Need to Watch out for Competition Law Traps when Licensing IP in Australia
Those licensing intellectual property (“IP”) in Australia should be aware of the traps set by local competition law. There are significant differences between Australian competition law and competition laws in the U.S., the EU and other jurisdictions.
The main potential competition law traps in Australia are:
- the repeal of the former IP exemption under Section 51(3) of the Competition and Consumer Act 2010 (Cth) (the “CCA”);
- the broad definition of cartel conduct under the CCA and the limited range and scope of exemptions from the cartel prohibitions under the CCA; and
- the uncertainty of the substantial lessening of competition test (“SLC” test) for CCA prohibitions against anti-competitive agreements and the lack of a rule of reason test.
Repeal of the Section 51(3) IP Exemption
The previous Section 51(3) of the CCA set out exceptions for IP licensing conditions from certain prohibitions under the Act.2 The Treasury Laws Amendment (2018 Measures No. 5) Act 2019 repealed Section 51(3). The repeal was enacted on February 18, 2019 and came into effect on September 13, 2019. As a result of the repeal, all conduct including conduct involving IP rights is subject to the anti-competitive conduct prohibitions in Part IV of the CCA.3
The scope of the Section 51(3) exemption was limited in several respects, most notably:
- the exemp