Royalties for Unpatented Technology

Abstract

The Court of Justice of the EU has ruled that a licensee could be obliged to pay past royalties under a patent licence agreement even after a patent has expired or been deemed invalid, provided that the licensee has the ability to terminate the licence agreement for convenience.  The Court of Justice’s response to the question posed by the Paris Court of Appeal in Genentech Inc v Hoechst and Sanofi-Aventis (Case C-567/14) suggests that, if a licensee does not have the option to terminate for convenience, requiring it to pay past royalties due under the licence could be anti-competitive, amounting to a violation of Article 101 of the Treaty on the Functioning of the European Union (TFEU).This ruling reflects the status quo in some jurisdictions, but highlights the importance of careful drafting in respect of royalty obligations.

Keywords: EU court of Justice, Genentech, Hoechst, Sanofi-Aventis, article 101, TFEU