[Ip-health] E.U. compulsory licence of Shell/BASF Targor Metallocene patent rights (2000 case)

[James Packard Love]

This is a E.U. compulsory license order in the field of metallocene
technologies.   As part of an analysis of a February 2000
announcement of a proposed joint venture by Shell and BASF, the
European Commission required non-discriminatory open licensing of
certain "Metallocene Patents".    (Separately and in different cases,
the U.S. FTC has required compulsory licensing of patents relating to
metallocene technologies). Jamie

-----------
Case No COMP/M.1751 -
SHELL / BASF / JV -
PROJECT NICOLE
Only the English text is available and authentic.
REGULATION (EEC) No 4064/89
MERGER PROCEDURE


Shell Petroleum NV / BASF AG (Project Nicole) - case IV/M.1751
NON- CONFIDENTIAL VERSION

In electronic form on the EUR-Lex website under document
number 32000M1751

Brussels, 29.03.2000

Subject: Case No COMP/M.1751 - SHELL/BASF =96 PROJECT NICOLE
Notification of 15.02.2000 pursuant to Article 4 of Council
Regulation No 4064/89

page 11

51.  The combination of BASF=92s metallocene patents with Shell=92s
position in the PP technology market is therefore a vital part of the
assessment of the concentration. In its originally notified form, the
concentration would mean that Nicole would have a combination of the
dominant Z/N technology and possession of a suite of patents that
effectively blocks any other party=92s attempts to develop a
metallocene technology. This would provide Nicole with both the
incentives and the ability to restrict the development of metallocene
technology and in turn would strengthen Nicole=92s dominant position
particularly by enabling it to maintain its dominance in the supply
of PP technology package licenses and conventional catalysts. While
certain competitors may hold blocking metallocene patents, they do
not have the same incentives as Nicole has to delay the development
of metallocene catalysts.


53. The Commission=92s concerns about the effect of the concentration
on competition are reinforced by the extent of vertical integration
exhibited by Nicole. . .

Conclusion - PP technology

54. Consequently, the transaction would give rise to serious doubts
as to its compatibility with the Common Market as it threatens to
strengthen a dominant position on the market for PP technology
package licensing as a result of the addition of BASF/Targor=92s
metallocene patents to Shell=92s previously dominant position and the
fact that BASF also controls the Novolen technology.

VI. COMMITMENTS PROPOSED BY THE PARTIES

55. In order to resolve the competition concerns raised by the
Commission the parties have offered to enter into the following
commitments (consolidated version of 27 March 2000, see Annex 1):

. . .
To license or not to assert the BASF/Targor metallocene patent rights
on nondiscriminating, arm=92s length terms and conditions to all
interested third parties, with the right for licensees to grant
sublicenses, without the requirement that licensees grant reciprocal
rights.

59.   Nicole=92s commitment to license or to enter into agreements not
to assert its metallocene patents to or against any third party that
wants access to the patents fully
addresses the concern that Nicole would be able to prevent the
development of the metallocene technology.

60. The Commission therefore considers that, taken together, this
package of remedies addresses its concerns about the effects of the
concentration on competition in the markets for polypropylene.


----
p. 1

Shell Petroleum NV / BASF AG (Project Nicole) - case IV/M.1751

COMMITMENTS SUBMITTED BY THE PARTIES ON 8 MARCH 2000
CONSOLIDATED VERSION OF 27 MARCH 2000

2 UNDERTAKING TO LICENSE OR NOT TO ASSERT THE TARGOR METALLOCENE
PATENT RIGHTS

A. Definitions

7. "Metallocene Patents" mean all patents and patent applications
having a filing date on or before the European Commission has
approved Nicole (the "Decision date") or are filed afterwards with a
priority claim before the Decision Date which cover Metallocene
Catalyst Systems as such, the manufacture of Metallocene Catalyst
Systems and/or the use of Metallocene Catalyst Systems and owned by
Targor GmbH or any of its affiliates (i.e. any entity controlled by,
controlling or under common control with Targor on the Decision Date).

B. Undertaking


Nicole will, at the option of the interested party, either

  * grant a license as described below under 1 ("License") to any
interested party or

  * enter into a non-assertion undertaking as described below under 2
("Non-assert") with any interested party.

1. License Grant

Nicole will grant:

  * a non-exclusive, non-transferable license including the right to
grant sub-licenses subject to additional payments for each sub-
license equivalent to the payments the respective sub-licensee would
have had to make to Nicole had it taken a License directly from Nicole;

  * under the Metallocene Patents;

  * for the manufacture of Metallocene Catalyst Systems, the use of
Metallocene Catalyst Systems so manufactured for the manufacture of
PP Resins, and the use and sale of PP Resins thus manufactured
(including the use of PP Resins in PP compounds.

2. Non-Assert

  * Nicole will undertake not to assert - at the discretion of the
interested party all or certain of - the Metallocene Patents against
that party in respect of the manufacture of Metallocene Catalyst
Systems, the use of Metallocene Catalyst Systems so manufactured for
the manufacture of PP Resins, and the use and sale of PP resins thus
manufactured (including the use of PP Resins in PP compounds).

3. Terms and conditions

NON- CONFIDENTIAL VERSION
p. 8

  * The Licenses and Non-Asserts will be granted on non-
discriminating, arm=92s length terms and conditions (taking into
account, in respect of the consideration, e.g. potential reciprocal
grants and the scope of the Non-Assert) as set out below.

  * If no agreement can be reached on the consideration for a License
or Non-Assert, such disagreement will be resolved by << pendulum
arbitration>>. Pursuant to such arbitration each party will submit a
single proposal for the consideration for such License or Non- Assert
to the arbitration panel which can only decide in favour of one of
the two submitted proposals in its entirety. Pending such
arbitration, if requested by the relevant interested party, the
License or Non-Assert will become effective immediately.

4. Term
The Licence and Non-Assert will be granted for the life of the
Metallocene Patents, unless terminated earlier by Nicole for breach
of contract or by the other party at its discretion.



----------------------------------------------
James Packard Love
Knowledge Ecology International
http://www.keionline.org
james.love@keionline.org
Washington, DC +1.202.332.2670

"If everyone thinks the same: No one thinks." Bill Walton"