Chapter X

COMPULSORY LICENSING

SEC. 93. Grounds for Compulsory Licensing

       The Director of Legal Affairs may grant a license to exploit a patented invention, even without the agreement of the patent owner, in favor of any person who has shown his capability to exploit the invention, under any of the following circumstances: 

       93.1. National emergency or other circumstances of extreme urgency; 

       93.2. Where the public interest, in particular, national security, nutrition, health or the development of other vital sectors of the national economy as determined by the appropriate agency of the Government, so requires; or 

       93.3. Where a judicial or administrative body has determined that the manner of exploitation by the owner of the patent or his licensee is anti-competitive; or 

       93.4. In case of public non-commercial use of the patent by the patentee, without satisfactory reason; 

       93.5. If the patented invention is not being worked in the Philippines on a commercial scale, although capable of being worked, without satisfactory reason: Provided, That the importation of the patented article shall constitute working or using the patent. (Secs. 34, 34-A, 34-B, R.A. No. 165a) 

SEC. 94. Period for Filing a Petition for a Compulsory License

       94.1. A compulsory license may not be applied for on the ground stated in Subsection 93.5 before the expiration of a period of four (4) years from the date of filing of the application or three (3) years from the date of the patent whichever period expires last. 

       94.2. A compulsory license which is applied for on any of the grounds stated in Subsections 93.2, 93.3, and 93.4 and Section 97 may be applied for at any time after the grant of the patent. (Sec. 34(1), R.A. No. 165) 

SEC. 95. Requirement to Obtain a License on Reasonable Commercial Terms

       95.1. The license will only be granted after the petitioner has made efforts to obtain authorization from the patent owner on reasonable commercial terms and conditions but such efforts have not been successful within a reasonable period of time. 

       95.2. The requirement under Subsection 95.1 shall not apply in the following cases: 

            (a) Where the petition for compulsory license seeks to remedy a practice determined after judicial or administrative process to be anti-competitive;

            (b) In situations of national emergency or other circumstances of extreme urgency; 

            (c) In cases of public non-commercial use. 

       95.3. In situations of national emergency or other circumstances of extreme urgency, the right holder shall be notified as soon as reasonably practicable. 

       95.4. In the case of public non-commercial use, where the government or contractor, without making a patent search, knows or has demonstrable grounds to know that a valid patent is or will be used by or for the government, the right holder shall be informed promptly. (n) 

SEC. 96. Compulsory Licensing of Patents Involving Semi-Conductor Technology

       In the case of compulsory licensing of patents involving semi-conductor technology, the license may only be granted in case of public non-commercial use or to remedy a practice determined after judicial or administrative process to be anti-competitive. (n) 

SEC. 97. Compulsory License Based on Interdependence of Patents

       If the invention protected by a patent, hereafter referred to as the "second patent," within the country cannot be worked without infringing another patent, hereafter referred to as the "first patent," granted on a prior application or benefiting from an earlier priority, a compulsory license may be granted to the owner of the second patent to the extent necessary for the working of his invention, subject to the following conditions: 

       97.1. The invention claimed in the second patent involves an important technical advance of considerable economic significance in relation to the first patent; 

       97.2. The owner of the first patent shall be entitled to a cross-license on reasonable terms to use the invention claimed in the second patent; 

       97.3. The use authorized in respect of the first patent shall be non-assignable except with the assignment of the second patent; and 

       97.4. The terms and conditions of Sections 95, 96 and 98 to 100 of this Act. (Sec. 34-C, R.A. No. 165a) 

SEC. 98. Form and Contents of Petition

       The petition for compulsory licensing must be in writing, verified by the petitioner and accompanied by payment of the required filing fee. It shall contain the name and address of the petitioner as well as those of the respondents, the number and date of issue of the patent in connection with which compulsory license is sought, the name of the patentee, the title of the invention, the statutory grounds upon which compulsory license is sought, the ultimate facts constituting the petitioner's cause of action, and the relief prayed for. (Sec. 34-D, R.A. No. 165) 

SEC. 99. Notice of Hearing

       99.1. Upon filing of a petition, the Director of Legal Affairs shall forthwith serve notice of the filing thereof upon the patent owner and all persons having grants or licenses, or any other right, title or interest in and to the patent and invention covered thereby as appears of record in the Office, and of notice of the date of hearing thereon, on such persons and petitioner. The resident agent or representative appointed in accordance with Section 33 hereof, shall be bound to accept service of notice of the filing of the petition within the meaning of this Section. 

       99.2. In every case, the notice shall be published by the said Office in a newspaper of general circulation, once a week for three (3) consecutive weeks and once in the IPO Gazette at applicant’s expense. (Sec. 34-E, R.A. No. 165) 

SEC. 100. Terms and Conditions of Compulsory License

       The basic terms and conditions including the rate of royalties of a compulsory license shall be fixed by the Director of Legal Affairs subject to the following conditions: 

       100.1. The scope and duration of such license shall be limited to the purpose for which it was authorized; 

       100.2. The license shall be non-exclusive; 

       100.3. The license shall be non-assignable, except with that part of the enterprise or business with which the invention is being exploited; 

       100.4. Use of the subject matter of the license shall be devoted predominantly for the supply of the Philippine market: Provided, That this limitation shall not apply where the grant of the license is based on the ground that the patentee’s manner of exploiting the patent is determined by judicial or administrative process, to be anti-competitive. 

       100.5. The license may be terminated upon proper showing that circumstances which led to its grant have ceased to exist and are unlikely to recur: Provided, That adequate protection shall be afforded to the legitimate interest of the licensee; and 

       100.6. The patentee shall be paid adequate remuneration taking into account the economic value of the grant or authorization, except that in cases where the license was granted to remedy a practice which was determined after judicial or administrative process, to be anti-competitive, the need to correct the anti-competitive practice may be taken into account in fixing the amount of remuneration. (Sec. 35-B, R.A. No. 165a) 

SEC. 101. Amendment, Cancellation, Surrender of Compulsory License

       101.1. Upon the request of the patentee or the licensee, the Director of Legal Affairs may amend the decision granting the compulsory license, upon proper showing of new facts or circumstances justifying such amendment. 

       101.2. Upon the request of the patentee, the said Director may cancel the compulsory license: 

            (a) If the ground for the grant of the compulsory license no longer exists and is unlikely to recur;

            (b) If the licensee has neither begun to supply the domestic market nor made serious preparation therefor; 

            (c) If the licensee has not complied with the prescribed terms of the license; 

       101.3. The licensee may surrender the license by a written declaration submitted to the Office. 

       101.4. The said Director shall cause the amendment, surrender, or cancellation in the Register, notify the patentee, and/or the licensee, and cause notice thereof to be published in the IPO Gazette. (Sec. 35-D, R.A. No. 165a) 

SEC. 102. Licensee’s Exemption from Liability

       Any person who works a patented product, substance and/or process under a license granted under this Chapter, shall be free from any liability for infringement: Provided however, That in the case of voluntary licensing, no collusion with the licensor is proven. This is without prejudice to the right of the rightful owner of the patent to recover from the licensor whatever he may have received as royalties under the license. (Sec. 35-E, R.A. No. 165a)