Q&A: key IP issues affecting licensing agreements in Netherlands

Intellectual property issues

Is your jurisdiction party to the Paris Convention for the Protection of Industrial Property? The Patent Cooperation Treaty (PCT)? The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs)?

The Netherlands is a party to all three treaties.

Can the licensee be contractually prohibited from contesting the validity of a foreign licensor’s intellectual property rights or registrations in your jurisdiction?

Such contractual arrangement can be made. However, the principles of reasonableness and fairness, which apply to all contractual relationships, may cause such an arrangement to be invalid or be set aside depending on the facts and circumstances of a particular matter. Also, under certain circumstances, such an arrangement may be contrary to the applicable competition laws.

What is the effect of the invalidity or expiry of registration of an intellectual property right on a related licence agreement in your jurisdiction? If the licence remains in effect, can royalties continue to be levied? If the licence does not remain in effect, can the licensee freely compete?

The effect is governed by the terms of the licence agreement. If the agreement does not provide for such a situation and the licensed right expires, the licence (at least insofar as the expired right is concerned) also ends. If the licensed right is declared invalid, it has (owing to the retroactive effect thereof) never existed. However, this does not affect the agreement concluded prior to the invalidity insofar as it has been performed prior to the invalidity date. Nevertheless, depending on the circumstances, repayment of royalties already paid may be claimed (article 55 of Regulation (EU) No. 2017/1001 (European Trademark Regulation) and article 26 of Regulation (EC) No. 6/2002) (European Design Regulation). After the licence has ended, the licensee can, in principle, freely compete with the former licensor, although the agreement may contain non-compete provisions that survive the termination of the licence. Whether those provisions are enforceable against the licensee depends on compliance with competition law. Competing with the licensor may, under the terminated agreement, also be prohibited owing to possible contractual restrictions on the use of licensed secret know-how.

Is an original registration or evidence of use in the jurisdiction of origin, or any other requirements unique to foreigners, necessary prior to the registration of intellectual property in your jurisdiction?

Yes, unless a priority right is invoked under article 4C of the Paris Convention for the Protection of Industrial Property 1883 (Paris Convention).

Can unregistered trademarks, or other intellectual property rights that are not registered, be licensed in your jurisdiction?

Under Benelux trademark law, unregistered trademarks do not receive trademark protection (unless they fall within the scope of article 6-bis of the Paris Convention). However, parties can conclude licences for the use of unregistered signs, such as trade names and domain names. Further, unregistered rights such as copyrights or unregistered community design rights can also be licensed, as well as confidential know-how.

Are there particular requirements in your jurisdiction to take a security interest in intellectual property?

A security interest in an intellectual property right must be vested by a written deed to that effect, which must contain a description of the pledged subject. There are no particular requirements for security interests in intellectual property rights. However, in order for the security interest (ie, a right of pledge) to have third-party effect, the security interest should be registered in the official intellectual property registers in case of a registered intellectual property right (such as a trademark, design right or patent). If a right of pledge is vested in an intellectual property right for which no register exists (such as copyrights), there is no such obligation. Usually, a deed of pledge will be registered with the tax authorities anyway.

Can a foreign owner or licensor of intellectual property institute proceedings against a third party for infringement in your jurisdiction without joining the licensee from your jurisdiction as a party to the proceedings? Can an intellectual property licensee in your jurisdiction institute proceedings against an infringer of the licensed intellectual property without the consent of the owner or licensor? Can the licensee be contractually prohibited from doing so?

Yes. The foreign owner or licensor is, in principle, free to act on its own against infringements, but the licensee can join the proceedings to claim its own damages. The licensee cannot initiate proceedings for infringement without the licensor’s consent and the licensee can only initiate proceedings of its own to claim damages with the express permission of the owner. However, the Court of Justice of the European Union has ruled (Hassan v Breiding and Thomas Phillips v Grüne Welle), that regarding EU trademarks and designs, the holder of an exclusive licence may initiate proceedings without the licensor’s consent if the licensor does not act after having been urged to do so. It furthermore ruled that the licensee can take action with the consent of the licensor, even if the licence has not been registered.

Often, licence agreements contain specific wording on actions to be taken in the event of infringements (eg, who will take the action or how will damages be distributed).

Can a trademark or service mark licensee in your jurisdiction sub-license use of the mark to a third party? If so, does the right to sub-license exist statutorily or must it be granted contractually? If it exists statutorily, can the licensee validly waive its right to sub-license?

Benelux trademark law does not allow or prohibit sub-licensing as such. Trademark licences fall within the scope of contractual relations, which are executed between the contracting parties. As a consequence, the licensor should give permission to the licensee for the granting of sub-licences. Further, it is recommended that the licensor and licensee agree on the consequences of the sub-licence (such as term, conditions, royalties), to avoid disputes over time.

If intellectual property in your jurisdiction is jointly owned, is each co-owner free to deal with that intellectual property as it wishes without the consent of the other co-owners? Are co-owners of intellectual property rights able to change this position in a contract?

Based on general civil law, the main rule is that co-owners only have a joint authority. There are some exceptions to this main rule:

• each co-owner is entitled to use all community assets on condition that this use is compatible with the rights of the other co-proprietors;
• ordinary maintenance operations and operations to preserve the assets of the community of property, and in general operations that cannot be postponed without causing damage, may be performed by all co-owners, if necessary independently; and
• every co-owner is entitled to file legal claims and to lodge legal applications at the court to get a judicial decision on behalf of the community of property.

However, the co-owners may make a contractual arrangement for the enjoyment, the use and the administration of the community assets and deviate from the above-mentioned main rules.

In addition to these main rules, there are some specific regulations following from the several intellectual property laws. Such rules precede the general civil rules.

The Benelux Convention for Intellectual Property 2005 does not know specific rules for the co-ownership of a trademark. General civil law applies.

The Dutch Copyright Act states that where two or more persons own the joint copyright in the same work, any one of them may enforce the right unless otherwise agreed. This rule is similar to general civil law.

The Dutch Patent Act 1995 also knows a specific regulation for co-ownership for registered patents. It states that if various persons are jointly entitled to a patent, their mutual relationship shall be governed by an agreement made between them. If no such agreement has been made or if the agreement does not provide otherwise, any person entitled to the patent shall have the right to solely use, maintain and exploit the patent. However, a licence may be granted only with the joint consent of the persons entitled to the patent.

Is your jurisdiction a ‘first to file’ or ‘first to invent’ jurisdiction? Can a foreign licensor license the use of an invention subject to a patent application but in respect of which the patent has not been issued in your jurisdiction?

The Netherlands has a ‘first to file’ system. Patent applications can be licensed. If the patent is not granted, the licensor may terminate the agreement. The licensor may only continue to collect royalties if the licensor continues to make certain efforts for the benefit of the licensee. Usually, the parties will make the validity of the licence conditional upon the patent being granted.

Can the following be protected by patents in your jurisdiction: software; business processes or methods; living organisms?

The 1995 Dutch Patent Act explicitly excludes software and business processes or methods from protection. However, the courts in Europe are becoming increasingly lenient in granting patents for software and business processes or methods, if the invention meets certain technical standards. Microorganisms (eg, bacteria) can, in general, be patented. Patenting animal and plant species is difficult, but it is possible to patent inventions that are applicable in animals, as well as a wide variety of animals and plants in which a certain invention has been applied (eg, all plants that are resistant against a certain herbicide).

Is there specific legislation in your jurisdiction that governs trade secrets or know-how? If so, is there a legal definition of trade secrets or know-how? In either case, how are trade secrets and know-how treated by the courts?

With the acceptance of Directive 2016/943/EU (Trade Secrets) as per 5 July 2016, EU member states had a maximum of two years to incorporate the Directive’s provisions into domestic law. The Dutch Senate accepted the draft Trade Secrets Law on 16 October 2018. The law entered into force on 23 October 2018.

The definition of a trade secret in Dutch law corresponds with the definition in the above-mentioned Directive. The courts will treat trade secrets more or less the same as intellectual property rights.

Regarding licence agreements, Commission Regulation (EC) No. 772/2004 (Technology Transfer Block Exemption Regulations) defines know-how as simply ‘secret, substantial and identified’. Because know-how or trade secrets are not intellectual property rights, Directive 2004/48/EC (Enforcement) as implemented into Dutch law does not apply to cases on the subject. Cases of unauthorised disclosure of know-how and trade secrets are usually dealt with as tort (such as unfair competition) or breach of contract (such as non-disclosure agreements, employment agreements or otherwise). Pursuant to case law, if the disclosing party has not made clear that the information is confidential, it cannot qualify as know-how. The confidential nature cannot be assumed merely based on the relationship between the parties.

Does the law allow a licensor to restrict disclosure or use of trade secrets and know-how by the licensee or third parties in your jurisdiction, both during and after the term of the licence agreement? Is there any distinction to be made with respect to improvements to which the licensee may have contributed?

Yes. The parties can and often do agree that disclosure is restricted and know-how remains confidential even after the term of the licence agreement. However, holding a licensee to such an arrangement while the know-how has meanwhile become public knowledge (through no fault of the licensee), may be in conflict with competition rules. For improvements to which the licensee has contributed, such an arrangement would only work if the licensee assigned its rights to the improvements to the licensor or if it has granted an exclusive (perpetual) licence to the licensor to use the improvements.

A specific law regarding trade secrets entered into force on 23 October 2018.

What constitutes copyright in your jurisdiction and how can it be protected?

According to the Dutch Copyright Act, works of literature, science or art can be protected by copyright. This includes an unlimited variety of works, including literary, musical and audiovisual works as well as software. To qualify for protection, the work has to have its own, original character and bear the personal stamp of the author. The work must be the author’s own intellectual creation and cannot be derived from an existing work. Ideas are not protected; the work must be in tangible form. Copyrights allow the author to object to the unauthorised making public or reproducing of the work, and include moral rights. Copyrights arise upon creation of the work and last for 70 years after the death of the author (or after its publication, if the author is a company).

Law stated date

Give the date on which the information above is accurate.

27 January 2021