European Union: Technology Transfer Agreements And EU Antitrust Law

The European Commission has adopted new rules on the application of the EU's antitrust regime to technology transfer agreements.

A founding principle of the European Union is to ensure freedom of movement – of goods, services, people and capital – among its member states. The EU's antitrust regime exists to ensure the removal of barriers to freedom of movement including, in particular, agreements that distort competition across the EU. For many years, the EU has relied on a series of "Block Exemptions" to permit, within certain parameters, certain frequently occurring types of agreements and behaviours that are generally felt to be acceptable in competition law terms.

One such Block Exemption, dealing with a broad range of agreements for the transfer of technology, has just been renewed and amended. Organisations based in the EU or doing business with the EU should be aware of the changes in what may – or may not – be allowed in technology-related agreements.

Arrangements that prevent, restrict or distort competition in the European Union are prohibited by Article 101 of the Treaty on the Functioning of the European Union (the "Treaty"). The European Commission, however, recognises that, despite this general prohibition, certain specific types of arrangement or agreement (e.g., technology transfer agreements, research & development agreements and distribution agreements) do not give rise to competition law concerns as long as they stay within certain bounds or safe harbours. These types of arrangements or agreements are, subject to certain conditions, "block exempted" from the application of Article 101 on the Treaty by a number of EU regulations, known as block exemption regulations.

On 21 March 2014, the European Commission adopted a new Technology Transfer Block Exemption Regulation (the "TTBER"). The new TTBER is accompanied by an updated version of the Commission's Guidelines on the application of the Treaty to technology transfer agreements (the "Guidelines").

The new TTBER will replace a prior block exemption regulation in force from 2004 until 30 April 2014. It will become effective on 1 May 2014, with a one year transition period to apply to agreements that were exempted under the previous regulation but which no longer meet the conditions of the new one. The new TTBER will last until 30 April 2026.

The new TTBER exempts agreements from the prohibition in Article 101 of the Treaty when one party authorises or licenses another party to use its technology for the production of goods or services and when those parties have limited market power. The accompanying Guidelines provide information for assessing compliance with Article 101 of the Treaty for agreements that are not exempted by the new TTBER.

Agreements covered by the TTBER include many types of technology licences, including, for example, both bilateral agreements and multi-party patent pools. An agreement is covered regardless of whether it's between competitors (so-called horizontal agreements) or non-competitors at different stages of the supply chain (so-called vertical agreements).


As was previously the case, the new TTBER doesn't give carte blanche to all types of technology transfer agreements. As explained below, some types of agreements are too awful for the EU to contemplate and must be individually considered for exemption. The same applies if the parties to the agreement are too big and powerful in their particular market.

The critical market share threshold is 20% for agreements between competitors and 30% where the parties are not competitors. The thresholds apply to both the market where the technology is licensed (upstream market) and the market where the product goods are sold (downstream market). If the parties' collective market shares are above those limits, they need to consider the application of the Article 101 prohibition without the assistance of the TTBER.

As well as size, colour is important in the world of block exemptions, although only monochrome. Previous versions of the TTBER have divided up certain types of agreement clauses into a "black list" and "grey list".

Black list clauses contain the most anti-competitive, hard-core restrictions – things like resale price maintenance, market sharing and restrictions on freedom to operate. If you include a hard-core, black-list restriction in your agreement, the block exemption doesn't apply and the agreement could be void on antitrust grounds.

If you include a grey-list clause in your agreement, the potential effect isn't as bad: the prohibition merely applies to the grey-list clause itself and not the entire agreement in which it resides.

The new TTBER is, broadly speaking, similar to its predecessors, and the black-list/grey-list split is retained – so it remains important in negotiating any technology transfer agreement affecting the EU market to be aware of what's covered by those lists. But the new TTBER still makes a number of key changes to the current regime.


The old TTBER previously allowed non-competing undertakings (e.g., a technology owner licensing a local licensee) to allocate to the licensee an exclusive territory or customer group and then to restrict passive sales by that licensee into another licensee's territory or customer group for a maximum of two years. That option has been removed from the new TTBER, which means that all passive sales restrictions are on the black-list, excluded from the safe harbour provided by the block exemption. This had been largely expected because it aligns the new TTBER with the existing Vertical Agreements Block Exemption.


Under the new TTBER, the grey list includes any direct or indirect obligation on the licensee to grant back to the licensor or its nominee an exclusive licence (or assign rights) to any improvements that the licensee makes to the licensed technology. Previously, there had been a distinction between severable and non-severable improvements (i.e., ones which could or could not be used with the original technology): only exclusive grant-back obligations relating to severable improvements didn't benefit from the block exemption. The new TTBER treats all exclusive grant-back obligations in the same manner and these clauses will now require individual assessment to ensure compliance with Article 101 of the Treaty.


The new grey list also covers any direct or indirect obligation on either party not to challenge the validity of intellectual property rights held in the EU by the other party. Previously, the Commission had allowed parties to include a right providing for termination of the agreement in the event of a challenge to the validity of a party's intellectual property rights – and this particular aspect has now changed, being permissible in exclusive licence agreements only. This change could have a significant impact on some forms of agreement because licensors and licensees in non-exclusive technology licences will now have to assess no-challenge clauses and accompanying termination rights under Article 101 of the Treaty and cannot rely on the fact that termination rights were previously protected by the block exemption.


The Commission accepts that, very often, settlement agreements in the context of technology disputes (e.g., about whether a patent is valid and infringed) are a legitimate way to find a mutually acceptable compromise to a legal dispute when the parties feel that the dispute has become too costly and time consuming.

However, the TTBER now clarifies that settlement agreements that lead to a delayed or otherwise limited ability for the licensee to launch a product in the EU may be prohibited by Article 101. If the parties to a settlement agreement are competitors and there is a significant value transfer from the licensor to the licensee, the Commission will be particularly attentive to the risk of market allocation or market sharing. This type of agreement is commonly referred to as ‟pay-for-delay" agreement or ‟reverse payment patent settlement" (where the term ‟reverse payment" refers to the fact that a payment is made in the opposite direction to that which would normally occur in a licensing agreement where a potential infringer/licensee pays the patent holder for the right to enter the market).

The TTBER Guidelines also clarify that even if a no-challenge clause in a settlement agreement in many cases would be seen as an inherent part of the agreement, it may be prohibited under specific circumstances, in particular in cases where the patent was granted following the provision of incorrect or misleading information. Scrutiny of such clauses may also be necessary if the licensor, besides licensing the technology rights, induces, financially or otherwise, the licensee to agree not to challenge the validity of the technology rights or if the technology rights are a necessary input for the licensee's production.


Agreements establishing technology pools are not covered by the new TTBER and are thus subject to a case-by-case assessment under the Article 101 prohibition. The Commission recognises that such pools can have both pro-competitive and anti-competitive effects, and that a range of specific factors affect the antitrust treatment of technology pools.

The Commission's Guidelines note that the creation and operation of a technology pool will typically fall outside the Article 101 prohibition if all of the following conditions are fulfilled:

  • participation in the pool is open to all interested rights owners;
  • sufficient safeguards are adopted to ensure that only essential technologies (which therefore necessarily are also complements) are pooled;
  • sufficient safeguards are adopted to restrict the exchange of sensitive information to a level which is necessary to create and operate the pool;
  • the pooled technologies are in-licensed into the pool on a non-exclusive basis;
  • the pooled technologies are out-licensed on fair, reasonable and non-discriminatory (FRAND) terms;
  • the parties contributing technology to the pool and any licensees are free to challenge the validity and essentiality of the pooled technologies; and
  • the parties contributing technology to the pool and the licensees are free to develop competing products and technologies.

A technology pool will generally need to be individually assessed for compliance with Article 101 of the Treaty, but the Commission's comments indicate the parameters within such an assessment can be made.


Technology licensing sometimes occurs in the context of other categories of agreements. The TTBER clarifies the interaction with other block exemptions. So, the new TTBER will also not apply to:

  • specialisation agreements or research & development agreements: these are covered by other block exemptions;
  • agreements for the mere reproduction and distribution of software copyright protected products: the production of copies of software for the purposes of selling those copies is not considered to be "production" for the purposes of the TTBER. In the Commission's view, these types of agreements are more akin to distribution agreements and should be assessed under the Vertical Agreements Block Exemption.

It is helpful that the Commission has clarified the interaction between Article 101 of the Treaty and technology pools, and that the new TTBER will not apply to specialisation agreements, research & development agreements or software distribution and resale. What is more concerning, however, is how the changes to the regime applicable to exclusive grant-back clauses, no-challenge clauses and accompanying termination rights will impact licensing. These changes will increase the burden on parties by requiring them to perform an individual assessment when they wish to include these types of provision in a licence agreement in circumstances where the licence agreement would otherwise benefit from the terms of the new TTBER. It may well be that these types of clauses will no longer be included in licence agreements affecting the EU market, and that the new TTBER will be used as a reason for licensees refusing agreement to these types of clauses.

Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morrison & Foerster LLP. All rights reserved

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.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
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