The Government Approved Methods for Calculating Compensation for the Use of Invention without Patent Holder’s Consent

On October 20, Resolution of the Government of the Russian Federation No. 1767 dated October 18, 2021, On Approval of the Methods for Determining a Compensation to Be Paid to a Patent Holder When Deciding on the Use of an Invention, a Utility Model, or an Industrial Design without His Consent, and of the Procedure for Its Payment was published on the official web portal of legal information.

Nikolay Bogdanov, Partner, Russian Patent Attorney, Counsel at Gorodissky & Partners, comments:

“In accordance with Article 1360 of the Civil Code, in the interests of national security, the Government may allow the use of an invention without the patent holder’s consent on condition of paying him a pro rata compensation.

At the end of last year, the Government exercised that right and, amidst the Covid-19 pandemic, allowed JSC Pharmasyntez to use inventions protected in Russia by the patents owned by Gilead, USA, to produce Remdesivir. The approval was granted for 1 year. At the same time, JSC Pharmasyntez was supposed to pay the patent holder a “pro rata compensation” as provided for in the said Article.

The version of the Article previously in effect was not clear as to what particular compensation should have been considered to be “pro rata,” but according to the mass media, JSC Pharmasyntez offered the patent holder 5 million rubles.

In May this year, a new version of Article 1360 became effective, which entitled the Government to approve the methods for calculating a compensation to the patent holder.

So now, on October 18, 2021, the Government approved these Methods. According to the Government, a “pro rata compensation” will be 0.5% of the revenues from producing and selling products made using the invention.

Recently, an order of the Government was issued to allocate more than 4 billion rubles to purchase Remdesivir. Supposing that all this money will go to JSC Pharmasyntez as the only entity allowed by the Government to produce Remdesivir using the Gilead’s inventions, the compensation to the patent holder for such use of the inventions without the patent holder’s consent should be 20 million rubles, not 5 million rubles offered by JSC Pharmasyntez”