LEGAL UPDATE
Legal update on Technology The European Commission has adopted a new Technology Transfer Block Exemption Regulation (TTBER) and revised guidelines on the application of Article 101 of the Treaty on the Functioning of the European Union (TFEU) to technology transfer agreements. By Thomas Bjørn, Solicitor, Royds in London
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n its press release, the Commission refers to the new rules as “incremental improvements to the current regime” and it is correct that there are no fundamental changes to the existing system. The new rules are, however, less permissive, particularly in relation to the restrictions on passive sales, exclusive grant back arrangements and termination upon challenge provisions and they are likely to increase the overall burden of self assessment on contracting undertakings.
The main substantive changes are as follows: • The TTBER contains a number of new or modified definitions for technology rights, technology transfer agreements, competing undertakings, selective distribution systems and exclusive licences. • Article 2 of the TTBER additionally provides that the safe harbour also apply to provisions in technology transfer agreements relating to the purchase of products or to the licensing of other IP, provided that such provisions are linked directly to the production or sale under the licensed technology. • In relation to agreements between non-competitors, restrictions on passive sales into territories or to customers remain strict - again subject to certain exceptions. It should be noted that the provision of the 2004 TTBER allowing such restrictions in respect of sales into territories assigned by the licensor to another licensee has been removed. • The “Excluded restrictions” now include any direct or indirect obligation on the licensee to grant an exclusive licence or to assign rights, in whole or in part, to the licensor or to a third party designated by the licensor in respect of its own improvements to, or its own new applications of, the licensed technology. • The “Excluded restrictions” now extend to termination upon challenge provisions in non-exclusive license agreements.
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They do, on the other hand, contain a number of clarifications and simplifications, both in relation to 2004 TTBER and in relation to the consultation draft which must be regarded as generally welcome.
Background It has always been acknowledged that technology licensing agreements can have an adverse impact on competition. A dominant licensor may seek to include
This means that provisions under which the licensor may terminate the agreement if the licensee challenges the validity of the licensed intellectual property will only benefit from block exemption in exclusive agreements. • The Guidelines set out the Commission’s view on the competitive effects of technology pools and settlement agreements. In respect of the latter, it is particularly worth noting that settlement agreements are described as legitimate instruments for settling a technology disputes
but that agreements which lead to a delayed or limited ability for a party to launch a product into the market, may be prohibited under Article 101.
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