EU Competition Law Implications of Technology Licensing: European Commission Proposes Changes to Its Technology Transfer Block Exemption Regulation and GuidelinesSullivan & Cromwell LLP - February 25, 2013
The principal rules of EU competition law relating to technology licensing are set out in the European Commission’s Technology Transfer Block Exemption Regulation (“TTBER”) and Guidelines on Technology Transfer Agreements (collectively, the “TTBER/Guidelines”). The TTBER provides a “block exemption” that shields certain types of agreements from EU antitrust scrutiny, while the Guidelines explain the TTBER and provide additional guidance on the EU competition law analysis of technology transfer agreements that do not fall within the scope of the TTBER. Practices not falling within the block exemption would be (i) subject to a case-by-case analysis by the Commission of the competitive effects of such practices using the analytical methodology set forth in the Guidelines or (ii) presumed to be a violation if such practices fell within the “hardcore” restrictive provisions identified in the TTBER. On February 20, 2013, the European Commission released for public comment proposed new TTBER/Guidelines to replace those currently in force when they expire on April 30, 2014.
The proposed revisions to the TTBER would, if enacted, subject additional licensing practices to EU review and limit the types of agreements that enjoy safe harbor protection under the existing rules. Among other changes, the TTBER exemption safe harbors would no longer apply to:
- Agreements containing exclusive grant-back clauses for improvements to licensed technology;
- Agreements that allow the licensor to terminate the license if the other party challenges the validity of the licensed intellectual property right; and
- In certain circumstances, agreements between non-competitors with a combined 20% market share in any relevant product or technology market.
In addition to explaining the proposed TTBER changes, the proposed Guidelines contain considerably expanded discussion regarding the EU competition law analysis of settlement agreements and technology pools, including the factors likely to make such agreements compliant with EU competition law. The additional guidance on settlements and pools reflects the European Commission’s increasing interest, echoed by other competition law enforcement authorities, to closely review licensing and other uses of intellectual property in markets that are increasingly dependent on innovation that has been granted patent and other protections.
The deadline for public comments on the proposed TTBER and Guidelines is May 17, 2013.