Part I
General Provisions

1. Any person who has made an invention which is susceptible of industrial application, or that person's successor in title, may, upon application, obtain a patent which gives the holder the exclusive right to exploit the invention commercially.

The principal innovations which are not considered to be inventions are those which concern exclusively:

(1) a discovery , scientific theory or mathematical method;

(2) an aesthetic creation;

(3) a scheme, rule or method for performing mental acts, for playing games or for doing business, or a program for a computer;

(4) the presentation of information.

Methods for surgical or therapeutic treatment or diagnostic methods practiced on humans or animals shall also not be regarded as inventions. This provision does not, however, prevent the granting of patents for products and equipment, including for substances and compositions of substances, for use in methods of this type.

A patent shall not be granted for:

(1) inventions the use of which would be contrary to morality or public order;

(2) plant or animal varieties or essentially biological processes for the production of plants or animals; patents may, however, be granted for microbiological processes and products resulting from such processes.

Part VI
Licensing, Transfer, etc.

45. If a patented invention is not worked to a reasonable extent in this country when three years have elapsed from the grant of the patent and four years have elapsed from the filing of the patent application, any person wishing to work the invention in this country may obtain a compulsory license to do so unless legitimate reasons are shown for the failure to work the invention.

Subject to reciprocity, the Minister of Industry may direct that, for the purposes of the first paragraph, working of the invention in another country shall be equivalent to working in this country .

46. The proprietor of a patent for an invention the exploitation of which is dependent on a patent held by another person may obtain a compulsory license to exploit the invention protected by the latter patent if it is deemed to be reasonable in view of the importance of the former invention or for other special reasons.

In the event of a compulsory license being granted to exploit a patented invention in pursuance of the first paragraph, the proprietor of that invention may also obtain a compulsory license to exploit the other invention unless special circumstances make this undesirable.

47. When required by important public interests, any person who wishes to exploit commercially an invention for which another person holds a patent may obtain a compulsory license to do so.

48. Any person who, at the time a patent application was made available to the public, was commercially exploiting in this country the invention for which a patent ls applied for, may, if the application results in a patent, obtain a compulsory license to exploit the invention if very special circumstances make it desirable and he had no knowledge and could not reasonably have obtained any knowledge of the application. Such a right shall also, under similar conditions, be enjoyed by any person who had made substantial preparations for commercial exploitation of the invention in this country .

A compulsory license in accordance with the first paragraph may include the time preceding the grant of the patent.

49. A compulsory license may only be granted to a person who may be presumed to be able to exploit the invention in a reasonable and acceptable way and in lccordance with the terms of the license.

A compulsory license shall not prevent the proprietor of the patent from exploiting the invention himself or from granting licenses to others. The compulsory license may only be transferred to others together with the business in which it is exploited or in which the exploitation was Intended.

50. The Reykjavik City Court shall decide whether a compulsory license shall be granted, to what extent the Invention may be exploited, the amount of the compensation to be paid to the proprietor and other terms of the compulsory license. If circumstances change significantly, the Court may, at the request of either party, cancel the license or lay down new terms for the license.

70. In a case of extreme necessity in the event of an emergency due to natural disaster, war or imminent risk of war, the Minister of Industry may direct that all rights for the exploitation of an invention devolve on the State or any other party that the Minister directs. Full compensation shall be payable for such transfer but, if no agreement can be reached on the amount of compensation, a decision shall be made according to criteria laid down in Law No. 11/1973.

If, on the grounds referred to in the first paragraph, the right to exploit an invention is transferred to a party other than the State and if the said party fails to pay the appropriate compensation, the State is obliged, on demand of the party who has the right to compensation, to pay the amount without delay.