New phase in the TTBER Revision: What the European Commission's evaluation reveals
1. What is the TTBER about?
The TTBER exempts restrictions of competition in technology transfer agreements from the prohibition of agreements that restrict competition. Technology transfer agreements are agreements by which one party authorises another party to use certain technology rights. A technology transfer agreement is typically a licence agreement (e.g. patent, know-how and software licence agreements) in which the licence is granted to enable the licensee to use the licensed rights or know-how for the production of goods or services. Generally, most licence agreements are compatible with Art. 101 TFEU.
The TTBER is intended to strengthen incentives for research and development, facilitate the dissemination of technology, promote competition and provide legal certainty for users. It is accompanied by the TT Guidelines, which provide further guidance and explanations on the application of the TTBER in order to facilitate understanding and application of it. The Guidelines are an important tool for legal practitioners and therefore indispensable in this field of law.
2. What are the evaluation findings?
The evaluation by the European Commission confirmed the TTBER’s critical role in providing legal certainty and streamlining the self-assessment of technology transfer agreements under Article 101 TFEU. Stakeholders broadly supported the framework, emphasising its effectiveness in exempting agreements that align with the pro-competitive aims of Article 101(3) TFEU. The evaluation, however, also indicates that evolving trends may necessitate adjustments to ensure that the legal framework remains relevant.
(a) Effectiveness: meeting key objectives
The evaluation confirms that the TTBER has been effective in achieving its two primary objectives: the TTBER successfully ensures that technology transfer agreements likely to meet the conditions of Article 101(3) TFEU are block exempted; and both the TTBER and the TT Guidelines provide significant legal certainty, particularly for smaller undertakings entering into licensing agreements.
(b) Scope: extension to further IP rights
The evaluation indicates that the TTBER does not cover licence agreement that should be covered. This concerns data rights although there is no clear consensus among stakeholders what types of data rights should be covered.
(c) Technology markets: limited visibility and insufficient data
One prerequisite for exemption under the TTBER is that the market shares of the parties to the technology transfer agreement do not exceed the thresholds of the TTBER. The evaluation brought to light difficulties in applying the TTBER’s market-share thresholds, particularly in technology markets. The problem is that a market share calculation is difficult due to the development status of the technology or unavailability of data.
(d) The 4+ test: certainty vs. practicality
The evaluation also touches the "4+test", which is the basis of a safe harbour defined by the TT Guidelines and states that in the absence of hardcore restrictions, an infringement of Article 101 TFEU is unlikely if there are at least four other independently controlled technologies that are sufficiently substitutable for the licensed technology at a comparable cost to the user. The idea of the test is to overcome uncertainty in cases where the parties are unable to calculate their market shares in relevant technology markets.
The European Commission found in its evaluation that there is a mixed picture regarding the practicality of the test. While the concept as such is supported, application in practice can be difficult due to unavailability of information on competing technologies and their licensing conditions, particularly in the case of innovative technologies.
(e) Technology pools
The evaluation indicates that in general the safe harbour provided for in the TT Guidelines for technology pools is useful. In technology pools, multiple technology right holders license their IP rights jointly. Depending on the standpoint of the stakeholders (i.e. on the licensor or licensee side), concerns were expressed about whether the guidance provided in the TT Guidelines on technology pools are successful in avoiding competition issues. The evaluation concludes that changes in technology pools over the past decade, especially regarding transparency, have created challenges in ensuring that the safe harbour is defined properly.
There is no clear indication regarding licensing negotiation groups (LNGs). Such agreements between licensees aim at negotiating jointly the conditions of the licensing with the technology right holder / licensor. This is a form of joint buying. LNGs are out of the scope of the existing TTBER since it only applies to bilateral agreements and it is not dealt with in the TT Guidelines. Again, whether a guidance on LNGs was necessary depended on the standpoint of the stakeholders (i.e. on the licensor or licensee sides).
(f) Exclusive grant-backs and termination-on-challenges clauses
The evaluation confirmed that the changes in the 2014 revision of the TTBER were useful. This concerns the exclusion of exclusive grant-back clause and termination-on-challenges clauses from the block exemption. An exclusive grant-back clause is a provision whereby the licensee is obliged to license back to the licensor on an exclusive basis its own improvements to the licensed technology. A termination-on-challenges clause allows the licensor to terminate the agreement if the licensee challenges the validity of the licensed technology. Under the current TTBER, only termination-on-challenge clauses in exclusive license agreements are block exempted.
(g) Coherence with other regulations
The evaluation confirmed that the TTBER and TT Guidelines are generally consistent with the EU competition law framework and that there are only limited inconsistencies with the 2023 HBERs and 2022 VBER. These mainly concern the definition of exclusive territory. The new VBER allows a supplier to allocate an exclusive territory to up to five distributors.
The evaluation did not identify any inconsistency between the TTBER and TT Guidelines and the proposed regulation on standard essential patents (SEP). Both legal sets are regarded as complementary.
3. What's next?
With the publication of the working papers, the Evaluation Phase of the TTBER review ends and the Impact Assessment Phase begins. In this phase, the European Commission will make a proposal, which must be made into a regulation before 30 April 2026 when the existing TTBER expires. We believe that the European Commission will adopt a new TTBER will have main principles that are similar to the old one. We expect that European Commission will sort anew the order of provisions just as it did in the Horizontal Block Exemption regulations of 2023. What remains to be seen it what changes compared to the existing TTBER and TT Guidelines the European Commission will propose to be made to take into account the evaluation findings.
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