The European Commission launched on 18 February 2013 a public consultation on a proposal for revised competition rules for technology transfer agreements.
The current legal framework on the competition rules applying to technology transfer agreements consists of two instruments. The first one is the Block Exemption Regulation creating a “safe harbour” for certain unproblematic agreements which are considered compatible with EU rules. The second legal instrument is the Commission Guidelines providing guidance on the assessment of technology transfer agreements under EU competition rules. The companies have to assess their agreement on the basis of those Guidelines in order to establish if they are anticompetitive and could infringe Article 101 of the Treaty on the Functioning of the European Union (hereinafter “TFEU”).
In December 2011, the Commission launched a first public consultation on the subject. In light of the responses to this consultation, the Commission is considering some changes to the current framework and is submitting its proposal for comments from interested parties.
The proposal aims to update the current framework in order to strengthen incentives for research and innovation, to facilitate the diffusion of intellectual property and to stimulate competition.
The Commission recognized that licensing is vital for economic development and consumer welfare. Indeed, it allows the dissemination of innovation and helps companies to integrate and use complementary technologies. However, licensing agreements may also have a negative effect on competition when it is used by two competitors to divide markets between them or when an important licensor tries to exclude competing technologies from the market.
For the Technology Transfer Block Exemption, the Commission intends to include a new test to decide whether certain provisions surrounding a technology transfer agreement, in particular concerning purchases of material or equipment from a licensor or the use of the licensor trademark, are exempted from Article 101 TFEU along with the technology transfer agreement itself. It will look at whether the provisions are directly and exclusively related to what the licensee produces with the licence technology.
The new block exemption will lower the market share threshold for certain licensing agreements between non-competitors to 20%.
The passive sales restrictions between licensees will no longer be covered by the “safe harbour” of the Technology Transfer Block Exemption. It will contain a list of so-called hardcore restrictions or practices that are considered so serious that they can never be automatically exempted.
All exclusive grant-backs which are a provision whereby the licensee is obliged to license back to the licensor on an exclusive basis and not even use itself its own improvements to the licence technology will also fall outside the “safe harbour” of the Technology Transfer Block Exemption. They will therefore require an individual assessment.
Furthermore, the Commission proposes to exclude the termination clauses from the “safe harbour” of the Technology Transfer Block Exemption.
The Guidelines for technology transfer agreements will be revised in order to reflect the changes in the Technology Transfer Block Exemption as described above.
Furthermore, the Commission intends to modify the section on settlement agreements and the one on technology pools. The draft Guidelines intend to clarify that settlement agreements involving a licence may infringe Article 101 TFEU, for example where a licensee agrees against a value transfer from the licensor to more restrictive terms than the licensee would have accepted solely on the strength of the licensor’s technology (“pay-for-delay” agreement or “reverse payment patent settlement”). The Commission also questions clauses in settlement agreements which state that patents must not be challenged in the future.
Concerning the section on technology pools, the Commission will take into consideration as an important factor whether only complementary technology (i.e. non-competing technology) is included in the pool in order to assess whether technology pools (patent pools) have a positive impact on competition.
The future Guidelines will aim at clarifying the definition of essentiality, covering not only essentiality in relation to producing a particular product but also in relation to complying with a standard.
The licensing agreement between a pool and third parties will in principle fall outside the scope of the Technology Transfer Block Exemption. Finally, the section on pools will provide a comprehensive “safe harbour” for pools covering the creation of the pool and its subsequent licensing out.
The European Commission invites all interested parties that are citizens, public authorities, organizations and in particular undertakings to express their opinion on both the draft regulation and Guidelines before 17 May 2013.
The new legal framework will have to be adopted before April 2014.
