Antitrust: Commission adopts revised competition regime for technology transfer agreements
24 Mar 2014 04:13 PM
The European Commission has
adopted new rules for the assessment of technology transfer agreements under EU
antitrust rules. The purpose of such agreements is to enable companies to
license the use of patents, know-how or software held by another company for
the production of goods and services. The revised rules facilitate such sharing
of intellectual property, including through patent pools, and provide clearer
guidance on licensing agreements that stimulate competition. At the same time
they aim to strengthen incentives for research and innovation. See also MEMO/14/208
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Licensing helps to spread
innovation and allows companies to offer new products and services. It also
strengthens incentives for research and development by creating additional
revenue streams to recoup costs. Licensing therefore plays an important part in
economic growth and consumer welfare. However, it can also be used to harm
competition, for instance if two competitors in a licensing agreement divide
markets between them instead of competing with each other. Another example
would be a licensing agreement that excludes the use of competing technologies
in the market. These and other anticompetitive agreements are prohibited by
Article 101 of the Treaty on the Functioning of the European Union (TFEU).
The regime provides better
guidance to firms on how to license in ways that stimulate innovation and
preserve a level playing field in the Single Market. It consists of the
Technology Transfer Block Exemption Regulation (TTBER), which exempts certain
licensing agreements from antitrust rules, and the Technology Transfer
Guidelines, which provide further guidance on the application of the
rules.
The main features of the new
rules are the following:
-
The revised regime continues to
reflect that licensing is in most cases pro-competitive. The Commission has
made incremental improvements to the current regime, which overall received
positive feedback from stakeholders in the two public
consultations.
-
New guidance on "patent
pools": Patent pools can give companies cheaper and easier access to
necessary intellectual property rights, such as standard essential patents, by
establishing a one-stop-shop. Recognising the often pro-competitive nature of
patent pools, the creation of and licensing from patent pools now benefits from
a safe harbour in the Guidelines.
-
A more prudent approach on
clauses that could harm competition and innovation: Certain types of clauses
are no longer automatically exempted from antitrust rules but have to be
assessed case-by-case. These are clauses which allow the licensor to terminate
a non-exclusive agreement if the licensee challenges the validity of the
intellectual property rights, and clauses that force a licensee to license any
improvements it makes to the licensed technology to the licensor on an
exclusive basis.
-
The Guidelines also give
guidance on settlement agreements in light of the Commission's recent
experience.
The adopted texts can be found
at: http://ec.europa.eu/competition/antitrust/legislation/transfer.h
tml#TTBER_and_guidelines
Background
The regime consists of two
instruments. First, the Technology Transfer Block Exemption Regulation (TTBER)
creates a safe harbour for licensing agreements concluded between companies
that have limited market power and that respect certain conditions set out in
the TTBER. Such agreements are deemed to have no anticompetitive effect or, if
they do, the positive effects outweigh the negative ones. Second, the
Technology Transfer Guidelines provide guidance on the application of the TTBER
as well as on the application of EU competition law to technology transfer
agreements that fall outside the safe harbour of the TTBER.
In December 2011, the Commission
launched a first public consultation on the current regime (see MEX/11/1206).
Replies, mainly from law firms, law and industry associations, but also from
several companies and citizens, are available here. A majority considered that the present system is
useful and an important tool for the industry. Many respondents made
suggestions for incremental improvements, in light of which the Commission
proposed a revised draft in early 2013 for consultation (see MEMO/13/120).
The replies welcomed the Commission's proposal to keep the overall
structure of the regime as well as the clarifications concerning the scope. On
substance, most of the submissions focused on the proposed changes concerning
market share thresholds, termination clauses, exclusive grant-back obligations
and patent pools. They are available here.