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Abstract

Field-of-use limitations are contractual restrictions in which the licensee is limited in the use of the license to one or more technical fields, product markets or industrial sectors. Field-of-use restrictions are one of the most frequently stipulated clauses in a licensing agreement and as such, it is crucial to understand the likely pitfalls accompanying them. In today’s economy, transatlantic agreements are ever more common and require familiarity with both US and EU legal framework. It is for this reason, that the paper takes a comparative approach, comparing the US and EU legal framework, when it comes to field-of-use restrictions.

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Key takeaways

AI

1. Field-of-use restrictions are vital in licensing agreements to balance competition and intellectual property rights.
2. The EU and US legal frameworks differ significantly in their treatment of field-of-use restrictions and antitrust law.
3. Article 101 TFEU and the Sherman Act govern field-of-use restrictions in the EU and US, respectively.
4. TTBER allows exemptions for licensing agreements under specific market share thresholds, crucial for compliance.
5. Understanding the 'rule of reason' and 'per se' approaches is essential for analyzing field-of-use restrictions' legality.

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References (10)

1. Title 15 of the United States Code §1. 35 First used in Chicago Board of Trade v. United States, 246 U.S. 231 (1918).
2. Thomas C. Meyers, Field-of-Use Restrictions as Precompetitive Elements in Patent and Know-How Licensing Agreements in the United States and European Communities, 12 Nw.j. Int'l L. & Bus. 364 (1991-1992).
3. US Guidelines, § 5.1.
4. Leslie S. Misrock, Brian D. Coggio, Norman C. Dulak. The exercise of Patent Rights Through Multiple Ecvlusive Field-of-use Licensing. 11 Rutgers Computer & Tech. L.J. 383 (1985). p 388.
5. Ibid.
6. Ibid.
7. Continental T.V. v. GTE Sylvania, 433 U.S. 36 (1977).
8. Indiana Federation of Dentists, 476 U.S (1984), where the court recognized the term ''group boycott''. 48 US Guidelines § 5.1.
9. U.S. Department of Justice and the Federal Trade Commission, Horizontal Merger Guidelines (August 19, 2010).
10. See Broadcast Music Inc. v. CBS Inc.411 U.S. 1 (1979) where a blanket license, that had an effect on price, was to be analyzed under the ''rule of reason''.

FAQs

AI

What are the primary differences between EU and US approaches to field-of-use restrictions?add

The paper reveals that the EU emphasizes competition law under Article 101 TFEU, while the US applies the Sherman Act's 'rule of reason' for assessing field-of-use restrictions. Each legal framework operates under specific thresholds, with the EU's block exemption system contrasting with the US's safety zone conditions.

How do field-of-use restrictions affect competition according to antitrust law?add

Field-of-use restrictions can potentially hinder competition by allowing licensors to monopolize markets if not properly regulated. The Commission's Guidelines state that such restrictions must be evaluated on a case-by-case basis to assess their implications for competition.

What exemptions exist for field-of-use restrictions under EU competition law?add

Field-of-use restrictions can qualify for exemptions under Article 101(3) TFEU if they produce efficiencies that outweigh their negative effects on competition. The Technology Transfer Block Exemption (TTBER) also provides a 'safe harbor' for certain licensing agreements.

Under what conditions do field-of-use restrictions in the US receive a 'per se' treatment?add

In the US, field-of-use restrictions receive 'per se' treatment when they involve blatant anticompetitive practices like market division or price-fixing. The General Talking Pictures Corp. case established that restrictions are generally enforceable if they remain within the patent scope.

What impact do market share thresholds have on field-of-use restrictions in licensing?add

The TTBER stipulates that agreements between competitors with an aggregate market share below 20% are typically exempt from Article 101(1). For non-competitors, the threshold increases to 30%, emphasizing how market position influences the legality of restrictions.

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