Introduction

A license is a legal instrument through which the owner of an intellectual property right (IPR) confers upon another party the right to (temporarily) use its IPR. Licenses are one of several ways to arrange exploitation of an IPR, together with direct exploitation and assignment. The licensing of IPRs is a valuable instrument to both stimulate and disseminate innovation and new technologies. The license mechanism can increase competition by allowing new entrants equal access to high technological standards. Licenses are accordingly generally seen as an expression of dynamic and innovative economies.

In certain circumstances, however, competition concerns related to licensing may arise. In most cases, licensing agreements provide the licensee with a conditional permission to exploit the right in question. Frequently, these concern the protection of confidential information, the meeting of high quality standards in the production or the use of the licensed good, or a protection against the risk of competition from the licensee. These conditions and obligations attached to the agreement can have anticompetitive intent and/or effect. Licensors can, for example, eliminate the possibility that the licensee will compete in one or more of its markets. It can do so by limiting the scope of application or confine territorial application of the IPR. Licensing conditions also often include explicit non-competition clauses or limitations on the licensee's freedom to deal with the licensor's competitors.