Changes to IP Licensing Agreements

A recent change to the Competition and Consumer Act 2010 (Cth) (CCA) may have significant implications for active Intellectual Property (IP) assignment agreements and licences[1].

This change relates to a repeal of the intellectual property exemption in section 51(3) of the CCA[2].  The IP exemption meant that commercial arrangements relating to IP rights were exempted from having to adhere to competition law requirements like all other commercial arrangements[3]. Now that this exemption has been repealed, commercial arrangements related to IP rights must meet competition law requirements like all other commercial arrangements[4]. The repeal of the IP exemption was justified on grounds that IP transactions are competitive and for this reason ought to adhere to competition law[5].

This will change commercial arrangements related to IP rights. Limitations to licences imposed by a licensor on a licensee that were previously allowable may now be unlawful[6]. For instance, IP licences will now be bound by the CCA relating to exclusive dealing and territorial restrictions[7]. It is important to further note that there are no plans for grandfather provisions to soften the transition from current arrangements[8].

These changes will take effect 6 months after the provisions receive Royal Assent, which is planned for 12 September 2019[9]. If you would like our advice regarding any of your IP licence agreements and whether they comply with competition law, we strongly advise that you contact us.

 

[1] Swinson et al., “Repeal of the IP Exemption.”

[2] “Repeal of Section 51 (3) of the Competition and Consumer Act 2010 (Cth),” 51.

[3] Swinson et al., “Repeal of the IP Exemption.”

[4] Ibid.

[5] Warwick, “Cartel Conduct and IP Licences and Assignments.”

[6] Swinson et al., “Repeal of the IP Exemption.”

[7] “Repeal of Section 51 (3) of the Competition and Consumer Act 2010 (Cth),” 51.

[8] Swinson et al., “Repeal of the IP Exemption.”

[9] “Repeal of Section 51 (3) of the Competition and Consumer Act 2010 (Cth),” 51.

 

References:

“Repeal of Section 51 (3) of the Competition and Consumer Act 2010 (Cth).” Australian Publishers Association, November 27, 2018. https://www.publishers.asn.au/news/repeal-of-section-51-3-of-the-competition-and-consumer-act-2010-cth.

Swinson, John, Michael Swinson, Scott Bouvier, and Lisa Huett. “Repeal of the IP Exemption: What Does This Mean for You?” Lexology, March 13, 2019. https://www.lexology.com/library/detail.aspx?g=671d9a37-4212-4216-a930-2c1aaf9b0f0b.

Warwick, Rothnie. “Cartel Conduct and IP Licences and Assignments.” IPwars.Com (blog), February 5, 2019. http://ipwars.com/2019/02/05/cartel-conduct-and-ip-licences-and-assignments/.