283 / 482
GAZETTE
AUGUST 1989
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.
"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-
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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