Patent and Know-how Licensing under the 2004 Technology Transfer Regulation

Intellectual property law seeks to promote society's industrial development through the recognition of patents. The logic of granting patent protection is clear-cut: Patents provide incentives for developing new technology. The lack of an adequate legal protection for innovations would slow progress and the benefits it brings. Without legal protection, companies would be unlikely to spend significant amounts of money on the R&&semicD that are the source of new products and processes. Jaffe and Lerner, p. 8. Unlike patents, know-how is not an intellectual property right. For companies it might nevertheless represent economic values that are the equivalent of patents. Patents and know-how are usually licensed together. A combined patent and know-how licensing agreement is advantageous for both the licensor and the licensee. From the perspective of the licensor, a combined license makes it possible to maximise the profit of the invention. From the perspective of the licensee, a combined license is valuable since it saves money and time. Moreover, most licensing agreements are beneficial for society. The possibility of exploiting an invention through the use of a license creates incentives for innovation. In addition, it leads to the dissemination of technology. EC competition law does not affect the existence of intellectual property rights obtained under national intellectual property laws. However, when an inventor decides to license a patented invention and related know-how, EC competition law may be operative and thus might govern the exercise of intellectual property rights granted under national intellectual property law. Article 81 EC addresses anti-competitive agreements, and certain patent and know-how licensing agreements could violate Article 81(1) EC. In May 2004, a new block exemption regulation on technology transfer - the 2004 Technology Transfer Regulation - entered into force, which placed patent and know-how licensing agreements that are considered to have significant pro-competitive effects outside the scope of Article 81(1) EC. The 2004 Technology Transfer Regulation (the 2004 TTBER) is the legal instrument that governs the framing of technology transfer agreements within the EU. The Regulation takes a positive stance to licensing. The approach underlying the 2004 TTBER is based on economics. The main features of the Regulation are the market share threshold, the distinction drawn between agreements between competitors and non-competitors and the inclusion of the principle ''what is not strictly prohibited is allowed''. The 2004 TTBER is expected to have a strong influence on the formation of licensing agreements in the future. The Regulation provides companies with flexibility. It brings a fruitful economic approach into the field of licensing. Furthermore, the 2004 TTBER brings the EU approach to licensing in harmony with that in the US. As part of the Lisbon strategy, the EU has set as its objective to become the most competitive economy by the year of 2010. In reaching this objective a legal framework, which creates incentives for innovation and promotes the dissemination of technology is of outmost importance. The 2004 TTBER do these things and should have an important part to play in reaching the objective of the Lisbon strategy.