Field-of-Use Restrictions as Precompetitive Elements in Patent and Know-How Licensing Agreements in the United States and the European Communities

The courts of both the United States and the European Communities have upheld the legality of various licensing restrictions. One such restriction, the field-of-use restriction, is the subject of this article. A field-of-use restriction prohibits a licensee from realizing the benefits of the license in certain technical fields. Field-of-use restrictions are usually written as restricting use to a particular field rather than listing prohibited fields… This article first sets forth an economic justification for the legality of field-of-use restrictions, concluding that such restrictions are usually pro-competitive. The article then analyzes the relevant law in both the United States and the European Communities… The article concludes that the legal structure governing licensing agreements in the European Communities provides more predictable and useful guidance in drafting transnational licensing agreements