Issue 127 | October 27, 2003
European Commission Proposes New Safe Harbor for Technology Licensing
 On October 3, 2003, The European Commission announced that it is seeking comments on proposed changes to the technology transfer "block exemption" (or TTBE) regulation, (EC) 240/96 of 31 January 1996, exempting certain agreements from scrutiny for possible anti-competitive effects. Comments on the proposed changes are due by November 26, 2003.

Licensing agreements that are distortive of competition are automatically void under Article 81(2) of the Treaty Establishing the European Community, except for certain cases where these provisions are inapplicable under Article 81(3). The block exemption regulation provides guidance for which agreements are exempt from review for possible anti-competitive effects by the Commission, the courts, and national competition authorities. In December 2001, as part of the the Commission's 22nd Annual Report on Competition Policy, the Commission addressed modernization of these rules starting in order to simplify compliance and enforcement starting in May of 2004. One of the core features of the reforms was a shift from a system of authorization, under which all agreements have to be notified to the Commission in order to obtain antitrust approval, towards a system of exceptions.

Under the current proposal, the block exemption regulation will have only a black list, instead of the the white and gray lists of the current regulation, and whatever is not explicitly excluded from the block exemption is now exempted. The scope of the proposed rules will extend to all types of technology transfer agreements for the production of goods or services, including patent and know-how licensing and software copyright licensing. The new rules will also make a clear distinction between licensing of competitors and non-competitors with regard to market share thresholds.

The proposed "Competition Rules Relating to Technology Transfer Agreements" and "Draft Guidelines on the Application of Article 81 of the EC Treaty to Technology Transfer Agreements" are available at http://europa.eu.int/eur-
. Other European Commission regulations under Article 81 of the EC Treaty are available via http://www.chaillot.com/En/pages/p9.html.

For more information on competition policy as it relates to international technology transfer agreements, please contact the author of this issue of "APLF Patent Law Updates," Bill Heinze (bill.heinze@tkhr.com), at Thomas, Kayden, Horstemeyer & Risley LLP in Atlanta, Georgia USA.

The information contained in this email is provided for informational purposes only and does not represent legal advice. Neither the APLF nor the author intends to create an attorney client relationship by providing this information to you through this message.