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Stanford – Vienna
Transatlantic Technology Law Forum
A joint initiative of
Stanford Law School and the University of Vienna School of Law

TTLF Working Papers

No. 18

Antitrust Issues in Technology Transfer:
A Comparative Legal Analysis of Patent
Licenses in the EU and the U.S.

Anna Maria Baumgartner

2013
TTLF Working Papers

About the TTLF Working Papers

TTLF’s Working Paper Series presents original research on technology, and business-
related law and policy issues of the European Union and the US. The objective of
TTLF’s Working Paper Series is to share “work in progress”. The authors of the
papers are solely responsible for the content of their contributions and may use the
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contact Vienna Law Professor Siegfried Fina, Stanford Law Professor Mark Lemley or
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Stanford-Vienna Transatlantic Technology Law Forum
http://ttlf.stanford.edu

Stanford Law School University of Vienna School of Law
Crown Quadrangle Department of Business Law
559 Nathan Abbott Way Schottenbastei 10-16
Stanford, CA 94305-8610 1010 Vienna, Austria
Sponsors

This project was co-sponsored by the Stanford-Vienna Transatlantic Technology Law
Forum (Stanford Law School/University of Vienna School of Law) and the Europe
Center at the Freeman Spogli Institute for International Studies at Stanford University.

About the Author

Anna Maria Baumgartner is an associate with bpv Hügel Attorneys at Law in Vienna,
Austria. Her areas of practice are European and national competition law and
litigation. Her research work is associated with the European Union Law Program of
the University of Vienna School of Law in Austria, where she obtained her J.S.D.
Before joining bpv Hügel, Anna Maria worked as a trainee and as an associate with
different corporate law firms in Vienna. She also participated in the International
Summer Program of the University of Vienna and worked as a legal clerk at different
courts in Austria. She received her J.D. from the University of Vienna School of Law
and studied European Union law as well as public international law at the Université
Panthéon-Assas in Paris, France. She focuses her research work on technology transfer
by way of patent licenses in the EU and the U.S. and their related antitrust issues. She
has been a TTLF Fellow since 2011.

General Note about the Content

The opinions expressed in this paper are those of the author and not necessarily those
of the Transatlantic Technology Law Forum or any of its partner institutions, or the
sponsors of this research project.

Suggested Citation

This TTLF Working Paper should be cited as:
Anna Maria Baumgartner, Antitrust Issues in Technology Transfer: A Comparative
Legal Analysis of Patent Licenses in the EU and the U.S., Stanford-Vienna TTLF
Working Papers No. 18, http://ttlf.stanford.edu.

Copyright

© 2013 Anna Maria Baumgartner
Acknowledgments

I am grateful to the Stanford-Vienna Transatlantic Technology Law Forum for making this
research possible, and in particular for having hosted me at Stanford Law School where
parts of this paper were written. I would especially like to thank Professor Siegfried Fina
and Professor Roland Vogl for their encouragement and support.
Abstract

In our modern and rapidly evolving society, technological progress is omnipresent.
New inventions are frequently protected by intellectual property rights (IPRs) to secure
for the inventor the exclusive use of its work. In the last two decades, reliance upon
licensing strategies as a source of revenue for IPR holders has dramatically increased.
Another advantage is that the licensee gains access to a technology that it could
otherwise not use. It can employ these new technologies to improve its manufacturing
operations or increase the functionalities of its products. Licensing agreements thus
lead to the dissemination of technology, thereby fostering the development of new or
better products. However, where an undertaking intends to gain access to another
firm’s technologies on a contractual basis, there is always a chance of forbidden
agreements and understandings between the parties that may have negative impacts on
the affected markets. This paper analyzes the potential antitrust issues in technology
transfers by way of patent licensing agreements in two major jurisdictions – the EU
and the U.S. Its main focus is the antitrust assessment under the core antitrust
prohibitions of Article 101 TFEU in the EU and Section 1 of the Sherman Antitrust
Act in the U.S. Both legal systems have moved towards convergence since a new EU
Technology Transfer Block Exemption Regulation was introduced in 2004. The aim of
this analysis is to elaborate on the existing similarities and remaining differences
between the EU and the U.S.
To my parents.
Thank you for your support and encouragement.
Table of contents

Part I: Introduction ........................................................................................................... 10
Part II: A comparative antitrust analysis of patent licenses in the EU and the U.S. ... 14
I. Antitrust law vs. intellectual property rights: contradictory or complementary fields
of law? ...................................................................................................................... 14
1. An outline of the relevant antitrust provisions ..................................................... 14
1.1. EU antitrust law .............................................................................................. 14
A. Article 101 TFEU ........................................................................................ 14
B. Article 102 TFEU ........................................................................................ 16
1.2. U.S. antitrust law............................................................................................. 17
A. Section 1 Sherman Act................................................................................. 18
B. Section 2 Sherman Act................................................................................. 20
1.3. EU and U.S. law compared ............................................................................. 20
2. The intersection between antitrust law and intellectual property rights .............. 22
2.1. Antitrust law and intellectual property rights in the EU ................................. 22
2.2. Antitrust law and intellectual property rights in the U.S. ............................... 26
2.3. Conformity of both legal systems ................................................................... 30
II. The legal and institutional framework of antitrust law applicable to patent licenses
in the EU and the U.S. ............................................................................................. 31
1. General introduction ............................................................................................ 31
1.1. EU framework ................................................................................................. 31
1.2. U.S. framework ............................................................................................... 35
1.3. A comparison of both systems ........................................................................ 37
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2. The EU Technology Transfer Block Exemption Regulation ............................... 39
2.1. The scope of the Technology Transfer Block Exemption Regulation ............ 40
2.2. Hardcore restrictions ....................................................................................... 44
2.3. Excluded restrictions ....................................................................................... 45
2.4. The effect of the Technology Transfer Block Exemption Regulation ............ 46
2.5. The applicability of the Technology Transfer Block Exemption Regulation to
other types of agreements ............................................................................... 47
A. Non-assertion and settlement agreements .................................................... 47
B. Subcontracting agreements .......................................................................... 48
C. Research and development agreements ....................................................... 49
D. Sublicensing agreements .............................................................................. 50
E. Purchase agreements .................................................................................... 51
F. Trademark and copyright licensing agreements .......................................... 51
G. Joint venture agreements.............................................................................. 52
H. Vertical agreements ..................................................................................... 52
2.6. Withdrawal in individual cases and non-application of the Technology
Transfer Block Exemption Regulation ........................................................... 53
3. The U.S. Antitrust Guidelines for the Licensing of Intellectual Property ........... 55
4. A comparison of the EU and the U.S. framework ............................................... 58
III. Market definition and the assignment of market-share thresholds .......................... 60
1. Product markets ................................................................................................... 62
1.1. The product market in the EU ......................................................................... 62
A. The definition of the product market in the EU ........................................... 62
a. Demand substitutability ........................................................................... 63
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b. Supply-side substitutability ...................................................................... 64
c. Geographic dimension ............................................................................. 65
B. The calculation of market shares in the EU ................................................. 66
1.2. The product market in the U.S. ....................................................................... 67
A. The definition of the product market in the U.S. ......................................... 67
B. The calculation of market shares in the U.S. ............................................... 69
2. Technology markets ............................................................................................. 72
2.1. The technology market in the EU ..................................................................... 72
A. The definition of the technology market in the EU ..................................... 72
B. The calculation of market shares in the EU ................................................. 72
2.2. The technology market in the U.S. ................................................................... 78
A. The definition of the technology market in the U.S. .................................... 78
B. The calculation of market shares in the U.S. ............................................... 79
3. Innovation markets............................................................................................... 80
3.1. The innovation market in the EU ...................................................................... 80
3.2. The innovation market in the U.S. .................................................................... 81
4. A comparison of market analysis in the EU and the U.S..................................... 83
IV. The determination of a competitive relationship between licensor and licensee..... 84
1. Agreements between competitors in the EU ........................................................ 84
1.1. Competitors on the relevant technology market ............................................. 85
1.2. Competitors on the relevant product market ................................................... 86
2. Agreements between non-competitors in the EU ................................................ 87
2.1. Non-competitors on the relevant technology market ...................................... 87
2.2. Non-competitors on the relevant product market ........................................... 88
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2.3. The evolvement from non-competitors to competitors ................................... 89
3. Vertical agreements in the U.S. ........................................................................... 90
4. Horizontal agreements in the U.S. ....................................................................... 91
5. EU and U.S. law compared .................................................................................. 95
V. The guiding principles in the application of the core antitrust prohibitions of Article
101 TFEU and Section 1 Sherman Act to patent licenses ....................................... 95
1. The EU approach under Article 101 TFEU ......................................................... 95
1.1. First step: The applicability of Article 101(1) TFEU ..................................... 96
A. The prerequisite of an agreement or concerted practice between
undertakings capable of affecting trade between Member States ................ 97
B. Restriction of competition.......................................................................... 100
a. Preserving effective competition ........................................................... 100
b. Restriction of inter-technology competition .......................................... 102
c. Restriction of intra-technology competition .......................................... 103
d. Restriction of competition by object ...................................................... 105
e. Restriction of competition by effect ...................................................... 106
C. Inapplicability of Article 101 TFEU .......................................................... 108
a. Ancillary restraints ................................................................................. 108
b. More than 4 other independently controlled technologies ..................... 110
c. De minimis ............................................................................................. 110
D. Relevant factors for the assessment under Article 101(1) TFEU .............. 112
1.2. Second step: Applicability of 101(3) TFEU ................................................. 116
A. Procompetitive efficiencies ........................................................................ 118
B. Consumers’ share of the resulting benefits ................................................ 123
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