Legal Aspects of Innovation Cooperation in Research and Development

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Legal Aspects of Innovation Cooperation in
Research and Development
Larry D. White, J.D. Partner, TNE
Consulting larry.white_at_tneconsulting.com
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Legal Aspects of Innovation

• Technology transfers and licensing
• Market dominance
• Patent control
• State aid
• Mergers
• Cooperative research
• Note Antitrust law is U.S. term for competition
  law

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Agreements Prohibited

• Competitors may not make agreements that reduce
  competition
• 15 U.S.C. 1
• Art 81 of the EC Treaty
• Law 4054 Art. 4

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Competition Law

• Encourage competition in the markets
• Focus on effect on consumers
• Protect competition, not competitors

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R D Cooperation

• Basic research and development (R D) is costly
  and there is increasingly less government funding
  available
• Scenarios
• Too expensive for a single firm
• Too expensive for some, possible for others
• Patent issues

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United States

• Antitrust Guidelines for Collaboration among
  Competitors (2000)
• R D agreements considered to be pro-competitive
• Investigation only if there is a complaint
• Evaluated under the Rule of Reason
• Balance pro-competitive and anticompetitive
  aspects

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European Union

• EC Treaty favors R D efforts
• EC Regulation 2659/2000
• General limit of 7 years for competitors
• General limit of 25 of market
• Unlimited if not competitors
• Phases out if market share goes above threshold

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Turkey

• Law 4054, Art. 5 authorizes exemptions
• Singular or Block
• Communique 2003/2
• 5 years duration
• Maximum of 40 of market share
• Limited to 20 if exclusive agreement is involved
• Phase-out if limit is exceeded

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Black List Issues

• Limitations on independent research
• Limitation of use of data after sharing
• Any restrictions on pricing
• Agreement on use of product or division of
  markets
• Limitations on licensing
• Restraints on uses with other products

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Suggested Elements

• Allow for as much market participation as
  possible
• Allow for as much data sharing as possible
• Focus on as basic research activities as possible
• Not allow one particular company to dominate but
  give all participants as voice
• Not allow post-data sharing restrictions
• Maintain an arms length management of the
  cooperative effort

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Questions to Ask

• Does the R D organization focus on basic,
  rather than applied, research?
• Is participation as broad as is possible?
• Is the data shared equally?
• Does the R D organization direct itself?
• Are there prohibitions on post-data sharing
  restrictions?
• Does the organizational structure of the
  cooperative venture reflect openness?

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Bottom Line

• If the organization is designed to promote
  research on a fair basis
• Then you will probably have no problem
• If it does anything else, you will