Yearbook of European Law - Vol. 4

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Vorsprung durch Technik: The Commission's
Policy on Know-How Agreements*

TIM FRAZER


Introduction

Of the recent legislative developments in EEC competition law, the publication of the block exemption for know-how agreements1 provides clear insights into the policy of the Commission on the place of technology within competition policy, and the objectives of competition policy generally. The Regulation appears to signify a triumph of technology over the idea of an internal market, 2 defined in the Single European Act, as 'an area without internal frontiers in which the free movement of goods, services and capital is ensured in accordance with the provisions of this [EEC] Treaty'. 3

The Commission justifies a block exemption for exclusive know-how licences on the basis that such licences 'encourage the transfer of technology and thus generally contribute to improving the production of goods and to promoting technical progress, by increasing the number of production facilities and the quality of goods produced in the common market and expanding the possibilities of further development of the licensed technology'. 4 It is also claimed that consumers are allowed a fair share of the resulting benefit and that the restrictions permitted by the block exemption are not indispensable to improving the transfer of technology.

The long-standing policy of the European Court of Justice is that, by applying a rule of reason analysis, exclusive licence agreements may be regarded as not incompatible with Article 85(1) in certain circumstances. 5 The Commission has extended the Community welcome to exclusive licences for know-how by block exempting those that do fall within Article 85(1). It is the theme of this paper that the terms of the block exemption are over-inclusive; the Commission has allowed its desire to

____________________
*
© Tim Frazer, 1989, Professor of law at the University of Newcastle-upon-Tyne. The author is grateful to Dr Steve Anderman for his comments on this paper.
1
Regulation 556/89, OJ 1989 L61/1, hereafter referred to as the 'Know-How Licence Regulation'.
2
Anderman talks of 'a new technology exception to the scope of Article 85(1)' -- S. D. Anderman, The Conflict Between Intellectual Property Rights and EEC Competition Policy, W.G. Hart Legal Workshop, Institute of Advanced Legal Studies, London, 1989.
3
Art 13, Single European Act, adding Art 8A to the EEC Treaty, emphasis added.
4
Know-How Licence Regulation, Preamble (7). In the Regulation the term 'licensed technology' includes initial and subsequent know-how communicated to the licensee and any patents included in the licence agreement: Art 1(7) 7.
5
See text at n 34 below.

-1-

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