The European Commission published some 114 submissions received on its consultation on the draft R&D block exemption regulation, the draft specialisation block exemption regulation and the draft horizontal guidelines.

One of the main areas of contention in the submissions concerns the Commission's approach to intellectual property rights (IPRs) in relation to the R&D block exemption regulation and the revised section on standardisation agreements in the draft horizontal guidelines.

We set out the key issues that have been raised in that context and consider whether the Commission may now alter its position when it adopts the final texts of the regulations and guidance in December of this year.

R&D Block Exemption Regulation

Almost half of respondents commented on the R&D block exemption.

The majority of comments focused on the proposed disclosure obligation. This obligation is a new condition of the application of the block exemption for R&D agreements from the prohibition of Article 101(1) of the EC Treaty. This condition would provide that prior to starting the research and development, all parties must agree to the disclosure of their existing and pending IPRs that would be relevant for the exploitation of results of joint R&D by the other party(ies). The aim of this new condition was to avoid patent ambush brought about by one of the parties preventing the exploitation of the joint R&D by reliance on its IPR.

Two thirds of respondents were against the disclosure of existing and pending IPRs and requested the deletion of the obligation altogether. Indeed, whilst some respondents stated that they would be content with a less stringent obligation, in its appraisal of the submissions, the Commission recognised that: "very few stakeholders have expressed outright support for the proposed disclosure obligation".

Given the extent of opposition to the inclusion of the new disclosure obligation, it could be that the Commission reconsiders this aspect of its proposal. Alternatively, the Commission could include a more "watered down" obligation (for example that only reasonable efforts at disclosure would need to be made). Watch this space.


Again, approximately two thirds of submissions commented on the revised section on standardisation in the draft horizontal guidelines.

The majority of comments related to the so-called safe harbour, namely where the Commission opined as to in what circumstances the prohibition of Article 101(1) EC would not apply to standard setting organisations. In particular, the greatest issue of contention concerned what the Commission terms the "first pillar" of the safe harbour: a) "the good faith disclosure of those IPRs that might be essential for the implementation of a standard" and b) "a requirement for all holders of essential IPR in technology which may be adopted as part of a standard to provide an irrevocable commitment to license their IPR on fair, reasonable and non-discriminatory terms ('FRAND')".

Disclosure of IPRs

A wide range of concerns were raised by stakeholders with respect to this, including:

  • A "one size fits all" approach to IPR policies is not workable
  • The term "essential IPR" needs fuller definition and clarification
  • The current wording could be seen to indicate that IPR holders must comply with the safe harbour and disclose all of their potentially essential IPR before a standard is agreed
  • It is likely to be hard in practice to identify which IPR will be essential before the standard is set
  • Conducting full patent searches could be onerous and expensive for licensors
  • The obligation for disclosure should not cover unpublished patent applications, which should remain confidential
  • An overly onerous disclosure could have a negative impact on standardisation itself as it could lead to unnecessary disclosures
  • Disclosure could be replaced by a commitment to license on royalty free or FRAND terms

FRAND licensing

In relation to FRAND licensing, concerns raised included:

  • Further clarification is needed over the meaning of FRAND and which licensing terms would be compliant with FRAND
  • References to excessive or abusive royalties or license fees are of concern since they are not well defined
  • Standard setting organisations may not be able to control the conduct of their participants - FRAND may not be effective
  • FRAND commitments should continue after assignment of the IPR (by transferring the commitment to the new IPR owner)
  • Some argued that injunctive relief should not be available with respect to IPR rights that are subject to a FRAND commitment

A major concern raised was that abuse of dominance under Article 102 should not be addressed by means of an Article 101 guidance document designed to deal with multilateral conduct. In any event, it is not clear that the inclusion of IPR in a standard would equate to a dominant position.

Given the level of controversy and conflicting views brought about by the 'first pillar' of the safe harbour, it will again be interesting to see if the Commission alters its position in line with some of the comments raised.