Q&As

Where a no-challenge clause is included in a trade mark licence, is this likely to fall foul of competition law? Does it make a difference if the licence is exclusive or non-exclusive?

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Published on LexisPSL on 12/10/2020

The following IP Q&A provides comprehensive and up to date legal information covering:

  • Where a no-challenge clause is included in a trade mark licence, is this likely to fall foul of competition law? Does it make a difference if the licence is exclusive or non-exclusive?
  • 90/186/EEC: Commission Decision of 23 March 1990 relating to a proceeding under Article 85 of the EEC Treaty (IV/32.736—Moosehead/Whitbread)

Where a no-challenge clause is included in a trade mark licence, is this likely to fall foul of competition law? Does it make a difference if the licence is exclusive or non-exclusive?

On the interaction between intellectual property and competition law see Practice Notes:

  1. Trade mark assignment and licensing

  2. Competition law and intellectual property

  3. Character merchandising—IP and competition law issues

Also see, Commentary: No-challenge clauses: Laddie, Prescott & Vitoria: The Modern Law of Copyright [42.42] which states:

'The European Commission and the European Court of Justice have generally regarded clauses in licences which prohibit the licensee from challenging the validity of the right in respect of which it is licensed as contrary to art 101(1) on the ground that the licensee cannot gain a release from the obligations of the licence by attacking the validity of the right. It is thus regarded as an anti-competitive clause.1 This may be so even where such a clause is included in a settlement agreement designed to put an end to existing litigation between the parties, although such cases are much more fact-sensitive.2 However, if the licence is one which is royalty-free or relates to a technically outdated process which the licensee does not use, such a clause may be permissible as the licensee is not under any competitive disadvantage.3 The presence of a no-challenge clause (except a clause allowing for

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