Agreements that have as their object or effect the restriction of competition are generally prohibited under EU competition law, subject to certain exemptions. Technology agreements (such as licences of patents, know-how or software) often contain provisions that may fall foul of competition law, unless they are covered by exemptions that have been approved by the European Commission.
The exemptions regime for technology licence and assignment agreements, which is set out in the Technology Transfer Block Exemption Regulation (TTBER), was amended recently. Although the changes are minor, they should be borne in mind by anyone in the business of commercialising technology rights to ensure that terms and conditions that they include in licences and assignments are lawful and enforceable.
How does the TTBER Regime Work?
The TTBER provides that where a licence or assignment of technology rights meets certain conditions, it will be exempt from the general prohibition on anti- competitive agreements that is set out in Article 101 of the Treaty on the Functioning of the European Union, even though it might otherwise be construed to be anti- competitive. To be covered by the TTBER regime, an agreement must meet the following initial criteria:
- the combined market share of the parties to the agreement must be less than 20% for agreements between competitors or less than 30% for agreements between non-competitors; and
- the agreement must not contain any “hard-core restrictions”, such as restrictions on passive selling to territories outside the licensed territory, or resale price fixing provisions.
Once a technology transfer agreement satisfies these conditions, it may be covered by the TTBER provided that it does not contain any other provisions excluded under the TTBER. Agreements which do contain provisions that are excluded under the TTBER may still be covered by the TTBER, however, if they can be construed to be compliant with EU competition law principles, based on criteria set out in guidelines published by the European Commission that accompany the TTBER.
Changes to the TTBER Regime
Following a two year public consultation process, the Commission has opted to leave the TTBER regime largely unaltered, however the new TTBER (Commission Regulation (EU) No 316/2014, which came into force on 1 May 2014) contains some minor but potentially significant changes. The main changes are as follows:
- An obligation on a licensee to exclusively license or assign back to the licensor any improvements made by the licensee to the licensed technology is no longer automatically exempt and must be assessed on a case by case basis under the Guidelines. There will no longer be a distinction between severable and non-severable improvements in this regard.
- An obligation on a licensee not to challenge the licensor’s intellectual property rights in the licensed technology is no longer automatically exempt, except that TTBER will continue to cover a right in an exclusive licence for the licensor to terminate the licence where the licensee challenges the licensor’s intellectual property rights in the licensed technology.
- Settlement agreements whereby either or both parties to a dispute agree to delay or limit their commercialisation of their own technology may be anti- competitive, particularly if they have the object or effect of market allocation or sharing between competitors, and must be assessed in accordance with the Guidelines.
- Technology pooling agreements are not covered by the TTBER but may nonetheless be deemed to be exempt from the prohibition set out in Article 101 of the Treaty on the Functioning of the European Union if they bear certain characteristics that are set out in the Guidelines.
- The Guidelines clarify that the TTBER applies only to agreements which are not covered by the R&D and Specialisation Agreements Block Exemption Regulations.