New EU framework for compulsory licensing of patents in crisis situations

Why should I read this?

The EU has passed a new regulation allowing compulsory licensing of patents and related rights during declared crises. The mechanism is designed as a measure of last resort to secure access to essential products when voluntary licensing cannot deliver timely or adequate supply. In this article we explore what is required in order to comply and the effect it will have on rights holders.

What is changing and why?

On 16 December 2025, the European Parliament approved the Council’s first-reading position on Regulation 2025/2645 on compulsory licensing for crisis management (the Regulation) establishing an EU-wide compulsory licensing mechanism for crisis management. The initiative amends Regulation 816/2006 and creates a harmonised process for granting a Union compulsory licence where essential products are needed to respond to an EU-declared crisis or emergency. A compulsory licence is one which permits use of an invention protected by intellectual property rights without the consent of the right holder. The Regulation covers “crisis-relevant products”, i.e. those that are indispensable for responding to a crisis or emergency in the Union, or for addressing the impact of a crisis or emergency in the Union. The Regulation was published in the official journal on 30 December 2025 and entered into force on 19 January 2026.

Whilst existing laws provide for compulsory licensing at Member State level thanks to The World Trade Organization’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement), there was, prior to the entry into force of the Regulation, no means of granting a compulsory licence across the EU. This meant that multiple licences were required in order to cover cross-border supply chains and in the event of emergencies affecting multiple or all Member States. The Regulation changes that position, making the EU more agile and able to ensure the supply and free movement of “crisis-related products” across the internal market in the event of another crisis such as COVID-19.

What rights are affected?

The Regulation allows compulsory licensing of the following intellectual property rights, where they are in force in at least one Member State:

• patents and published patent applications
• utility models and published utility model applications
• supplementary protection certificates

The mechanism does not require disclosure of trade secrets and does not apply to defence-related products (Article 2).

When can a Union compulsory licence be granted?

A licence may only be granted where all four cumulative conditions are met (Article 4):

• an EU crisis or emergency has been formally declared
• use of a protected invention is necessary to secure supply of crisis-relevant products within the Union
• alternative measures, including voluntary licensing, cannot ensure access within a reasonable timeframe
• the rights holder has been given the opportunity to comment to the Commission and the advisory body

This reinforces the licence as a public interest, last-resort mechanism.

Will rights holders be compensated?

Under the Regulation licensees must pay appropriate remuneration to rights holders. The Commission will set the amount and payment timeframe, with criteria emphasising:

• the economic value of the licensed activities
• any public funding received for developing the invention

Rights holders should be aware that if a published patent application in respect of which a Union compulsory licence has been granted does not lead to the granting of a patent, it will have to refund the remuneration paid (the same applies for utility models).

What if licensees breach their obligations?

The financial penalties that will apply for non compliance by licensees have been reduced from the original Commission proposal and adjusted to account for the impact the penalties would have on small and medium enterprises (SMEs). Fines may now not exceed 300,000 Euros, or 50,000 Euros for SMEs and periodic penalty payments for each working day may not exceed 1.5% of average daily turnover in the preceding financial year, or 0.5% for SMEs. Fines and penalties are subject to a limitation period of five years. Rights holders are not subject to fines or periodic penalties under the Regulation.

What happens next?

The Commission must regularly review the list of crisis instruments in the Regulation’s annex and report to co legislators every five years. Future assessments will specifically consider semiconductors for medical equipment, reflecting strategic supply-chain concerns.

What does this mean for businesses?

The Regulation creates a unified and predictable EU mechanism for compulsory licensing during crises, reducing fragmentation across Member States. Rights holders should monitor developments closely and consider how crisis related supply obligations, voluntary licensing strategies and remuneration frameworks may apply to their portfolios.

Trade secrets are once again enjoying protection at an EU level that is not being afforded to other rights. It will be interesting to see how the compulsory licensing provisions will play out in practice (though obviously we hope that crises making them necessary are few and far between). Given the increasing strategic importance of trade secrets, businesses should ensure they are taking full advantage of this type of protection.