The Commission acknowledges that competition is one of the main driving forces of innovation and that it is therefore important to find the right balance between protecting competition and protecting intellectual property rights.
The EC Treaty prohibits agreements that may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the common market.
However, the Treaty also provides an exception. An anti-competitive agreement may be permissible if the positive effects brought about by the agreement outweigh its negative effects.
In 1996 the Commission decided that this exception should apply to licensing of patent and know-how rights, and adopted the Technology Transfer Block Exemption Regulation, known as the TTBE, under rules that allow it to block exempt categories of agreements of the same nature.
In December 2001 the Commission adopted an evaluation report of the TTBE, which raised concerns over the flexibility and scope of the Regulation. After consultation with industry and Member States, a replacement has been drafted, and the Commission now seeks comments on the changes that are proposed.
These changes are intended to reduce the regulatory burden for companies, while ensuring an effective control of agreements between companies holding significant market power.
The new rules, according to the Commission, contain a more economic approach and leave companies more freedom to devise their licensing agreements according to their commercial needs.
They will have a clear list of restrictions that are normally prohibited, and will contain a safe harbour below certain market share thresholds – 20% for licensing agreements between competitors and 30% for agreements between non-competitors.
Cases falling out with these limits are may be subject to the provisions of the EC Treaty. Guidance for companies not in the safe harbour limits will be found in draft guidelines issued by the Commission.
The proposed rules make the following general changes:
The block exemption regulation will now only have a black list – whatever is not explicitly excluded from the block exemption is now exempted.
The new rules will cover all types of technology transfer agreements for the production of goods or services – not only patent and know-how licensing but also software copyright licensing. Where the Commission does not have the powers to adopt a block exemption regulation, as for patent pools and for copyright licensing in general, the guidelines will give clear guidance as to future enforcement policy.
The new rules will make a clear distinction between licensing between competitors and licensing between non-competitors. The distinction is necessary because the hardcore black list will differ for each situation. Competition problems are more likely to arise in licensing between competitors than in licensing between non-competitors.
All interested parties should send their comments on the proposed new rules to the Commission by 26th November 2003.
The draft Regulation is available in a 12-page PDF.
The draft Guidelines are available in a 61-page PDF