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EU
Commission adopts new framework for the licensing of patents,
know-how and software copyright.
On the 7th April last the EU Commission announced the adoption
of new rules for applying competition policy to the licensing
of patents, know-how and software copyright.
These new rules came into force on the 1st May last and
replace the 1996 Block Exemption that was regarded as too
restrictive and formalistic.
As a result more licensing agreements of this type will
benefit from the "safe harbour" provisions of
the new rules.
Background
Article 81(1) of the EU Treaty prohibits agreements which
may affect trade between Member States and which have the
objective of preventing, restricting or distorting competition.
However under the provisions of Article 81(3), agreements
that would otherwise be regarded as anti-competitive may
be exempted if the positive effects of such agreements outweigh
the negative effects. The 1996 Block Exemption dealt with
these types of agreements and these rules have now been
updated.
Licensing Agreements restrictive of competition are unlawful
unless they come within the scope of the 1996 Block Exemption.
The new Regulations are aimed at providing more freedom
for entries to devise their licensing agreements according
to their commercial requirements and needs (the "safe
harbour").
The New Regulations
These new Regulations will only apply below certain market
share thresholds as follows:
If
these thresholds do not apply then the parties to the agreement
do not have to be concerned about the issue of compatibility
with EU Competition law. That said "hardcore restrictions"
that produce clearly defined negative effects on the market
are prohibited.
The "white list" and "grey list" of
terms contained in the 1996 Regulations have been replaced
with the "black list". So in simple terms those
terms not expressly excluded by the new Regulations are
permitted.
The new rules also govern design right and software copyright
licensing as well as patent and know-how licensing.
Conclusion
These new Regulations are designed - in the words of
Mario Monti - EU Competition Commissioner, "to reform
the rules on technology transfer agreements so as to facilitate
wider dissemination of innovation so as to give companies
greater scope and design freedom". It follows on from
the adoption in 1999 of new rules to govern distribution
agreement and the adoption in 2000 of new rules to govern
horizontal co-operation agreements.
For
further information contact:
Anthony Layng at
Email : alayng@kilroys.ie
©
Kilroys Solicitors 2004
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