Case 12 - Use Restrictions

Summary

A.1. CASE

Dr Grey, the director of a private research institution, undertakes research projects with a variety of sponsors. She receives a licence for 100 EMC rats from White Corp. for a research project headed by her employee, Dr Black. The licence obliges the institute only to use the rat model in the identified experiment conducted by Dr Black. The use of the rat model in experiments sponsored by White’s competitor, Yellow Corp., is expressly forbidden.

Two years later, Dr Black is entrusted with an in-house research project sponsored by Yellow Corp. He continues using the rat model EMC 4 and patents his results.

Does White Corp. have a right to a share in profits as damages on the basis of breach of contract.

A.2. EDITORIAL NOTE ON THE EUROPEAN FRAMEWORK

The EU competition law framework is set by the Research and Development Block Exemption Regulation (Regulation (EU) No. 1217/2010) and the Technology Transfer Regulation (EC) No. 772/2004 (now Regulation (EU) No. 316/2014). In addition, Article 13 Directive 2004/48/EC (issued after the cases were designed in 2000) may play a role. Accordingly, courts can set damages by looking at different aspects like negative economic consequences, lost profits and unfair profits made by the infringer or, as an alternative, may set a lump sum on the basis of the royalties that would have been paid in the case of a valid licensing agreement between the parties (Art. 13(a) and (b) Directive 2004/48/EC). If the infringer did not knowingly, or with reasonable grounds to know, infringe the IP, member states may allow the courts to decide the recovery of profits (Art. 13(2)). Yet Case 12 asks for a share of profits based on the violation of a contract. Thus, Directive 2004/48/EC was not directly applicable, but may influence the reasoning.

A.3. COUNTRY REPORTS

(1) BELGIUM

I. Operative Rules

No, White Corp. does not have a right to a share in the profits as damages on the basis of breach of contract since the contract clause at stake will probably be invalid.