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Recent changes to the Competition and Consumer Act 2010 (CCA)  may affect your current contracts and agreements, regardless of when they were entered into.

Under the CCA, deals between competitors to fix prices, divide up customers or divide up markets are a form of “cartel conduct”, which is prohibited (and attracts huge penalties).

Some types of exclusive deals are also prohibited, depending on whether the arrangement results in a ‘substantial lessening of competition’ in the marketplace.

However, it has always been the case that where those deals have been based on intellectual property rights and the use and exploitation of IP, then those deals have been permitted (and have NOT constituted prohibited cartel conduct or other anti-competitive arrangements).

But changes to the law mean this IP “exemption” will no longer apply. IP-related licensing arrangements entered into between competitors may now fall foul of the “cartel conduct” and other anti-competitive prohibitions.

Importantly, the new law does not apply only to IP licensing arrangements entered into in the future, but will also capture IP deals done in the past.

It is important that businesses are aware of these changes, as non-action could lead to a violation and be subject to fines and pecuniary penalties.

The critical elements are:

  • You have entered into an IP-related deal (e.g. Licensing Agreement, Cross-Licensing Agreement, Settlement or Co-Existence Deed etc);
  • With a competitor of yours;
  • Which:
    • restricts or divides up the parties’ use of IP, customers, territories, product segments, product outputs or markets etc; or
    • grants exclusivity of use of IP.

If you think this could apply to you, get in touch with the IP team at Macpherson Kelley.

 

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Law change could impact on contracts, agreements or deeds involving IP rights

04 October 2019
kelly dickson

Recent changes to the Competition and Consumer Act 2010 (CCA)  may affect your current contracts and agreements, regardless of when they were entered into.

Under the CCA, deals between competitors to fix prices, divide up customers or divide up markets are a form of “cartel conduct”, which is prohibited (and attracts huge penalties).

Some types of exclusive deals are also prohibited, depending on whether the arrangement results in a ‘substantial lessening of competition’ in the marketplace.

However, it has always been the case that where those deals have been based on intellectual property rights and the use and exploitation of IP, then those deals have been permitted (and have NOT constituted prohibited cartel conduct or other anti-competitive arrangements).

But changes to the law mean this IP “exemption” will no longer apply. IP-related licensing arrangements entered into between competitors may now fall foul of the “cartel conduct” and other anti-competitive prohibitions.

Importantly, the new law does not apply only to IP licensing arrangements entered into in the future, but will also capture IP deals done in the past.

It is important that businesses are aware of these changes, as non-action could lead to a violation and be subject to fines and pecuniary penalties.

The critical elements are:

  • You have entered into an IP-related deal (e.g. Licensing Agreement, Cross-Licensing Agreement, Settlement or Co-Existence Deed etc);
  • With a competitor of yours;
  • Which:
    • restricts or divides up the parties’ use of IP, customers, territories, product segments, product outputs or markets etc; or
    • grants exclusivity of use of IP.

If you think this could apply to you, get in touch with the IP team at Macpherson Kelley.