Two months have gone by since the prohibition on restrictive trade practices under the Competition and Consumer Act 2010 (Cth) (CCA) began applying to the licensing and assignment of intellectual property rights, following the repeal of section 51(3) of the CCA. See our discussion of the changes here.
The Australian Competition and Consumer Commission (ACCC) has since released Guidelines outlining how it might approach anti-competitive conduct prohibitions in the context of intellectual property. Three of the ACCC’s practical examples caught our eye as being of particular interest to our clients:
- Trade mark licence. Firm A and B compete in the building cladding product market. Firm A manufactures and distributes “SafeClad” and contracts Firm B to assist in Australia. Firm A licenses its registered trade mark in “SafeClad” to Firm B but restricts application of the trade mark only to materials that have met defined safety standards. The ACCC does not consider Firm A or B are at risk of contravening the cartel provisions, as the purpose of the restrictions is quality control, rather than restricting or limiting supply.
- Output restrictions. Firm A owns a patent relating to transmission systems used in mining vehicles, and licences this to Firms B and C for manufacture and on-sale. Without Firm C’s knowledge, Firm B agrees to pay a higher price to Firm A for the licence than the amount paid by Firm C for the same licence, in consideration for Firm A imposing more stringent quality requirements on Firm C. The ACCC considers Firms A and B are at risk of making an agreement that substantially lessens competition in contravention of section 45 of the CCA.
- Exclusive dealing. Firm A is a multinational chemicals company, operating in Australia, which holds a patent for a profitable fertiliser product. Firm A’s patent is set to expire in six months and it is concerned other competitors will enter the market. Firm A enters into an agreement with a large home improvement retailer for the sale of Firm A’s fertiliser on the condition that it will not sell any other competitors’ products. The ACCC considers this conduct may have the effect of substantially lessening competition in the market in contravention of section 47 of the CCA.
A business can apply to the ACCC for authorisation of conduct they propose to engage in if they are concerned it would or might breach the prohibitions against anti-competitive conduct in the CCA.
Please get in touch with our Intellectual Property and Competition teams if you would like us to assess your IP assignment and licensing practices.