Amendments to Civil Code expand government's rights to mandate compulsory licences

Introduction

Two federal laws adopted in April and June 2021 give the government additional powers to make decisions to allow the use of patented rights without the patentee's consent and with the payment of an appropriate compensation.

The amendments are based on article 5[A] of the Paris Convention and articles 30, 31 and 31 bis of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).

Using patented rights to protect population's health

The first amendment, adopted on 30 April 2021, adjusted article 1360 of the Civil Code. Article 1360 gives the government the right to make a decision to use, in certain cases, an invention, a utility model or an industrial design without the consent of the patent holder. Before the amendment this was possible "in the interests of defence and security". In the new version, the cited phrase is amended to read as follows: "in the case of an extreme need related to ensuring the defence and security of the state and protecting the life and health of citizens".

Some commentators say that the added phrase does not in fact change the government's powers as the protection of citizens' life and health can be regarded as an important part of the nation's security. In December 2020, before the amendment was introduced, the first decision under this article was issued: the Russian company Pharmasynthez was given the right to use a number of patented inventions relating to the medication remdesivir used for the treatment of covid-19. The decision was challenged by the rights owner, Gilead Sciences. The Supreme Court rejected the lawsuit. Therefore, the government's right to grant compulsory licences in order to protect citizens' life and health was confirmed even before the new amendment.

However, the amendment now makes the situation clearer and helps avoid any doubts. Moreover, the current wording allows the government to grant compulsory licences, not only in the case of emergencies such as the covid-19 pandemic, but also in other situations where it is not possible to claim a threat to the national security.

Using patented inventions to produce pharmaceuticals for export

The amendment introduced by the Federal Law of 11 June 2021 appends the Civil Code with a new article. Article 1360(1) entitles the government to make decisions to use a patented invention without the patentee's consent (with appropriate compensation) for manufacturing medications for export to other countries.

The amendment was based on article 31 bis of the TRIPS agreement and it is aimed at supplying the least-developed countries with important medicinal products. It is presumed that the application of the new article may take place only in accordance with the procedures set out in the TRIPS agreement, including the importer country's notification to the TRIPS Council of its intention to use the system, limitations of volumes, prevention of re-exportation, special requirements for packaging and labelling etc.

The amendment is yet to be used in any case; the procedures and the appropriate amount of compensation are to be defined by the government.

This article first appeared in Lexology