Stefano Barazza - The Technology Transfer Block Exemption

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ARTICLE
Journal of Intellectual Property Law & Practice, 2014, Vol. 9, No. 3
The Technology Transfer Block Exemption

Regulation and related Guidelines: competition
law and IP licensing in the EU
Stefano Barazza*
Background
*
1
E-mail: stefbar@gmail.com.
See generally Alison Jones and Brenda Sufrin EU Competition Law
(Oxford University Press Oxford 2011), 718, and Guifang Yang and Keith
E Maskus Intellectual Property Rights, Licensing, and Innovation (2003)
2973 World Bank Policy Research Working Paper 1.
Mirza Gogic Intellectual Property Licensing for the Purpose of the
Technology Transfer Block Exemption Regulation (2012) 1 Nordic Journal
of Commercial Law 1, 3:
Most licenses bear royalties, either in a form of a lump sum, or as
running royalties. . . . Even in cases where a license does not bear
# The Author(s) (2014). Published by Oxford University Press. All rights reserved.
The author
Stefano Barazza is a lawyer at Studio Legale Barazza, in
Italy.
This article
The technology transfer realized through the licensing
of intellectual property rights represents the key to the

diffusion of innovation in the industry, which allows
the creation of new and improved products, with beneficial effects for innovators, manufacturers and consumers.
Although they generally give rise to significant efficien-
cies and pro-competitive effects, technology transfer

agreements may also contain restrictions capable of
affecting the competition in the relevant product and
technology markets, such as exclusive licensing, exclusive grant-back provisions, price restraints, and nonchallenge clauses.
In the European Union, the Commission has progres-
sively refined its approach towards the assessment of

the compatibility of technology transfer agreements
with Article 101 of the Treaty on the Functioning of the
European Union (TFEU), currently disciplined by
Regulation 772/2004 and by the Guidelines on the application of Article 81 of the EC Treaty to technology
transfer agreements. A recent reform proposal seeks to
maintain the principles enshrined in the existing legislation, introducing appropriate changes to improve the
protection of the undertakings involved and to dissipate the risks of anti-competitive effects on the relevant
markets.
royalties, still it can create cost savings by means of cross-licensing. . . .

Another important incentive for licensing is penetration of new
geographic and product markets.
Steven D Anderman and John Kallaugher Technology Transfer and the New
EU Competition Rules (Oxford University Press Oxford 2006). See e.g.
Intellectual Property Enforcement Guidelines of the Competition Bureau
of Canada (2000), s 2.2 and see 4 Trade Reg Rep (CCH) 13, 132, s 2.3 and
Regulation 19/65 [1965] OJ 36/533.
Luc Peeperkorn IP Licenses and Competition Rules: Striking the Right
Balance (2003) 26(4) World Competition Law & Economics Review 527.
doi:10.1093/jiplp/jpt235
Downloaded from http://jiplp.oxfordjournals.org/ at University of Oslo Library on April 9, 2015
Technology transfer agreements play a vital role in

ensuring the dissemination of scientific knowledge,
which provides a fundamental stimulus for the development of innovative products and services, increases the
commercial exploitation of inventions, enhances the
efficiency and effectiveness of research and development
efforts and guarantees significant incentives to innovate.1 The main purpose of these agreements is to discipline the licensing of intellectual property in exchange for
a direct or indirect benefit2 for the licensor.
Technology licensing, however, raises significant concerns for its potential effects on competition. Although
it is generally recognized that they generate an overall
pro-competitive effect,3 technology transfer agreements
frequently contain restrictive licensing terms, which are
liable to cause the foreclosure of third parties and their
technologies, to facilitate collusion and to prevent the
parties from gaining a competitive lead over each other
or any competitors.4
To address these potential issues, in the European
Union, the Commission developed, and constantly
refined, a specific policy on the compatibility of technology transfer agreements, and the restrictions thereby
included, with Article 101(1) of the Treaty on the Functioning of the European Union (TFEU). In 2004, the
Commission introduced the current system, which
revolves around (i) a block exemption, which excludes
the applicability of Article 101(1) to technology transfer
agreements concluded between two undertakings not
exceeding specific market share thresholds, provided that
the agreements do not contain certain severe restrictions
Stefano Barazza . Competition law and IP licensing in the EU
Making sense of technology transfer

agreementsthe international debate
The perimeter of the notion of technology transfer has
been the subject of a long-standing debate,5 as a classic
definition described it as the process by which science
and technology are diffused throughout human activity.6 The United Nations Conference on an International
Code of Conduct on the Transfer of Technology (1974
1995) attempted to draw a more precise definition: the
draft code of conduct7 stated that transfer of technology
7
8
9
10
11
For an overview, see David M Haug The International Transfer of

Technology: Lessons that East Europe Can Learn from the Failed Third
World Experience (1992) 5 Harvard Journal of Law & Technology 209.
Harvey Brooks National science policy and technological innovation in
Ralph Landau and Nathan Rosenberg (eds) The Positive Sum Strategy
(National Academy Press Washington, DC 1986) 119.
UNCTAD Draft International Code of Conduct on the Transfer of
Technology (1985) UN Doc. TD/CODE/TOT/47.
Ibid, ch 2.
SCP/14/4 (11 December 2009).
The SCP clarified that the term transfer of technology may be
understood in either a broad sense, referring to processes for the sharing
or acquisition of ideas, knowledge, technology and skills, or in a narrow
sense, as the commercialization of technology developed by public
research institutions. On the latter aspect see 63 USC 15 s 3710(a)(2).
Transnational transfer of technology has been frequently advocated as a
fundamental aid for the economic and social development of third world
187
is the transfer of systematic knowledge for the manufacture of a product, for the application of a process or for
the rendering of a service and does not extend to the
transactions involving the mere sale or mere lease of
goods. Additional provisions clarified that the transfer
usually involves (i) the assignment, sale and licensing of
all forms of industrial property, except for trade marks,
and (ii) the provision of know-how and technical
expertise.8
The Standing Committee on the Law of Patents (SCP)
of the World Intellectual Property Organization, in its
14th session,9 provided an overview of the role of these
agreements,10 clarifying from a general perspective that
they have significant beneficial effects for (1) the companies, as they improve competitiveness, add value in
the commercial chain, promote cooperation and collaboration, contribute to building technical expertise and
know-how; (2) the society at large, by promoting the
dissemination and further creation of knowledge and
technology,11 acting as a catalyst for economic growth,
encouraging the creation of local industries and increasing the competitiveness of the national industry sector
in the global market;12 and (3) consumers, through
indirect effects on the availability of technologically
advanced products at low cost. This beneficial flow of
technology not only allows the licensee to use patented
technology for inclusion in its products and services,
against the payment of a royalty, but also increases its
understanding of the technology, stimulating further
innovation, and promotes joint venture agreements and
collaborative research efforts.13
In this context, the development of rules aimed at
dealing with the licensing of technology pursued two
converging objectives: first, to stimulate the widespread
dissemination of technology and increase the efficiency of
the process14 and, secondly, to reduce the negative impact
12
13
14
countries. See UN Industrial Development Organization The Role of

Intellectual Property Rights in Technology Transfer and Economic
Growth: Theory and Evidence (2006), http://www.unido.org/
index.php?ido60037.
See e.g. James W Christian The Dynamics of Economic Growth,
Technological Progress, and Institutional Change (1968) 2(3) Journal of
Economic Issues 298, which draws a link between the level of technology
and the expansionary potential of the economy.
SCP/14/4, above, n 9, 17.
William E Souder, Ahmed S Nashar and Venkatesh Padmanabhan A
guide to the best technology-transfer practices (1990) 15(1) The Journal
of Technology Transfer 5, observed that in the 1980s [h]igh transfer failure
rates persist[ed] throughout industry, government, and academia,
suggesting the adoption of more efficient practices to improve technology
transfers.
of competition; and (ii) appropriate guidelines to aid in

the individual assessment of the agreements that fall
outside the scope of the block exemption. Recently the
Commission formulated a reform proposal that retains
the basic structure of the system, introducing some
minor changes.
The first section of this article briefly examines the
role and characteristics of the technology transfer agreements, as well as their effects on competition, from a
transnational perspective. The second section provides
an overview of the European approach to the matter,
while the following two sections analyse the development of a specific EU policy on the compatibility of
these agreements with competition law and Article
101(1) TFEU, from the 1960s to 2001. The fourth
section describes the current regime of block exemption,
introduced by Regulation 772/2004, and the principles
applicable to technology transfer agreements falling
outside the scope of the regulation. The final section
takes a look at the reform proposal recently formulated
by the Commission, the context and rationale of the
proposed changes, the debate that surrounds them and
the issues that still remain unaddressed.
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15
16
17
John H Burton New trends in Technology Transfer (2007) 18 ICTSD

Programme on IPRs and Sustainable Development Papers 1.
Who were concerned that companies, if left unchecked, will misuse the
potential market power available under intellectual property law to
eliminate competition or extend market power beyond lawful limits
(Howard W Fogt and Ilene Knable Gotts The Antitrust and Technology
Transfer Licensing Interface: A Comparative Analysis of Current
Developments (1995) 13 International Tax and Business Law 1).
See e.g. the US Department of Justice and Federal Trade Commission
Antitrust Guidelines for the Licensing of Intellectual Property (6 April
1995), and the Draft International Code of Conduct on the Transfer of
Technology, ch 4.
The European approach: block

exemption and individual assessment
under Article 101 TFEU
In the European Union, the matter is disciplined by
Regulation 772/200421 (Technology Transfer Block
Exemption Regulation, TTBER), and by the Guidelines
on the application of Article 81 of the EC Treaty22 to
technology transfer agreements23 (Guidelines), which
establish the necessary framework for the analysis of
technology transfer agreements under Article 101(1) and
(3) TFEU. The former provision prohibits, as incompatible with the internal market, all the agreements which
may affect trade between Member States and have as
their object or effect the prevention, restriction or distortion of competition within the internal market, providing a non-exhaustive exemplificative list. Article 101(1)
TFEU can be declared inapplicable, under Article
101(3), if the agreement contributes to improving the
production or distribution of goods or to promoting
technical or economic progress, while allowing consumers a fair share of the resulting benefit, provided that it
does not (a) impose on the undertakings concerned
restrictions which are not indispensable to the attainment of these objectives, (b) afford such undertakings
the possibility of eliminating competition in respect of a
substantial part of the products in question.
Relying on Regulation 19/65,24 which empowered the
Commission to apply Article 101(3) TFEU to certain
categories of bilateral agreements falling within Article
101(1), Regulation 772/2004 provides a block exemption for licensing agreements which do not contain
severely restrictive provisions, and which are concluded
between two undertakings not exceeding specific
market-share thresholds. The Guidelines provide an
interpretative guide to the TTBER, and a framework of
rules to examine the agreements not covered by the
block exemption. Both acts share the same principles,
which, akin to the US approach, recognize (i) the overall
pro-competitive effects of technology transfer, (ii) the
risk that restrictive licensing terms may negatively affect
competition and (iii) the opportunity of evaluating such
18
19
20
21
22
23
24
SCP/14/4, above, n 9, at 128.

4 Trade Reg Rep (CCH) 13, 132, s 2.3.
Ibid, s 3.1.
Technology Transfer Block Exemption Regulation 772/2004 [2004] OJ
L123/11 (TTBER).
Now Article 101 TFEU.
Guidelines on the application of Article 81 of the EC Treaty to technology
transfer agreements [2004] OJ C101/2 (Guidelines).
Regulation 19/65 [1965] OJ 36/533.
of the provisions most restrictive of competition, by

dynamically restraining them to the minimum necessary
to ensure that the licensor and licensee have sufficient
incentives to conclude the agreement.15 Among the provisions interested by the latter objective, policy makers16
identified exclusive licensing, exclusive grant-backs,
exclusive dealing, price fixing and provisions limiting the
licensees right to challenge the validity of the licensed
technology.17 The SCP explained that [c]ertain limitations
in licensing agreements, such as territorial limitations or
limitations as to the field of use, may be pro-competitive
under certain circumstances, but a competition law
concern may arise if a licensing agreement contains
restraints that adversely affect competition among entities
that would have been competitors in the relevant market
in the absence of the license.18
In the United States, the Antitrust Guidelines for the
Licensing of Intellectual Property19 (Antitrust Guidelines), drafted by the Department of Justice and Federal
Trade Commission, recognized that [l]icensing, crosslicensing, or otherwise transferring intellectual property
can facilitate integration of the licensed property with
complementary factors of production and provide significant beneficial effects for the industry (more efficient
exploitation of the intellectual property, incentives for
its creation, promotion of greater investment in research
and development), and consumers (reduction of costs,
and introduction of new products).
The restrictions contained in the licensing agreements, according to the Antitrust Guidelines, may have
pro-competitive effects, in so far as they allow the licensor to exploit its intellectual property as efficiently and
effectively as possible, and stimulate the licensor to
license its technology, and the licensee to invest in the
commercialization and distribution of products incorporating the licensed intellectual property. However, antitrust concerns may arise when a licensing arrangement
harms competition among entities that would have been
actual or likely potential competitors in a relevant
market in the absence of the license, by facilitating
market division or price fixing, or by determining foreclosing effects.20
In making this assessment it is necessary to take account

of the likely impact of the agreement on inter-technology
25
26
27
28
29
30
31
32
33
TTBER, above, n 21, Recital 5.

Guidelines, above, n 23 para 17.
Ibid, para 8.
Ibid, para 10.
Ibid, para 11.
For an overview see Jones and Sufrin, above, n 1.
Notice on patent licensing agreements [1969] JO 139 2922/62 (Christmas
Notice), withdrawn in 1984 (OJ C220/14).
Other terms deemed compatible with Article 101(1) included, inter alia,
limitations to the types of exploitation of the patent, and to the use of the
patented invention, as well as quantitative, temporal, spatial and personal
limitations to its exploitation.
Christmas Notice, above, n 31, para I.E(1). The Commission argued that
even without examining whether [exclusive licensing agreements] may
189
competition (i.e. competition between undertakings using

competing technologies) and on intra-technology competition (i.e. competition between undertakings using the same
technology). . . . It is therefore necessary to assess to what
extent the agreement affects or is likely to affect these two
aspects of competition on the market.29
The Commissions approach to technology transfer

agreements endorsed in the TTBER and the Guidelines
is the result of more than 40 years of policy changes and
constant refinements30 of the balance between intellectual property rights and competition law. In this
context, before examining the current legislation in
detail, it is necessary to delve deeper into the debate and
the legislation that the Commission developed from the
1960s onwards, which remain in the background of the
TTBER and the Guidelines, and may be useful to understanding why the Commissions approach evolved
towards the current system.
The development of the EU policy

on technology transfer
The debut of the debate on an appropriate policy for the
licensing of intellectual property rights may be traced
back to a Notice on patent licensing agreements,31 published in 1962, where the Commission took the view
that some of the terms32 commonly contained in patent
licences, including provisions assuring exclusivity for the
licensee,33 did not fall within Article 101(1) TFEU,34
provided that they did not extend beyond the scope of
the patent.35
Less than a decade later, in 1971, the Commission
started shifting its perspective with the decisions issued
in Burroughs-Delplanque 36 and Burroughs-Geha 37 where
it recognized that some exclusive licensing agreements
may fall within Article 101(1) TFEU.38 A similar conclusion was reached with regard to grant-back provisions,
which remained outside the perimeter of the antitrust
law only if non-exclusive,39 while a list of clauses caught
34
35
36
37
38
39
restrict competition, . . . they do not appear capable of affecting trade

between member states. See also Mark R Joelson An International
Antitrust Primer: A Guide to the Operation of United States, European
Union and Other Key Competition Laws in the Global Economy (Kluwer
Law International Alphen aan den Rijn 2006), 361.
At the time, Article 85(1) of the Treaty establishing the European
Economic Community. Agreements containing the listed terms did not
need to be notified to the Commission.
Anderman and Kallaugher, above, n 3, 52.
Burroughs-Delplanque, Decision 72/25/EEC [1972] JO L013.
Burroughs-Geha, Decision 72/26/EEC [1972] JO L013.
Ibid, para II.
Raymond-Nagoya, Decision 72/283/CEE [1972] JO L 143/39.
anti-competitive clauses in light of their contribution

to the overall pro-competitive effect of the licensing
agreement.
The Commission clarified that [t]he vast majority of
licensing agreements are pro-competitive, as they
improve economic efficiency, reduce duplication of
research and development, strengthen the incentive for
the initial research and development, spur incremental
innovation, facilitate diffusion and generate product
market competition.25 Further, such agreements
promote the dissemination of technologies and their
efficient allocation and exploitation, allowing (i) the
licensors to recover the costs of their research and development efforts; (ii) the licensees to produce new or
improved products, or to gain additional design
freedom by removing the risk of infringement of the
licensed technology; and (iii) the consumers to benefit
from the reduced production costs or from the availability of improved products.26
The Guidelines clearly state that [t]here is no presumption that intellectual property rights and licence
agreements as such give rise to competition concerns,
clarifying that restrictive provisions may be necessary for
the conclusion of a technology transfer agreement, and
that their effects on competition may be compensated by
the overall pro-competitive effects of the licensing agreement. Further, as the creation and exploitation of intellectual property rights frequently represents a risky
endeavour requiring substantial sunk investments, the
application of Article 101 TFEU to licensing agreements
should take into account these factors, which may lead
to the agreement falling outside Article 101(1) or fulfilling the conditions of Article 101(3), for the period of
time required to recoup the investment.27 When an
agreement does not fall within the scope of the TTBER,
the Guidelines explain that its individual assessment
must be made within the actual context in which competition would occur in the absence of the agreement:28
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40
41
42
43
44
45
46
47
AOIP-Beyrard, Decision 76/29/EEC [1976] OJ L 6/8.

The Commission explained that [t]hese clauses are liable, directly or
indirectly, to affect the free movement of trade between Member States in
a way which would hinder the realization of the objectives of a common
market.
Fourth Report on Competition Policy (1974), at 20.
See Guido Westkamp Intellectual Property, Competition Rules, and the
Emerging Internal Market: Some Thoughts on the European Exhaustion
Doctrine (2007) 11(2) Marquette Intellectual Property Law Review 291.
Jones and Sufrin, above, n 1, at 719.
Case 258/78 L C Nungesser KG and Kurt Eisele v Commission [1982] ECR
2015. See also Joined Cases 56 and 58/64 Etablissements Consten SaRL &
Grundig-Verkaufs-GmbH v Commission [1966] ECR 429, where the Court
found that clauses conferring absolute territorial protection were contrary
to Article 101(1), as they affected trade between member states and
resulted in the artificial maintenance of separate national markets.
Although the Court hinted that its approach was sensitive to the nature of
the products covered by the agreement. See, in this perspective, Case 27/
87 SPRL Louis Erauw-Jacquery v La Hesbignonne SC [1988] ECR 1919.
Nungesser KG, above, n 45, 53.
beyond what [was] indispensable for the improvement

of production or distribution or the promotion of
technical progress.
In Windsurfing International Inc v Commission, 49 the
Court of Justice sided with the Commission on the
assessment of several provisions contained in nonexclusive licences, concluding that provisions comprising
tying obligations, non-challenge clauses, quality obligations and production restraints, infringed Article 101(1)
TFEU. According to a notable commentator, the judgment
disclosed an unreasonably strict approach towards patent
monopoly.50
Regulations 2349/84 and 240/96: the

formalistic approach
In 1984, drawing extensively from the case law of the
Court of Justice, the Commission adopted the first block
exemption with Regulation 2349/84.51 The exemption
applied to patent and utility model licensing agreements,
as well as to mixed agreements containing ancillary provisions on trademarks, or provisions assigning, or granting the right to use, know-how, provided that the
predominant element remained the licensed patents.52
Article 1 provided a list of licensing terms which,
although liable to restrict competition, benefited from
the exemption due to their beneficial effects on trade
and technical progress;53 the list included open exclusive licences, whether imposing territorial54 limitations
to the licensor or the licensee. The Regulation expressly
acknowledged that exclusive licensing agreements are
not in themselves incompatible with Article [101(1)]
where they are concerned with the introduction and protection of a new technology in the licensed territory, by
reason of the scale of the research which has been undertaken and of the risk that is involved in manufacturing
48
49
50
51
52
53
54
Their compatibility rested, therefore, on their indispensability for the

attainment of the objectives set out in Article 101(3) TFEU.
Case 193/83 Windsurfing International Inc v Commission [1986] ECR 611.
Jim Venit In the Wake of Windsurfing: Patent Licensing in the Common
Market (1986) Fordham Corporate Law Institute 517. See also Jones and
Sufrin, above, n 1, at 725 26.
Regulation 2349/84 [1984] OJ L 219/15. The Regulation is examined in
detailed by Joelson, above, n 33, 362 63.
Regulation 2349/84, Recitals 4 10. Regulation 556/89 [1989] OJ L61/1
applied to pure know-how licenses, or mixed agreements where knowhow was the predominant element.
According to Regulation 2349/84, Recital 12, these obligations generally
contribute to improving the production of goods and to promoting
technical progress; they make patentees more willing to grant licences and
licensees more inclined to undertake the investment required to
manufacture, use and put on the market a new product or to use a new
process.
As long as the licensed product was protected by parallel patents in the
territories of the licensee and the licensor (ibid).
by Article 101(1) was expressly provided in AOIPBeyrard 40 (territorial exclusivity, conditional export
prohibitions, non-challenge clauses, obligations to pay
royalties in respect of expired or unused patents, or in
relation to products manufactured using alternative
technologies developed by the licensee or third parties,
and non-competition clauses41). Generally, the Commission noted that patent licensing agreements are not
automatically within Article [101(1)] if the agreements
simply confer rights to exploit patented inventions
against payment of royalties, but may be caught by it if
a grant is accompanied by terms which go beyond the
need to ensure the existence of an industrial property
right, or where the exercise of such right is found to be
the object, means or consequence of a restrictive
agreement.42
The new sensitivity towards the potential anti-competitive effects of exclusive licensing agreements and
other licensing terms primarily stem from the development of the exhaustion of rights doctrine,43 and of the
distinction between existence and exercise of a right.44
The Court of Justice judgment in L C Nungesser KG and
Kurt Eisele v Commission 45 provided the first review of
the restrictive approach taken by the Commission in the
1970s. The case concerned a licensing agreement for
hybrid maize seeds, which conceded exclusive territorial
distribution rights to the licensee. The Commission had
found that exclusivity and territorial provisions fell
within Article 101(1), but the Court of Justice took a
step further.46 Drawing a distinction between open and
closed exclusive licences,47 the Court found that the
former, under which the licensor agreed not to grant
other licenses, nor to compete itself, in the same territory, were not incompatible per se with Article 101(1)
TFEU,48 while the latter, which conferred absolute territorial protection and prohibited parallel imports, went
55
56
57
58
59
60
61
62
63
Ibid, Recital 18.

Ibid, Article 2.
Regulation 240/96 [1996] OJ L31/2.
See Jianming Shen Block Exemption for Technology Licensing
Agreements under Commission Regulation (EC) No. 240/96 (1997) 20
Boston College International and Comparative Law Review 251.
Including those containing ancillary provisions concerning the licensing
of other intellectual property rights, if the latter contribute to the
achievement of the objects of the licensed technology (Regulation 240/96,
above, n 57, Recital 6).
Ibid, Article 5.
Ibid, Recital 10.
Or the licensed patents expired. See also ibid, Recital 21: the parties do
not need to be protected against the foreseeable financial consequences of
an agreement freely entered into.
Herbert Hovenkamp, Mark D Janis, Mark A Lemley and Christopher R
Leslie IP and Antitrust: An Analysis of Antitrust Principles Applied to
Intellectual Property Law (Aspen Publishers New York 2001), 45 28
191
(i) non-exclusive, reciprocal grant-back; (ii) obligations

not to use the licensed technology to construct facilities
for third parties, or to supply only a limited quantity of
the licensed product to a particular customer for
second-source supply or to use best endeavours; and
(iii) reservation of the rights to oppose the exploitation
of the licensed technology by the licensee outside the
licensed territory, or to terminate the agreement if the licensee contests the validity of licensed patents or if it
claims that such patent is not necessary, or of it enters
into competition with the licensor, or connected undertakings, for competing products.
The black list, instead, was shortened. Non-challenge
clauses, as well as obligations to accept quality specifications, or further licences, or to procure goods or services not necessary for the exploitation of the licensed
technology, were inserted in Article 4 of Regulation
240/96, which required notification to the Commission,
and extended to them the applicability of the block
exemptions, if the Commission did not oppose them
within four months. Other licensing terms, including
the obligation to continue paying royalties until the
end of the agreement, even after the know-how has
become publicly known,62 disappeared from the black
list.
The approach employed by Regulations 2349/84 and
240/96 was frequently criticized as overly formalistic,63
as it provided a list of common licensing terms and an
ex ante assessment of their compatibility with Article
101(1) TFEU,64 generally disregarding significant variables, such as the market power of the undertakings65 or
the horizontal or vertical nature of the agreement,66
capable of altering their effects on trade and competition. This approach, reportedly inspired by German
law,67 drew upon the Commissions experience under
the individual exemption system, and rested on the assumption that contractual terms extending beyond the
64
65
66
67
(Regulation 240/96 employed a structure that frequently seemed to place

formalism ahead of economic reasoning).
See Marc Hansen and Omar Shah The New EU Technology Transfer
Regime Out of the Straightjacketing into the Safe Harbour? (2004)
25(8) European Competition Law Review 465. The authors noted that the
Commission . . . attempted to replicate the legal certainty of the individual
exemption system.
Article 7(1) of Regulation 240/96, above, n 57, however, allowed the
Commission to withdraw the benefit of the exemption if the agreement
exhibited anti-competitive effects, mentioning a market share of 40 per
cent as the threshold for a plausible epiphany of such effects. The
European Commission, XXV Report on Competition Policy (1996) COM
(96)126 final, at 35, described Article 7(1) as a clear warning to
enterprises with strong market positions.
Exceptions could be found in Article 5.1(2) and (3) of Regulation 240/96,
above, n 57 (but not in Article 5.1(1)).
Hansen and Shah, above, n 64, 466.
and marketing a product which is unfamiliar to users in

the licensed territory at the time the agreement is made
or where they allow the introduction and protection of
a new process for manufacturing a product which is
already known.
Article 2 contained a non-exhaustive55 white list56 of
clauses not normally restrictive of competition, which
could benefit from the exemption in the event that,
because of particular economic or legal circumstances,
they . . . exceptionally fall within the scope of Article
[101(1)]. The list comprised, inter alia, (i) obligations
imposed for a technically satisfactory exploitation of the
licensed invention, or concerning the confidentiality of
know-how; (ii) provisions on minimal royalties, product
output, non-exclusive grant-back of improvements and
new applications; and (iii) prohibition of sublicensing.
Article 3 contained a black list of licensing terms which
prevented the application of the block exemption: nonchallenge clauses, provisions extending the duration of
the agreement beyond the expiry of the patents, noncompete agreements, obligations to pay royalties for unpatented technology, quantitative, price or customer
restrictions, assign-back clauses and provisions inducing
the licensee to accept unwanted licences.
Regulation 240/9657 introduced several changes to
this regime,58 while maintaining the structure of the previous law. The new block exemption extended its field of
application to include pure know-how licensing agreements, as well as mixed agreements59 where know-how
was the predominant element, although licensing agreements related to patent pools, joint ventures or predominantly concerning other intellectual property rights
than patents, remained excluded.60 Further, it essentially
reiterated the approach taken by Regulation 2349/84 in
relation to exclusive licensing agreements.61
Among the most significant changes, Regulation
240/96 introduced a longer white list, which included
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mere payment of royalties in exchange for patent licensing generally restricted the commercial freedom of the
parties, with the exception of those terms specifically
examined by the Commission in previous cases.
In the Evaluation Report on the Transfer of Technology Block Exemption Regulation 240/9668 published in
2001, the Commission acknowledged the criticism,
highlighting that Regulation 240/96:
Thus the Commission endeavoured to draft a new block

exemption regulation, accompanied by a set of interpretative guidelines, featuring a wider scope and a simpler
structure and implementing a new economic-based approach, sensitive to the competitive relationship between
the parties and their market power. The proposal
spurred a lively debate which questioned, inter alia,71 the
use of market share considerations and the adoption of
different thresholds for competitors and non-competitors, the elimination of the notification system and the
adoption of stricter rules on territorial and customer
restrictions.
68
69
70
71
72
73
74
Evaluation Report on the Transfer of Technology Block Exemption

Regulation 240/96 [2001] COM/2001/0786 final. The mid-term review
was adopted pursuant to Article 12(2) of Regulation 240/96.
Anderman and Kallaugher, above , n 3, 11: For those commercial
agreements whose curves could fit within the corset of the BER, there were
considerable benefits. However, for those commercial agreements whose
contours were either too angular or too plump to fit within the golden
corset, there was a form of legal limbo.
Regulation 2790/99 [1999] OJ L 336/21 (on vertical agreements);
Regulation 2658/2000 [2000] OJ L 304/3 (on specialization agreements);
and Regulation 2659/2000 [2000] OJ L 304/7 (on research and
development agreements).
An overview of the issues is provided by Jones and Sufrin, above, n 1, at
728.
Regulation 772/2004, above, n 21, Recital 4.
Regulation 2790/99, above, n 70; Regulation 2658/2000, above, n 70; and
Regulation 2659/2000, above, n 70.
See Charles River Associates Ltd The European Commissions draft
Technology Transfer Block Exemption Regulation and Guidelines:
Regulation 772/2004 and the Guidelines:

towards an economic-based approach
In April 2004, the Commission adopted Regulation
772/2004, and a detailed set of Guidelines on the application of Article 81 of the EC Treaty to technology
transfer agreements, which expressly recognized that
it was appropriate to move away from the approach
of listing exempted clauses and to place greater emphasis on defining the categories of agreements which
are exempted up to a certain level of market power
and on specifying the restrictions or clauses which
are not to be contained in such agreements,72 in line
with the approach set out in the new generation of
block exemptions.73 The Guidelines also provided information on the interpretation of the block exemption regulation, and a series of rules and principles
to be applied to agreements falling outside the scope
of the TTBER.
The revised legislation faced significant criticism,74 as
undertakings expressed concerns in relation to (i) the
reduction of legal certainty75 arising from the repeal of
the notification system, (ii) the risk that market definition problems, as well as the complexities of the
economic criteria employed in the Regulation,76 could
obstacle the application of the block exemption; (iii) the
inadequacy of market-share to represent a reliable
indicator of the competitive situation of the relevant
market; (iv) the Guidelines approach towards incentives
to innovation.77 At the same time, however, commentators noted that [i]n general, the Commissions . . .
approach is to be unambiguously welcomed,78 in light
of the importance given to dynamic aspects of competition,79 and of the emphasis placed on economic criteria,
which, despite their complex application, add a layer
75
76
77
78
79
A significant departure from accepted competition policy principles

(2003) 8 CRA Competition Policy Discussion Papers 1.
Benedict Bird and Adrian Toutoungi The New EC Technology Transfer
Regulation: Two Years On (2006) 28(5) European Intellectual Property
Review 292.
See Hanns Ullrich The Interaction between Competition Law and
Intellectual Property: An Overview (2005) Robert Schuman Centre EU
Competition Law and Policy Proceedings 1, 22: Who else but big
business will be able to do the assessment or to defend itself on the basis
of the Guidelines, and will even large firms really do it, except where a big
deal is at stake?. Similar remarks can be found in Frank L Fine The EC
Competition Law on Technology Licensing (Sweet & Maxwell London 2006)
53.
Jones and Sufrin, above, n 1, 728.
Simon Bishop and Dan Gore From Black and White to Enlightenment?
An Economic View of the Reform of EC Competition Rules on
Technology Transfer in Claus-Dieter Ehlermann and Isabela Atanasiu
(eds) Competition Law Annual 2005 (Hart Publishing Oxford 2007) 142.
Ibid, 159 60.
adopted an overly formalistic and complex approach,

which could result in the imposition of an unnecessary compliance burden and force the industry into a
legal straitjacket;69
was too narrow in scope, as it did not cover several licensing arrangements unlikely to negatively affect
competition;
did not place sufficient weight on inter-brand issues,
nor coherently took into account the competitive
relationship between the parties; and
did not fall in line with the Commissions new
approach adopted in the most recent block exemption
regulations.70
of flexibility to the analysis of the potential anticompetitive effects of IP licensing.80
The block exemption
ARTICLE
193
The new economic-based approach endorsed by Regulation 772/2004 relies on an evaluation of the effects of restrictive licensing terms on the overall pro-competitive
impact of technology transfer agreements: these effects
depend, according to the Commission, on the market
power of the parties, and on the extent to which they
face competition from undertakings owning substitute
technologies or producing substitute products.81 Essentially, the Regulation submits the block exemption to
two cumulative conditions, concerning the respect of
specific market-share thresholds, and the absence of
hard-core restrictions (severely anti-competitive
restraints82). Where the conditions are fulfilled, there is
a presumption that the agreements generally lead to an
improvement in production or distribution and allow
consumers a fair share of the resulting benefits.83
The block exemption applies only to bilateral84 technology transfer85 agreements permitting the production
of contract products which, according to Article 1.1(b)
of Regulation 772/2004, comprise (i) pure agreements
for the licensing of patents,86 know-how, or software
copyright and (ii) mixed agreements, including those
the licensed rights have not expired, lapsed or been

declared invalid, or the know-how become publicly
known (Article 2);92
the combined market share93 of the parties on the
affected relevant technology and product market94
does not exceed 20 per cent, if they are competitors;95
or the market share of each of the parties does not
exceed 30 per cent on the affected relevant technology
and product market, if they are non-competitors
80
92
81
82
83
84
85
86
87
88
89
90
91
Mark R Patterson Revision of the New Technology Transfer Block

Exemption Regulation: convergence or capitulation? in Hanns Ullrich
(ed) The Evolution of European Competition Law: Whose Regulation, Which
Competition? (Edward Elgar Cheltenham 2006) 53, 70.
Regulation 772/2004, above, n 21, Recital 6.
Ibid, Recitals 10 11.
Ibid.
Ibid, Recital 19. The exemption also covers agreements where the
conditions are stipulated for more than one level of trade. If the
agreement is concluded between more than two parties, the Commission
will apply by analogy the same principles set out in the block exemption
(see Guidelines, above, n 23, para 40).
Including authorized sublicensing (Guidelines, above, n 23, para 48),
unless sublicensing is the primary objective of the agreement (ibid, para
45).
The notion of patents, according to Art 1.1(h), includes patents, patent
applications, utility models, applications for registration of utility models,
designs, topographies of semiconductor products, supplementary
protection certificates for medicinal products or other products for which
such supplementary protection certificates may be obtained and plant
breeders certificates.
See Guidelines, above, n 23, paras 51 53. The Commission declared that
it would apply the principles developed in the block exemptions and the
Guidelines to the licensing of copyright for the purpose of reproduction
and distribution of protected works. However, it would not extend them
to trademark licensing, nor apply them by analogy to the licensing of
rights in performances and other copyright-related rights.
See also Recital 9 of Regulation 772/2004, above, n 21.
Guidelines, above, n 23, para 63.
For an exception, see ibid, para 45.
Regulation 772/2004, above, n 21, Recitals 7 and 19.
93
94
95
Unless the know-how has become publicly known as a result of action by

the licensee, in which case the exemption applies for the duration of the
agreement.
For the calculation of market share in the technology market, it is possible
to take into account the share of the total licensing income from royalties
pertaining to each, or to rely on the sales of products incorporating the
licensed technology on downstream product markets. Article 3 of the
TTBER endorses the second method of calculation, which is in general a
good indicator of the strength of the technology (Guidelines, above, n 23,
para 23).
Ibid, paras 19 22, and the Commission Notice on the definition of the
relevant market [1997] OJ C372/5. According to Guidelines, above, n 23,
paras 20 21, product market comprises both the product and
geographical dimensions of the relevant goods and services markets, and
includes products which are regarded by the buyers as interchangeable
with or substitutable for the contract products incorporating the licensed
technology, by reason of the products characteristics, their prices and
their intended use. The technology market, instead, consists of the
licensed technologies and other interchangeable of substitutable
technologies.
To identify the competitive relationship between the parties, under
Guidelines, above, n 23, para 27, it is necessary to examine whether the
parties would have been actual or potential competitors in the absence of
the agreement (see also Article 1.1(j) of the TTBER, above, n 21).
Potential competition in the technology market is not taken into account
for the application of the block exemption (Guidelines, above, n 23, para
30). According to Article 4.3 of the TTBER, above, n 21 and Guidelines,
above, n 23, para 31, if the parties become competitors after the
conclusion of the agreement, the list of hardcore restrictions applying to
agreements between competitors will not be applied to [the agreement]
unless [it] is subsequently amended in any material respect after the
parties have become competitors.
related to the sale and purchase of products or to the licensing of other intellectual property rights,87 provided
that such provisions are not the primary object of the
agreement and are directly related to the production of
the contract products.88 Licences containing provisions
imposing specific obligations on the licensee as to the way
in which he must sell the products incorporating the
licensed technology benefit from the block exemption,
provided that they also satisfy the conditions set by Regulation 2790/1999 on vertical agreements.89 Agreements for
the purpose of subcontracting research and development,90 or to set up technology pools, as well as supply
and distribution agreements, are instead expressly
excluded from the field of application of the exemption.91
Article 2 enunciates the block exemption, which
applies only if the following conditions are collectively
satisfied:
194
ARTICLE
(Article 3);96 outside of these thresholds,97 individual

assessment is required;98
the agreement does not contain any hardcore restrictions,99 whose presence causes the exclusions of the
whole agreement from the benefit of the exemption
(Article 4).100
96
97
98
99
100
101
102
103
104
105
106
See, generally, Guidelines, above, n 23, para 68. According to ibid, para 32,
[i]f the parties own technologies that are in a one-way or two-way
blocking position, they are considered to be non-competitors on the
technology market. A special case is contemplated by ibid, para 33: an
agreement between competitors may change into a relationship between
non-competitors, if the licensees technology is obsolete or uncompetitive
on the relevant markets, or later becomes so.
If, during the duration of an exempted agreement, the market share of the
parties exceeds the threshold set by Article 3 of Regulation 772/2004,
above, n 21, the block exemption continues to apply for an interim period
of two years, following the year in which the threshold is exceeded (ibid,
Article 8(2)).
See also Article 4.3, which states that, if the undertakings were noncompetitors at the time of conclusion of the agreements and later become
competitors, the list of hardcore restrictions for non-competing parties
continues to apply, unless the agreement is amended.
Further, these restrictions are also unlikely to satisfy Article 101(3) TFEU,
when individually assessed (see Guidelines, above, n 23, paras 18 and 74
76).
For indirect price fixing, see ibid, para 78.
On cross-licensing agreements with running royalties, ibid, para 79.
Which can take the form of minimum or maximum caps, fixed royalties
or recommended prices (ibid).
Liable to reduce output in the market, even if they merely restrict the
incentive of the parties to expand output (ibid, para 82).
According to ibid, para 84, these restrictions are caught by Article 4
irrespective of whether the licensee remains free to use his own
technology, as the licensee would incur in significant costs to maintain
separate lines of production, and thus have little incentive to produce
using its own technology.
Exceptions include: (i) field of use and product market restrictions; (ii)
field of use, product market, and territorial restrictions, imposed on the
customer group that the licensor allocated to another

licensee during the first two years since the latter first
entered the related markets; (iii) restrictions of active or
passive sales to end-users by a licensee which is a
member of a selective distribution system and operates
at the retail level, excluding obligations prohibiting a
member of the system from operating out of an unauthorised place of establishment.
Article 5 contains a list of restrictions which are
excluded from the block exemption in order to protect
the incentives to innovate and the appropriate application of intellectual property rights:108 these excluded
restrictions, contrary to what happens for the hardcore
restrictions, do not prevent the application of the block
exemption to the rest of the agreement. The list of
Article 5 includes (a) exclusive grant-back109 and (b) assignment clauses related to severable110 improvements
or new applications of the licensed technology developed
by the licensee, imposed on it for the benefit of the licensor or of a third party designated by the licensor, as well
as (c) obligations on the licensee not to challenge the validity of intellectual property rights held by the licensor
in the common market, with the exception of termination clauses to be applied if the licensee challenges the
licensed rights.111 Further, if the undertakings are noncompetitors, any direct or indirect obligation limiting
107
108
109
110
111
licensor or the licensee, in relation to its industrial production, in

non-reciprocal agreements; (iii) an obligation on the licensor not to
license the technology to another licensee in a particular territory; (iv) in
a non-reciprocal agreement, the restriction of active or passive sales by the
licensee or the licensor into the exclusive territory or to the exclusive
customer group reserved for the other party; (v) in a non-reciprocal
agreements, restrictions on active sales by a licensee into the territory or
to the customer group allocated by the licensor to another licensee (ibid,
para 89), provided that the licensee was not a competitor of the licensor at
the time of the conclusion of the license; (iv) captive use restrictions
imposed on the licensee (which concern the obligation of the licensee to
produce the contract products only for its own use), provided that there
are no restrictions to the active sale of contract products, or their passive
sale as spare parts for its own products; (vii) in a non-reciprocal
agreement, the obligation on the licensee to produce the contract
products only for a particular customer, if the licence was granted to
secure an alternative source of supply for that customer (second-source).
Other exceptions include (i) restrictions concerning an exclusive territory
or customer group reserved for the licensor; (ii) captive use restrictions;
(iii) second-source provisions, at the same conditions established for
competitors; (iv) restriction of sales to end-users by a licensee operating at
the wholesale level of trade; and (v) restrictions of sales to unauthorized
distributors.
Recital 14 of Regulation 772/2004, above, n 21.
Which are likely to reduce the licensees incentive to innovate since it
hinders the licensee in exploiting his improvements, including by way of
licensing to third parties (Guidelines, above, n 23, para 109). On feed-on
provisions, see ibid, para 111.
No issues arise in relation to non-severable improvements, as they cannot
be exploited without the licensors permission (ibid, para 111).
According to the Guidelines, above, n 23, para 112: [t]he reason for
excluding non-challenge clauses from the scope of the block exemption is
the fact that licensees are normally in the best position to determine
The list of hard-core restrictions for undertakings that

are competitors comprises (i) price restrictions101 for the
sale of products to third parties102 (price fixing103), with
the exclusion of an obligation on the licensee to pay a
minimum amount of royalties; (ii) reciprocal output
restrictions,104 except restrictions imposed on only one
of the licensees in a reciprocal agreement; (iii) the allocation of markets or customers,105 with numerous exceptions;106 (iv) restrictions that reduce the licensees ability
to exploit its own technology, or restriction of the ability
of any of the parties to carry out research and development, unless indispensable to prevent the disclosure of
the licensed know-how to third parties.
Hard-core restrictions for non-competitors include (i)
price restrictions for the sale of products to third parties,
excluding the imposition of maximum or recommended
sale prices, if it does not amount to price fixing due to
pressure or inducement; (ii) territorial or customer
restrictions in relation to passive sales, except, inter
alia,107 restrictions concerning an exclusive territory or
Agreements falling outside the

block exemption
Technology transfer agreements falling outside the scope
of Regulation 772/2004 remain subject to individual
assessment under Articles 101(1) and (3).117 In this
context, the Guidelines provide a set of principles and
factors to be taken into account. Generally, there is no
presumption of illegality of agreements falling outside
the block exemption, or concerning undertakings whose
market-share exceeds the thresholds of Article 3, provided that they do not contain hard-core restrictions.118
112
113
114
115
116
117
whether or not an intellectual property right is invalid, and that the

elimination of invalid intellectual property is in the public interest. These
considerations do not apply to know-how.
Unless the restriction is indispensable to prevent the disclosure of the
licensed know-how to third parties.
According to Guidelines, above, n 23, para 119, in this case, the burden of
proof is on the Commission.
Ibid, para 121.
Ibid.
See ibid, paras 123 129.
Ibid, para 18 clarifies that [w]hen all four conditions of Article 81(3) are
satisfied, the restrictive licence agreement in question is valid and
enforceable, no prior decision to that effect being required.
195
Further, the Guidelines highlight the importance of

assessing the presence of independently controlled substitute technologies,119 to the effect that when there are
four or more substitute technologies in addition to those
controlled by the parties, an infringement of Article 101
TFEU is unlikely.120
Paragraph 12 of the Guidelines sets out the two fundamental questions that remain in the background of
the Commissions approach towards technology transfer
agreements, both in the block exemption and in the
assessment of agreements falling outside it:
Does the licence agreement restrict actual or potential
competition that would have existed without the contemplated agreement? If so, the agreement may be
caught by Article 81(1). In making this assessment it
is necessary to take into account competition between
the parties and competition from third parties.
Does the agreement restrict actual or potential competition that would have existed in the absence of the
contractual restraint(s)? If so, the agreement may
be caught by Article 81(1). . . . However, certain
restraints may in certain cases not be caught by
Article 81(1) when the restraint is objectively necessary for the existence of an agreement of that type or
that nature. . . . The question is . . . whether, given the
nature of the agreement and the characteristics of the
market, a less restrictive agreement would not have
been concluded by undertakings in a similar setting.
The individual assessment should be conducted taking
into account the way in which competition operates in
the relevant market121 and, in particular, (i) the nature
of the agreement (competitive relationship between the
parties, restrictive licensing terms); (ii) the market position of the parties (market power, assessed in relation
to market share122), (iii) of the competitors,123 (iv) of
the buyers of the licensed products; (v) the presence of
entry barriers; (vi) the maturity of the market; and (vii)
other factors (cumulative effects, collusive behaviours,
duration of the agreement).
118 See Guidelines, above, n 23, para 130. The provision is frequently referred
to as the second safe harbour (Jones and Sufrin, above, n 1, at 755).
119 Providing that the substitute technologies are available at a comparable
cost to the user.
120 Guidelines, above, n 23, para 131.
121 Ibid, para 132. According to ibid, para 24, market share may not always
be a good indication of the relative strength of available technologies; it is
thus appropriate to take also into account the number of independently
controlled substitute technologies.
122 Ibid, para 134.
123 Ibid, para 136: [t]he stronger the actual competitors and the greater their
number the less risk there is that the parties will be able to individually
exercise market power. A small number of competing companies, in a
similar market position, creates an increased risk of collusion.
the licensees ability to exploit its own technology or the

ability of any of the parties to carry out research and
development112 constitutes excluded restriction.
Article 6 allows the Commission to withdraw113 the
benefit of the Regulation when an agreement qualifying
for the exemption exceptionally has effects incompatible
with Article 101(3) TFEU, as, according to para 118 of
the Guidelines, the list of hardcore restrictions and the
list of excluded restrictions do not take into account all
the possible impacts of licence agreements. In particular,
anti-competitive effects may arise from (i) the presence
of parallel networks of restrictive agreements prohibiting
licensees from using third parties technologies, or licensors from licensing to other licensees, which generates a
significant risk of foreclosure of other licensors and
licensees;114 (ii) the non-exploitation of the licensed
technology without a valid reason; and (iii) the presence
of a significant number of licensors of competing technologies which impose on their licensees an obligation
to extend to them the more favourable conditions
granted to other licensors.115
Finally, Article 7 empowers the Commission to
declare the block exemption inapplicable to technology
transfer agreements containing specific restraints if the
relevant market is characterized by the presence of
predominant (over 50 per cent of the relevant market)
parallel networks of similar technology transfer agreements.116
ARTICLE
196
ARTICLE
obligations which are generally not restrictive of competition: confidentiality obligations, obligations on
licensees not to sub-license; obligations not to use the
licensed technology after the expiry of the agreement,
provided that the licensed technology remains valid
and in force; obligations to assist the licensor in enforcing the licensed intellectual property rights; obligations to pay minimum royalties or to produce a
minimum quantity of products incorporating the
licensed technology; and obligations to use the licensors trade mark or indicate the name of the licensor
on the product;129
royalty obligations,130 which are assessed taking into
account the competitive relationship between the
parties, with particular attention to sham licences,
disproportionate royalty rates, foreclosure effects
arising from the determination of royalties in relation
124
125
126
127
128
129
130
131
132
Ibid, para 141.

Ibid, paras 142 144.
Ibid, para 145.
See ibid, paras 146 152.
Ibid, para 146.
Ibid, para 155.
But, according to ibid, para 164, it is unlikely to be caught by Art 101(1)
TFEU [i]f the licensor has a limited market position on the product
market or lacks the capacity to effectively exploit the technology in the
licensees territory, or if the parties only compete on the technology
to products produced with technologies licensed by

third parties;
exclusive licensing:131 (i) reciprocal exclusive licensing
between competitors falls under the hardcore
restraint of Article 4.1(c) of the TTBER, as market
sharing; (ii) non-reciprocal exclusive licensing
between competitors requires an assessment of the
likely anti-competitive effects;132 (iii) exclusive licensing between non-competitors is likely to fulfil the
conditions of Article 101(3) TFEU and thus does not
generally warrant the Commissions intervention; (iv)
exclusive licensing of competing technologies to a
dominant licensee may have significant anticompetitive effects, leading to the foreclosure of third parties;
(v) cross-licensing agreements, containing an obligation not to license to third parties, give rise to
particular concerns when the package of technologies
resulting from the cross licences creates a de facto
industry standard to which third parties must have
access in order to compete effectively on the
market133 and are to be assessed according to the
same principles applicable to technology pools;
sales restrictions134 contained in a reciprocal agreement between competitors fall under Article 101(1)
TFEU and are unlikely to fulfil Article 101(3) TFEU;
if they are part of a non-reciprocal agreement between
competitors, their anti-competitive effects depend on
the market power of the parties, but they may be
indispensable for the dissemination of valuable technologies, and therefore fulfil the conditions135 of
Article 101(3); in agreements between non-competitors, such restrictions may fall outside Article 101(1)
if licensing would not occur in their absence;
output restrictions136 on the licensee may restrict
competition if the parties enjoy a significant market
power, but may also be indispensable to ensure dissemination of the licensors technology, and Article
101(3) is likely to apply if the licensors technology
is substantially better than that of the licensee, and
the output limitation substantially exceeds the prior
133
134
135
136
market and the licensor lacks the production and distribution assets to
effectively bring to market products incorporating the licensed
technology.
Ibid, para 170. Similar treatment in reserved to non-reciprocal agreements
with restrictions on active sales into the territory or to the customer
group allocated to another licensee, who was not a competitor of the
licensor at the time when he concluded the licence agreement.
Restrictions to passive sales are hard-core restrictions under Art 4.1(c)
TTBER.
Guidelines, above, n 23, paras 175 178.
To aid the interpreter in the examination of the

nature of the agreement, and the effects of restrictive licensing terms, the Guidelines clearly indicate124 that
negative effects include reduction of inter (through
grant-back provisions, and other clauses that increase
the transparency in the market or the commonality of
costs, or that create barriers to entry125) and intratechnology competition (primarily through territorial
restraints126), as well as foreclosure of competitors. Positive effects, under the umbrella of Article 101(3) TFEU,
can also arise from restrictive licence agreements, primarily in the form of market efficiencies (cost savings,
efficiencies at the distribution stage, combined research
and development efforts, etc127). Therefore, restrictive
licence agreements mostly also produce procompetitive
effects in the form of efficiencies, which may outweigh
their anti-competitive effects.128
Finally, the Guidelines examine the common
restraints that can be found in the agreements not
covered by Regulation 772/2004, applying the above
principles, in order to identify the likely outcome of the
individual assessment. Some of the most significant provisions concern:
Technology pools, settlement and

non-assertion agreements
Section 4 of the Guidelines specifically deals with technology pools, agreements whereby two or more parties
agree to pool their respective technologies and license
them as a package, either directly or through an authorized third party.142 The pooling agreements are not
covered by the block exemption, irrespective of the
number of parties, whereas the individual licences
granted to third party licensees fall within the scope of
Regulation 772/2004, if the conditions thereby set are
fulfilled.143 The Commission identifies both the restrictive and pro-competitive effects of technology pools:144
the former include the reduction of competition
between pool members, the risk of price fixing in pools
primarily composed of substitute technologies, the
reduction of innovation by foreclosure of alternative
technologies, when the pool supports or establishes a
standard;145 the latter comprise the reduction of transaction costs, double marginalization and royalty stacking,
137 Ibid, para 175.
138 Which take the form of an obligation on the licensee not to use third
party technologies which compete with the licensed technology (ibid,
para 196). See also ibid, paras 197 203.
139 Ibid, paras 179 185.
140 Ibid, paras 186 190.
141 Ibid, paras 191 195.
142 Ibid, para 41.
143 Ibid, para 212.
144 See ibid, paras 213 214.
145 Unless the licensee can terminate the licensing agreement at reasonable
notice, obtaining a reduction of total royalties due (ibid, para 222).
197
as well as the streamlining of the licensees negotiation

burden.
The Guidelines adopt a distinction between technological complements (when two technologies are both
required to produce the product or carry out the process
to which the technologies relate) and substitutes,146 as
well as between essential147 (if there are no substitutes
for that technology inside or outside the pool and the
technology in question constitutes a necessary part of
the package of technologies for the purposes of producing the product(s) or carrying out the process(es) to
which the pool relates148) and non-essential technologies. The nature of the technologies included in the pool
gives rise to specific concerns, which are addressed by
paras 219221 of the Guidelines.
The inclusion of substitute technologies is generally
regarded as a violation of Article 101(1) TFEU,149 and
does not lead to a reduction of transaction costs, as third
parties, absent the pool agreement, would not have
demanded licenses to both technologies. If substitute
technologies are non-predominant in the pool, their inclusion restricts inter-technology competition and
amounts to collective bundling; if they are predominant,
the agreement amounts to price fixing between competitors. The inclusion of non-essential but complementary
patents leads, under para 220, to a risk of foreclosure of
third party substitutes, and constitutes collective bundling, as the licensee is forced to license technologies it
may not need; therefore, when the pool has a significant
position on a relevant market, it is likely to fall within
Article 101(1). If the pool includes non-essential technologies, the individual assessment of the agreement
under Article 101(3) is bound to take into account: (i) if
the pool ensures competitive efficiencies, or if it could
not be limited to essential technologies, without a significant loss of efficiencies;150 (ii) whether the licensors
remain free to license their respective technologies independently; and (iii) if the licensee can obtain licences for
separate packages, when the pooled technologies have different functions or (iv) for part of the pooled technologies, with a corresponding reduction of royalties. Finally,
146 According to ibid, para 218, [w]hen due to efficiencies stemming from
the integration of two technologies licensees are likely to demand both
technologies the technologies are treated as complements even if they are
partly substitutable.
147 Which are also reciprocally complementary. The assessment of
essentiality is an on-going process, whose outcome depends on the
development of complementary or substitute technologies after the pool
is created (ibid, para 222).
148 Ibid, para 215.
149 When a significant amount of these technologies is included in the pool,
the conditions for individual exemption are also unlikely to be fulfilled.
output of the licensees production;137 the combination of output restrictions and exclusive licensing
increases the restrictive effects;
non-compete obligations138 may lead to foreclosure
of third-party technologies and facilitate collusion
between licensors; their restrictive potential is sensitive, inter alia, to the market power of the parties, the
presence of entry barriers, and the cumulative effect
of agreements concluded by several licensors; among
their pro-competitive effects, the Guidelines recall (i)
the prevention of misappropriation of the licensed
technology, in particular know-how, (ii) the provision
of an incentive to the licensee to invest in the licensed
technology and exploit it effectively and (iii) the provision of an incentive to the licensor, when it has to
make significant client-specific investments.
Other provisions concern field of use restrictions,139
captive use restrictions140 and tying and bundling.141
ARTICLE
198
ARTICLE
The procedures leading to the formation of the pool should

rely on an open and non-discriminatory process, involving
independent experts,155 to ensure that the included technologies are chosen on the basis of price/quality considerations, and that royalties reflect their respective value.
Similarly, the administrative rules of the pool should

include provisions aimed at preventing the exchange of
sensitive information,156 which is likely to facilitate collusion, and appropriate dispute resolution mechanisms,
preferably entrusted to independent third parties.157
The Guidelines explain that non-compete and grantback obligations, as well as termination clauses related to
the challenge of licensed patents, generate significant anti151 But not the licensing agreement between the pool and the licensee, which
may be caught by Article 101(1).
152 Joseph Scott Miller Standard Setting, Patents, and Access Lock-In: Rand
Licensing and the Theory of the Firm (2006) 40 Indiana Law Review 351.
153 See J Gregory Sidak Patent Holdup and Oligopsonistic Collusion in
Standard-Setting Organizations (2009) 5(1) Journal of European
Competition Law & Economics 123.
154 In particular, there should be no discrimination within product markets,
and the treatment of licensees should not depend on whether they are
licensors or not (Guidelines, above, n 23, para 226).
155 Ibid, para 231 233.
156 Concerning, inter alia, pricing and output data.
competitive concerns. Non-compete obligations should be

avoided, as they cause the foreclosure of substitute third
party technologies, and prevent the formation of competing pools featuring improved technology.158 Grant-back
obligations should be non-exclusive and be limited to
developments that are essential or important to the use of
the pooled technology.159 The right to terminate a licence
in case of challenge of pooled technologies should not
extend beyond the relationship between the challenged licensor and the licensee, and should not extend to the technologies owned by the other pool members.160
A separate set of rules161 is provided to deal with
settlement and non-assertion agreements: according to
para 204, [l]icensing including cross licensing in the
context of settlement agreements and non-assertion
agreements is not as such restrictive of competition since
it allows the parties to exploit their technologies post
agreement. Similarly, pro-competitive effects stem from
settlement agreements, without which the licensee
would be excluded from the market. However, this
general presumption does not apply to the individual
terms and conditions contained in such agreements,
which may be caught by Article 101(1),162 with the
exception of non-challenge clauses, which are inherent
to the objective of these agreements.163 If the conditions
thereby set are fulfilled, the block exemption applies to
settlements: the hard-core list for non-competitors
applies when the technologies involved are in a one-way
or two-way blocking position,164 while the list for competitors applies if there are no blocking positions and
the agreement serves the purpose of restricting the competition that existed before the agreement.
Agreements which contain cross-licensing provisions,
and reciprocal restrictions on the use or licensing of their
technologies, may equally be caught by Article 101(1),
especially if the parties have a significant degree of
market power and the restrictions clearly go beyond what
is required in order to unblock, or if they share markets
or fix reciprocal running royalties that have a significant
impact on market prices. Further, if the cross-licensing
extends to future developments, the agreement may
158
159
160
161
162
163
164
Ibid, para 227.

Ibid, para 228.
Ibid, para 229.
Ibid, para 204.
Ibid, para 209.
See ibid, para 32: A one-way blocking position exists when a technology
cannot be exploited without infringing upon another technology. . . . A
two-way blocking position exists where neither technology can be
exploited without infringing upon the other technology and where the
holders thus need to obtain a licence or a waiver from each other.
when the pool comprises only essential technologies,

the pooling agreement151 generally falls outside Article
101(1), irrespective of the market position of the parties.
The individual assessment of the effects of licensing in
the context of technology pools, pursuant to para 224, is
guided by three principles, which clarify that the risk of
anti-competitive effects is directly related to the pools
market position, that pools should not unduly foreclose
third-party technologies or limit the creation of alternative pools, and that pools enjoying a strong market position should be open and non-discriminatory. In light of
these principles, pool members are normally free to
negotiate and fix royalties for the technology package
and each technologys share of the royalties either before
or after the standard is set, but the perimeter of this
freedom in setting royalties is linked to the market position of the pool. Concerns about the lock-in152 effect
surrounding standard-setting organizations and the possible leverage of members holding standard essential
patents on their increased market power following inclusion in the standard (holdup153), suggest that royalties
should be agreed before the standard is finalized, in
order to minimize the anti-competitive effects. Further,
when the pool has a dominant position on the market,
members should commit to licensing their technologies
on fair and non-discriminatory (FRAND)154 terms,
through non-exclusive licenses.
ARTICLE
negatively affect the parties incentive to innovate, and

prevent them from gaining a competitive lead.165
The Commissions reform proposal
165 But see ibid, para 208.

166 Submission are available online: Revision of the rules for the assessment
of licensing agreements for the transfer of technology under EU
competition law, Public Consultations,
http://ec.europa.eu/competition/consultations/2012_technology_transfer/
(accessed 14 July 2013).
167 Draft revised Technology Transfer Block Exemption Regulation C(2013)
921 draft.
168 Minor changes include: (i) the provision that agreements concerning
more than one level of trade should comply with Regulation 330/2010
[2010] OJ L 102/1 concerning supply and distribution agreements (Recital
6); (ii) a new definition for exclusive licence and the inclusion of
trademarks in the list of intellectual property rights; (iii) the
reorganization of Art 5.1(a) and (b) into a single provision (Art 5.1(a));
(iv) the clarification that field of use restrictions are not considered also to
be output restrictions, falling among the hard-core provisions of Art 4, if
they do not limit the output that the licensee can produce within the
licensed field of use (para 195); (v) the provision that subcontracting
agreements whereby the contractor determines the transfer price of the
intermediate contract product between subcontractors in a value chain of
subcontracting generally also fall outside Art 101(1) provided the contract
products are exclusively produced for the contractor (para 45); (vi) the
provision that, if the market share threshold is exceeded on one or more
product or technology markets, the block exemption does not apply to
the agreement for the market concerned (Recital 12).
169 Regulation 1217/2010 [2010] OJ L 335/36.
170 Regulation 1218/2010 [2010] OJ L 335/43.
171 Which are subject to Regulation 330/2010, above, n 168. For more details,
see revised Guidelines, C(2013) 924 draft, para 52.
the technology defined in Art 1.1(b), and agreements

containing other provisions related to the purchase of
products by the licensee or to the licensing of other
intellectual property rights, provided that these provisions are directly and exclusively172 related to the
production of the contract products173Art 1.1(c));
extension of the 20 per cent market share threshold
(but not of the list of hardcore provisions dedicated
to competitors) to agreements concluded between
non-competitors, when the licensee owns a substitute
technology, which it uses only for in-house production (Art 3.2);174
elimination of Article 4.2(b)(ii) of the current Regulation, to the effect that restrictions of passive sales into
an exclusive territory or to an exclusive customer group
allocated by the licensor to another licensee during the
first two years that this other licensee is selling the contract products in that territory or to that customer
group are now considered to be a hard-core restraint;175
extension of the excluded restriction concerning
exclusive grant-back and assignments to any improvements made by the licensee to the licensed technology,
whether severable or not (Art 5.1(a));
extension of the excluded restriction covering nonchallenge clauses to direct or indirect obligations
imposed on either of the parties (Art 5.1(b));176
the addition, among the excluded restrictions, of the
provisions177 granting, to either party,178 the right to
172 Currently, Regulation 772/2004, above, n 21, requires that these

provisions do not constitute the primary object of the agreement and are
related to the production of the contract products (Art 1(b)).
173 See the revised Guidelines, above, n 171, para 51: [p]rovided these other
intellectual property rights enable the licensee to better exploit the
licensed technology, the TTBER covers technology transfer agreements
even if the principal interest of the parties lies in the exploitation of the
former rather than the latter.
174 Revised Guidelines, above, n 171, para 72 explains that [i]f the licensee
already owns technology which is substitutable for the licensed
technology, the technology transfer agreement is more likely to negatively
affect competition on the downstream product market as the licensee is
already (potentially) active on that market without the technology
transfer agreement in question.
175 Unless such restrictions are objectively necessary for the protected licensee
to penetrate a new market, and subject to time limitations. See ibid, para
116: Where substantial investments by the licensee to start up and
develop a new market are necessary, restrictions of passive sales by other
licensees into such a territory or to such a customer group which are
necessary for the licensee to recoup those investments generally fall
outside Article 101(1) for a period of up to two years.
176 Currently, Regulation 772/2004, above, n 21, Art 5.1(c) only concerns
non-challenge clauses imposed to the licensee.
177 Except to those pertaining to know-how (the revised Guidelines, above, n
171, para 126).
178 Currently, Regulation 772/2004, above, n 21, Art 5.1(c) allows termination
clauses, in relation to challenges brought by the licensee against the
licensed IPRs.
In December 2011, the Commission launched a preliminary public consultation, seeking the stakeholders
views166 on their experience with the block exemption,
and suggestions for suitable improvements to the regime
introduced by Regulation 772/2004, in light of its
scheduled expiry on 30 April 2014. In February 2013, a
draft revised Technology Transfer Block Exemption
Regulation was published.167 The proposal includes the
following main changes:168
the exclusion, from the field of application of the
block exemption, of research and development agreements falling within the scope of Regulation 1217/
2010169 (Art 9), of specialization agreements covered
by Regulation 1218/2010170 (para 58 of the revised
Guidelines) and of agreements the purpose of which
is the mere reproduction and distribution of software
copyright protected products (Recital 7);171
a set of new definitions for the notions of technology
(which comprises, according to Art. 1.1(b), knowhow, patents, utility models, design rights, topographies of semiconductor products, supplementary
protection certificates, plant breeders certificates and
software copyright), and technology transfer agreement (which covers licensing agreements related to
199
200
ARTICLE
terminate the agreement in case of validity challenges

to intellectual property rights which the other party
holds in the European Union (Art 5.1(b));179
the inclusion of an extensive corpus of rules providing
definitions for product, geographic and technology
markets,180 and addressing the calculation of market
share.181
The following table provides an overview of the main
differences between the current regime of block exemption and its proposed revision:
Draft revised
TTBER
Agreements for the

mere reproduction
and distribution of
software copyright
protected products
Within the field of

application of the
TTBER
Outside of the field

of application of the
TTBER, and subject
to Regulation 330/
2010 on vertical
agreements
Mixed agreements
(containing
provisions related to
the purchase of
products by the
licensee or to the
licensing of other
IPRs not included in
the TTBER
definition)
Within the field of

application of the
TTBER, if the other
provisions do not
constitute the primary
object of the
agreement and are
related to the
production of the
contract products
Within the field of

application of the
TTBER, if the other
provisions are
directly and
exclusively related to
the production of the
contract products
Agreements between
non-competitors,
when the licensee
owns a substitute
technology, which it
uses only for inhouse production
Subject to the 30 per

cent market share
threshold (as for noncompetitors), and to
the list of hard-core
restrictions for noncompetitors
Subject to the 20 per

cent combined
market share
threshold (as for
competitors), and to
the list of hard-core
restrictions for noncompetitors
Two-year restriction
of passive sales by a
non-competitor
licensee into an
exclusive territory or
to an exclusive
customer group
allocated to another
licensee
Allowed
Constitutes a hardcore restriction,

which precludes the
application of the
safe harbour of the
TTBER
179 The modification is warranted, according to the Commission, by the fact

that termination rights can have the same effect as a non-challenge clause
(the revised Guidelines, above, n 171, para 125), and by the public interest
in enforcing only valid intellectual property rights.
180 See Draft Revised TTBER, above, n 167, Art 1 and the revised Guidelines,
above, n 171, paras 21 24.
181 Revised Guidelines, above, n 171, paras 76 83. Draft Revised TTBER,
above, n 167, Art 8(d) and the revised Guidelines, above, n 171, para 25
explain that the market share in the technology market should be
calculated on the basis of the presence of the licensed technology on the
If concerning
severable
improvements, it
constitutes an
excluded restriction.
Constitutes an
excluded restriction,
both in relation to
severable and
non-severable
improvements
If concerning
non-severable
improvements, it is
allowed.
Non-challenge
clause
Constitutes an
excluded restriction, if
imposed to the
licensee
Constitutes an
excluded restriction,
if imposed to either
party
Termination clause
Allowed, in relation to
challenges brought by
the licensee against
the licensed IPRs
Always constitutes
an excluded
restriction, even if
imposed on the
licensor or
concerning nonlicensed IPRs that
the other party
holds in the EU
Technology pools, settlement and nonassertion agreements

The principles surrounding the assessment of settlement
agreements remain the same, but Section 3 is enriched
through some new provisions. Paragraph 223 clarifies
that pay-for-restriction or pay-for-delay clauses in settlement agreements between competitors may be caught by
Article 101(1) TFEU, especially if the licensor induced,
financially or otherwise, the licensee to accept settlement
terms more restrictive than those based on the merits
of the licensors technology. Paragraph 227 concerns
non-challenge clauses and states that, although these
provisions are inherent to the nature of settlement agreements, they may still have anti-competitive effects, if
they are negotiated in bad faith182 on the part of the
licensor, or if it induced the licensee to accept the clause.
The revised Guidelines also provide a re-organization
of Section 4, dedicated to technology pools. Paragraph
229, aiming to clarify the relationship between technology pools and standards in light of the Guidelines on
the applicability of Article 101 of the Treaty on the
Functioning of the European Union to horizontal
relevant market(s) where the contract products are sold, that is on the
basis of the sales data of the contract products produced by the licensor
and its licensees combined, taking into account relevant geographical
limitations. The royalty-based methodology, or a combination of both,
may be used for agreements falling outside of the block exemption, to
evaluate the market strength of the licensor and the relative strength of the
available technologies.
182 When the licensor knows or could reasonably be expected to know that
the licensed technology does not meet the respective legal criteria to
receive intellectual property protection.
Regulation 772/2004
Exclusive grant-back
and assignment of
improvements made
by the licensee
(a) participation in the standard and pool creation process

is open to all interested parties; (b) sufficient safeguards are
adopted to ensure that only essential technologies (which
therefore by necessity are also complements) are pooled; (c)
sufficient safeguards are adopted to ensure that exchange of
sensitive information is restricted to what is necessary for
the creation and operation of the pool; (d) the pooled technologies are licensed into the pool on a non-exclusive basis;
(e) the pooled technologies are licensed out to all potential
licensees on FRAND terms; (f) the parties contributing
technology to the pool and the licensees are free to challenge
the validity and the essentiality of the pooled technologies;
and (g) the parties contributing technology to the pool and
the licensee remain free to develop competing products and
technology.
Departing from the previous perspective, para 231 clarifies that neither pooling agreements, nor licensing agreements between the pool and third parties, as multiparty
agreements, are covered by the block exemption. Among
the provisions concerning the latter agreements, para
250 provides a modified list of principles applicable: new
principles include (i) the stronger the market position of
the pool, the more likely that agreeing not to license to
all potential licensees or to license on discriminatory
183 Guidelines on the applicability of Article 101 of the Treaty on the
Functioning of the European Union to horizontal co-operation
agreements [2011] OJ C 11/1 (Horizontal Guidelines).
184 The same principle is enshrined in the current Guidelines, above, n 23,
para 231.
185 Revised Guidelines, above, n 171, para 229.
186 Ibid, para 256 introduces a new provision, which deals with the inclusion,
in the pool, of patent applications, inviting pool members to use the
patent application procedures that allow for faster granting.
187 Current Guidelines, above, n 23, para 226.
188 See Inquiry into competition in the pharmaceuticals sector IP/09/1098
[2009], and the Final Report of 8 July 2009.
189 See Cases T-321/05 [2010] AstraZeneca v Commission ECR II-02805, and
C-457/10 P AstraZeneca v Commission, 6 December 2012.
190 European Commission, Assessment of potential anticompetitive conduct
in the field of intellectual property rights and assessment of the interplay
201
terms will infringe Article 101 TFEU, and (ii) the technology transfer agreements should not contain any of
the hard-core restrictions listed in Article 4 of the block
exemption. As pertaining to non-challenge obligations,
including termination clauses, the proposal clarifies that
they are likely to fall under Article 101(1) TFEU, modifying the previous approach that allowed termination
clauses within the boundaries of the relationship between
the challenged licensor and the licensee.185 Finally,186 the
fair and non-discriminatory licensing commitment prescribed by the current Guidelines in relation to pools
enjoying a dominant position on the market,187 is now
replaced by a FRAND commitment, as defined by para
287 of the Horizontal Guidelines.
Improvement or hindrance? The future

of IP licensing in the EU
The proposed reform of the TTBER takes inspiration from
recent studies and developments that clearly highlighted
some outstanding issue arising from the overlapping of intellectual property and competition law. In particular,
several of the changes suggested by the Commission appear
to have been conceived in light of: (i) the 2009 Inquiry into
competition in the pharmaceuticals sector,188 (ii) the judgments of the General Court and of the Court of Justice in
AstraZeneca v Commission,189 (iii) the 2011 Assessment of
potential anticompetitive conduct in the field of intellectual
property rights and assessment of the interplay between
competition policy and IPR protection,190 and (iv) the
current debate on the licensing of essential patents.191
The in-depth competition inquiry into the pharmaceutical sector showed that originator companies frequently seek to delay generic entry, relying, inter alia,192
on reverse-payment settlements, through which the
originator and the generic company settle an ongoing
dispute, agreeing to a temporary restriction on generic
entry and a direct payment from the former to the
between competition policy and IPR protection (November 2011).
Available at http://ec.europa.eu/competition/consultations/
2012_technology_transfer/study_ipr_en.pdf (accessed 16 October 2013).
191 See, for an ample discussion, John Temple Langs comments on
Regulation 772/2004, available at http://fordhamipconference.com/wpcontent/uploads/2010/08/TempleLang_Transfer.pdf (accessed 16 October
2013).
192 The Inquiry also found that originator companies seek to delay generic
entry by recurring to (i) patent clusters, filing a large number of EU-wide
patents and pending patent applications for a single medicine; (ii) judicial
actions meant to force generic companies to agree to settlements
(although generic companies won more than 60 per cent of these
lawsuits); (iii) intervention in national procedures for the approval of
generic medicines (causing an average delay of four months).
co-operation agreements (Horizontal Guidelines183),

holds that [t]here is no inherent link between technology pools and standards, but often the technologies in
the pool (wholly or partly) support a de facto or de iure
industry standard. Paragraph 233 clarifies the benefits of
ensuring the presence of people representing different
interests in the standard, as this can ensure the selection
of technologies on the basis of price/quality considerations, and their licensing to all potential licensees
without discrimination and on fair terms, reflecting the
value of the technology.184
Paragraph 244 summarizes the conditions that generally make a pooling agreement remain outside Article
101(1), irrespective of the market position of the parties.
These conditions comprise:
ARTICLE
202
ARTICLE
In this context, the introduction of a specific provision to directly address pay-for-restriction and payfor-delay clauses in settlement agreements is particularly
relevant. Paragraph 223 of the revised Guidelines now
clarifies that:
193 The Commission noted that direct payments aimed at restricting access to
the market for generic manufacturers, have attracted antitrust scrutiny in
the USA.
194 MEMO/09/321 [2009].
195 IP/13/563 [2013]. Other investigations are pending (IP/12/835 and IP/13/
81).
196 The Statement of Objections had been sent in July 2012. See IP/12/834
[2012].
197 Federal Trade Commission v Actavis Inc and others, Docket No. 12-416
(2013).
198 Standard Oil Co of New Jersey v United States, 221 US 1 (1911).
199 Similarly, the last sentence the revised Guidelines, above, n 171, para 227
targets reverse-payment settlements in which the licensor induces,
financially or otherwise, the licensee to agree not to challenge the validity
of the technology.
200 C-457/10 P AstraZeneca, above, n 189. The judgments reviewed a
Commissions decision, which found that AstraZeneca had committed
two abuses of a dominant position. In particular, the first abuse consisted,
according to the Commission, in misleading representations to patent
offices in several member states, which allegedly formed part of an overall

strategy aimed at preventing generic entry, by obtaining SPCs for
omeprazole to which the company was not entitled.
201 Even if its application is rejected, since the potential for anti-competitive
effects is relevant for the application of Art 102 TFEU ([i]t follows from
the Courts case-law that, although the practice of an undertaking in a
dominant position cannot be characterised as abusive in the absence of
any anti-competitive effect on the market, such an effect does not
necessarily have to be concrete, and it is sufficient to demonstrate that
there is a potential anti-competitive effect). See Michele Giannino The
EU Court of Justice Upholds the AstraZeneca Condemnation for
Misusing Patent Law Procedures (2013) 4(4) Journal of European
Competition Law & Practice 317.
202 Thus, added the court, there was no need for the Commission to
demonstrate AZs bad faith or positively fraudulent intent on its part, it
being sufficient to note that such conduct, characterised by a manifest
lack of transparency, is contrary to the special responsibility of an
undertaking in a dominant position not to impair by its conduct genuine
undistorted competition in the common market.
Settlement agreements between competitors which include

a licence for the technology and market concerned by the
litigation but which lead to a delayed or otherwise limited
ability for the licensee to launch the product on this market
may under certain circumstance be caught by Article
101(1). Scrutiny is necessary in particular if the licensor provides an inducement, financially or otherwise, for the licensee to accept more restrictive settlement terms than would
otherwise have been accepted based on the merits of the
licensors technology.199
Pay-for-delay and reverse-payment settlements are not,

however, the only competitive distortions that may be
introduced in settlement agreements. In AstraZeneca v
Commission 200 the Court of Justice, upholding the
judgment rendered by the General Court at first instance,
acknowledged that a dominant undertaking commits an
abuse of its dominant position in the market, if it applies
for patent protection providing misleading information to
the patent offices, in order to prevent generic entry.201 The
General Court, in particular, focused on AstraZenecas
deceptive behaviour, observing that the company could
not reasonably be unaware that its behaviour was likely to
mislead some of the patent offices,202 and that it deliberately applied a strategy of misleading [other] national
patent offices.
Concern over similar practices appears to have influenced the approach of the revised Guidelines towards
the inclusion of non-challenge clauses in settlement
agreements. Paragraph 227 tackles the issue, explaining
that, although non-challenge clauses in bona-fide
latter.193 The Commission found that [i]n approximately 50% [of the settlements concluded between originators and generic companies] generic entry was restricted
and in approximately half of these there was a value
transfer from the originator to the generic company,194
and that [m]ore than 10% of the settlements were
so-called reverse payment settlements which provided
for direct payments, amounting in total to more than
EUR 200 million.
In the Final Report, the Commission noted that
[s]ettlement agreements that limit generic entry and
include a value transfer from an originator company to
one or more generic companies are an example of . . .
potentially anticompetitive agreements, in particular
where the motive of the agreement is the sharing of
profits via payments from originator to generic companies to the detriment of patients and public health
budgets. On 19 June 2013,195 following an investigation
which lasted almost a year,196 the Commission imposed
fines of EUR 93.8 million and 52.2 million respectively
on the pharmaceutical giant Lundbeck and several
generic manufacturers, for concluding pay-for-delay
agreements, contrary to Article 101 TFEU, in relation to
the entry into the market of generic versions of Lundbecks citalopram, a blockbuster anti-depressant.
The sensitive approach to the issue exhibited by the
Commission, signals a general awareness of the anticompetitive potential of similar agreements. In this
perspective, on 17 June 2013, the US Supreme Court
disclosed its position on reverse-payment settlements in
Federal Trade Commission v Actavis Inc:197 the court
refused the quick look approach advocated by the FTC
and held that the assessment of these settlements requires
the application of the rule of reason,198 finding that a
reverse payment, where large and unjustified, can bring
with it the risk of significant anticompetitive effects.
[C]onsider the case of a dominant company that files a

patent application where it knows that there are some
claims in its application that are debatable, but does not disclose these weaknesses in its application to the patent office.
Is this failure to proactively disclose these weaknesses misleading? Does it make a difference how debatable the claims
203 See the revised Guidelines, above, n 171, para 226.
204 Case 322/81 Nederlandsche Banden-Industrie-Michelin v Commission
[1983] ECR 3461, para 57.
205 David W Hull The Application of EU Competition Law in the
Pharmaceutical Sector (2012) 3(5) Journal of European Competition Law
& Practice 473.
206 Ibid, 476.
207 Assessment of potential anticompetitive conduct, above, n 190.
203
are before failure to disclose becomes misleading? Who

determines this? Is it necessary to show that the patent office
would not issue the patent if it knew of the issue? Or is it
sufficient to show that it would be unlikely to issue the
patent? . . . Does the likelihood that the patent office would
normally identify and investigate such a weakness during its
review of a patent make any difference?206
Other changes introduced by the Commissions reform

proposal appear to have been inspired by a 2011 study on
the interplay of intellectual property and competition
law,207 where the researchers examined, inter alia, the
issues arising from patent thickets, cross-licensing, patent
pools and grant-backs. On the latter, the study thoroughly
examined the effects of grant-back provisions contained
in agreements concluded between competitors and noncompetitors, whether related to severable or non-severable improvements. The findings were not aligned with
the current regime of the TTBER, and brought into question the leniency exhibited towards non-severable
improvements.208 The researchers observed that:
Overall, . . . irrespective of the number of licensees, the licensor cannot be hurt ex post by non-severable innovation but
is hurt by severable innovation. While this conclusion seems
to question the current leniency toward grant-backs of nonseverable innovations it also suggests that the but for argument in defence of grant-back might be strong when it
comes to severable innovations. Should we then recommend
a regime under which grant-backs of severable innovation
are looked at quite favourably? We would answer this question negatively for two main reasons. The first one is practical. It is crucial that the range of innovations to which
grant-back clauses apply be defined quite precisely and narrowly. . . . The second reason is that the patent system does
already take into account the fact that todays technologies
are likely to be supplanted by future generations and that
the very knowledge imparted by a patent might help others
to obtain their own patents that might make the original
invention obsolete. In economic terms, the patent system deals with this issue through the concept of leading
breadth.209
Essentially, the study suggested retaining the current

regime on exclusive grant-backs related to severable
improvements or new applications, which are included
in the excluded restrictions of Article 5 of Regulation772/2004, but challenged the different approach
208 Ibid, 63: The contrast is, once again, stark between the case of nonseverable improvements, where grant-backs do not lead to more licensing
and the case of severable improvements, where grant-backs usually do
lead to a greater occurrence of licensing. This raises further doubts as to
the wisdom of a policy that looks at grant-back clauses more leniently
when it involves non-severable improvements.
209 Ibid, 64.
settlement agreements are generally considered to fall

outside Article 101(1),203 they can under specific circumstances be anti-competitive and be caught by Article
101(1). In particular, the provision clarifies that this is
the case where the licensor knows or could reasonably be
expected to know that the licensed technology does not
meet the respective legal criteria to receive intellectual
property protection, for example where a patent was
granted following the provision of incorrect, misleading
or incomplete information.
The new provision, however, raises significant issues, as
it requires a complex and objectionable ex post review not
only of the active or passive conduct of the licensor, but
also of its state of mind at the time of patent filing. In
AstraZeneca, the Court of Justice, following the General
Courts observations, confirmed that the assessment of
whether representations made to public authorities for
the purposes of improperly obtaining exclusive rights are
misleading must be made in concreto and may vary
according to the specific circumstances of each case, to
the effect that not any patent application made by such
[a dominant] undertaking which is rejected on the
ground that it does not satisfy the patentability criteria
automatically gives rise to liability under Article 82 EC.
Further, para 227 does not explicitly limits its application to the licensors behaviour at the time of patent application. Taking into account the lack of a definite
temporal framework, and the special responsibility of an
undertaking in a dominant position not to impair
genuine undistorted competition,204 it could be inferred
that, if the licensor acquired knowledge of the invalidity
of its application after filing, it should at least abstain
from including a non-challenge clause in a subsequent
settlement agreement, if not be required to withdraw the
application.
It is readily apparent that the application of such provision will not be easy. One commentator, D W Hull,205
explicitly listed some of the key issues that remain unaddressed, and undermine legal certainty:
ARTICLE
204
ARTICLE
210 For a detailed list of the studys conclusions, see ibid, 32.
211 Revised Guidelines, above, n 171, para 250(b).
212 Which constitutes, per se, one of the reasons that allow pools to include
complementary but non-essential technologies, ex para 247(a). This
provision clarifies that the assessment of these pools should take into
account whether there are any pro-competitive reasons for including the
non-essential technologies in the pool, for example due to the costs of
assessing whether all the technologies are essential in view of the high
number of technologies.
213 See eg IGR Stereo-Television/Salora in the Commissions XI Competition
Policy Report (1982), 63.
214 Horizontal Guidelines, above, n 183.
215 As exemplified by the Commissions investigations on Samsungs and
Motorolas use of injunctions for the enforcement of standard-essential
patents, IP/12/1448 [2012] and IP/13/406 [2013]. See also Case C-170/13
Huawei Technologies, pending before the Court of Justice, which concerns
the availability of injunctions against willing potential licensees of the
essential technologies.
216 See, generally, Mark A Lemley Intellectual Property Rights and StandardSetting Organizations (2002) 90(6) California Law Review 1889.
The revised rules on technology pools constitute a refinement of the antitrust policy which case law has been
carving since the 1980s.213 As of late, the Commission
has focused on the definition and consequences of
FRAND licensing commitments, which the revised
Guidelines apply to patent pools, following the approach
of the Horizontal Guidelines.214 In particular, the Commissions concerns appear to concentrate on the use of
injunctive relief against willing licensees,215 which is frequently seen as a form of anti-competitive leverage on
the increased market power conferred by the dominant
position of the essential patent holders.216 In the context
of patent pools, the rules on governance and participation refined by the proposed reform address similar concerns, and are likely to discourage and prevent abusive
conducts by pool members, strengthening the Commissions favourable approach towards pools which adopt
the institutional framework set out in para 244. The
revised Guidelines, however, do not contemplate a methodology for the calculation of FRAND rates, nor impose
a royalty cap,217 to the effect that the royalty calculation
remains subject to the general principles contained in ss
paras 289 and 290 of the Horizontal Guidelines.218
Controversial yet reasonable changes

Following a public consultation219 on the reform proposal, the Commission received more than 50 submissions by public authorities and private organizations.
Although some of the submissions welcomed the proposed changes without reservations,220 most focused on
the four major changes (termination clauses, grantbacks concerning non-severable improvements, passive
sales restriction, application of the 20 per cent market
share threshold for non-competitors, when the licensee
217 In line with the suggestion formulated by the study on the interplay of
intellectual property and competition law, Assessment of potential
anticompetitive conduct, above, n 190, at 31: would it make sense to
impose some ceiling on the royalties that can be charged by the pool? As
pointed out by Gilbert (2009) such a restriction is likely to be
counterproductive.
218 According to these provisions, the assessment of FRAND rates should be
based on whether the fees bear a reasonable relationship to the economic
value of the IPR. The Horizontal Guidelines discourage the use of costbased methods, and suggest to compare the licensing fees charged preand post-standardization, to obtain an independent expert assessment, or
to compare the proposed rates with licensing rates charged for similar
intellectual property rights included in comparable standards.
219 The stakeholders submissions are available at Draft proposal for a revised
block exemption for technology transfer agreements and for revised
guidelines, Public Consultations, http://ec.europa.eu/competition/
consultations/2013_technology_transfer/index_en.html (accessed 14 July
2013). The following footnotes refer to these submissions by the name of
the stakeholder.
220 See Bundesministerium fur Wirtschaft und Technologie und
Bundeskartellamt.
taken towards similar clauses concerning non-severable

improvements. In this perspective, the revised TTBER
proposal provides the harmonization suggested by the
study, as the new formulation of Article 5.1(a) does away
with the distinction between severable and non-severable improvements, and defines as excluded restriction
any direct or indirect obligation on the licensee to grant
an exclusive licence or to assign rights, in whole or in
part, to the licensor or to a third party designated by the
licensor in respect of its own improvements to or its
own new applications of the licensed technology.
The researchers also undertook a detailed review of
scholarly and empirical studies on patent pools. Their
conclusions210 suggested (i) keeping the safe harbour
limited to essential patents, (ii) assessing the inclusion of
complement technology under the rule of reason, (iii)
requiring the pool to allow members to keep licensing
their IP freely outside of the pool, (iv) requiring a justification for pools with selective membership rules, (v) focusing (not on royalty levels or caps, but) on the type of
IPRs included in the pool and on governance rules.
Again, the numerous changes introduced by the revised
Guidelines fall in line with the studys observations, as
the reform of s 4 aims at providing greater legal clarity,
by adopting a new definition of essentiality and a list of
detailed principles that should guide the formation and
governance of the pool. The introduction of a new
market-share test for the assessment of the licensing
practices of the pool,211 and the criteria set out by para
247 to evaluate the competitive effects of pools including
complementary but non-essential technologies, also
respond to the researchers suggestions, although the
latter provision may be difficult to apply, due to the
complexities inherent in the evaluation of the essentiality
of a technology.212
Although the stakeholders objections voice reasonable

concern arising from customary industry practices, the
changes suggested by the Commission appear to have sound
justifications, as both termination clauses, and exclusive
grant-backs of non-severable improvements, are capable of
significant anti-competitive effects.
221 See e.g. American Chamber of Commerce (ACC), Bird & Bird, Intellectual
Property Owners Association, American Bar Association, Association of
the British Pharmaceutical Industry.
222 For an overview of the arguments against the new regime on termination
clauses, see ACC. Bird & Bird and GRUR suggested that the exclusion
should be limited to F/RAND commitments in the standard setting
context (contra, Microsoft, which submitted that the current regime, and
especially the market share threshold, are sufficient to take care of the risk
of abuse in licensing agreements concerning standard essential patents).
Alstom highlighted that the termination clause should only concern the
licensed intellectual property rights.
223 Revised Guidelines, above, n 171, para 125. It has also been alleged that
such objective should not be applied in such a way that it shifts the duty of
assessing the validity of intellectual property rights from the authorities in
charge of their administration, to their holders (see ACC).
224 Bird & Bird.
225 Who is normally in the best position to determine whether or not an
intellectual property right is invalid (para 123 of the Revised Guidelines,
above, n 171).
205
Such clauses may respectively (i) discourage the licensee225 from challenging the validity of the licensed technology, and perpetuate the exclusionary effects of an
invalid monopoly, and (ii) discourage the licensee from
actively developing improvements of the licensed technology, reducing intra-technology competition and the
overall development of the relevant technology market,
foreclosing third parties interested in licensing the
improvements, and conferring increased market and
bargaining power on the licensor. These concerns
provide sufficient justification for the submission of
termination and grant-back provisions to an individual
assessment of their compatibility with Article 101(1)
TFEU.226
The evaluation of the proposed changes concerning
restrictions to passive sales and the application of the
20 per cent combined market share to non-competitors,
when the licensee owns a substitute technology used
only for in-house production, raises significant issues.
The first change, under which the previously exempted
two-year restrictions of passive sales by a non-competitor licensee into an exclusive territory or to an exclusive
customer group allocated to another licensee become
hard-core restrictions, harmonizes the TTBER with
Regulation 330/2010,227 concerning vertical supply and
distribution agreements. However, several stakeholders228 questioned the rationale underlying this
harmonization, highlighting the differences between the
agreements disciplined by the two regulations. Further,
it was observed that, although the restriction can be
individually exempted if objectively necessary for the
licensee to penetrate a new market, such burden of proof
would undermine legal certainty,229 and could discourage competition by smaller undertakings attempting to
enter new markets, or markets characterized by dominant players. The second change incurs the risk of (i)
muddling the distinction between competitors and
226 See also s 5.6 of the Antitrust Guidelines, according to which, in the USA,
the evaluation of grant-back provisions requires the use of the rule of
reason, and takes into account their likely effects in light of the overall
structure of the licensing arrangement and conditions in the relevant
markets.
227 See above, n 168.
228 See e.g. City of London Law Society. Bird & Bird submitted that [t]he
Commission appears to be concerned that in certain instances, such
investments by licensees may not be made. Any such reaction is in our
view disproportionate, given that as a general rule licensees under
agreements covered by the draft Regulation are producing contract
products for which appropriate investments are expected and needed.
This is in contrast to the position under a vertical agreement where
transaction specific investments are much less likely on the part of the
buyer/distributor.
229 City of London Law Society.
owns a substitute technology used only for in-house

production), suggesting their repeal.221
In particular, several stakeholders222 highlighted that
the inclusion of termination clauses among the excluded
restriction of Article 5 could trigger abusive behaviour
on the part of the licensee, which could conclude a
licensing agreement for the sole purpose of challenging
the validity of the licensed technology, while continuing
to use it, without incurring in the risk of infringement.
In a similar situation, the licensee could wilfully postpone the review of the licensed technologies validity,
which is normally conducted before or during the negotiations, in order to subsequently be in a position to rely
on the threat of a challenge of invalidity to obtain direct
or indirect benefits (reduction of royalties, or renegotiation of licensing terms). A similar behaviour would
thus defeat one of the purposes of the change, namely
that of protecting the public interest to eliminate any
obstacle to economic activity which may arise where an
intellectual property right was granted in error,223 as a
settlement would probably be the most likely outcome
of the controversy.
As concerns exclusive grant-backs, submissions
pointed to the fact that the inclusion of grant-backs
related to non-severable improvements among the
excluded restrictions could determine a lock-in effect,
under which the licensor could remain dependant on its
relationship with the licensee or could lose the ability to
exploit the (improved) technology,224 effectively discouraging the licensing of technologies, especially if in
an early stage of development.
ARTICLE
206
ARTICLE
non-competitors,230 by applying the market-share

threshold defined for the former, and the list of hardcore restrictions reserved to the latter, and (ii) submitting the application of the provision to information that
may not be available to one of the parties at the time of
negotiations,231 and to a questionable assessment of the
nature, characteristics, and use of the technology owned
by the licensee.
Towards a third generation approach?
First, the block exemption itself appears to be overly tightly

defined, with the result that many of the agreements that the
TTBER purports to encourage will remain unaffected by the
block exemption and will be subject to costly and uncertain
individual assessment under Article 81(3) EC. Secondly, the
Guidelines suggest that in applying the TTBER the Commission will stray beyond the limits of the static benefits a competition authority can seek to secure whilst safeguarding
innovative incentives.
230 Bird & Bird: [s]ince potential competition is not taken into account for
purposes of the draft Regulation in relation to technology markets, in our
view the scenario envisaged in this provision should be treated for all
purposes as being an agreement between non-competitors.
231 Because the other party wilfully refrains from disclosing the possession of
particularly sensitive assets, provides incomplete information, or fails to
correctly assess the nature of the technologies it holds.
232 Although the European approach remains more sensitive towards intratechnology competition, and does not share the principle of s 3.1 of the
Antitrust Guidelines (The Agencies will not require the owner of
intellectual property to create competition in its own technology). See
also Sergio Baches Opi The approaches of the European Commission and
Further, the national courts now entrusted with applying the block exemption to technology licensing agreements may encounter practical problems in defining the
appropriate markets for technology and products based
thereon, and in determining the objective necessity of
licence terms.234
The next ten years will provide a key opportunity to

witness the evolution of the interplay between intellectual property and competition law. Some of the provisions of the revised TTBER and Guidelines hint at
plausible developments of this relationship: for example,
the inclusion of termination clauses among the excluded
restrictions echoes the clear warning of para 220 of the
revised Guidelines, which explains that it is in the
general public interest to remove invalid intellectual
property rights as an unmerited barrier to innovation
and economic activity.235 Similar examples may be
found in para 4 of the revised Guidelines, which provides a tight framework of rules and limitations for
pools willing to benefit from the safe harbour, and in the
abolition of the exemption granted to passive sales
restrictions. If these modifications are indicative of a
future direction, it is plausible to imagine that the interplay may be slowly, but steadily, shifted towards antitrust
law. To restore the balance, competition authorities
should ensure that the rules stimulate both product and
research competition (not in the short, but) in the long
term, providing sufficient reward for inventors.
Globalization of research and development, the increasing importance of pooling resources and assets, as
well as the necessity to facilitate international technology
transfer agreements, are likely to be the challenges confronting the EU in the next years, on the path towards a
third-generation approach to the matter.
Meanwhile, the Commission should persevere in its
efforts to monitor the effects of licensing agreements on
competition, through sectorial inquiries and ad hoc investigations aimed at preventing abusive conducts. This approach could address some of the criticism surrounding
the reform proposal, incentivizing best practices in technology transfers, as an alternative to increasing the legal
the US Antitrust Agencies Towards Exclusivity Clauses in Licensing
Agreements (2000) 24 Boston College International and Comparative Law
Review 85.
233 Ullrich, above, n 76, at 18.
234 Bishop and Gore, above, n 78, 159 60.
235 The principle is commonly accepted in US case law, though its application
is not uncontroversial, as highlighted by the recent case of Soverain
Software LLC v Newegg Inc, US Court of Appeals for the Federal Circuit,
2011-1009, 22 January 2013. For a brief overview of the matter, see
Stefano Barazza Shopping cart patents held invalid, a key judgment for ecommerce (2013) 8(6) Journal of Intellectual Property Law & Practice 425.
The current set of rules surrounding the technology

transfer agreements has proved balanced and effective
for almost a decade, and aided the convergence between
the antitrust rules applicable to licensing agreements in
the EU and USA.232 The modifications proposed by the
Commission are expected to provide better clarity and
legal certainty, strengthening the protection of licensees,
and discouraging the use of IP licenses as means to alter
the outcome of competition on the merits. The intricacies inherent to the economic-based approach, however,
remain intact, and some of the proposed changes may
actually increase the cost and complexity of the assessments required during negotiations (eg concerning
market share, substitutable technologies, essentiality,
complementarity etc).
The current TTBER, and its reform proposal, represent
a second-generation approach to the licensing of intellectual property, which transitioned from a legal straightjacket to an umbrella approach.233 The limits of the
reform envisioned by the Commission remain the same
embodied in the rules adopted in 2004, which only receive
minor modifications. The critiques that targeted Regulation 772/2004, therefore, still hold before the new regime:
burden through a stricter legal approach. At the same

time, however, an effort to conduct an in-depth review of
the costs and benefits of the TTBER for industry participants would provide the basis for a more significant
revision of the current regime, allowing an assessment of
the alignment between the regulations provisions and
ARTICLE
207
industry practices, of the reasons and effects of eventual

misalignments and of the real-world impact of the block
exemption (the percentage of agreements falling within
the current market share thresholds and devoid of hardcore restrictions, in contrast to those subject to individual
assessment).

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186

Journal of Intellectual Property Law & Practice, 2014, Vol. 9, No. 3

The Technology Transfer Block Exemption

of intellectual property rights represents the key to the

cies and pro-competitive effects, technology transfer

sively refined its approach towards the assessment of

royalties, still it can create cost savings by means of cross-licensing. . . .

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Technology transfer agreements play a vital role in

Stefano Barazza . Competition law and IP licensing in the EU

Making sense of technology transfer

For an overview, see David M Haug The International Transfer of

countries. See UN Industrial Development Organization The Role of

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of competition; and (ii) appropriate guidelines to aid in

John H Burton New trends in Technology Transfer (2007) 18 ICTSD

The European approach: block

SCP/14/4, above, n 9, at 128.

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of the provisions most restrictive of competition, by

Journal of Intellectual Property Law & Practice, 2014, Vol. 9, No. 3

Stefano Barazza . Competition law and IP licensing in the EU

In making this assessment it is necessary to take account

TTBER, above, n 21, Recital 5.

competition (i.e. competition between undertakings using

The Commissions approach to technology transfer

The development of the EU policy

restrict competition, . . . they do not appear capable of affecting trade

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anti-competitive clauses in light of their contribution

AOIP-Beyrard, Decision 76/29/EEC [1976] OJ L 6/8.

beyond what [was] indispensable for the improvement

Regulations 2349/84 and 240/96: the

Their compatibility rested, therefore, on their indispensability for the

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Journal of Intellectual Property Law & Practice, 2014, Vol. 9, No. 3

Stefano Barazza . Competition law and IP licensing in the EU

Ibid, Recital 18.

(i) non-exclusive, reciprocal grant-back; (ii) obligations

(Regulation 240/96 employed a structure that frequently seemed to place

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and marketing a product which is unfamiliar to users in

Thus the Commission endeavoured to draft a new block

Evaluation Report on the Transfer of Technology Block Exemption

Regulation 772/2004 and the Guidelines:

A significant departure from accepted competition policy principles

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adopted an overly formalistic and complex approach,

Journal of Intellectual Property Law & Practice, 2014, Vol. 9, No. 3

Stefano Barazza . Competition law and IP licensing in the EU

of flexibility to the analysis of the potential anticompetitive effects of IP licensing.80

The block exemption

the licensed rights have not expired, lapsed or been

Mark R Patterson Revision of the New Technology Transfer Block

Unless the know-how has become publicly known as a result of action by

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(Article 3);96 outside of these thresholds,97 individual

customer group that the licensor allocated to another

licensor or the licensee, in relation to its industrial production, in

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The list of hard-core restrictions for undertakings that

Journal of Intellectual Property Law & Practice, 2014, Vol. 9, No. 3

Stefano Barazza . Competition law and IP licensing in the EU

Agreements falling outside the