Saturday, June 22, 2024

EU Reviews Compulsory Licensing Proposal Amid Business Concerns Over Innovation and Standards

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The European Union is currently reviewing a proposal on compulsory licensing intended to be utilized during various crises, including health emergencies and environmental challenges. Despite amendments by the European Parliament to involve rights-holders more and require attempts at voluntary licensing, several concerns remain. These include issues over forced technology transfers, sharing of trade secrets, and inadequate judicial review.

Business leaders advocate that compulsory licensing should be a measure of last resort, used exclusively when it is the sole means of accessing indispensable, crisis-relevant products or services. They urge for the exclusion of trade secrets and know-how from any additional measures complementing the Union compulsory license. Furthermore, the proposal demands clearer definitions, especially regarding what constitutes a ‘crisis.’ The advisory board set to counsel the Commission on its decisions should include industry experts to incorporate business perspectives at both European and national decision-making levels.

The business community is also pushing for high manufacturing standards and argues against compromising quality for expediency. They assert that any legislative measures should respect the principles of proportionality and subsidiarity, ensuring that right holders have the opportunity to be heard and negotiate remuneration before any compulsory licensing decision is finalized.

Compulsory Licensing

European Businesses Critique EU’s Compulsory Licensing Proposal for Crisis Management

A coalition of leading European business groups has expressed significant reservations about the EU’s new proposal for managing crises through compulsory licensing. The groups argue that the proposal could hinder technological advancement, reduce incentives for innovation, and potentially have a chilling effect on business investment, particularly in sectors vital for public health and safety. Additionally, there are concerns that the proposal might set a dangerous precedent that could lead to overreach and misuse of compulsory licensing in future crises.

This has led to calls for a more balanced approach that protects the interests of both public health and private enterprise. The business community is urging EU policymakers to consider modifications that would safeguard the integrity of Europe’s innovative sectors while still providing necessary tools for crisis response. The coalition believes that while preparedness for future crises is crucial, the current form of the initiative could stifle innovation and weaken the international competitiveness of European firms, ultimately hindering Europe’s ability to effectively address future challenges. The COVID-19 pandemic demonstrated how existing frameworks could facilitate swift responses to global health emergencies, with industry stakeholders voluntarily licensing their rights to aid the crisis response.


Resource: European Federation of Pharmaceutical Industries and Associations, May 13, 2024

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