Bristows comments on revision of European rules governing technology licensing

Pat Treacy, head of the competition practice at Bristows, has commented on the revision of the European rules governing technology licensing. Notwithstanding significant lobbying and concern in some quarters during the consultation process, these are generally as in the earlier draft, although with one major concession to protect small biotech firms and technology start-ups.

She said: ‘The European Commission has announced the detail of the new regime, which will apply to the transfer of technology across the European Union from 1 May 2014.’

According to Treacy, the licensing of technology is a vital tool for the spread of technology and the encouragement of innovation — it enables companies to develop and sell improved products, while inventors can profit from their innovations.

She added: ‘However, some licensing arrangements may affect competition. Companies need clarity on when this can be the case and the European Commission regime aims to provide a “safe harbour” for benign deals. This regime underpins licensing arrangements across a number of industries, in particular the fast-moving and technologically complex TMT and pharma sectors.

‘The new legislation will shape the licensing landscape across the EU for years to come, in sectors that are crucial to Europe’s economic recovery. Despite much lobbying and debate, several of the changes will dismay licensors, who will have to consider more carefully some of the provisions they may want to include to protect themselves before licensing out their technology.’

However, Treacy explained, there has been some shift in the European Commission’s position, with a change to ensure that small and medium-sized enterprises (SMEs) are able to protect themselves when licensing to larger companies — ‘this will particularly benefit small biotech firms and technology start-ups that will be able to terminate arrangements more easily if their intellectual property is challenged’, she added.