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Technology Transfer Block Exemption

On 3 October 2003, the European Commission published its revised draft of the Technology Transfer Block Exemption (TTBE), which is due to replace the existing rules. The TTBE sets out a 'safe harbour' in relation to certain licence agreements relating principally to patents and know-how.

Under Article 81(1) of the EU Treaty, agreements that may affect trade between member states and have as their object, or effect, the prevention, restriction or distortion of competition within the common market are prohibited. Technology licencing could have this effect if the licence is used between competitors of significant market power to divide a market between them, or if used by an important licensor to exclude competing technologies from the market. By complying with terms of the TTBE, licence agreements are automatically exempt from such EU competition rules.

The new TTBE will contain a clear and short hardcore list of restrictions and does away with previous 'white' and 'grey' lists of exclusions. Exemption will apply for companies with a market share of less than 20% (combined) if they are competitors and 30% (each) for agreements between non-competitors. The new TTBE extends the regime to software copyright licensing and is expected to be in place after 1 May 2004. The Commission's consultation period extends until 26 November 2003.

Colm Kelly

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