May a manufacturer obtain permission to exploit an Israeli patent when its owner refuses to license the technology or demands conditions that the manufacturer regards as unreasonable? In limited circumstances, yes. But refusal alone is not enough. Sections 117–128 of Israel’s Patents Law, 5727-1967, provide a specialized mechanism under which the Registrar of Patents may grant a compulsory licence where the patent monopoly is being abused, subject to statutory conditions and the public interest.
A compulsory licence does not cancel the patent, transfer ownership or ordinarily provide a royalty-free right. Nor does merely filing an application authorize the applicant to manufacture or sell infringing products. For foreign patent owners and companies seeking to enter Israel, the important questions are the basis for intervention, the evidence needed, the relevant period after patent grant and the terms that the Registrar may impose.
When Can the Israeli Registrar Grant a Compulsory Patent Licence?
Section 117(a) allows the Registrar to grant a licence for exploiting a patented invention where satisfied that the patent proprietor is abusing the monopoly conferred by the patent. Section 119 identifies two principal circumstances.
One concerns failure to satisfy demand for the patented product in Israel on reasonable terms. The other concerns conditions imposed by the patentee for supplying the product or licensing its manufacture or use that are unfair in the circumstances, disregard the public interest and arise primarily from the patent monopoly. The patentee may present a reasonable justification for the situation.
Not every high price or unsuccessful licence negotiation demonstrates abuse. The inquiry concerns market supply, the conditions actually imposed and the relationship between those conditions and the exclusive patent right. The fact that the product is manufactured abroad does not by itself establish a failure to supply the Israeli market; imports may be relevant.
In Strauss Water v. Dubin, Tel Aviv District Court, Civil Case 16853-04-17 (28 August 2019), a counterclaim effectively seeking to compel the patentee to supply water filters was struck out. Where the real remedy sought is a compulsory patent licence, the special statutory procedure before the Registrar cannot ordinarily be bypassed by framing the demand as an ordinary commercial counterclaim.
The Three-Year and Four-Year Waiting Periods
Section 117(b) establishes an express threshold: a compulsory licence request under this provision cannot be considered until the later of three years from patent grant or four years from filing of the patent application. Both dates must be calculated.
For example, an application filed in January 2020 and granted in January 2024 would not reach the threshold until January 2027, three years after grant, even though four years from filing passed in January 2024.
Passing this threshold does not create entitlement to a licence. The applicant must still establish abuse and persuade the Registrar that the requested remedy is justified. The separate route for dependent later patents under Section 121 has its own conditions.
Requesting Information About Exploitation Under Section 118
A potential applicant may not know whether insufficient Israeli supply results from restricted distribution, manufacturing constraints or some other reason. After the statutory period, Section 118 permits the Registrar to require the patentee to report in writing on exploitation in Israel by manufacture or import, the scale of supply and the place of manufacture.
A request to invoke this mechanism is submitted under Regulation 112 of the Patents Regulations, with the prescribed form and fee. The patentee must generally respond within 60 days of the requirement or an authorized extension. Under Section 118(c), failure to respond in time is treated as an admission of abuse of the monopoly.
These information provisions are not an unrestricted right to inspect a competitor’s commercial books. Regulation 115 protects specified trade secrets from disclosure to the applicant, and Regulation 116 limits the evidentiary use of material provided under the information mechanism.
What Must Be Included in a Compulsory-Licence Application?
Regulation 117 requires a written application to the Registrar, payment of the applicable fee and supporting evidence. The application should identify the patent, specify the alleged statutory ground, explain the circumstances justifying compulsory exploitation and show that the applicant has a genuine capacity to exploit the invention.
Evidence may cover Israeli demand and supply, offers and licensing correspondence, production or import capabilities, necessary regulatory authorizations, proposed output and the time needed to make the product available. An applicant who establishes a supply problem but cannot explain how it could remedy that problem may face difficulty under Section 122.
Where licensing terms are alleged to be unfair, the relevant proposals and their market effects should be identified. Section 117 does not establish a universal minimum period of unsuccessful negotiations as an independent condition to filing. Prior negotiations can nevertheless be relevant evidence.
Publication, Third-Party Participation and the Patent Owner’s Response
Under Section 124, notice of the application is published so that persons with an interest in the matter or who may be affected by a licence have an opportunity to join the proceedings.
Regulations 118–119 address access to the application and participation. A person seeking to join generally must do so within two months after publication, with supporting material under the applicable rules. Registered licensees also have procedural rights concerning service of documents.
Under Regulation 120, the patent proprietor has three months from the filing of the application to submit pleadings and evidence. Failure to do so is treated by the regulation as consent to grant of the licence. The subsequent stages borrow procedures used in patent oppositions, with the necessary modifications.
Both applicants and patent holders should treat these deadlines as procedural requirements with substantive practical consequences, not informal negotiation periods.
What Does the Registrar Consider Under Section 122?
The public interest is central. Section 122 calls for consideration of the applicant’s ability to remedy the alleged abuse, the needs of the public, reasonable remuneration to the patentee, the interests of existing licensees and other persons exploiting the invention, the nature of the invention, and steps taken by the owner toward its exploitation in Israel.
Even where an actual shortage is established, the proposed licence must be assessed for its likely effect. A manufacturer with no realistic ability to supply the product may not provide an effective remedy. Conversely, the patent holder can present evidence of manufacturing and imports, commercial supply, regulatory obstacles, existing commitments and good-faith efforts to expand availability.
The procedure is not intended to punish the patentee for holding an exclusive right. It is designed to address a statutorily defined misuse of that exclusivity while safeguarding reasonable remuneration.
Scope, Remuneration and Conditions of a Compulsory Licence
Section 123 primarily directs compulsory licensing to supply the domestic Israeli market. Under Section 126, the licence is non-exclusive, and the Registrar determines its terms, including royalties or other consideration owed to the patent proprietor.
Section 125 generally provides that the licence enters into force 30 days after the Registrar’s decision, or on a later date specified by the Registrar. Where an appeal is filed, the court may suspend its entry into force or impose appropriate conditions.
Section 126A restricts assignment of the compulsory licence separately from the part of the business or goodwill connected with its exploitation. The restrictions matter when a licensee changes ownership, transfers a manufacturing operation or sells a product line. A compulsory licence should not be treated as a freely tradeable asset independent of the authorized business.
Does Applying for a Compulsory Licence Prevent an Infringement Claim?
No. Applying for a compulsory licence does not itself authorize exploitation and cannot be assumed to legalize earlier infringing sales retrospectively. Evidence of technical capability may be provided through plant records, staff, equipment and commercial preparations rather than by commencing unauthorized production.
In Pfizer v. Unipharm, Israeli Supreme Court, Civil Appeal 7247/19 (15 March 2022), the Court discussed the statutory treatment of abuse of patent rights, including Sections 117 and 119, and rejected automatic transplantation of the American patent misuse doctrine into Israeli infringement litigation. That case did not grant a compulsory licence or legalize patent infringement.
A party considering market entry should separately investigate possible infringement and any available declaratory relief. See Declaratory Judgments of Patent Non-Infringement in Israel.
Dependent Patents: The Separate Section 121 Route
Section 121 addresses a later patent that cannot be exploited without infringing an earlier patent. Under the statutory conditions, the Registrar may permit the later patentee to use the earlier patented invention to the necessary extent where the later invention represents an important technical advance of considerable economic significance over the earlier one.
This is not simply a licence for anyone who owns a second patent. It is a targeted mechanism for dependent inventions with the specified degree of advancement. Where the inventions serve the same purpose, the Law includes conditions concerning a reciprocal licence to the earlier patentee upon request.
Amending or Revoking a Compulsory Licence
Under Section 127, the patent proprietor may request reconsideration where the circumstances that justified grant have changed or the licensee has breached the licence terms. Variation or cancellation of the licence should not be confused with cancellation of the patent itself.
Section 129 provides a separate exceptional mechanism for cancellation of a patent after compulsory licensing has not removed the abuse, subject to additional conditions including a two-year period following the first compulsory licence for that patent.
The appropriate appeal or later application depends on whether the challenge concerns the original grant, entry into force, licensee conduct or new facts affecting the need for continued licensed use.
Compulsory Licensing Versus Government Use of Patents
A compulsory licence under Sections 117–128 concerns a defined abuse of the patent monopoly and is granted through proceedings before the Registrar. Government authorization under Sections 104–105 concerns exploitation for national defense or essential supplies and services; the associated remuneration is governed by Section 108 and may be determined by the Compensation and Royalties Committee.
These routes have different purposes, decision-makers and conditions. Neither should be described as an unrestricted power to exploit private patents without compensation. See Government Use of Patents in Israel: Royalties and Compensation.
The relevant legal framework is Sections 116–129 of the Patents Law and Regulations 112–122 of the Patents Regulations. Further analysis appears in Yonatan Drori, Patent Law (Hebrew, 2023), Chapter 14. For contentious proceedings and coordination with international counsel, see Patent Litigation in Israel.
