Focus on European Tech Transfer

While entering into licensing agreements with companies operating in the European Union, there are certain issues to be aware of. Namely, the Technology Transfer Block Exemption Regulation (TTBER; Regulation (EU) No 316/2014) which sets certain requirements and limitations to drafting licensing agreements.

Purpose of Technology Transfer Block Exemption Regulation

TTBER aims to clarify how EU competition law applies to certain categories of licensing agreements and the criteria used to assess these agreements. TTBER provides a safe harbor for technology transfer agreements that fulfil certain criteria. In order to benefit from the safe harbor provided for in the TTBER, the parties of licensing agreement must fulfill market-share thresholds:

• For agreements between competitors, the TTBER will only apply if the parties’ combined market share is 20% or less on either the relevant product and geographic market or on the relevant technology market.
• For agreements between non-competitors, the TTBER will only apply if the parties each have a market share of 30% or less on either the relevant product and geographic market or on the relevant technology market.

TTBER is applied as long as the licensed technology rights have not expired, lapsed or been declared invalid or, in the case of know-how, for as long as the know-how remains a trade secret. TTBER also applies to provisions of technology transfer agreements, which relate to the purchase of products by the licensee or which relate to the licensing or assignment of other intellectual property rights or know-how to the licensee, if those provisions are directly related to the production or sale of the contract products.

What you should be aware of?

Particular attention should be paid to certain restrictions under the TTBER:

A) Prohibition of grant back obligations
B) Prohibition of non-challenge clauses
C) Exceptions of research and development

Prohibition of grant back obligations

The TTBER safe harbor does not allow any direct or indirect obligation on the licensee to grant an exclusive license 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.

Prohibition of non-challenge clauses

The TTBER safe harbor does not allow any direct or indirect obligation on a party not to challenge the validity of intellectual property rights, which the other party holds in the EU, without prejudice to the possibility of, in the case of an exclusive license, providing for termination of the technology transfer agreement in the event that the licensee challenges the validity of any of the licensed technology rights.

Exceptions of research and development

The TTBER safe harbor is not applied in agreements between non-competitors causing restrictions on the licensee's ability to exploit its own technology or restrictions on either party's ability to carry out research and development except where necessary to prevent disclosure of licensed know-how to third parties.

Also, with respect to agreements between competitors, any restriction on the licensee's ability to exploit its own technology or restrictions on either party's ability to carry out research and development, except where they are necessary to prevent disclosure of licensed know-how to third parties, is strictly prohibited by the TTBER.

However, TTBER does not apply to

• licensing arrangements in research and development agreements containing provisions which relate to the assignment or licensing of intellectual property rights to one or more of the parties or to an entity the parties establish to carry out the joint research and development, paid-for research and development or joint exploitation, provided that those provisions do not constitute the primary object of such agreements, but are directly related to and necessary for their implementation (Regulation (EU) No 1217/2010 of research and development agreements), or
• specialization agreements regarding production and preparation of services which fall within the scope of Regulation (EU) No 1218/2010.

Even if an agreement comprising technology transfer provisions does not fulfil the criteria of the TTBER and does not enjoy the provided safe harbor, if does not mean there is a presumption that the agreement is unlawful. The agreement will require individual analysis with regard to the guidance provided in the guidelines on technology transfer agreements.

For more information on technology transfer and licensing agreements in Europe or any other aspect of European intellectual property law, please contact Berggren´s International Team at internationaldesk@berggren.fi.  We would be pleased to assist you.