Licensing 2023: A global overview

We are pleased to have contributed to the Lexology "Getting the Deal Through" Licencing Report. Discussing the topic of licensing across jurisdictions, the report provides a global overview. We have also produced a specific insight into legislation and licensing in the United Kingdom.

Intellectual property licensing is a truly global activity, which makes this annual review of applicable laws in several key jurisdictions invaluable – both to those directly involved in the licensing process, and their advisers.

There were a number of key developments in 2022, and it is good to see that we have moved on from the emergency covid-19 procedures introduced in many patent offices over the past couple of years. These measures appear to be leading to increased digitisation and to a longer-term easing of formalities both in relation to the patenting process itself and the registration of patent licences, which is good news. Please see the entries from Brazil, Thailand and Switzerland for further information on recent developments in their patent offices.

One of the most exciting developments in Europe, after many decades of work and planning, is the introduction of the Unified Patent Court and the new unitary patent regime, both of which will apply in much of the EU. As at the date of writing, the provisional application period has commenced and the new court is expected to start in early summer 2023. The sunrise period for opting patents out of the new unitary patent regime is expected to start in spring 2023. These measures are intended to harmonise the patent landscape across Europe. The arrangements will also affect patent licences as under the new regime only the owner(s) of European patents are entitled to opt their existing European patents out of the new court system. Existing licence agreements therefore should be reviewed and where necessary amended to protect the interests of licensees. Furthermore, under the new system when European patent applications are ready to be granted a decision has to be made as to whether a new unitary patent will be issued or not – another key decision that can only be taken by the patent owner(s) and not a licensee. Once again licence agreements need to be reviewed to ensure that licensees’ interests are protected – for example in circumstances where an exclusive licensee has a licence that includes European patent applications and does not wish a unitary patent to be granted. Of course, the owner/licensor will need to agree to that amendment. These changes also mean that it is vitally important for licensees to carry out due diligence to ascertain the owner of the licensed patents, which may or may not be the licensor.

Another important European development reported in the Netherlands chapter is the new EU Vertical Block Exemption Regulation, which came into force in June 2022. This regulation is intended to provide parties to vertical agreements (such as distribution or supply agreements) with more certainty regarding the compatibility of their agreements with EU competition law. Although the regulation does not apply to general IP licence agreements, such as licences to develop or manufacture products, it will apply to any supply contracts containing restrictions on the use or resale of contract goods that may be patented or trademarked. It also applies to franchise agreements.

In the UK, a key development has been The National Investment and Security Act 2021, which came into force on 4 January 2022, introducing new governmental powers to review and prevent mergers, acquisitions, and other transactions with connections to the UK on national security grounds. It is important to emphasise that the new Act covers not only mergers and acquisitions but other commercial arrangements such as collaboration agreements and IP licences. Individuals and businesses are required to notify the relevant Secretary of State where an acquisition of certain entities operates within one of the 17 ‘high-risk’ sectors. These include artificial intelligence, computing hardware, data infrastructure, and energy. The legislation also introduces the possibility of the Government preventing IP licensing arrangements between UK and foreign entities. July 2022 saw the Government’s first exercise of these prevention powers in an intellectual property context.

In Asia there have been several developments including the setting up of the new IP division of the Delhi High Court, which is now the leading venue for the resolution of IP disputes in India.

In New Zealand it is reported that the Fair Trading Amendment Act 2021 broadens the existing prohibition on unfair terms in consumer contracts and there is a new prohibition on ‘unconscionable conduct’ – both of which may affect licence arrangements.

Lastly, in the US chapter it is reported that two key IP cases, both concerning trademarks, will be heard by the Supreme Court in 2023. One of these cases will address the international reach of the Langham Act (the US trademark statute) and, in particular, whether the Act applies to a defendant’s foreign sales. The second case will address the proper scope of ‘parody’ defences and whether the use of another’s trademark in a humorous manner on a commercial product is subject to the Act’s traditional ‘likelihood of confusion’ analysis.

Click here to read our chapter on licensing in the United Kingdom.

Click here to read more on licensing in other jurisdictions.

Reproduced with permission from Law Business Research Ltd. This article was first published in Lexology GTDT – Licensing 2023. For further information, please click here.