account the legitimate interests of the licensees.

12.2 How should products made under a compulsory licence be treated if the compulsory licence is terminated/revoked?

Austrian law does not specify that. We would expect this to be addressed by a decision of the Patent Office that terminates the licence.

13. Does the compulsory licensee have to pay a royalty to the right holder? 

Yes.

13.2 If the compulsory licensee is required to pay a royalty, how is the amount of royalty determined and who will decide the amount of the royalty?

The patent owner is entitled to reasonable compensation taking into account the commercial value of the licence. It is determined by the Patent Office if no agreement with the patent owner can be reached.  

13.3 Is there any remuneration available for the right holders other than royalty?

The Austrian Patent Act does not specify the nature of the compensation, so it can be in form of a lump sum, a royalty or another form of compensation. In addition, the Patent Office may request a security deposit.

The decision of the Austrian Patent Office is subject to appeal to the Vienna Higher Regional Court (and in some cases to the Supreme Court as a court of third instance).

15. In order to implement the compulsory licence, for example, to manufacture the licenced product, is the right holder required to provide necessary support, such as know-how and training as in a voluntary agreed licence agreement? 

The Patent Office has to take into account the nature of the invention and the circumstances of the case. If warranted by specific circumstances, it may therefore order know-how and training.

15.1 Will this provision of know-how and support be compensated and how is the amount of such compensation determined?

The Patent Office has to provide reasonable compensation. If it would be reasonable to compensate for know-how and support. Such compensation would in our view have to include a component for know-how and support.

16. Is the compulsory licensee subject to any confidentiality obligation? 

There are no specific provisions under Austrian law addressing confidentiality obligations in connection with compulsory licences. We assume that the Patent Office may provide for confidentiality obligations of the licensee in its decision if warranted by the nature of the invention and/or the circumstances of the case.

16.1 If the compulsory licensee discloses the confidential information in violation of its obligation, does the right holder have a basis of claim against the compulsory licensee? 

Generally, in Austria, legal action can be taken in case of a violation of a confidentiality agreement. This would also apply to the breach of a confidentiality obligation that is part of a compulsory licence grant.

17. Is the compulsory licensee allowed to export their products under the compulsory licence? 

The Austrian Patent Act provides that the compulsory licence is primarily granted for the supply of the domestic market. It appears therefore, that export restrictions may be imposed.  However, such restrictions must be in compliance with the rules governing the free movement of goods within the EU. 

18. Have the laws on compulsory licensing been used in previous health emergencies and/or in the present COVID-19 pandemic in your jurisdiction?

They have not been used in the past or in the present situation, but compulsory licensing was discussed in the media in relation to COVID-19 medicines and vaccines.

19. Is it possible for third parties to use the current laws on compulsory licensing in your jurisdiction to facilitate the treatment of patients infected by COVID-19?

Yes, if they are able to demonstrate that granting a compulsory licence is in the public interest. 

20. Are there any recent major regulatory exemptions and/or amendments made following COVID-19 to regulations governing compulsory licensing?

No. 

21. Can a compulsory licence be transferred or assigned?

According to Sec 38 of the Austrian Patent Act, most compulsory licences may be transferred among the living without the consent of the patent owner only together with the part of the enterprise or business entitled to the licence and shall, in case of death, pass to the legal successors only if that part of the enterprise or business entitled to the licence is continued by them. A licence granted under Section 36 (1) in respect to an earlier patent is not transferable unless it is transferred together with the transfer of the later patent.

22. Does the issuance of a compulsory licence have any impact on the previously agreed licence?

The Patent Act does not address this situation. This would be governed by the contract with the licensee.

23. Is there any special labelling requirement for the products made under the compulsory licence?

No, but the Patent Office may order such requirements in its decision granting the compulsory licence.

24. Is there any special distribution channel requirement for the products made under the compulsory licence?

No, but the Patent Office may order such requirements in its decision granting the compulsory licence.

25. Is there any price requirement for the products made under the compulsory licence?

No, but the Patent Office may order such requirements in its decision granting the compulsory licence. 

Portrait ofGabriela Staber
Gabriela Staber
Partner
Vienna
Portrait ofEgon Engin-Deniz
Egon Engin-Deniz
Partner
Vienna