Ch.12 Control of Restrictive Practices in Contractual Licences
This chapter discusses Article 40 of the Trade-related Aspects of Intellectual Property Rights (TRIPS) Agreement, which is the outcome of a proposal originally made by developing countries, which were concerned about the impact of strengthened intellectual property rights (IPRs) on the conditions of voluntary licenses. Article 40.1 recognizes that some licensing practices pertaining to intellectual property rights which restrain competition ‘may have adverse effects on trade and impede the transfer and dissemination of technology’. Meanwhile, unlike most provisions of the TRIPS Agreement, Article 40.2 does not contain specific obligations. It expressly allows countries to adopt measures to control or prevent certain practices or conditions relating to licensing agreements. Judgement of whether they should be controlled or prevented is based on three elements. Contractual practices or conditions should: be examined in each particular case; constitute an ‘abuse’ of intellectual property rights; and have an ‘adverse effect on competition in the relevant market’.