Patent Royalties Don’t Harm EU Competition

     (CN) — Forcing a patent licensee to pay agreed-upon royalties even if it doesn’t infringe the patent doesn’t harm competition, the European Court of Justice ruled Thursday.
     More than two decades ago, Germany-based Behringwerke granted a worldwide, nonexclusive license to Genentech for the use of its patented human herpes virus enhancer used in gene therapy.
     Genentech used the enhancer to transcribe the genetic sequence in order to produce the drug Rituxan. But the company’s use of the enhancer did not infringe Behringwerke’s patent, so it refused to pay a portion of the agreed royalty.
     Behringwerke sued in a French court, which asked the European Court of Justice whether forcing Genentech to pay the full royalty would violate EU competition law.
     In its preliminary ruling, the Luxembourg-based EU high court said Thursday that competition law does not prohibit the obligation to pay royalties for using technology, regardless of whether a patent has been infringed or is later deemed to be invalid or is withdrawn.
     The court said that a royalty is the price paid for the privilege to exploit a patent commercially, and also offers the licensee protection from potential infringement proceedings brought by the patent holder.
     Furthermore, the fact that Genentech and any licensee can freely terminate the licensing agreement means that competition is not affected by forcing the company to pay the agreed royalty.
     The French court will make the final decision in the case, and is bound by the EU high court’s ruling in the matter.

%d bloggers like this: