Technology licensing law changes to affect trademark licensing

The European Commission has proposed changes to the Technology Transfer Block Exemption Regulation, which exempts certain types of agreement from the application of Article 81(1) of the EC Treaty, which itself prohibits commercial agreements that restrict competition within the European Union. If adopted, the proposal could have an impact on technology and (ancillary) trademark licensing.

The current regulation specifically excludes from exemption agreements whose primary purpose is the licensing of trademarks. However, together with the Vertical Agreements Block Exemption Regulation, and its forerunner (Exclusive Distribution Agreement Block Exemption Regulation 83/1983) and the guidelines set out in Moosehead/Whitbread, the current regulation gives trademark practitioners some comfort as to the sort of restrictions they could include in the licence. In contrast, the proposed replacement - in the form of a regulation and guidelines - may create some uncertainty.

The proposed regulation treats agreements between competitors more strictly than those between non-competitors. It exempts both types of agreement from the application of Article 81(1) if (i) certain market share thresholds are not exceeded, and (ii) certain specified restrictive terms are not present in the agreement. However, if the agreement falls outside the proposed regulation or, as is likely, the parties are not confident that it clearly falls within it, they must themselves determine whether the agreement infringes Article 81(1) - a difficult assessment to make.

Trademark licences are not included in the definition of 'technology transfer agreements' in the proposed regulation, which expressly does not apply "where the value of such technology to the licensee is limited because it already employs an identical or very similar technology and the main object of the agreement is the trademark". This approach is consistent with the commission's decision in Moosehead and the existing regulation. The proposed guidelines also state that trademark licensing agreements are generally more akin to distribution agreements than technology licensing. Furthermore, they add that where a trademark licence is directly related to the use, sale or resale of goods and services, and does not constitute the primary object of the agreement, the agreement is covered by the Vertical Agreements Block Exemption Regulation. However, trademark licensing is covered by the proposed regulation where it is directly related to the exploitation of the licensed technology and does not constitute the primary object of the agreement.

Mark A Lubbock, Ashurst Morris Crisp, London