Compulsory licensing in Spain

  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?

Spanish regulation does not provide a specific definition of compulsory licensing.

In general terms, compulsory licensing refers to a special regime provided in Spanish regulation, through which there is a limitation of the patent right through which, in specific cases provided by law, the Spanish Patents and Trademarks Office (“SPTO”) grants a licence over a patent, utility model or plant variety right, which is valid and owned by a third party (the right holder).

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

  • Spanish Patent Act no. 24/2015 (“SPA”);
  • Spanish Plant Variety Act no. 3/2000, of 7 January (“SPVA”);
  • Regulation (EC) no 816/2006 of the European Parliament and of the Council of 17 May 2006 on compulsory licensing of patents relating to the manufacture of pharmaceutical products for export to countries with public health problems.

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

Compulsory licensing applies to any invention protected by a patent or a utility model, 1 For the purpose of this guide, patent and utility models are hereinafter collectively referred to as “patent”. or to new plant varieties protected by a plant variety right. However, there are some particularities for certain products, such as new plant varieties or pharmaceutical products aimed at countries with public health problems.

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 natural person or legal entity that fulfils the requirements of the application for a compulsory licence.
  • Spanish law does not prevent foreigners or foreign companies from applying for a compulsory licence.

Compulsory licences can be granted for a given patent in one of the following cases:

  • Lack or insufficiency of exploitation of the patented invention: Cases in which a right holder, without any legitimate reason, fails to have exploited the patent within three years since the publication date of the granting of the patent or within four years since the filing date, whichever period expires last. The patent will also be considered to be insufficiently exploited if, once these periods have elapsed, the exploitation is interrupted for over a year;
  • Dependent patents, or cases in which there is a dependency between patents and plant variety rights: Where it is not possible to exploit the invention protected by a patent or a plant variety right without infringing the rights conferred by a prior patent or by a prior plant variety right.
  • Need to put an end to practices, which have been declared contrary to national or EU antitrust law by a final administrative or judicial decision.
  • Existence of public interest grounds for the grant of the compulsory licence: Public interest shall be deemed to exist when:
    • The initiation, increase or generalisation of the exploitation of the invention, or the improvement of the conditions under which such exploitation takes place, are of primary importance for public health or national defence.
    • The lack of exploitation or the insufficient quality or quantity of the exploitation carried out entails serious prejudice to the economic or technological development of the country.
    • National supply demands require it.
  • Manufacture of pharmaceutical products for export pursuant to EU Regulation (EC) No 816/2006, through which compulsory licences may be granted over patents concerning manufacturing of pharmaceutical products, which will be destined to countries with public health issues.

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

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

Yes. The applicant must prove that he has unsuccessfully attempted (within a reasonable time) to obtain from the right holder a contractual licence on reasonable commercial terms and conditions. However, there are certain situations where this attempt is not required (e.g. national emergency, non-commercial public use and cases in which there is a need to put an end to practices, which have been declared contrary to national or EU rules).

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

Not specifically. Urgent situations such as national defence or public health could lead to the existence of public interest grounds (as stated in question 5) but this is just one of the situations in which a compulsory licence can be granted.

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?

No. The only scenario in which there is a minimum number of years is in cases in which the compulsory licence is requested due to lack or insufficiency of exploitation of the patented invention.

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

There is no specific limit in this regard in Spanish legislation.

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

Yes. The agreement between the parties or the decision of the SPTO granting the compulsory licence shall stipulate the scope of the licence, and particularly, the scope of the compulsory licence, the royalty, the duration, the guarantees to be provided by the licensee and any other clauses ensuring compliance by the licensee with the conditions that justify the granting of the licence.

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

The SPTO.

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

The application for a compulsory licence shall be submitted with the SPTO through the specific standard form.

The SPTO shall notify the application to the right holder and enable the right holder to file a brief of arguments within the following month. If no allegations are submitted, the SPTO will grant the licence.

If the right holder does file a brief of arguments, the SPTO will evaluate the arguments and evidence of both parties. If the SPTO considers that there are circumstances, which allow for the granting of a compulsory licence, the SPTO will request the parties to appoint a common mediator within a period of two months, or each party shall appoint an expert who, together with a third expert appointed by the SPTO, shall agree on the terms and conditions of the licence.

In the absence of agreement on the appointment of a mediator or expert, or on the conditions of the licence within a period of two additional months, the SPTO shall decide accordingly.

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

The application shall be accompanied by proof of the previous attempt to obtain a contractual licence, except in those cases of (i) national emergency or other circumstances of extreme urgency, (ii) public non-commercial use, (iii) anti-competitive practices. The application shall include the receipt of payment of the official fee.

The applicant shall provide evidence proving that a circumstance enabling the granting of a compulsory licence is met as well as evidence proving that he has sufficient means and guarantees to carry out a real and effective exploitation of the patented invention.

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

According to the above timelines, it could take around 5-6 months, although there are no precedents enabling an estimation of how long a decision by the SPTO would take.

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

No.

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

Yes, the Spanish Patent Act expressly envisages the revocation/termination of the compulsory licence.

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

If the licensee seriously or repeatedly fails to comply with any of the obligations under the compulsory licence, the SPTO may, on its own initiative or at the request of an interested party, terminate the compulsory licence. Further from that, if there is a judicial decision declaring that the licensor has acted in bad faith, the licensee could request the termination of the compulsory licence to the SPTO.

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

There are no specific provisions in this regard in the Spanish legislation. Thus, parties of the compulsory licence agreement should carefully assess the conditions of the compulsory licence  imposed by the SPTO in this regard (if any).

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

Yes, the compulsory licensee has to pay a royalty to the owner of the patent.

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 compulsory licence shall be accompanied by adequate remuneration according to the circumstances of each case, taking into account the economic importance of the invention. As mentioned, the SPTO shall invite the parties to appoint a joint mediator in order to reach an agreement on the terms and conditions of the compulsory licence. In any case, the SPTO’s resolution granting the compulsory licence shall determine the content of the licence, including the amount of the royalty.

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

There are no specific provisions in this regard in the Spanish legislation.

Yes, the SPTO decision can be appealed (administratively/judicially) by any of the parties. However, the filing of the appeal does not suspend the execution of the resolution, although the SPTO may authorise the licensee, upon a justified request, to delay the exploitation of the patent until the granting decision becomes final.

Moreover, both the licensee and the rights holder can request from the SPTO the modification of the royalty or other conditions if new facts justify such modification and, especially, if the right holder has granted contractual licences with conditions, which are unjustifiably more favourable to the conditions of the prior compulsory licence.

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? 

Yes, the right holder has the obligation to provide the licensee with the technical knowledge needed to proceed to a suitable commercial exploitation of the invention.

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

This obligation falls under the principle of good faith. Accordingly, if a court decision finds that the right holder has breached this obligation and thus has violated this principle, the licensee may request that the SPTO reduce the royalty to be paid.

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

There are no statutory provisions in this regard in the Spanish legislation, although foreseeably the conditions of the compulsory licence would provide a confidentiality obligation covering all confidential information.

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? 

Probably yes, although this should be assessed on a case by case basis taking into account the conditions of the compulsory licence, the specific information disclosed and whether this information could be considered a trade secret.

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

It may be possible for compulsory licensees in Spain to export pharmaceutical products to eligible importing countries in need of such products in order to address 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?

According to Regulation (EC) No. 816/2006, the patented pharmaceutical product made under the licence shall be exported only to the eligible importing country specified in the licence, and upon acceptance of an application by the national competent authority. The application may include evidence of prior negotiation with the rights holder within 30 days prior to the submission of the application. It shall also include evidence of a specific request from:

  1. authorised representatives of the importing country or countries;
  2. a non-governmental organisation acting with the formal authorisation of one or more importing countries;
  3. or UN bodies or other international health organisations acting with the formal authorisation of one or more importing countries.

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

There are currently no reported cases of compulsory licensing being used in Spain in previous health emergencies or in the present COVID-19 pandemic.

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?

Spanish legislation provides that the Spanish government may, at any time, impose the compulsory licensing regime to any patent or patent application on public interest grounds. Since treatment for people infected with COVID-19 could be considered to be of primary importance for public health, the Spanish government could use this provision to impose this regime on any patent or patent application.

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

None.

21. Can a compulsory licence be transferred or assigned?

Yes. A compulsory licence can be transferred or assigned although it must be transferred together with the company or the part of the company that exploits it. Further to that, the assignment shall be expressly noted by the SPTO. In case the compulsory licence has been granted due to the dependent patent circumstance explained above, it is also necessary for the compulsory licence to be transferred together with the dependent patent.

In any case, the granting of sub-licences by the licensee is considered null and void.

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

There are no specific provisions in this regard in Spanish legislation.

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

According to Regulation (EC) No. 816/2006, the patented pharmaceutical products made under the compulsory licence shall be clearly identified through specific labelling or marking, as being produced pursuant to this regulation. The products shall be distinguished from those made by the rights holder through special packaging and/or special colouring/shaping, provided that such distinction is feasible and does not have a significant impact on price. The packaging and any associated literature shall bear an indication that the product is subject to a compulsory licence under this regulation, providing the name of the competent authority and any identification reference number, and clearly specifying that the product is exclusively for export to and distribution in the importing country or countries concerned. Details of the product characteristics shall be made available to the customs authorities of the member states.

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

There are no specific provisions in this regard in Spanish legislation.

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

There are no specific provisions in this regard in Spanish legislation.

Portrait ofMaría González Gordon
María González Gordon
Managing Partner
Madrid
Portrait ofRicardo Gómez-Barreda de la Gándara
Ricardo Gómez-Barreda de la Gándara
Associate
Madrid