The current 2014 TTBER, Commission Regulation (EU) No 316/2014 of 21 March 2014 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of technology transfer agreements, expires on 30 April 2026 but the Commission has already started the evaluation and consultation process.
The TTBER exempts restrictions of competition in technology transfer agreements from the prohibition of agreements that restrict competition. Technology transfer agreements are agreements by which one party authorises another party to use certain technology rights for the production of goods or services. A technology transfer agreement is typically a licence agreement (e.g. patent, know-how and software licence agreements) in which the licence is granted to enable the licensee to use the licensed rights or know-how for the production of goods or services.
The TTBER is accompanied by the TT Guidelines, which provide further guidance and explanation on the application of the TTBER to facilitate understanding and application. In practice, the guidelines are an important tool for legal practitioners and are therefore indispensable in this field of law.
The main objectives of the TTBER are as follows: firstly, it is intended to provide stronger incentives for research and development in this field of play. In addition, it is intended to facilitate the dissemination of technologies and promote overall competition. Another focus of the TTBER, which has already been mentioned, is the intended legal certainty. Generally, it is assumed that most licence agreements are compatible with Art. 101 TFEU.
The application of the current TTBER and TT Guidelines appears to be trouble-free and smooth. There is no important case-law on the interpretation of the TTBER and there is no visible enforcement activity by the Commission or national competition authorities. This again shows that the existing rules have not been assessed as predominantly positive without good reason.
The purpose of the Commission's first consultation, launched in April 2023, was to provide guidance on the decision to allow the expiry, prolongation or revision of the existing TTBER and TT Guidelines. The following are the main points raised in the consultation:
1. Extension to further IP-rights
It was pointed out that the current TTBER does not cover every TT agreement that fulfils the conditions for clearance, due to the limited list of technology rights covered. The TTBER applies to know-how as technology right and the following rights such as patents, utility models, design rights, topographies of semiconductor products, supplementary protection certificates for medicinal products or other products for which such supplementary protection certificates may be obtained, plant breeders' certificates and software copyrights. Other rights can be subject to the current TTBER, but only if part of ancillary provisions in the TT agreement. It has been argued in the consultation that other rights should be covered, such as intellectual property rights in databases or relating to raw data. If the Commission acts, it will need to ensure coherence and consistency with the other rules regulating this area of law.
2. LNGs
It has been stated that the Commission should provide guidance for licensing negotiation groups (LNGs), which are groups on the "buyer" (i.e., licensee) side, the counterpart to technology pools. They are a form of buying cooperation. Some stakeholders have argued in favour of extending safe-harbour provisions for technology pools in the TT Guidelines to LNG, while others have vehemently opposed this line of thinking, arguing that such purchasing cooperatives not only incorporate the possibility of facilitating and streamlining negotiations with SEP licensors but also entail the risk of a buyers' cartel. If the Commission chooses to provide guidance in this field, it would be in the TT Guidelines rather than in the TTBER, since the TTBER only covers agreements between two parties.
3. Minor incoherencies with recent regulations
Stakeholders mentioned that there are limited incoherencies between the present TTBER and the revised 2023 HBERs and 2022 VBER. This is exemplified by the new definition of exclusive distribution contained in the VBER 2022. Restrictions of active sales no longer requires an exclusive territory to be allocated to a single distributor. Instead, the supplier can allocate an exclusive territory to a maximum of five distributors.
4. Potential Conflict with COM(2023)232
It was also pointed out that there is an incoherence between the safe harbour for technology pools as set out in the current TT Guidelines and the Commission’s recently adopted proposal for a Regulation on Standard Essential Patents of April 2023, which the European parliament is about to render its position in the first hearing. It has also been suggested that the TT Guidelines do not provide sufficient legal certainty and clarity in dealing with technology pools and the licensing of standard essential patents, partly as a consequence of the above.
5. Conclusion
In conclusion, it can be stated that the TTBER and TT Guidelines to date have provided sufficient legal clarity and certainty in this field of play. The respondents to the consultation are supporting the continued relevance of the TTBER and guidelines.
A new TTBER is due for adoption by the Commission in the third quarter of 2024. We therefore expect a draft to be published in the coming months. We believe that the Commission will adopt a new TTBER similar to the old one, at least in terms of the main principles. The Commission, however, may change the order of the provisions as it did in the HBERs.
The extent to which the Commission will take the wishes of stakeholders into account in its proposal is an open question. It remains a guessing game. We will have to wait and see whether the Commission will come up with an unexpected game changer.
For more information on the TTBER and TT Guidelines, contact your CMS client partner or these CMS experts.
This article is based on the authors‘ contribution in the February edition of the EU Law Briefing: Outlook 2024: EU Competition Law Briefings 2024 webinar series (cms.law)
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