Intellectual Property Licences and Technology Transfer

The Author: partner at McDermott, Will & Emery. Summary: examines new changes by the European Commission (EC) to the law governing the enforceability of intellectual property licences in Europe. Agreements which contain the grant of a licence by one party to another of intellectual property rights (IPRs) are subject to European competition (anti-trust) laws. In particular, many agreements containing licences of patent rights and rights in confidential information and technical know-how are caught by Article 81(1) of the EC Treaty, which prohibits agreements between undertakings which prevent, restrict or distort competition in the Common Market. However, because licences of IPRs usually facilitate the transfer of technology from one undertaking to another, and the licensor and licensee will often operate at different levels of the market, many licences of IPRs may benefit from an automatic exemption under Article 81(3) of the EC Treaty. Contents: Introduction - IPRs; exploitation of IPRs (licences and other agreements); the impact of competition law; Article 81(1) of the EC Treaty; Article 81(3) of the EC Treaty (individual exemption; block exemption; Regulation (EC) No.;240/96) Modernisation - the Modernisation Regulation (EC) No. 1/2003 (abolition of the notification procedure); an economics based approach; market power (product markets; geographic markets; methodologies) The new Technology Transfer Block Exemption Regulation - competitors or non-competitors (flow diagram); technology markets; agreements between non-competitors; agreements between competitors; transitional arrangements Hardcore restrictions - improvements (grant back of exclusive licence; assignment); no-challenge clauses; limiting of output; limiting of licensee's ability to exploit its own technology Article 81(3) Challenging the legality of licence agreements - in the Courts; complaints to the European Commission Conclusions - risk assessment