On 21 March 2014, the European Commission published a revised Regulation on the application of Article 101(3) TFEU to categories of technology transfer agreements. The purpose of the revised Regulation is to update and replace the Technology Transfer Block Exemption Regulation 772/2004 ("TTBER") that is scheduled to expire on 30 April 2014. The Commission also published Guidelines on the application of Article 101 TFEU to technology transfer agreements (the "Guidelines").

Technology transfer agreements involve a licensed technology such as a patented invention, know-how or software for the production of goods and services. Such agreements can be concluded bilaterally or between several parties (e.g., patent pools), as well as between competitors and non-competitors. Competition rules are supposed to make sure that technology transfer agreements are pro-competitive and do not prevent innovation. The principal rules for these types of agreements are contained in: the TTBER and its accompanying Guidelines. The TTBER deals only with bilateral agreements whereas the Guidelines cover both bilateral and multiparty licensing agreements.

According to the Commission, the aim of the revised TTBER is to boost research and innovation, to facilitate the dissemination of intellectual property and to stimulate competition in the EU. The main changes include the following:

  • Explicit rule on which Block Exemption Regulation ("BER") applies – The TTBER will only apply if the R&D or Specialisation Agreement BERs are not applicable.
  • The market share thresholds remain the same – The market share thresholds under which the TTBER may apply remain at 20% for competitors and 30% for non-competitors.
  • New test for when purchase of raw materials or equipment is covered by the safe harbour of the TTBER – The safe harbour of the TTBER now only covers provisions that are directly related to the production or sale of the contract products which are produced with the licensed technology.
  • Passive sales restrictions between licensees are never exempted by the TTBER – The revised TTBER removes an exception to the passive sales restrictions, which previously protected a licensee in its exclusive territory during the first two years of an agreement with a competitor. Thus, while these restrictions no longer automatically benefit from an exemption under the revised TTBER, the Guidelines show that they can be valid on a case-by-case analysis if they are objectively necessary for the licensee to penetrate a new market.
  • The hardcore list for competitors has been simplified but there are no substantive changes.
  • All exclusive grant-back obligations fall outside the safe harbour of the TTBER - Exclusive grant-backs are provisions that oblige licensees to license back improvements to licensors on an exclusive basis, precluding the licensees from using their own improvements to the licensed technology. Whereas the current TTBER distinguishes between severable and non-severable improvements and excludes from the safe harbour exclusive grant-back obligations concerning severable improvements, all exclusive grant-backs will in the future fall outside the scope of the TTBER and will be subject to individual assessments.
  • Termination clauses fall outside the safe harbour of the TTBER - As with no-challenge clauses in the current TTBER, termination clauses (i.e., clauses that allow licensors to terminate the agreement if the licensee challenges the validity of the licensed technology) no longer benefit from the safe harbour of the TTBER and should be instead assessed individually.

In parallel, the Guidelines have been updated. Changes to the Guidelines mainly cover settlement agreements and technology pools. The section on settlement agreements clarifies that these may infringe Article 101 TFEU if they lead to a delayed or otherwise limited ability for the licensee to launch the product on any of the markets concerned (the so-called "pay-for-delay" agreements). The section on technology pools, (i) clarifies that the definition of "essentiality" covers not only essentiality in relation to producing a particular product, but also covers essentiality in relation to complying with a standard; (ii) indicates that the licensing agreements between a pool and third parties in principle fall outside of the scope of the TTBER and; (iii) provides a safe harbour for pools covering both the creation of the pool and its subsequent licensing.

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