The Gazette 1989

GAZETTE

AUGUST 1989

"Sec r e t" means that the know- how package is not generally known or easily accessible. "Substantial"means that the know-how includes information which is of importance for the whole or a significant part of (1) a manufacturing process or (2) a product or service or (3) for the development thereof. The Regulation contains an exhaustive list of the restrictive obligations where the exemption will apply; they include restrict- ions which essentially confer exclusive rights on the licensee and territorial protection on one or both of the parties, for example, an obligation on the licensee not to exploit the licensed technology in territories within the Common Market which are reserved for the licensor. However, restrictive obligations which allow terri- torial protection between the licensor and the licensee for manufacture, use or sale are only exempt for a period not exceed- ing, for each licensed territory within the EEC, ten years from the date of signature of the first licence agreement entered into by the licensor for that territory in respect of the same technology. Where the licensee is obliged not to manufacture or use the licensed product in other licensed territories or is obliged not to pursue an active policy of putting licensed products on the market of those other territories, then the exemption shall extend for a period not exceeding ten years from the date of signature of the first licence agreement entered into by the licensor within the Common Market in respect of the same technology. An obligation on the licensee not to put the licensed product on the market in the territories licensed to other licensees with- in the Common Market may only extend for a period not exceed- ing five years from the date of the signature of the first licence agreement entered into by the licensor within the Common Market in respect of the same technology. Article 2 of the Regulation provides that the exemption will apply no t w i t h s t and i ng the presence of certain other obliga- tions regarded as being non-

The exemption shall^apply on condition that the franchisee is free to obtain goods that are the subject matter of the franchise from other franchisees and the franchisee is obliged to indicate its status as an independent undertaking. The exemption will not apply where undertakings producing goods or providing services which are identical or are considered by users as equivalent in view of their characteristics enter into fran- chise agreements in respect of such goods or services or generally where the franchisee is prevented from obtaining sup- plies of goods of a quality equivalent to those offered by the franchisor or where the franchisee is prevented from continuing to use the licensed know-how after termination of the agreement where the know- how has become generally known or easily accessible or if the franchisee is restricted by the franchisor in the determi- nation of sale prices for the goods or services. The Commission reserves the right to withdraw the benefit of the exemption pursuant to Regulation 19/65/EEC where it finds in a particular case that an agreement that is exempted, nevertheless has certain effects which are incompatible with the conditions laid down in Article 85(3) of the Treaty of Rome, and in particular where territorial protection is awarded to the franchisee. The Regulation expires on 31 December 1999. 8. Know-How Licences Regulation 556/89, which is effective from 1st April 1989, grants a block exemption to pure know-how licensing agreements and to mixed know-how and patent licensing agreements not exempted by Regulation 2349/ 84, including those agreements containing ancillary provisions relating to trade marks or other intellectual property rights, to which only two undertakings are party. The exemption will only apply where the know-how remains secret and substantial. " Know- how" means a body of technical information that is secret, substantial and identified in any appropriate f o rm.

restrictive of competition; these include an obligation on the licensee not to divulge the know- how communicated by the licensor, an obligation on the licensee not to grant sub- licences or assign the licence, an obligation on the licensee not to exploit the licensed know-how after termination of the agree- ment insofar and as long as the know-how is still secret, an obligation on the licensee to observe mi n imum quality specifications for the licensed product and an obligation to inform the licensor of mis- appropriation of the know-how or infringements of the licensed patents. Block exemption will not apply if the agreement contains restrictions on the licensee continuing to use the licensed know-how after the termination of the agreement where the know- how has meanwhile become publicly known, obliging the licensee to assign in whole or in part to the licensor rights to improvements or new applica- tions of the licensed technology, or the charging of royalties for the use of know-how which has become publicly known by the action of the licensor or if one party is restricted in the determination of prices. The Regulation provides it does not apply to certain arrangements. These include agreements between members of a patent or know-how pool which relate to the pooled technologies, know-how licens- ing agreements between com- peting undertakings which hold interests in joint venture, agree- ments under which one party grants the other a know-how licence and the other party grants the first party a patent, trademark or know-how licence or exclusive sales rights, where the parties are competitors in relation to the products covered by those agreements, agree- ments including the licensing of intellectual property rights other than patents or the licensing of softwares except where these rights or the software are of assistance in achieving the object of the licensed tech- nology and there are no obligations restrictive of com-

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