No C 248/8 Official Journal of the European Communities 17.9.84 
2. The Committee does not take a stand with regard to the increase in the value limit 
and the list of goods in the Appendix. It does, however, insist that harmonization be 
completed by the end of the five-year period. 
Done at Brussels, 4 July 1984. 
The Chairman 
of the Economic and Social Committee 
Francois CEYRAC 
Opinion on the proposal for a Commission Regulation on the application of Article 85 (3) 
of the Treaty to certain categories of patent licensing agreements(') 
(84/C 248/05) 
The Committee's Bureau decided on 22 November 1983, in accordance with Article 20 (3) 
of the Rules of Procedure, to deliver an opinion on the proposal for a Commission 
Regulation on the application of Article 85 (3) of the Treaty to certain categories of 
patent licensing agreements. 
Asked to prepare work on the matter, the Section for Industry, Commerce, Crafts and 
Services adopted its opinion on 13 June 1984. The rapporteur was Mr Poeton. 
At its 218th plenary session (meeting of 4 July 1984) the Economic and Social 
Committee adopted unanimously the following opinion: 
The Commitee welcomes the latest version of the 
draft Regulation of the Commission (84.CC.1). Al­
though it could be improved in a number of signifi­
cant respects, the draft represents the basis of a 
workable Regulation. The Committee considers that 
there should be a high priority given to clarifying the 
thinking behind the regulation. 
The Committee is pleased that the Commission 
acknowledges that in order to encourage the patent 
licensing process and its contribution to the promo­
tion of technical progress, it must allow at least the 
minimum legal protection required to make it 
worthwhile for companies to make use of patent 
licensing as a process to develop new products. It is 
important to remember that a patent licensing ar­
rangement is a 'second best' method for most com­
panies who would tend to look first to exploitation 
as the primary method. If too many obstacles are 
(') Opinion of ESC on the 12th report of the Commission 
of the European Communities on competition policy 
(September 1983) (OJ No C 341, 19. 12. 1983, p. 30). put in the way of the patent licensing process, resort 
to that method of promoting technical progress may 
be inhibited. 
The Committee's recommendations are presented 
under four heads: 
1. The treatment of exclusive sales obligations built 
into patent licensing agreements. 
2. The treatment of field of use restrictions. 
3. The treatment of 'know-how' agreements mixed 
with patent licensing. 
4. Other comments and recommendations. 
1. The treatment of exclusive sales obligation built 
into patent licensing agreements 
1.1. The most important aspect of the draft Regu­
lation is that in respect of exclusive sales obligations 
built into patent licensing agreements. The absence 
17. 9. 84 Official Journal of the European Communities No C 248/9 
of any limitation on sales exclusivity as between 
licensor and licensee in the draft Regulation allows 
an effective contractual protection in favour of the 
licensor's territory. 
1.2. The Committee's view is that the arguments in 
favour of absolute protection for the licensor (subject 
of course to the rules of free movement of goods 
which always allows parallel imports) are over­
whelming. Anything less would have raised a ques­
tion about the commercial realism of the Regula­
tion. 
1.3. The degree of contractual protection allowed 
by the draft Regulation as between licensees as a 
condition of exemption is however limited. 
1.4. In Article 1 (1) (5) the Commission introduces 
a distinction between active and passive sales policy 
and allows an exemption only to contracts which go 
no further than restraining licensees from an active 
sales policy in other licensees' territory. Passive sales 
by licensees cannot be curtailed. Licensees may 
supply customers in other licensees' territories on 
request. 
1.5. The Committee considers this rather limited 
protection between licensees to be far from ideal 
from the licensees' point of view who would rather 
have a period of five to seven years' protection 
against passive sales, but would accept it in the 
absence of agreement on fuller protection. 
1.6. The Committee wishes to emphasize the point 
that the block exemption in the present draft Regu­
lation is concerned essentially with contractual rela­
tionships. 
1.7. The draft Regulation operates independently 
of the national patent system. Consequently, the 
contractual arrangements made by licensors and 
licensees may be complemented by enforcement of 
national patent rights. 
1.8. This second tier of enforcement may prove to 
be quite important, particularly if the judgments of 
the European Court of Justice one day allow a wider 
protection of the licensee's territory by the device of 
enforcing national patent rights. 
1.9. Until the ECJ clearly pronounces upon 
whether or not the enforcement of national patent 
rights is consistent with the free movement of goods, 
however, it is better to have the possibility of protec­tion afforded by Article 1 (1) (5) than to have noth­
ing at all. 
1.10. Article 1 
1.10.1. The Committee notes that even though Arti­
cle 1 (1) (3), (1) (4) and (1) (5) contain the words: 'in 
so far as this territory is protected by parallel pa­
tents' the Commission advises that it is possible to 
file for a patent in one country and through the use 
of contracts impeed the licensees from manufactur­
ing in all other countries. 
1.10.2. Amend Article 1 (1) (2) to read: 
'An obligation on the licensor not to manufacture, 
use or sell the patented product or products 
manufactured using the process (the licensed pro­
duct), use the patented process or use the commu­
nicated know-how, if any, in the licensed territory 
himself.' 
1.10.3. Amend Article 1 (1) (3) to read: 
'An obligation on the licensee not to manufacture, 
use or sell the licensed process in the territory 
within the common market in so far as this terri­
tory is reserved for the licensor.' 
1.10.4. The use of the term 'work' is undesirable 
and it would be better to revert to the more familiar 
'manufacture, use or sell' throughout Article 1. Arti­
cle 1 (2) refers to 'sales restrictions... in para­
graph 1 (2) and (3)' and explicit reference to sales is 
therefore desirable on grounds of comprehensibility 
alone. 
1.10.4.1. The Committee notes that the Commis­
sion is aware of this problem and undertakes to do 
away with it. 
1.10.5. The definition of active sales policy in 1 (1) 
(5) should be clarified. 
1.10.5.1. It is not entirely clear what an 'active sales 
policy' would include. One possible improvement 
might be to adopt the wording of the distribution 
Regulation, i.e.: 
'the obligation to refrain, outside the contract ter­
ritory and in relation to the contract goods, from 
seeking customers, from establishing any branch, 
and from maintaining any distribution depot' (Ar­
ticle 2 (2) (c) of Regulation (EEC) No 1983/83). 
No C 248/10 Official Journal of the European Communities 17.9.84 
2. The treatment of field of use restrictions 
2.1. The Committee welcomes the retention of the 
possibility of a field of use restriction in Article 2(1) 
(3), and in particular the way in which Article 3 (7) 
allows more scope for field of use restrictions than 
earlier drafts. The Committee always had doubts 
about the reasonableness of limiting field of use 
restrictions under the previous draft because it ig­
nored the reality that it was sometimes essential to 
restrict the field of use for reasons of quality and 
product control development. The previous draft 
appeared to allow its concerns about the possible 
anti-competitive implications of field of use restric­
tions to create too wide a limitation on all field of 
use restrictions. 
2.2. Article 2 (1) (3) in the draft Regulation retains 
the principle of field of use restrictions as acceptable 
obligations. Article 3 (7) takes away exempted status 
only where the restrictions on one party are 'as to 
the customers to whom he may sell or as to the mar­
keting or packaging of the licensed products'. 
2.3. Even here, such restrictions may be acceptable 
if they are a direct consequence of the different tech­
nical field of application of the licensed patent. 
2.4. Nevertheless, the Committee considers that the 
clause should be further widened. The Committee's 
view is that the word 'technical' is too limited to 
cover all the necessary field of use restrictions that 
licensors might wish legitimately to include. 
2.5. The Committee is also concerned about the 
retention of the proviso in Article 2 (1) (10). There is 
no real justification for an insistence that such obli­
gations must be non-exclusive. In the first place, the 
general practice is for such obligations to be exclu­
sive and as a consequence this proviso will provide 
exemption to relatively few cases. 
2.6. Moreover, under the particular circumstances 
of paragraph 1(10) such an exclusive license should 
not restrict competition unduly, because the licensee 
in any case requires the consent of the licensor to 
use the earlier patent, on which the subsequent pa­
tent depends. The object of the Regulation is to pro­
vide an exoneration from 85 (1) for agreements con­
ferring an exclusive license on lincensees. As a reci­
procal measure the licensor should be entitled to ask 
the licensee for an exclusive license in respect of 
inventions relating to improvements. 2.7. The Committee recommends that at the end of 
Article 2 (1) (10) the words 'as far as the licensee is 
concerned' should be added in order to make sure 
that the licensor at least can undertake to grant an 
exclusive license on inventions relating to improve­
ments. Such an obligation is in conformity with the 
letter and the spirit of Article 1 of the draft Regula­
tion. 
3. The treatment of 'know-how' agreements mixed 
with patent licensing agreements 
3.1. The draft Regulation gives some weight to the 
realities of how 'know-how' develops during the 
course of patent licensing agreements and the need 
to ensure that the provision of non-patented techni­
cal 'know-how' is protected. 
3.2. Article 2 (1) (7) retains the principle that the 
draft Regulation will apply to 'know-how' provi­
sions mixed with patent licence agreements. More­
over paragraph 9 in the new preamble takes a realis­
tic view of 'know-how'. 
3.3. More importantly, Article 3 (1) (4) provides 
that royalty repayments may be spread over a period 
longer than the duration of the licence without qual­
ification as to a fixed period of years or whether 
such 'know-how' had entered the public domain. 
3.4. It is important to remove such qualifications 
in order to allow realistic arrangements for pay­
ments to be made between licensor and licensee. 
3.5. If licensees have to pay too much money 'up 
front' they will be dissuaded from entering into 
licensing agreements and as a result opportunities 
for the exploitation of innovations may be lost. The 
Committee considers that the current draft Regula­
tion is realistic, but does not go far enough. 
3.6. It therefore recommends the following 
changes: 
3.6.1. Article 3 (2) should be amended to read as 
follows: 
'Without prejudice to paragraphs (1) 7 and (1)4) 
of Article 2, the duration of the agreement extends 
beyond the expiry (of the last to expire), of the 
licensed patents existing at the time the agreement 
was entered into, unless each party has at least the 
17. 9. 84 Official Journal of the European Communities NoC 248/11 
yearly right after such expiry to terminate the 
agreement provided that for a period of up to ten 
years the licensee may be obliged not to divulge 
the 'know-how' and to continue to make pay­
ments for 'know-how' for a like period.' 
The Committee notes that it is necessary until such 
time that the Commission specifically covers 'know-
how' agreements by a Regulation. 
3.6.2. Article 3 (4) does not permit the practice of 
calculating royalties, for convenience, on some raw 
material or end product rather than the licensed 
invention itself. This could cause practical difficul­
ties. 
Article 3 (4) should therefore be amended to read 
approximately as follows: 
'4. The licensee is obliged to pay royalties on 
products not relating to the manufacture or use of 
the licensed invention or incorporating the li­
censed product, without prejudice to arrange­
ments whereby the royalty payments for the use of 
a licensed invention are spread over a period lon­
ger than the duration of the licence in order to 
facilitate payment by the licensee.' 
4. Other comments and recommendations 
4.1. Article 3 
4.1.1. The Commission has emphasized that the 
clauses listed in Article 3 do not per se constitute 
violations but are such as to require individual as­
sessments. Article 3 (3) should make it clear that it 
refers to restrictions contained within the licence 
itself and relating to the licensed products. At pre­
sent the wording could refer to other restrictions, 
e. g. the existence of patent and other rights under 
which the licensee is not licensed. 
4.1.2. Article 3 (5) should take into account the fact 
that maximum quantity restrictions are quite normal 
in engineering agreements concerning the building 
up of a plant. If, for example, the plant needs a 
patented process, the licence is given for the quan­
tity which the plant has the capacity to produce. 
There is no reason to put such a limited licence on 
the 'prohibited list' scheduled in Article 3. 
4.1.3. Moreover, Article 3 (5) could have adverse 
consequences for small and medium-sized enter­
prises which are sometimes granted licences at pre­ferential rates in view of their limited capacity. This 
Article should reflect this by exempting arrange­
ments whereby a licensee may be limited to a certain 
output but has a right to increased output at a higher 
royalty. 
4.1.4. Article 3 (7) is difficult to reconcile with Ar­
ticle 1 (1) (6) which exempts an obligation on the 
licensee to use the licensor's trade mark or get up. 
Article 3 (7) withdraws the exemption if 'one party is 
restricted ... as to the marketing or packaging of the 
licensed products'. The Committee recommends that 
the words 'without prejudice to Article 1 (1) (6)' 
should be inserted in Article 3 (7) to avoid any risk 
of conflict. 
4.1.5. Furthermore, in Article 3 (7) the use of the 
word 'packaging' in English and of'Aufmachung' in 
German is confusing and is not in accordance with 
the French version. A clarification is necessary. 
4.1.6. Paragraphs 10 and 11 of Article 3 should be 
deleted. In the first place they are superfluous, be­
cause they do not refer to clauses in agreements but 
to behaviour by the parties. This behaviour can be 
prohibited by the Commission under Article 85 (1) 
of the Treaty and it could even be punished, but 
there is no need to withdraw the exemption for the 
total agreement. Incidentally, the withdrawal of the 
exemption for the total agreement would raise com­
plicated legal questions. For example, what happens 
to the agreement when the bad behaviour ceases? 
4.1.6.1. Secondly, it is very difficult to define the 
bad behaviour briefly as in this Regulation without 
restricting the jurisprudence of the Commission and 
the Court. 
4.1.6.2. Thirdly, Article 3(10) and (11) raise impor­
tant issues about the nature and effect of block 
exemptions. Article 3 (10) appears to say that a sin­
gle refusal to supply, on the part of a single licensee, 
could invalidate the agreement, without the know­
ledge of the licensor, thereby putting the licensor as 
well as the licensee at risk of fines and/or civil pen­
alties. This is wholly unacceptable. 
4.1.6.3. Article 3 (11) is also misplaced. It states 
that the block exemption cannot apply where one 
party takes steps to exercise national property rights 
against a parallel importer or user. 
No C 248/12 Official Journal of the European Communities 17. 9. 84 
4.1.6.4. This is objectionable because it appears to 
say that a licensor (or the licensee in another territo­
ry) cannot even test the authenticity of the first or 
'passive' sale, which the exporting licensee would 
claim constituted 'proper' marketing. All parties are 
free to notify their agreements and to challenge such 
sales. 
4.1.6.5. If these paragraphs of Article 3 are not del­
eted altogether, they should at least be moved to 
Article 10, where there would then be a ground for 
withdrawal of exemption, after due inquiry. 
4.1.6.6. An alternative compromise might be to 
mention in the recitals that behaviour as defined in 
Article 3 (10) and (11) was not covered by the ex­
emption and could be prosecuted by the Commis­
sion. 
4.1.6.7. The Committee notes that the Commission 
is considering the desirability of splitting up para­
graphs 10 and 11 into concerted practices and unila­
teral action, the former would remain in Article 3, 
the latter moved to Article 10. 
4.2. Article 4 
4.2.1. The Committee recognizes that Article 4 pro­
vides a useful and valuable alternative to the exist­
ing procedure for notification, or exemption of 
agreements under Article 85. It had doubts however 
that under the previous draft this Article would have 
proved of much use to many parties to licences. 
Now that the requirement in Article 4 that a com­
pany must meet a size limitation has been deleted, 
some of these doubts have been removed. Yet the 
Committee remains concerned about the scope of 
the Article and the language used by it to describe 
the transactions to which the Article might apply. 
4.2.2. The Committee therefore recommends that 
in Article 4(1) there should de deleted the words: 
'which are analogous in their nature and effect to 
obligations covered by those articles'. 
The real meaning of these words is not at all clear 
and their effect is to narrow down the scope of the 
new procedure considerably. 
4.3. Article 5 
4.3.1. Article 5 still requires everyone who goes to 
arbitration to communicate to the Commission the terms of the award and the leasing agreement. Yet is 
it necessary or justified for all awards to be notified 
even where they do not have the effect of destroying 
the exemption? 
4.3.2. This Article is designed to obtain informa­
tion about a number of awards, in particular those 
involving settlement of disputes on EEC matters ac­
cording to the law of a non-EEC member State. The 
reason for this is that non-member States do not 
consider that the EEC rules of competition belong 
to the 'ordre public' in such a procedure. In intro­
ducing a notification procedure, the Commission 
hopes to have the arbitrator apply the EEC rules of 
competition where appropriate. 
4.3.3. The means envisaged by this Article are out 
of proportion to the aims. The Commission wants to 
educate a small number of arbitrators by imposing 
the notification of all awards concerning licensing 
agreements falling under the scope of the Regula­
tion. This is the more objectionable as the notifica­
tion procedure violates an important principle of the 
arbitration procedure which is to keep the terms of 
the awards secret. 
4.3.4. Moreover, if an agreement is contractually 
modified, or interpreted, in such a way as to take it 
outside the scope of the Regulation, the parties must 
already notify it, so the provision adds nothing to 
existing law. 
4.3.5. Furthermore, it is difficult to see how the 
provision could be enforced. The Commission could 
not fine an undertaking merely for non-notification 
of an award which had no effect on the agreement's 
eligibility for block-exemption. 
4.3.6. Article 5 should either be deleted altogether 
or be amended so that after 'licensing agreement' in 
line 5 the words are added 'if the terms of the award 
are such as to render the agreement no longer ex­
empt under Article 1'. 
4.3.7. Alternatively, the objective which the Com­
mission has in view could be reached by less drastic 
means. The Commission could for example help to 
educate arbitrators by publishing a general commu­
nication on the application of the EEC rules of com­
petition in arbitration procedures. 
4.3.8. The Committee notes that the Commission is 
prepared to delete this Article. 
17. 9. 84 Official Journal of the European Communities No C 248/13 
4.4. Article 6 
4.4.1. The Committee would welcome a definition 
of 'patent pools' in Article 6.1. The Committee has 
reservations about the exclusion under Article 6 (2) 
of licences between competitors who hold interests 
in a joint venture or between one of them and the 
joint venture because this leaves an important gap in 
the Regulation. The Committee hopes that the Com­
mission will soon provide a block exemption for 
such agreements. 
4.4.2. The effect of Article 6 (3) is to exclude cross 
licences by which means patent infringement and 
validity actions are settled. The benefit of this Regu­
lation would be greatly reduced if cross licences are 
entirely excluded. 
4.4.3. Moreover the second half of Article 6 (3) is 
somewhat obscure. It appears to put cross-licensing 
agreements between competitors beyond the scope of the exemption unless there are no territorial res­
trictions on the licensed products; it then goes on to 
say that 'this shall also apply where one party grants 
the other a trade mark licence or a sales licence for 
unprotected products'. It is not at all clear whether 
'this' means the situation which is beyond the scope 
of the exemption or the one which is within it. 
4.4.3.1. The situations described should be within 
the scope of the exemption, since the inevitable 
result of a licensing agreement is to create a 'compe­
titor'. The thinking behind this provision is perhaps 
equally obscure and deserves further study. 
4.4.4. The Committee notes that the Commission 
will redraft Article 6 (3). 
4.5. Article 10 
4.5.1. Article 10 (3) should be reformulated in view 
of the deletion of Article 5. 
Done at Brussels, 4 July 1984. 
The Chairman 
of the Economic and Social Committee 
Francois CEYRAC 
Opinion on the proposal for a Council Directive amending Directive 83/181/EEC deter­
mining the scope of Article 14 (1) (d) of Directive 77/388/EEC as regards exemption 
from value added tax on the final importation of certain goods and on the proposal for a 
Council Directive amending Directive 68/297/EEC on the standardization of provisions 
regarding the duty-free admission of fuel contained in the fuel tanks of commercial motor 
vehicles (*) 
(84/C 248/06) 
On 22 March 1984 the Council decided to consult the Economic and Social Commit­
tee, under Articles 75 and 100 of the Treaty establishing the European Economic 
Community, on the abovementioned proposal. 
(') OJ No C 95, 6. 4. 1984, p. 3.