Allocating Territories, Customers and Fields of Use in Patent Licensing Agreements
(2005)Department of Law
- Abstract
- As a matter of business reality, the allocation of markets through direct agreements are the most favourable and efficient construction in any level of commerce as it provides the delight of not having to compete with other companies in a certain territory, to a specific customer group or within a particular field of use. However, the practice of dividing different areas within a patent licensing agreement, in particular where to draw the exact line between permitted respectively prohibited allocations has long been an area of conflict. The uncertainty is mainly due to two fundamental conflicting interests, which clearly stand out when examining the question at issue. On the one hand, the European Union's policy objective to promote a... (More)
- As a matter of business reality, the allocation of markets through direct agreements are the most favourable and efficient construction in any level of commerce as it provides the delight of not having to compete with other companies in a certain territory, to a specific customer group or within a particular field of use. However, the practice of dividing different areas within a patent licensing agreement, in particular where to draw the exact line between permitted respectively prohibited allocations has long been an area of conflict. The uncertainty is mainly due to two fundamental conflicting interests, which clearly stand out when examining the question at issue. On the one hand, the European Union's policy objective to promote a harmonised development of the economic activity within the Union, where on the other hand, the industry's effort to maximize their profits by outsourcing different areas. In order to rectify this uncertainty the Commission has adopted the Technology Transfer Block Exemption Regulation 772/2004 where the hardcore rules in Article 4.1(c) and 2(b) prohibit market and customer allocation in patent licensing agreements and, if incorporated, may cause the whole agreement to be void and unenforceable under Article 81 EC Treaty. These hardcore restrictions contain two sets of separate exceptions to the general rule that apply depending on the status of the parties, i.e. if the parties to the patent licensing agreement are regarded as competitors or non-competitors. If the parties are regarded as competitors Article 4.1(c) and its corresponding seven exceptions will apply, however, if they are non-competitors Article 4.2(b) will apply with its seven exceptions. The rationale behind the difference is that the Commission regards agreements between competitors to pose a greater risk to competition within the Common market than agreements between non-competitors. The EC has solved the crossing point between permitted respectively prohibited allocations on territories, customer groups and fields of use by partly relying on the preservation of free movement of goods, i.e. relying on the absolute territorial protection concept, and partly by relying on safeguarding free competition by analysing the restriction's economic effect on competition. In essence, the concluding point is that European businesses can impose territorial, customer group and field of use restrictions in their patent licensing agreements as long as they do not prevent parallel trade hindering free competition or free movement of goods. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/1557313
- author
- Eriksson, Maite
- supervisor
- organization
- year
- 2005
- type
- H3 - Professional qualifications (4 Years - )
- subject
- keywords
- Immaterialrätt
- language
- English
- id
- 1557313
- date added to LUP
- 2010-03-08 15:55:20
- date last changed
- 2010-03-08 15:55:20
@misc{1557313,
abstract = {{As a matter of business reality, the allocation of markets through direct agreements are the most favourable and efficient construction in any level of commerce as it provides the delight of not having to compete with other companies in a certain territory, to a specific customer group or within a particular field of use. However, the practice of dividing different areas within a patent licensing agreement, in particular where to draw the exact line between permitted respectively prohibited allocations has long been an area of conflict. The uncertainty is mainly due to two fundamental conflicting interests, which clearly stand out when examining the question at issue. On the one hand, the European Union's policy objective to promote a harmonised development of the economic activity within the Union, where on the other hand, the industry's effort to maximize their profits by outsourcing different areas. In order to rectify this uncertainty the Commission has adopted the Technology Transfer Block Exemption Regulation 772/2004 where the hardcore rules in Article 4.1(c) and 2(b) prohibit market and customer allocation in patent licensing agreements and, if incorporated, may cause the whole agreement to be void and unenforceable under Article 81 EC Treaty. These hardcore restrictions contain two sets of separate exceptions to the general rule that apply depending on the status of the parties, i.e. if the parties to the patent licensing agreement are regarded as competitors or non-competitors. If the parties are regarded as competitors Article 4.1(c) and its corresponding seven exceptions will apply, however, if they are non-competitors Article 4.2(b) will apply with its seven exceptions. The rationale behind the difference is that the Commission regards agreements between competitors to pose a greater risk to competition within the Common market than agreements between non-competitors. The EC has solved the crossing point between permitted respectively prohibited allocations on territories, customer groups and fields of use by partly relying on the preservation of free movement of goods, i.e. relying on the absolute territorial protection concept, and partly by relying on safeguarding free competition by analysing the restriction's economic effect on competition. In essence, the concluding point is that European businesses can impose territorial, customer group and field of use restrictions in their patent licensing agreements as long as they do not prevent parallel trade hindering free competition or free movement of goods.}},
author = {{Eriksson, Maite}},
language = {{eng}},
note = {{Student Paper}},
title = {{Allocating Territories, Customers and Fields of Use in Patent Licensing Agreements}},
year = {{2005}},
}