Compulsory licensing in Italy

  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?

The Industrial Property Code (hereinafter the “Code”) does not contain any specific definition of compulsory licensing. However, it provides a set of rules governing compulsory licences related to patents, utility models, biotechnological inventions and plant varieties.

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

The main rules for compulsory licensing provided for by the Code are those concerning patents, laid down in Articles 70 to 74, Article 76 and Article 199.

In particular:

  • Article 70 regulates compulsory licences due to lack of implementation by the owner of the patent or his successor in title;
  • Article 71 regulates compulsory licences for dependent patent;
  • Article 76, paragraph 4, provides that if the conversion of an invalid patent into a different patent entails the extension of its original duration, the licensees and those who in view of the upcoming expiration had made serious and actual investments to use the invention shall have the right to obtain a free and non-exclusive compulsory licence for the extended period;
  • Articles 72, 73 and 74 regulate respectively the granting of compulsory licences, their withdrawal and the relationship between compulsory licences and military inventions;
  • Article 199 establishes the procedure to obtain compulsory licences.

The rules provided for compulsory licensing relating to patents apply also to utility models, biotechnological inventions and plant varieties as far as they are compatible with the regulation of said IP rights and unless special provisions apply.

The answers below are based essentially on the provisions concerning compulsory licensing related to patents.

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

The Code does not provide the types of products or technologies, which compulsory licensing applies to. However, Article 74 expressly provides that the provisions relating to compulsory licensing do not apply to patented inventions belonging to military agencies or to patented inventions subject to a confidentiality obligation by military agencies.

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

There are no official information relating to compulsory licensing in Italy. However, from an informal inquiry with the PTO, we know that compulsory licensing is an unused tool.

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

According to Article 70 of the Code, a compulsory licence due to lack of implementation may be requested by any interested party.

According to Article 71 of the Code, a compulsory licence for a dependent patent may be requested by the owner of a later patent, if the requirements laid down in the same Article 71 are met (refer to the answer to question 5).

The Code does not prevent (or limit) foreigners or foreign companies from applying for a compulsory licence.

Compulsory licence due to lack of implementation.

According to Article 70, paragraphs 1 and 2, of the Code, a compulsory licence due to lack of implementation may be granted if:

  • Within three years from the issue of the patent or within four years from the filing of the relevant application if it comes last, the owner of the patent (or his successor in title) has not implemented the patented invention (directly or through licensees), or has implemented it to an extent that is seriously disproportionate to the Country’s needs.
  • The implementation of the invention has been suspended or reduced for more than three years in such a manner to be seriously disproportionate to the country’s needs.

More specifically, the implementation of the invention means either the production in the territory of the Country, or the importation of products manufactured in a state belonging to the EU, to the European Economic Area or to the WTO.

Furthermore, according to Article 70, paragraph 3, of the Code, the compulsory licence is not granted if the lack of or the insufficient implementation is due to causes out of control of the owner of the patent or his successor in title. The same Article 70 specifies, however, that the lack of financial means or the lack of demand in the national market (when the product is marketed abroad) cannot justify the lack of or insufficient implementation.

Compulsory licence for dependent patent.

According to Article 71 of the Code, a compulsory licence for dependent patent may be granted if:

  • The invention protected by the later patent cannot be used without harm to the rights related to the patent granted on a previous application; and
  • The later patent represents important technical progress of considerable economic importance in respect to the object of the previous patent.

The “technical progress” and “economic importance” mentioned in Article 71 are assessed on a discretionary manner by the administrative authority issuing the compulsory licence. However, as suggested by the authors, the “economic importance” should consist either in an advantage for the society or in a saving of costs compared to the already known production processes.

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

In addition to the requirements described in the answer to question 5, consider the following:

  1. In order to obtain a compulsory licence, the applicant must prove that he has asked the owner of the patent first and has been unable to obtain a contractual licence at fair conditions (Article 72, paragraph 1, of the Code);
  2. The Code does not refer to any urgency requirement regarding the granting of a compulsory licence.
  3. As pointed out in the answer to question 5, the compulsory licence due to lack of implementation may be requested within three years from the issue of the patent or within four years from the filing of the relevant application, if it comes last. On the contrary, no minimum-years requirements are provided for compulsory licences for dependent patents.

Furthermore:

  1. The applicant must be able to give appropriate guarantees regarding his ability to satisfactorily implement the invention (Article 72, paragraph 2, of the Code);
  2. The applicant must not have infringed the patent, unless he can prove his good faith (Article 72, paragraph 3, of the Code).

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

No, the Code does not provide 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? 

According to Article 72, paragraph 7, of the Code, the scope and duration of the compulsory licence, the relative methods of implementation, the guarantees and the other terms to which the granting of the licence is subject in relation to its scope, as well as the amount and method of payment of the compensation are determined by the decree granting the licence. The decree is subject to amendments at request of each of the interested parties.

In any case, according to the same Article 72, paragraphs 4 and 5, a compulsory licence may be granted:

  • For exploitation of the invention aimed mainly at supplying the national market;
  • For a period not exceeding the remaining duration of the patent.

With specific reference to compulsory licences for dependent patent, Article 71, paragraph 1, of the Code, provides that they may be granted only to the extent necessary to exploit the inventions of the dependent patents.

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

The Ministry of Economic Development.

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

According to Article 199 of the Code, the application for the granting of a compulsory licence must be submitted before the PTO. The Office shall promptly give notice of the request to the owner of the patent and to those who have rights on the patent (based on acts that have been registered or annotated). These subjects are entitled to oppose the application or the amount and method of payment of the compensation proposed by the applicant within 60 days. In case of opposition, the PTO, within 45 days from the expiration of the above term, shall summon the parties to attempt at conciliation. The applicant may file a brief by the fifth day prior to the date of the meeting scheduled for the conciliation attempt. Within 45 days after the meeting the Ministry of Economic Development will decide whether to grant the compulsory licence or reject the application.

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

The applicant must file a grounded request to the Italian PTO, indicating the amount and method of payment of the offered compensation.

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

The proceeding shall be concluded within 180 days from the filing of the application (Article 199, paragraph 7, of the Code).

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

The procedure described in the answer to question 11 applies also in case of urgency.

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

A compulsory licence automatically terminates with the expiry of the patent.

Furthermore, according to Article 73 of the Code, a compulsory licence shall be revoked by decree of the Ministry of Economic Development:

  • On joint request of the parties; or
  • Upon request of the licensor, when the requirements indicated under letter b) below are met (in such a case a procedure governed by the same rules explained under the answer to question 10 shall commence).
12.1 What are the conditions for the revocation/termination of a compulsory licence? 

A compulsory licence shall be revoked if:

  • The conditions established for the implementation of the invention have not been fulfilled;
  • The licensee has not paid the compensation in the amount or by the methods set; and
  • In case the circumstances that have led to the granting of the licence ceased to exist and it is unlikely that they will recur.
12.2 How should products made under a compulsory licence be treated if the compulsory licence is terminated/revoked?

Pursuant to Article 73, paragraph 4, of the Code, in the event of revocation, the party who obtained the licence may still implement the invention at the same conditions, within the limits of previous use or the limits that are determined by serious and actual preparations. For example, the revocation of the licence will have no effect on the products manufactured under it by the licensee.

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

According to Article 72, paragraph 2, of the Code, a compulsory licence may be granted only against the payment of fair compensation by the licensee. Note that the Code does not specify if the compensation shall consist in a lump-sum payment or in royalties; therefore, both kinds of compensation seem to be possible.

13.1 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 amount and the method of payment of the compensation are determined in the decree granting the licence on a case-by-case basis.

In the event of opposition to the amount and/or method of payment of the compensation, the decision shall be issued by an Arbitration Board, consisting of three members (any party will appoint one member, while the third member will be appointed by the two appointed members or, in case of disagreement, by the President of the Board of Appeal of the PTO). The Arbitration Board shall decide on the basis of a fair assessment. If one of the parties does not appoint its arbitrator, or the determination of the board is clearly unfair or erroneous, the decision will be issued by the competent court.

The decision of the Ministry of Economic Development is an administrative order, which can consequently be challenged before the competent Administrative Court.

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 Code does not provide for the obligation of the licensor of a compulsory licence to support the licensee in the implementation of the licence. However, in principle such an obligation could be provided by the decree of the Ministry of the Economic Development granting the licence.

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

Should the decree expressly provide for such obligations, it could also determine compensation and the relevant amount.

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

The Code does not provide for any obligation of confidentiality for the licensee of a compulsory licence. However, in principle such an obligation could be provided by the decree of the Ministry of the Economic Development granting the licence.

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? 

Should the decree expressly provide for such obligation, it could also determine the relative consequences in the event of a violation. In any case, the violation of the confidentiality obligation, if provided in the decree, could justify a request of revocation of the licence.

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

Although, in principle, the export of products under the compulsory licence is not forbidden, according to Article 72, paragraph 4, of the Code, the compulsory licence must be aimed mainly at supplying the national market. In this regard, some authors argue that only the unexpected production surpluses may be exported.

17.1 If the compulsory licensee is permitted to export products under the compulsory licence, are there any requirements and limitations on the export of such products?

There are no specific limitations, except for the main purpose indicated above.

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

To the best of our knowledge, laws on compulsory licensing have not been used in previous health emergencies or in the present COVID-19 pandemic in Italy.

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?

In principle, the current provisions on compulsory licensing can be used by third parties to facilitate the treatment of patients infected by COVID-19. However, in our opinion, the particularly strict requirements and burdensome procedure provided for by the Code may prove ineffective to grant solutions in emergency situations.

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

No regulatory exemptions and/or amendments have been made following COVID-19 to regulations governing compulsory licensing.

21. Can a compulsory licence be transferred or assigned?

According to Article 72, paragraph 5, of the Code, except whether there is an express consent of the patent owner or his successor in title, the compulsory licence may only be transferred with the licensee's business or with the business unit in which the licence is used.

Furthermore, according to Article 71, paragraph 2, the compulsory licence for the dependent patent may be transferred only accompanied by the patent on the dependent invention.

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

The Code does not provide specific provisions in this regard; it only establishes that any previous licensee is not relieved by the obligation to implement the invention.

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

Italian rules on compulsory licensing do not provide for any specific labelling, distribution channels and/or price requirements. However, in principle such requirements could be provided by the Decree of the Ministry of the Economic Development granting the licence.

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

Refer to the answer to question 23.

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

Refer to the answer to question 23.

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Paola Nunziata
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