UK: Major Changes In The Pipeline For EU Rules On Technology Licensing

Last Updated: 27 February 2013
Article by Sarah Byrt and Gillian Sproul

Keywords: technology licensing, anti-trust rules, public consultation, EU Technology Transfer Block Exemption Regulation

The European Commission has moved a step closer to adopting tougher anti-trust rules on technology licensing and has launched a public consultation on these. Industry has just under three months from now to make its views heard.

The current "safe harbour" rules aimed primarily at patent and know-how licences, contained in the EU Technology Transfer Block Exemption Regulation, expire on 30 April 2014 after 10 years in place. So the Commission consulted on new rules in December 2011 and responses to that consultation gave rise to a proposal for a new Regulation and revised explanatory Commission guidelines, issued on 20 February 2013. The deadline for comments on the proposal, which sets out some significant changes to the current regime, is 17 May 2013.

The old regime will continue after it expires to protect most pre-existing agreements that complied with it. Any new law based on the 20 February proposal will apply to agreements concluded after it comes into effect.

The key changes

The current Regulation confers on bipartite technology licences an automatic exemption from the EU prohibition on anti-competitive agreements, as long as they meet certain conditions. If it were to go through, the new proposal would preserve the principle of automatic exemption, but would make a number of changes.

First of all, the exemption would apply even to technology licences containing other elements, such as obligations to buy raw materials or equipment from the rights owner, that are directly and exclusively related to the products the licensee makes with the licensed technology. This is the case even if those other elements are more valuable than the licensed technology – good news for industry, since this would extend the scope of the safe harbour.

However, most of the other changes will restrict that scope and so open licences to a greater risk of being found anti-competitive and, potentially, unenforceable in their entirety.

  • The current Regulation applies only where the parties' market shares are below certain limits – 20% if they are competitors, 30% if they are not. The proposal is that the 20% threshold would now also apply where the parties are not competitors, but the licensee owns technology that it uses in-house only and that is a substitute for the technology being licensed to it. The rationale here is that allowing the safe harbour to apply up to a 30% licensor market share could result in competition being squeezed out where the licensee acquires exclusive access to the rights being licensed, as well as keeping its own technology to itself.
  • The proposal clarifies the basis for calculating the licensor's share of a technology market. The current Regulation is silent on this, leaving it to the guidelines to set out alternative approaches. Adoption of the proposal would mean a single approach –using sales data for the products produced by the licensor and all its licensees in the relevant geographic catchment area.
  • A further key change, likely to concern particularly licensees expected to expend significant effort in developing the licensed technology, relates to passive sales. These are unsolicited sales made to customers outside a licensee's allotted territory – sales made "passively" in response to an order, rather than "actively" through marketing efforts in that territory. The current Regulation is out of step with other safe harbour rules, as it protects a licensee from passive sales into its territory by other licensees, for the first two years of the licensee's sales. That two-year period would be removed so that passive sales would have to be allowed from day one of the licence, unless restricting them could be justified as objectively necessary for the relevant licensee to penetrate a new market. If not, any ban on passive sales would be treated as a "hardcore" restriction of competition, taking the entire licence outside the safe harbour.

In addition, two well-used ways of legitimately getting around anti-trust restrictions would be removed. The consequences of retaining them would be less drastic than for passive sales bans - they would not be treated as hardcore, so that the remainder of the agreement would continue to benefit from automatic exemption, but they would be treated as unenforceable, unless they could be justified under the general EU rules on exemption, which need to be applied on a case-by-case basis. They are as follows:

  • Any provision entitling the licensor to terminate the licence if its licensee challenges the IP in question within the EU (e.g. if the licensee brings a revocation action against a licensed patent) would fall outside the safe harbour. It is not possible to ban the licensee outright from attacking the IP (using "no challenge clauses") but a common way around this limitation has been to terminate the licence, so that the licensee is then in the same position as the rest of the world – it must take the risk that its attack fails, leaving it without the licence which it needs. This escape route would disappear.
  • Currently, a licensor cannot insist on owning improvements to its IP which the licensee makes, but it can insist on these being exclusively licensed back to it (so achieving a similar effect) where those improvements are "non-severable" – meaning that the improvements cannot be used without also infringing the underlying patent, or disclosing the underlying know-how. This carve-out from the anti-trust rules is also set to disappear from the safe harbour, so that at most, a licensor looking to bring all its licence terms within the scope of the exemption could require only a non-exclusive licence of improvements, leaving the licensee free to exploit them.

Settlement agreements and technology pools

Finally, the proposal would also amend the guidelines accompanying the Regulation, in particular in relation to settlement agreements and to technology pools (such as patent pools between several companies).

Whilst settlement agreements can often be pro-competitive, the draft revised guidelines note that "pay for delay" clauses, and others where a licensee takes payment in exchange for more restrictive settlement terms, might be anti-competitive. The same applies to settlements involving cross-licensing of IP between competitors and no-challenge clauses (mentioned above).

Similarly, technology pools can be pro- or anti-competitive. For a pool to be treated as pro-competitive, the technology in it is required to be complementary and the guidelines, if amended as proposed, would clarify the meaning of "complementary". They would also set out the conditions under which both the creation of a pool and licensing by the pool to third parties would benefit from exemption.

Next steps

We will offer further insights into the proposed new rules as the process moves forward. We are happy to assist those wishing to make submissions. Official information can be found at the links below.


Responses to the December 2012 consultation can be found here:

The new proposal can be found here:

Originally published February 21, 2013

Learn more about our Intellectual Property and Antitrust & Competition Practices.

Visit us at

Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe – Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

© Copyright 2013. The Mayer Brown Practices. All rights reserved.

This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions