Intellectual Property Licensing for the Purposes of the Technology Transfer Block Exemption Regulation (TTBER)

Interaction between technology licensing and EU Competition rules drastically changed seven years ago. Before this change in approach, applying competition law rules to licensing agreements was a relatively simple matter of identifying restrictive provisions of the agreement and proofing them against a block exemption regulation. There was no need to fully understand the competition policy or mechanics of Article 101 TFEU1. It all changed when the Commission decided to modernize its approach, which ended in adoption of Technology Transfer Block Exemption Regulation (TTBER) and extensive guidelines related to licensing agreements. In order to give a full picture on this interaction the paper will examine in detail how and why intellectual property rights [hereinafter IPRs] are being licensed, what kind of licenses exist, and what the key issues in licensing IPRs are. Because the focus is on block exemption regulation and the hardcore restrictions therein, only the four IPRs that the TTBER applies to, will be analyzed. Since the vast majority of scholarship globally that cover the issues related to interaction between competition rules and intellectual property rights licensing, turn immediately to the very core of the problem (hardcore restrictions in the agreement, position of the contracting parties, reduction of dynamic efficiency etc.) there is a need for scholarship that outlines the starting point and assumptions underlying the aforementioned issues and thoroughly guides a less IP-educated reader of such materials into the area with less difficulty. One must keep in mind that the Commission’s concern is aggravated regarding IPRs, due to the fact that they are territorial in their nature (the content of IPRs in one country is determined by the law of that country and effective only within that jurisdiction), which makes their exercise inherently restrictive of the free movement of goods in the internal market. The inherent contradiction between free trade and IPR protection has been recognized globally. The Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS)2, which is administered by the World Trade Organization, sets forth minimum standards for protection of IPRs for WTO Member States, thus leveling the playground for holders of IPRs and other players on the market.