Tech Transfer rules review comes to the UK

Hard on the heels of the European Commission initiation of a review of the 2014 Technology Transfer Block Exemption (TTBE) and Guidelines comes a CMA announcement that it too is consulting on a replacement to the European Block Exemption, which currently forms part of assimilated EU law. 

We commented on the points of interest for tech and life sciences companies (in particular) arising from the EU review in a previous post. While the intended overhaul is not expected to be radical, the EU is contemplating a number of changes to the rules, including to the range of types of licences which may be protected, and plans to provide additional guidance, for example in relation to the licensing of data and the use of licensee negotiation groups in FRAND licensing. 

The CMA is recommending that the UK now adopts its own block exemption order (having previously sought views on whether there was merit in retaining a block exemption at all), and that the order should have a 12-year duration. Encouragingly, it recognises that the order should “help ensure that businesses are not deterred from engaging in pro-competitive technology licensing”. It also plans to publish a guidance document.

As licences are typically multi-jurisdictional in scope, the proposal to make only limited changes to the current EU rules is pragmatic; however, it does mean that the UK Order will be based primarily on the EU 2014 rules, rather than the updated version. 

The UK also plans a few variations of its own:

• Changing the types of technology licences which can benefit from the exemption, to drop utility models (on the basis that there is no such protection available in the UK) and to include database rights/copyright in a database (chiming with a proposal to provide better coverage to licensed data in the EU TTBE; data more generally will not be included unless it falls under the existing definition of know-how which may lead to another divergence with the EU which is considering aligning the definition of know-how with the new EU rules on trade secrets);
• Adding definitions of active and passive sales - this appears to be for practicality only, given that definitions of different sales types already exist in the Verticals Block Exemption Order;
• Removing the market share thresholds in technology markets and replacing the thresholds with a condition that the exemption will be available provided there are at least three independently controlled substitutable technologies. The EU is also contemplating changes in this area, although it is questionable how easy a condition of this kind will be to apply, particularly early in the technology life cycle where typically only limited information about competing technologies is available. 
• Similarly to the EU, it may also provide guidance on licensee negotiation groups and technology pools, but does not intend to expand the block exemption order itself to cover such multi-party arrangements. 

One novel proposal which will be unwelcome to business is buried in the latter portion of the consultation document - the CMA is contemplating introducing an obligation on parties to provide the CMA with information in connection with technology transfer agreements to which they are party within a baseline period of just ten working days, failing which the block exemption may be withdrawn. This seems onerous: licences often remain in place over a number of years, such that the information in question might not be readily available. The CMA does indicate that there will be scope to provide a ‘reasonable excuse’ for failing to provide such information. Ultimately this sanction seems somewhat futile: if an agreement is compliant with the block exemption it is very likely that will also comply with competition law generally, even if the block exemption is withdrawn (except perhaps in limited circumstances, for example if the parties have become competitors since the start of the agreement). 

This proposal does emphasise the importance more generally for companies to retain information that may be relevant to the competition law assessment of their agreements. This aligns with the recently introduced Digital Markets, Competition and Consumers Act (see our series here), which increases the obligations on companies to preserve documents where they are relevant to an investigation which has been commenced or is “likely” to be carried out. 

The deadline for responding to the consultation is 5 pm on 11 April 2025 (before the deadline for the equivalent EU consultation, where responses are due on 25 April 2025).