R&D Agreement (Drafting)

What is an R&D agreement? A Research & Development ("R&D") agreement can be compared to a cooperation agreement. R&D stands for research and development. In an (international) R&D agreement (whether or not on the basis of subsidies or projects) you lay down the most important agreements between your company and cooperation partners. Elements of an R&D agreement usually include: a division of tasks, the distribution of costs and revenues, intellectual property (distribution of results), liability, exclusivity, termination and dispute resolution. In the event of international cooperation, you must pay special attention to the choice of law and forum in an R&D agreement. After all, the obligations arising from an R&D agreement must be enforceable abroad. 

Features of R&D Agreement

The following restrictions of competition are considered as strict ones when R&D agreement has an appreciable effect on the trade between Member States:

1.Restriction of freedom to carry out R&D in other fields during and after the period of the agreement

2.Restriction of freedom to carry out R&D in the same field after expiration of the agreements

3.Prohibition from challenging the validity of intellectual property right

4.Limitation of production or sales

5.Price fixing related to sales to third parties

6.Market sharing (geographical are of group of customers), with some exceptions

There must be in addition an appreciable restriction of competition for the rules to be applied. Otherwise, certain restrictions of competition may be permitted in accordance with the “de minimis“ Notice, subject to the fulfillment of the conditions in the Notice. The European Commission and the ESA give a definition of what is an appreciable restriction of competition in the Notice. The R&D agreements are horizontal agreements of minor importance. Due to this reason, they are not considered to appreciably restrict the competition when the parties' market share on the relevant market affected by the R&D agreement is under 15%. When the parties are actual or potential competitors, this rate is reduced to 10%. Nevertheless, there might be more strict national competition rules applied. In the situation when manufacturer orders the R&D from another party in the exchange for payment, the ownership of the result is not covered by the Regulation on horizontal agreements, but instead by the Regulation on vertical Agreements.