Last spring, the Commission of the European Union issued new regulations and guidelines on the application of EU antitrust law to technology transfer agreements (Commission Regulation No. 772/2004 of 27 April 2004). For the most part, EU antitrust law (or competition law, as it is called) is stricter than the American version. Consequently, many agreements and ventures that would be uncontroversial in this country have come under the scrutiny of EU antitrust authorities. The purpose of the new regulations is to expand a "block exemption" from antitrust liability for technology transfer agreements. The result is that the parties to the most common types of patent, copyright and know-how (trade secret, in American terminology) licenses can proceed without fear of running afoul of EU antitrust law.
The basic operating principle is that antitrust restrictions "shall not apply to technology transfer agreements between two undertakings [parties] permitting the production of contract products." In other words, in most cases two companies may agree to license intellectual property for use in making a specified product, without fear that the restrictions that are customary in license agreements will be deemed illegal restraints of trade.
The apparent simplicity of the operating principle is deceptive, however, as the regulation has numerous exceptions. Some pertain to the market power of the contracting E-business Legal Article January 25, 2005 parties, denying the exemption to parties with substantial market shares. Others forbid certain kinds of license restrictions, including resale price controls and many kinds of customer and market allocations. Overall, while the regulation should greatly simplify life for American companies doing business in Europe, it should not be taken as a blank check.
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