diff --git a/.gitignore b/.gitignore
index 3ad036a..ebf9afa 100644
--- a/.gitignore
+++ b/.gitignore
@@ -84,3 +84,4 @@
 /setuptools-35.0.2.zip
 /setuptools-36.0.1.zip
 /setuptools-36.2.0.zip
+/setuptools-36.5.0.zip
diff --git a/python-setuptools.spec b/python-setuptools.spec
index 4918f08..4eec648 100644
--- a/python-setuptools.spec
+++ b/python-setuptools.spec
@@ -29,8 +29,8 @@
 %endif
 
 Name:           python-setuptools
-Version:        36.2.0
-Release:        4%{?dist}
+Version:        36.5.0
+Release:        1%{?dist}
 Summary:        Easily build and distribute Python packages
 
 Group:          Applications/System
@@ -50,11 +50,13 @@ BuildRequires:  python2-devel
 BuildRequires:  python2-pip
 BuildRequires:  python2-wheel
 %endif # without bootstrap
-%if %{with test}
+%if %{with tests}
 BuildRequires:  python2-pip
 BuildRequires:  python2-pytest
 BuildRequires:  python2-mock
 BuildRequires:  python2-backports-unittest_mock
+BuildRequires:  python2-pytest-fixture-config
+BuildRequires:  python2-pytest-virtualenv
 %endif # with tests
 %endif # with python2
 
@@ -64,6 +66,8 @@ BuildRequires:  python3-devel
 BuildRequires:  python3-pip
 BuildRequires:  python3-pytest
 BuildRequires:  python3-mock
+BuildRequires:  python3-pytest-fixture-config
+BuildRequires:  python3-pytest-virtualenv
 %endif # with tests
 %if %{without bootstrap}
 BuildRequires:  python3-pip
@@ -211,11 +215,12 @@ rm -r docs/{Makefile,conf.py,_*}
 %if %{with tests}
 %check
 %if %{with python2}
-#LANG=en_US.utf8 PYTHONPATH=$(pwd) py.test
+# see https://github.com/pypa/setuptools/issues/1170 for PYTHONDONTWRITEBYTECODE
+PYTHONDONTWRITEBYTECODE=1 PYTHONPATH=$(pwd) py.test-%{python2_version}
 %endif # with python2
 
 %if %{with python3}
-LANG=en_US.utf8 PYTHONPATH=$(pwd) py.test-%{python3_version}
+PYTHONDONTWRITEBYTECODE=1 PYTHONPATH=$(pwd) py.test-%{python3_version}
 %endif # with python3
 %endif # with tests
 
@@ -241,6 +246,9 @@ LANG=en_US.utf8 PYTHONPATH=$(pwd) py.test-%{python3_version}
 %endif # with python3
 
 %changelog
+* Tue Nov 21 2017 Miro Hrončok <mhroncok@redhat.com> - 36.5.0-1
+- Update to 36.5.0 (related to #1474126)
+
 * Wed Aug 09 2017 Tomas Orsava <torsava@redhat.com> - 36.2.0-4
 - Add Patch 0 that fixes a test suite failure on Python 3 in absence of
   the Python 2 version of pip
diff --git a/sources b/sources
index 7b96f5e..02e5f07 100644
--- a/sources
+++ b/sources
@@ -1 +1 @@
-SHA512 (setuptools-36.2.0.zip) = ef199e2140eb32ec3dc224462c408a923b3f7756d39e49b12be5446f109b970513ac17ba9727de5a4e217e04f1a7d62b59065f25f777b28a137adba2cc334136
+SHA512 (setuptools-36.5.0.zip) = e61c2f9ee640bf5dd8ab7c7a7c29667d91aa2498a7b027e387493ad7bcc9b56927e6fa63cdb4e083333c57eb355a670ba3df861ed5f8447b216fef0bc77c8b43