New EU rules on R&D cooperation

The new R&D block exemption came into force at the beginning of the year. You can find the text athttp://eur-lex.europa.eu/LexUriServ/LexUriServe.douri=CELEX:32010R1217:EN:NOT

Block exemptions are designed to help companies stay within the EU competition rules. If your contract terms fall within the rules set out in the block exemption you are generally OK. Basically what the Commission is saying is that although your contract may have terms that on the face of it seem to restrict competition the advantages of a contract of this nature outweigh the downsides. Even if you are outside the terms of the R&D block exemption you may still be on the right side of the law but the analysis may be more complex and you may be left in some uncertainty. If you find yourself in this position the Commission’s new guidelines on horizontal arrangements may offer some assistance but the basic principal remains the same – you must be confident that the benefits to the consumer are greater than the potential reduction in competition in the market, usually this requirement will be met if through the agreement a party is able to do something that it could not do alone.

Many aspects of the new R&D block exemption repeat the terms of the old provisions that it replaces, for example the combined market share of the parties to the agreement must still be under 25% and most of the outlawed clauses such as price fixing and a refusal to supply remain in place but there are important relaxations.

An important new provision covers the situation whereby only one of the parties is going to exploit the results and the other is merely being paid for its work. Where the parties make unequal contributions to the R&D they can also make provision for one of the parties to make a reasonable further contribution for access to the results. A number of the hard core restrictions have also been relaxed or are now subject to some exceptions so offering greater potential for partners to share responsibilities between them for manufacture and sale so long as production is not generally restricted.

An area that had attracted a lot of discussion during the progress of the legislation had been a proposal that the parties should disclose to each other all their IP that might be in some way related to the subject of the research however after receiving extensive public comment on this that provision has now been abandoned and left to the parties to regulate for themselves however it is still a requirement that preexisting knowhow necessary for the exploitation of the results

As with all the Block Exemptions it is likely that practice will lead to further refinements of the interpretation suggested in the guidance notes.

If you have contracts that were designed to meet the needs of the old regulation you can continue with them for a further two years, there is no need to revise them now although if you have any long terms agreements in place it might be as well to review them so that any amendment can be handled in a manner convenient to the project

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