On March 21, 2014, the European Commission adopted a new package of rules for the assessment of technology transfer agreements (TTAs) under EU competition law. The package consists of: (1) an updated Block Exemption Regulation for TTAs (TTBER) substituting the previous TTBER adopted in 2004; and (2) new guidelines to reflect the changes in the TTBER, the most recent case law and developments on the assessment of TTAs that fall outside the TTBER. The main changes focus on the scope of the TTBER, patent pools, termination clauses, exclusive grant-back obligations and settlements.
TTAs are licensing agreements where the licensor authorizes one or more licensee(s) to exploit its patents, know-how, utility models, design rights and software copyrights for the production of goods and services.
The new recitals to the TTBER clarify that it is subsidiary to the application of the Research and Development block exemption (Reg. 1217/10) and to the Specialisation block exemption (Regulation 1218/10). It also states that agreements only for reproduction and distribution of software, rather than the licensing of a technology to produce, are more akin to distribution agreements as defined under the Vertical Agreements block exemptions (Reg. 330/10). On the other hand, the new TTBER also covers "vertical provisions" (e.g., purchase of inputs) contained in TTAs if such provisions are "directly and exclusively related to the production of the contract products," thus entailing that the value of the purchased inputs is immaterial. Agreements with patent pools have been completely excluded from the scope of the TTBER because they involve more than two parties, but the guidelines provide for a comprehensive safe harbour out of the TTBER to incentivise the creation of pro-competitive pools.
The list of "hardcore" clauses set out in the current TTBER is simplified but not changed in substance, save for removal of an exception relating to passive sales restrictions so that such restrictions are never block exempted under the new TTBER. Passive sales restrictions may nonetheless enjoy individual exemptions in particular cases as clarified in the new guidelines. In addition, all exclusive grant-back obligations will fall outside the automatic exemption provided by the TTBER and will require an individual assessment since the distinction between "severable" and "non-severable improvements" has been removed. The new TTBER also excludes from its safe harbour the clauses that allow the licensor in non-exclusive licensing agreements to terminate the agreement in case the other party challenges the validity of the licensed technology.
Finally, the new guidelines endorse the most recent case law on settlement agreements that imply "pay-for-delay" or "reverse payment" strategies, or that are based on patents granted through incorrect or misleading information. According to such case law, settlement agreements involving significant "value transfer" from the licensor to the licensee in exchange of a waiver from challenging a patent or for refraining from marketing a competing product may be deemed unlawful. Further, the guidelines clarify that a settlement on a patent dispute may be regarded as anticompetitive where the licensor knows, or could reasonably be expected to know, that the licensed technology does not meet the legal criteria to obtain IP protection.
The text of the new TTBER is available here and that of the new guidelines here.
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