Commission adopts new rules to encourage innovation through licensing

April 13, 2004

Brussels, 12 Apr 2004

The Commission introduced new rules on 7 April aimed at reducing bureaucracy and increasing legal certainty for the licensing of patents, know-how and software copyright.

The measures relate to the application of competition policy to licensing agreements. While licensing between companies is important for disseminating innovation, it can also be used for anti-competitive purposes, for instance when two companies use a license agreement to divide markets between them. However, the Commission accepts that its previous rules created too much of a 'straight-jacket' for innovation, due to their formalistic requirements.

Under the new system, companies will not have to worry about the compatibility of their licensing agreements with EU competition law if they command less that a 20 per cent market share in the case of two competitors, or 30 per cent in the case of non-competitors.

Furthermore, the new rules are broader in scope and will now cover design right and software copyright licensing, as well as the original patent and know how licensing. The net effect, hopes the Commission, is that companies will enjoy more freedom to conclude licensing agreements according to their commercial needs.

'The reform of our rules on technology transfer agreements will facilitate wide dissemination of innovation and give companies greater scope and design freedom,' said Competition Commissioner Mario Monti.

'By strengthening the incentives for innovation while focussing on those restrictions which can seriously damage competition, competition policy can play an important role in injecting new dynamism into EU economies and thus help to deliver on the Lisbon targets,' he concluded.
Further information

CORDIS RTD-NEWS / © European Communities

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