L42 Competition Law

It is absolutely vital to consider the implications of competition laws at both a national and international level when negotiating licensing agreements.

It is impossible to give a detailed outline of this area of law in a few words but the following two pages aim to reference some of the more important implications. These pages deal primarily with EC law with some reference to International law, and mainly the USA and Japan. In EC countries parties to a license agreement will have to consider both national and EC competition law as well as relevant provisions of IP law which deal with competition issues.

These laws aim to promote competition and in the EC to reduce barriers to trade between states.

IPRs are generally national rights and can in theory be used to control movement of goods between countries. They are also in the nature of monopolies, albeit time limited state sanctioned ones such as patents. There is thus an inherent conflict between IP law which grants exclusive rights to the IP owner to encourage innovation and Competition law which tries to prevent any one firm dominating a business. Article 30 (ex Art.36) permits the use of intellectual property rights providing they do not constitute a means of arbitrary discrimination or a disguised restriction on trade betweenMember States but the potential conflict still exists.

This conflict may be good for consumers and good business for lawyers but it is also full of traps for the unwary or unscrupulous businessman. In the EC the European Commission can fine companies up to 10% of their turnover for breaches of competition regulations. IP License agreements and collaborative R&D agreements involving IP are a frequent source of problems with competition law and it is therefore essential to take good legal advice.