1 Dec 2016 | Anti-Trust

CJEU: The antitrust assessment of licence contracts for patents which have become invalid

In its decision of 7 July 2016 (case C-567/14 – Genentech / Sanofi-Aventis), the CJEU followed up on its antitrust Ottung case law (320/87, EU: C: 1998: 195, para. 11 et sqq.) and confirmed that licence contracts on patents which have become invalid can be valid if the licensee can terminate the licence contract within a reasonable deadline.

According to the CJEU decision, the cartel ban of Article 101 Para. 1 TFEU is not violated if in the case of the invalidation or the non-infringement of a licenced patent during the entire period of the licence contract a fee is to be paid for the use of the patented technology, as long as the licensee can terminate the licence contract within a reasonable deadline. Therefore, licence contracts which stipulate the payment of a licence fee for the use of a patented technology – even in the case of invalidity or non-infringement of the licenced patent – do not contravene antitrust law as long as a reasonable cancellation period is foreseen in the licence contract.

The CJEU also confirmed once again its decision Ottung of 12 May 1989 (320/87, EU: C: 1998: 195, para. 11 et sqq.) which stipulated that a licence fee can still be charged for the exclusive use of a technology even after the expiration of the period of protection of a patent if the licensee can terminate this contract within a reasonable deadline.

Furthermore, it also follows from the CJEU’s Genentech / Sanofi-Aventis decision that licence fees which have already been paid in the past cannot be claimed back due to the (later determined) invalidity of a patent.

With regard to licence contracts where a payment is also stipulated in case of non-infringement of the licenced patent, the Technology Transfer Block Exemption Regulation (TTBER) (Regulation (EU) No. 316/2014 of the Commission of 21 March 2014) has to be considered. According to para. 101 of the guidelines on TTBER, a hardcore restriction according to Article 4 Para 1a, d of the TTBER is given if the licence fees in a licence contract are calculated on the basis of all product sales, irrespective of whether the licenced technology is used. According to para. 102 of the guidelines on TTBER, such a licence clause which covers all product sales can, however, be admissible if it is indispensable, for example because the licensor cannot verify the scope on which his technology is deployed. Possibly licence clauses calculating licence fees based on all product sales can be valid irrespective of para. 102 of the guidelines on TTBER due to the CJEU Genentech / Sanofi-Aventis decision, as according to this decision they do not contravene Art. 101 Para. 1 TFEU if they contain a reasonable cancellation period. Ultimately, however, there is no legal certainty, so that contract clauses where licence fees are calculated on the basis of all product sales, irrespective of whether the licenced technology is used, should be avoided.

What is also still unclear is the situation that patent licences are granted for areas in which no patent protection existed at any time. An example for such a situation would be if a patent licence with a quota licence for the whole of Europe is agreed upon, although no patent protection exists in Latvia. Whether a reasonable cancellation period for the area of Latvia would be sufficient here to avoid a breach of antitrust law, is questionable.

However, patent licences should at any rate be invalid if the parties are aware at the time of the conclusion of the contract that no valid patents exist (also not in other areas).