#3238 - Ip Competition Law - Commercial and IP

Intellectual Property Rights

IP and Competition Law

The transfer of IP rights

IP rights can be traded through asset sale / share sale
Buyer’s objective = acquire the rights to use all IPR necessary to conduct the business in the same manner as the seller prior to the sale.

The Process of Technology Transfer

Due diligence: enquiries, searches – identify potential problem areas.
Evaluation: what is the significance of the IPRs to the business
Drafting of transfer agreement: define the IPRs being sold and agree the IP-specific warranties and special provisions such as licenses.
Transfer
Post completion matters: ensure that the buyer is properly recorded as the proprietor of IPRs assigned to him.

Competition Issues

IP rights restrict trade and competition [e.g. Patent – stops someone making / selling the machine]
Mostly concerning: Patents; Copyright and Trademarks
Terms of a IP license agreements can restrict trade also e.g. give licensee exclusive territory or stop licensee exporting from the territory
EU balancing act = provide rewards for creativity but stop IP rights harming competition within the single market.
Treaty on the Functioning of the European Union; Art.101

Outlaws:

Agreement / decision between undertakings
Which may have an affect on trade between MS; and
Which have as their object or effect the prevention, restriction or distortion of competition within the EU

Must have appreciable effect!

A license agreement OR simply the bringing of proceedings to stop infringement of an IP right may infringe Article 101.
Potential problems – causing “affect on trade” [breaching S.101 – unduly restrictive of competition]

Territorial problems	“X agrees to not appoint any licensees in France other than Y”
Price	“Y will sell the machines at a price which X will determine”

Exception Art 101(3):

The provisions of paragraph 1 may, however, be declared inapplicable in the case of:

Any agreement, which contributes to improving the production or distribution of goods or to promoting technical or economic progress.

Technology Transfer Block Exemption [Regulation 2004]

Specific statutory exemption for IP agreements
Draft within the Block exemption to avoid infringing competition issues under Art.101
Only applies to certain sorts of IP rights agreements.

Technological licensing agreements only - PATENTS / software / know how licensing agreements [invention type work! – this is the type of work EU is trying to protect][Article 1(b) definition]
Ones that is for the purpose of providing services [i.e. not if it simply allows licensee the ability to do research / development work]
Agreements between 2 parties [not technology pools – i.e. businesses get together and agree to share a pot of IP rights collectively

NB. Trademarks = Vertical Agreement Block Exemption

NB. Assignments – not so many restrictions so not likely to have anti-competative effect

Art.2	The Exemption:
Art.3:	Market share of parties [market share threshold Market share test is different depending on whether the 2 parties are competitors or not. Art 3(1): Parties are competitors - lower threshold – combined MS must be less than 20% [Harder threshold to satisfy – do not encourage competitors to use the exemption to create a “non-compete” agreement. Competitors more dangerous!] Art 3(2): Not competitors – each party share must be below 30%
Art.4	Hardcore Restrictions: If you breach these you loose the protection of the Block exemption completely Different restrictions depending on whether parties are competitors or non-competitors.
Art.4	Competitors [Art 4(1)] Price Fixing: anything which restricts ability to set price is outlawed. Includes setting maximum prices. Production caps Restrictions on active / passive sales Tougher on competitors!!!	Non-Competitors [Art.4(2)] No fixed minimum price [but fine to set a maximum price] Restrictions on sales – active or passive
Art 5	Excluded Restrictions: The existence of this kind of provision will not take the whole agreement outside the protection of the BE. If the provision is severable, only that provision looses protection Examples: Art 5(1)(a): Obligation on licensee to grant exclusive license to licensor in respect of its own severable improvements to its own new applications to the product Art 5(1)(c): Obligation on licensee not to challenge the validity of an IP rights which the licensor holds
Art.6&7	Removal of protection – just mention in exam!

Other IP rights

Trade mark / copyright – cannot be protected by TTBE but may be protected by vertical agreements block exemption
Checklist: [Article 2(3) of Block exemption:]

Vertical agreement [i.e. different stages of distribution chain]
IPR must be ASSIGNED to / licensed to distributor
IPR provisions must not constitute the primary object of the agreement and must be directly related to the use, sale or resale of the relevant goods. [IPRs must be a...

#3238 - Ip Competition Law - Commercial and IP

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