The revised Technology Transfer Block Exemption Regulation (TTBER) and accompanying guidelines entered into force on 1 May 2014. Certain changes impose a stricter regime for common licensing provisions such as grant-back obligations, no-challenge clauses and passive sales restrictions. Companies are advised to reassess their agreements for licensing technology rights to ensure compliance with the revised TTBER.
The TTBER provides a ‘safe harbour’ for technology agreements that license patents or other technology rights for production, as long as these agreements do not contain any blacklisted provisions, and are entered into between companies with limited market power. An agreement fulfilling the requirements of the TTBER is held to fulfil the requirements of Article 101 (3) TFEU and thus to not infringe the cartel prohibition laid down in Article 101 (1) TFEU. The revised TTBER replaces the prior block exemption regulation for technical transfer agreements that was in force from 2004 to April 2014.
Exclusive grant-back provisions, which provide the licensor with the exclusive right to exploit any improvements made by the licensee to the licensed technology, fall outside the block exemption in the revised TTBER. Under the old TTBER, only exclusive grant-backs of severable improvements were excluded. This distinction between severable and non-severable improvements has now been removed. This means that all exclusive grant-back obligations require individual assessment. Non-exclusive grant-backs are still covered by the TTBER.
Another important change in the revised TTBER applies to no-challenge clauses: clauses that prevent the licensee from challenging the validity of the licensor’s intellectual property rights. The old TTBER extended the safe harbour to clauses which allowed the licensor to terminate the licence agreement if the licensee challenged the licensed technology rights. The revised TTBER, however, excludes those clauses from the safe harbour for non-exclusive licensing agreements. This means that all no-challenge clauses in a non-exclusive licensing agreement require individual assessment. This change is highly important since this type of termination clause was often used under the old TTBER to protect a patent. The licensor’s ability to terminate the licence agreement if the licensee challenges the validity of any of the licensed technology rights continues to be included within the safe harbour for exclusive licensing agreements.
All passive sales restrictions into the exclusive territory or customer group of another licensee are blacklisted in the revised TTBER. Under the old TTBER, a licensor was allowed to restrict passive sales – unsolicited requests from customers – for a period of two years after the licensee began to sell. This exemption has now been removed from the TTBER. A passive sales restriction into the exclusive territory or customer group of another licensee is only allowed if the restraint is objectively necessary for the licensee to penetrate a new market, which is to be assessed on a case-by-case basis.
The revised TTBER will remain in effect until April 2026. A one-year transition period applies to agreements that were exempted under the 2004 TTBER which no longer meet the conditions of the new TTBER. Companies are advised to reassess their agreements for licensing technology rights to ensure compliance with the revised TTBER.