Compulsory licensing in Serbia

  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?

Compulsory licensing refers to the legal mechanism whereby the competent government authority in accordance with the law authorises interested parties to implement a patent without the permission of the patentee.

A similar mechanism is applicable to plant varieties and a statutory licence exists for copyright and related rights.

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

  • Patent Law (Official Gazette of the Republic of Serbia no. 99/2011, 113/2017, 95/2018, and 66/2019);
  • Law on Protection of Rights of Plant Variety Breeders (Official Gazette of the Republic of Serbia no.41/2009 and 88/2011);
  • Law on Copyright and Related Rights (Official Gazette of the Republic of Serbia no. 104/2009, 99/2011, 119/2012, 29/2016, and 66/2019).

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

The law does not exclude or provide specific types of products or technologies that can be subject to compulsory licensing, which can be granted for any patented invention if the legal requirements are met, although for certain products the legal grounds for granting a compulsory licence may be limited (see point 5 on semi-conductor technology and plant varieties).

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

No.

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

Any interested party can apply if it proves that it has the appropriate technological capacity and production facilities for the commercial use of the protected invention. If the protected invention is necessary for the commercial use of the subsequently protected invention of another person, only a dependent patent holder can apply.

Foreigners or foreign companies are not prohibited from applying for a compulsory licence if they otherwise fulfil legal requirements.

If the right holder refuses to licence the right of commercial use of a protected invention to other persons or sets unreasonable conditions for such licensing, the government authority competent in the field in which the invention shall be employed may, at the request of an interested party after considering the merits of each individual case, grant a compulsory licence, in the following cases:

  1. if the right holder himself or a person authorised by him does not use the protected invention or uses it insufficiently in the Republic of Serbia;
  2. if the commercial use of an invention that has been subsequently protected in the name of another person is not possible, without the use of the protected invention in whole or in part;
  3. when it is necessary to remedy a practice determined after a judicial or administrative process to be anti-competitive.

In the case of semi-conductor technology, a compulsory licence may be granted only with the aim of public non-commercial use or when it is necessary to remedy a practice determined after a judicial or administrative process to be anti-competitive.

In case of a plant variety, a compulsory licence can be granted only for reasons of general interest (national or other exceptional needs for the purpose of protection of health and nutrition of the population and protection of public interest in areas of vital importance for socio-economic and technological development).

In case of copyright and similar rights, the law itself provides for a statutory licence permitting reproduction for educational purposes, reproduction of certain newspaper articles and reproduction of works displayed in the open space.

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

  1. Before making the request for the grant of a compulsory licence, the interested person must prove that it has made efforts to obtain authorisation for the use of the protected invention from the right holder on reasonable commercial terms and conditions and that such efforts have not been successful within a reasonable period of time.
  2. Urgency is not a requirement for granting a compulsory licence, but prior negotiations and the minimum period from the filing of the patent application/granting of the patent or petty patent, are not required for granting a compulsory licence when the public emergency endangers the survival of the state or its citizens or in cases of public non-commercial use.
  3. The request for the grant of a compulsory licence cannot be filed before the expiration of a period of four years from the date of filing of the patent application or before the expiration of a period of three years from the grant of the patent or petty patent, whichever period expires last.
  4. In case of non-use or insufficient use, an interested party must prove that it has the appropriate technological capacity and production facilities for the commercial use of the protected invention.
  5. In case of a dependent patent, only the holder of the dependent patent can apply provided that the second invention involves a technical advancement of special economic significance in relation to the first protected invention, and that the owner of the first invention is entitled, on reasonable terms, to a cross-licence to use the second invention.
  6. In case of compulsory licences for patents relating to the manufacture of pharmaceutical products for export to countries with public health problems, additional requirements have to be met.
  7. In case of a plant variety, an interested party must prove that it has the possibilities and capacities necessary for the use of the protected plant variety.

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? 

Yes.

In case of patents, the scope and duration of a compulsory licence shall be limited to the purpose for which it has been granted.

A compulsory licence shall predominantly be granted for the supply of the domestic market, and only exceptionally for the supply of the foreign market. The compulsory licence shall be non-exclusive and may be assigned only with the manufacturing plant that exploits the invention, or with the assignment of the dependent patent, respectively.

In case of plant varieties, the compulsory licence is issued only for reasons of general interest, for the supply of the market of the Republic of Serbia, the scope and duration are limited to reasons of general interest for which a compulsory licence has been issued. A compulsory licence cannot be exclusive and can be transferred only together with the legal entity or part of the legal entity where it is used.

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

A compulsory licence is granted by the government authority competent in the field in which the invention shall be employed (e.g. Ministry of Health for medicines, Ministry of Agriculture for plant varieties).

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

An interested party initiates the administrative procedure by submitting a written request for a compulsory licence to the government authority competent in the field in which the invention shall be employed. The government authority shall conduct the proceedings, consider the evidence, and pass a decision granting a compulsory licence or refusing the request.

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

With the request, the interested party should submit the information and evidence necessary for the government authority to make a decision: details of the applicant, right holder, and patent, evidence related to the prior negotiations with the right holder, available technological capacity and production facilities for the commercial use of the protected invention, details of the subsequent invention and its dependence on the use of the invention for which the compulsory licence is requested, other evidence depending on a particular case (e.g. additional evidence in case of pharmaceutical products for export to countries with public health problems).

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

The Patent Law does not specify the deadlines in which the government authority should decide, so the general deadlines applicable in administrative procedure will apply (i.e. 30/60 days). It should be noted that deadlines are not binding for the authority and an applicant can only file an appeal after the expiry of the deadline. He will not acquire any other rights due to the failure of the government authority to decide within the deadline.

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

The Patent Law does not exclude hearing in an urgent situation, it only provides that the requirements related to the prior negotiations and minimum period from filing of a patent application/granting of the patent or petty patent do not have to be fulfilled.

General rules applicable to the administrative procedure envisage the hearing when there are parties with opposing interest. Although the Law on General Administrative Procedure provides the conditions when oral hearings do not have to be conducted, it is unlikely that the authorities would grant the compulsory licence without obtaining the statement from the right holder.

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

Yes.

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

A compulsory licence may be revoked/terminated upon expiry of its term, if and when circumstances that have led to its grant cease to exist and are unlikely to recur. In case of compulsory licences for patents relating to the manufacture of pharmaceutical products for export to countries with public health problems, such a licence can be revoked/terminated if the importing country has failed to honour its obligations or if the opposing party does not comply with the decision on the granting of the compulsory licence. In case of plant varieties, if the conditions under which the mandatory licence is issued change or if the person to whom the mandatory licence is issued ceases to meet the requirements, the Minister may revoke the compulsory licence.

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

The Patent Law and the Law on Protection of Rights of Plant Variety Breeders do not specify how to treat the products made under a compulsory licence if the compulsory licence is terminated/revoked, except for compulsory licences for patents relating to the manufacture of pharmaceutical products for export to countries with public health problems, where the licensee shall at its expense, redirect all the products that are in his possession to the country having needs or otherwise dispose of them after consultation with the holder of right. 

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

Yes, but the statutory provisions related to the compulsory licensing refer to the payment of remuneration rather than royalties.

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 holder of compulsory licence shall be required to pay to the right holder a mutually agreed remuneration. In the absence of an agreement on the amount and method of payment of such remuneration, the competent court shall decide, considering the merits of each individual case and the economic value of the compulsory licence. In case of compulsory licences for patents relating to the manufacture of pharmaceutical products for export to countries with public health problems, the decision on the grant of a compulsory licence shall require that the icensee shall pay the remuneration to the right holder that is to be determined as follows: 1) in the cases of national emergency or other circumstances of extreme urgency or in cases of public non-commercial use, the remuneration shall be a maximum of 4% of the total price to be paid by the importing country or on its behalf; 2) in all other cases, the remuneration shall be determined taking into account the economic value of the use authorised under the licence to the importing country or countries concerned, as well as humanitarian and non-commercial circumstances relating to the issue of the licence.

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

Only one type of remuneration is available; the law does not specify how it is calculated, except for the compulsory licences for patents relating to the manufacture of pharmaceutical products for export to countries with public health problems. 

Yes. The party who is not satisfied with the decisions of the government authority on the grant of a compulsory licence, the refusal of the request to grant a compulsory licence, the amendment and cancellation of the compulsory licence, may file an appeal to the government of the Republic of Serbia within 15 days from the receipt of the decision. The decision of the government is final and only an administrative dispute may be instituted against that decision concerning the appeal within 30 days from the date of the receipt of the government’s decision.

In the case of plant varieties, the only available remedy against the decision of the Minister of Agriculture is an administrative dispute. 

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 Law and Law on Protection of Rights of Plant Variety Breeders do not regulate this matter.

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

The Patent Law and Law on Protection of Rights of Plant Variety Breeders do not regulate this matter.

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

The Patent Law does not regulate this matter, but the compulsory licensee should comply with the confidentiality obligations under the Law on Protection of Trade Secrets.

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? 

The Patent Law does not regulate this matter, but the right holder has a claim on the basis of trade-secret infringement.

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

Yes. Although a compulsory licence should predominantly be granted for the supply of the domestic market, the compulsory licences can also be granted for patents relating to the manufacture of pharmaceutical products for export to countries with public health problems.

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?

Yes. The following requirements apply in case of compulsory licences for patents relating to the manufacture of pharmaceutical products for export to countries with public health problems:

  1. The importing country is considered as the country with public health problems;
  2. The quantity of product does not exceed that notified to the WTO by an importing country that is a WTO member, or to the government by an importing country that is not a WTO member;
  3. Taking into account other compulsory licences granted in other countries, the total amount of product authorised to be produced for any importing country does not significantly exceed the amount notified by that country to the WTO, which are WTO members, or to the government body, in the case of importing countries that are not WTO members
  4. No product made or imported under the compulsory licence shall be offered for sale or put on the market in any country other than that cited in the application, except where an importing country avails itself of the possibilities to export to fellow members of a regional trade agreement that share the health problem in question.
  5. The products made under the compulsory licence must be clearly identified, through specific labelling or marking, as being produced under a compulsory licence, must be distinguished from those made by the right holder through special packaging and/or special colouring or shaping, provided that such a distinction is feasible and does not have a significant impact on price;
  6. The packaging and any associated text must bear an indication that the product is subject to a compulsory licence, giving the name of the authority that has granted the compulsory licence and any identifying reference number, and specifying clearly that the product is exclusively for export to and distribution in the importing country or countries concerned;
  7. Details of the product characteristics shall be made available to the customs authorities of the Republic of Serbia;
  8. Before shipment to the importing country, the licensee shall post on a website and notify the Ministry of Health the quantities being supplied under the compulsory licence, the importing countries to which they are supplied, and the distinguishing features of the product or products concerned.
  9. If the product covered by the compulsory licence granted in the Republic of Serbia is protected by a patent or petty patent in the importing countries cited in the request, the product shall only be exported if those countries have issued a compulsory licence for the import, sale and/or distribution of the product.
  10. The import of products manufactured under such a compulsory licence in the Republic of Serbia for the purposes of release for free circulation, re-export, placing under suspensive procedures or placing in a free zone or free warehouse is prohibited.

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

No.

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, the existing legal framework allows that possibility.

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?

A compulsory licence may be assigned only with the manufacturing plant that exploits the invention for which the licence has been granted.

Also, authorisation for the use of the earlier protected invention shall be non-assignable except with the assignment of the subsequent patent.

In case of plant varieties, the compulsory licence can be transferred only together with the legal entity or part of the legal entity where it is used.

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

It should not have any impact on the previously agreed upon licence (such a licence will continue), given that the compulsory licence cannot be exclusive.

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

There is a labelling requirement in case of compulsory licences for patents relating to the manufacture of pharmaceutical products for export to countries with public health problems. In this case, the products made under the compulsory licence must be clearly identified, through specific labelling or marking, as being produced under a compulsory licence, must be distinguished from those made by the right holder through special packaging and/or special colouring or shaping, provided that such a distinction is feasible and does not have a significant impact on price; the packaging and any associated text must bear an indication that the product is subject to a compulsory licence, giving the name of the authority that has granted the compulsory licence and any identifying reference number, and specifying clearly that the product is exclusively for export to and distribution in the importing country or countries concerned.

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

No product made or imported under the compulsory licence shall be offered for sale or put on the market in any country other than that cited in the application, except where an importing country exports to fellow members of a regional trade agreement that share the health problem in question.

The licence conditions are without prejudice to the method of distribution in the importing country.

A government authority can access the books and records kept by the licensee, for the sole purpose of checking whether all obligations cited in the decision to grant the compulsory licence, and in particular those relating to the final destination of the products, have been met.

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

The Patent Law does not regulate pricing of the products made under a compulsory licence. There may be other laws that regulate the prices of certain products, but this would not be related to the compulsory licence.

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Maja Stepanović
Partner
Belgrade