The Gazette 1989

GAZETTE

SEPTEMBER

1989

the validity of intellectual

property rights held by the

parties in the Common Market

relevant to the R + D programme,

are restricted as to the quantity

of products they may manu-

facture or sell or in the

de t e rmi na t i on of prices or

customers or freedom of market

or to allow manufacture by third

parties or are required to refuse

unreasonably to meet demand

from purchasers or to make it

difficult for purchasers to obtain

products.

The Regulation, like Regula-

tion 417/85, expires on 31

December, 1997.

Selective Distribution and

Motor Vehicle Agreements

Regulation 123/85 relates to

certain categories of motor

vehicle distribution and servicing

agreements to which two under-

takings are party and in which

one agrees to supply the other

only within a particular territory

of the Common Market or only

the other and a specified number

of other undertakings for the

resale of motor vehicles and

spare parts.

The dealer can be obliged

among other things not to

modify contract goods, not to

manufacture competing goods,

not to sell competing new

vehicles or spare parts or use

competing parts for mainten-

ance, not to subcontract dis-

tribution or servicing or repairs to

other dealers without consent,

not to maintain distibution

branches outside the dealer's

territory or seek customers or

entrust distribution to others

outside his territory or supply to

a reseller contract goods unless

the reseller is an undertaking

within the distribution system,

to observe certain minimum

standards, to order goods from

the supplier only at certain times

or within certain periods, to sell

mi n imum quantities, keep

certain minimum stocks, demon-

s t r a t i on vehicles, perform

guarantee work, free servicing,

use only specified spare parts

and to inform customers of use

of parts from sources other than

the supplier. The dealer must

provide services in respect of

contract goods sold in another

territory of the Common Market

by another dealer in the

d i s t r i bu t i on ne two r k. The

supplier cannot unreasonbly

apply minimum requirements for

distribution and servicing and

must distinguish between cate-

gories of goods (i.e. vehicles and

parts) in calculating discount

and must supply any car in its

current range marketed in the

Member State of the dealer.

The Regulation expires on 30

June 1995.

6 . Patent Licences

Regulation 2349 / 84 provides

block exemption to certain

categories of patent licensing

agreements between two under-

takings; such agreements may

relate to national patents,

European or Community patents

as well as associated non-

patented know-how. Such agree-

ments may include obligations on

the licensor not to license third

parties or to exploit the licence

itself, and obligations on the

licensee to procure goods or

services from the licensor, to pay

a minimum royalty, restrict

exploitation to particular appli-

cations, not to exploit the patent

after expiration of the agreement,

to mark products with details of

the patentee, to ensure minimum

quality standards and to inform

the licensor of infringements of

the patent. A number of pro-

visions cannot be included in

agreements if the block exempt-

ion is to apply, including, for

example: prohibition on the

licensee challenging the validity

of the licensor's patent or other

intellectual property rights, the

duration of the licensing

agreement beyond the term of

the patent, restriction on either

party competing with the other

in respect of research and

development, manufacture or

sales, the charging of royalties on

products not entirely or partially

patented or manufactured by

patented process, restriction as

to the quantity of products either

party may produce, freedom as

to pricing and discounts, an

obligation to assign improve-

ments or new applications of the

licensed patent, or a requirement

to take further unwanted

licenses.

Agreements between mem-

bers of a patent pool or com-

petitors in a joint venture or

reciprocal agreements between

competitors in relation to unpro-

tected products are excluded

from block exemption.

The Regulation expires on 31

December 1994.

Franchise Agreements

Regulation 4087/88, which took

effect on 1st February 1989,

grants a block exemption to

franchise agreements between

two undertakings, the franchisor

and the franchisee, for the

retailing of goods or the provision

of services to end users, or a

combination of these activities. It

also covers cases where the

relationship

between

the

franchisor and the franchisee is

made through a third under-

taking, the master franchisee.

However, the Regulation does

not cover wholesale franchise

agreements

industrial

franchise agreements.

The exemption from Article

85(1) will operate where there is

an obligation on the franchisor, in

a defined area, not to grant the

right to exploit all or part of the

franchise to third parties or itself

supply the franchisor's goods to

third parties, and an obligation on

the franchisee to refrain from

seeking customers for the goods

or services outside the defined

area. The Regulation allows the

presence of certain obligations

on the franchisee in order to

protect the franchisor's intellect-

ual property rights, for example:

to sell goods or provide services

according to specifications laid

down by the franchisor, not to

engage in any similar business in

the area which would compete

with a member of the franchised

ne twor k, to use its best

endeavours to sell the goods or

provide the services and to offer

for sale a minimum range of

goods and achieve a minimum

turnover.

The exemption will apply even

where the franchisee is obliged

not to disclose to third parties the

know-how provided by the

franchisor or to communicate to

the franchisor any experience

gained in exploiting the franchise

or not to use know-how licensed

by the franchisor for purposes

other than the exploitation of the

franchise.

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