EU Competition Law: European Commission Adopts New Technology Transfer Block Exemption Regulation and Guidelines

Sullivan & Cromwell LLP - April 1, 2014

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 (“Guidelines”) (collectively, the “TTBER and 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.  Agreements not falling within the block exemption are (i) subject to a case-by-case analysis of their competitive effects using the analytical methodology set forth in the Guidelines or (ii) presumed to be a violation if they fall within the “hardcore” restrictive provisions identified in the TTBER.  Following a public consultation launched on February 20, 2013, the European Commission adopted the new TTBER and Guidelines on March 21, 2014.  The new TTBER and Guidelines will replace the current TTBER and Guidelines when the current Guidelines expire on April 30, 2014.

In sum,  the new TTBER and Guidelines subject additional licensing agreements to EU review and limit the types of agreements that had enjoyed safe-harbor protection under the existing rules.  Among other changes, as of May 1 the TTBER safe harbors will no longer apply to:

  • Exclusive grant-back or assignment clauses for improvements to licensed technology; and
  • Provisions that allow the licensor to terminate the license if the licensee challenges the validity of the licensed intellectual property right, although licensors can terminate the exclusivity granted to the licensee in response to such a challenge without losing the protection of the TTBER.
In addition to explaining the TTBER changes, the new 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 around the world, in licensing and other uses of intellectual property in markets that are dependent on innovation and where patents and other intellectual property protections are of critical importance.

The new TTBER and Guidelines come into force on May 1, 2014.  There is a one-year transitional period for agreements in force on April 30, 2014 that satisfy the conditions set out in the current TTBER.