Procedure for Issuing the Export License is Established

03 June 2022
Elizaveta Gromova
Legal Trainee
Anna Kuminova
Associate

The Russian Government adopted Regulation No. 947 “On the use of an invention to produce of a medicine in the Russian Federation for its further export without the patentholder consent” on 25 May 2022. The Regulation establishes the procedure for issuing export licenses, as well as the methodology for calculation of the sum of compensation to patentholders.

The Regulation was adopted in compliance with the art. 1360.1 of the Russian Civil Code and will come into force on 4 June 2022.

The Government may grant an export license when the following conditions are simultaneously met:

  • A WTO Member notifies the TRIPS Council of its intention to receive an export license;

  • The Russian Government receives a request from a WTO Member about ability to produce a medicine in Russia, indicating the volume, delivery date and importing country;

  • Russian manufacturers have abilities to produce the requested medicine;

  • Attempts to obtain a permission from the rightsholder to use the invention on reasonable commercial terms were unsuccessful;

  • There is a contract between a foreign country and a manufacturer with the ability to produce a medicine in Russia that is subject to export.

The Ministry of Industry and Trade prepares the opinion on the ability to produce a medicine, and the Ministry of Economic Development checks that the first two conditions are met. Both opinions must be submitted to the Government within 10 days.

The Government then notifies the request’s author of the ability to produce the medicine with a list of manufacturers for further contracting with them, or the lack thereof.

Should all conditions be met, the Government issues a decision to use the invention for production of the medicine in Russia for its further export without the rightsholder consent.

The decision states, among other things:

  • Specific INN;

  • List of manufacturers allowed to use the invention (indicating the name of the medicine, location and website);

  • Information on the authorized production volume (if there is more than one manufacturer, this information should be given for each one in accordance with the contract concluded), with the total volume not exceeding the requirement of the foreign country;

  • Name of the foreign country to which the medicine is to be exported.

The term of the export license is set according to the volume of production and time of transport of medicines.

The draft decision is subject to approval by the Ministry of Foreign Affairs, Ministry of Health, Ministry of Industry and Trade, Ministry of Economic Development, Federal Antimonopoly Service and Rospatent.

The Governmental decision may be terminated upon the term expiry or earlier in the event of a change in the conditions under which the decision was made, a change in the TRIPS Agreement terms or termination of the Russian participation in the TRIPS Agreement, occurrence of force majeure circumstances, or by an enforceable court decision.

Within 30 days from issuing the Governmental decision, Rospatent notifies the rightsholder(s) of valid patents on the export license. The Ministry of Economic Development also notifies the TRIPS Council of the decision. Should a decision be taken in respect of a Eurasian patent, Rospatent shall notify the Eurasian Patent Office accordingly.

The Regulation establishes a methodology for calculation of the compensation to patentholders as well.

The amount of compensation is 0,5% of the medicine cost. The cost is calculated according to a special formula (authorized production volume per unit selling price of the medicine).

The methodology also contains special formulas for determining compensation when it is paid to more than one rightsholder or for more than one invention, or when a medicine is produced by more than one manufacturer.

Compensation shall be paid by placing an irrevocable letter of credit with a minimum validity period of 3 years. The manufacturer, which has used the invention, shall notify the rightsholder of placing the letter of credit within 15 days. In this case, compensation shall be deemed paid from the date of the letter of credit placement.

Moreover, compensation may be paid within 6 months from the date of signing by the rightsholder an agreement for the payment of compensation. Should the rightsholder deny entering into such agreement, the obligation to pay compensation ceases.

If the rightsholder has not sent a waiver to sign the agreement within 3 years or has not used the letter of credit during its term, that shall be considered a waiver and shall result in termination of the obligation to pay compensation.

The manufacturer refusal to pay compensation may be appealed by the rightsholder in a court.