The European Commission has revised its competition regime for technology transfer agreements.  The new rules came into effect on 1 May 2014.

Originally enacted in 2004, the Technology Transfer Block Exemption Regulation (BER) offers a ‘safe harbour’ by deeming certain agreements compatible with EU competition rules.  It applies to licences and certain assignments of patents, know-how and software that permit the production of goods or services.  To benefit from the BER, the agreement must not include certain prohibited provisions and the market shares of the parties must be below specified thresholds.

Following a consultation, the Commission has adopted a revised BER. This is accompanied by revised Guidelines explaining the BER and providing guidance on the assessment of agreements that are not protected by the BER.  

Key changes introduced by the revised BER include:

  • A simplified test for determining whether provisions relating to the purchase of raw materials or equipment are protected by the BER.  These provisions will now benefit from the BER once they are directly related to the production or sale of the contract products.
  • All clauses obliging a licensee to license improvements to the licensed technology back to the licensor exclusively must now be assessed on a case-by-case basis – they do not benefit from the protection of the revised BER.
  • Clauses giving licensors the right to terminate the agreement if a licensee challenges the validity of the licensed IP will only be exempted by the revised BER if the clause is included in an exclusive licensing agreement. In non-exclusive agreements, such provisions must be assessed individually.
  • In contrast to the previous regime (which contained a minor exception), restrictions on passive sales between licensees are never exempted under the revised BER.

The revised Guidelines contain expanded analysis of settlement agreements in IP-related disputes and technology pools under competition law.  

Rather than fundamentally altering the existing regime, the 1 May 2014 rules will change the shape of the ‘safe harbour’ for technology transfer agreements.  The revised rules will necessitate the review of certain existing agreements (which enjoy a one-year grace period), and will have to be considered at the outset in new agreements.