Grant back clauses development from Regulation 772/2004 to 316/2014 - Implications for the industry

University essay from Lunds universitet/Juridiska institutionen

Abstract: A grant back obligation refers to the obligation for a licensee to assign or license future developed improvements to a licensor. Grant back clauses affect on competition has been a controversial subject in economic and legal doctrine. The study answers if the changed approach in the European Union towards the separation of severable and non­severable improvements in relation to grant back clauses affects industrial co­operation. By adopting Regulation 316/2014, the Commission excluded exclusive grant back clauses concerning non­severable improvements from the TTBER. All exclusive grant backs are currently under the application of art. 101 TFEU and individually assessed. The thesis illustrates that non­exclusive grant backs, royalties and territorial restrictions might compensate for the possibility of inserting exclusive grant backs. However, it is not possible to determine if the licensor’s measurements against the licensee will be sufficient to maintain the industries’ incentive to license innovations, or if in fact competition will suffer since undertakings will refrain from entering into license agreements. The change within the European Union can be compared to the U.S. rule of reason approach suggesting that it would lead to international conformity. The thesis conclude that the change appears to lead to a higher degree of functionality for the term improvement since each license agreement will be individually assessed.

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