COMPULSIVE LICENSE IN UKRAINE: RULES OF ENGAGEMENT

Patent protection granted by the state is always a balance between inventor's entitlement to the material proceeds from his intellectual pursuits and his responsibility of advancement of science and technology at large as well as the need to contribute required technology to ensure security of the general public in times of specific need. Compulsory license is one of the elements regulating this balance.

The legal framework for compulsory license in Ukraine is set out in the Law of Ukraine on Protection of Rights in Inventions and Utility Models (Article 30 of the Law) as well as in the Law of Ukraine on Protection of Rights in Designs (Article 23 of the Law).

The law establishes conditions for grant of the compulsive license where the invention is not used or is not adequately used in the jurisdiction and the patent owner is refusing to grant the license to an interested party or where public safety requires the use of the technology to secure essential public interests in the time of need. .

Based on the law, there is no requirement for the patent owner to routinely confirm that the patent is actually being used in Ukraine. In some countries, India, for example, the owner has to proactively file a working patent declaration to show use in the country. In Ukraine, there is no such requirement.

Third parties, however, that are willing and ready to use certain patented technology, have options to use inventions (utility models and designs) that are not adequately used by the patent owner where the patent owner refuses to grant license on such invention.

There are two avenues to obtain compulsive license in Ukraine - administrative exercised by the government in the public interests and civil - exercised by individual entities who are willing and ready to use the invention in the absence of consent from the patent owner.

Administrative avenue is opted for when public interests or public security are at stake. In this case the Cabinet of Ministers is taking it onto itself to grant license on the invention (utility model) to a specified entity without the consent from the patent owner in case such patent owner refused to grant such license without legitimate grounds. In this case the license in granted based on the specific circumstances and the conditions are determined based on the specific needs and purpose determined by the circumstances. The law is very vague as to what those circumstances are. It leaves the patent owner with a level of uncertainty. Grant of such license by the Cabinet of Ministers doesn't preclude the patent owner from granting licenses based on the subject patent to other entities. The rights are granted together with the enterprise and or part of business practice that facilitates implementation /realization of the right. Another limitation of the compulsive license is that it is only granted for internal market.

The owner should be properly notified of the grant of such license. Such compulsive license shall be terminated as soon as the circumstances that warranted the grant of such license cease to exist or change. The patent owner shall be adequately compensated based on the value of the invention.

The above conditions and limitation on the process of the compulsive license are stipulated in the Act of the Cabinet of Ministers of Ukraine on the Order of grant of compulsive license by the Cabinet of Ministers of Ukraine. This document is adopted under No 8 and is dated January 14, 2004.

Based on the above, we can conclude that administrative avenue has the following prerequisites:

extraordinary circumstances and/or established needs of public
refusal by the owner to grant license

The civil option can be exercised in the form of civil action filed with the local court to request compulsive license from the patent owner where the patent owner refuses to voluntary grant such license without proper cause. One of the condition is that the invention (utility model or design) has not been used or not adequately used in Ukraine during three years from publication date or within any three continuous years of the validity of the patent. In this case any entity willing and ready to use the object of the intellectual property right may file a court action requesting the court to grant compulsory license. Unless the patent owner provides persuasive argument explaining legitimate reason for non use, the court may decide to grant such license to the petitioner defining the scope, royalty, term - basically concluding the agreement between the parties.

Based on the above, compulsive license can only be granted through court action where the following conditions are present:

Non use or not adequate use of the underlying invention of utility model without adequate cause during any continuous three years of the validity of the patent (the minimum time limitation for working patent).
Refusal by the patent owner to grant license.

In all cases compulsive licensee is precluded from granting further licenses or sub licenses.