Competition law and settlement agreements
Published by a LexisPSL Competition expert

The following Competition practice note provides comprehensive and up to date legal information covering:

  • Competition law and settlement agreements
  • European Commission guidelines
  • Pay for delay
  • Settlement agreements in the pharmaceuticals sector

Competition law and settlement agreements

A common IP dispute is where one party—in this note usually the claimant—alleges infringement of its patent and the defendant challenges the patent’s validity.

Such disputes are frequently settled by agreement, and those agreements have the potential to infringe Article 101(1) TFEU. The European Commission has issued guidance on this issue.

European Commission guidelines

On 21 March 2014, the Commission adopted revised guidelines on the application of Article 101 TFEU to technology transfer agreements. Section IV, Part 3 of those guidelines concern settlement of IP disputes and the main points are:

  1. settlements which include a licence from the claimant to the defendant or an agreement by the claimant not to assert IP are not anti-competitive per se. Indeed they are pro-competitive as they have an unblocking effect

  2. there may still be aspects of such agreements that infringe Article 101(1) TFEU, but the block exemption applies provided there are no hardcore restrictions, such as price restrictions

  3. Pitfall 1—in particular, one potentially objectionable aspect is identified: cross-licensing, in settlement of a dispute where each party alleges infringement by the other. The guidelines are particularly concerned about cross-licensing which:

    1. imposes restrictions which go beyond what is necessary to resolve the dispute, especially restrictions on licensing to third parties

    2. extends to future developments if it inhibits incentives to innovate, particularly where there is no other significant

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