The court said patent holders’ rights may be overridden if sanctions and high prices risk shortages of medicines for rare diseases.
Russia’s Constitutional Court has clarified the conditions under which courts may grant compulsory licenses for patented products, including imported medicines from jurisdictions Moscow considers “unfriendly.”
The ruling followed a review of the constitutionality of provisions in Article 1362 of the Civil Code, which allows compulsory licensing of inventions, utility models or industrial designs. The case was brought by Sanofi Russia and U.S. pharmaceutical company Vertex Pharmaceuticals Incorporated.
The court said strict adherence to the rights of patent holders who “categorically refuse to reasonably lower procurement prices for original medicines for rare diseases during the patent period” does not serve the interests of Russian society.
Vertex developed the original drug used to treat cystic fibrosis. In Russia, patients are entitled to receive the therapy free of charge, and the expensive medicine is purchased through centralized state procurement.
Since 2021, the drug has been supplied to Russia through a single distributor, Sanofi Russia, which manages Vertex’s exclusive rights to the patented product.
Several years after the drug was created, an Argentine company developed a cheaper generic version. When planning supplies to Russia, the medical research company MIC, its distributor, asked Vertex for a licensing agreement to use the U.S. company’s inventions. After failing to obtain consent, the company went to court seeking a compulsory license.
In its claim, MIC cited concerns about a possible partial or even complete halt to supplies due to sanctions, which could create a shortage of the drug on the Russian market, and also pointed to its “excessively high price.”
A lower court initially rejected the request, but an appeals court overturned the decision and ordered the license to be granted. Russia’s Intellectual Property Court and Supreme Court upheld that ruling, prompting Vertex to file a complaint with the Constitutional Court.
The applicants argued that Article 1362 — which allows companies to seek a compulsory license if a patent is insufficiently used and the rights holder refuses to sign a licensing agreement — violates the constitution.
According to Vertex, the provision creates a “systemic vulnerability” that allows generic manufacturers to bypass intellectual property protections by manipulating procurement data and licensing rules rather than competing through innovation and market demand.
“Such an approach undermines the institution of intellectual property and restrains further scientific development, including the search for effective treatments for cystic fibrosis and other rare diseases,”
Vertex said in its complaint.
After reviewing the case, the Constitutional Court ruled that the contested provisions do not contradict the Russian Constitution.
“Russian legislation, while recognizing the need to protect the intellectual rights of drug developers, also allows for their limitation in light of constitutionally significant public interests,”
the court said.
The court explained that compulsory licenses may be granted when necessary to eliminate a threat to society arising from shortages of products on the market. Evidence of abuse of patent rights aimed at preserving a dominant market position could indicate a lack of intention to supply the Russian market, it said.
The risk of supply dependency increases for Russia when suppliers are based in “unfriendly” jurisdictions that comply with sanctions against the country, the court added.
The ruling also states that refusal by a patent holder or distributor to supply products, systematic avoidance of procurement tenders, or willingness to supply only at very high prices — significantly exceeding potential generic alternatives — may be treated as non-use of a patent that leads to shortages.
When deciding such cases, courts should determine the scope of a compulsory license based on the actual needs of the Russian market and the licensee’s ability to manufacture and sell equivalent products without posing risks to consumers.
The Constitutional Court stressed that compulsory licensing is an exceptional and forced measure intended only to address shortages on the Russian market and does not strip patent holders of their intellectual property rights.
Such licenses may be revoked once the market is sufficiently supplied, provided there is no risk of renewed shortages and the patent holder is willing to provide the product in adequate volumes at a reasonable price.
