Passed by the 481st Commissioners' Meeting on January 18, 2001 
Promulgated by Order (90) Kung Fa Tzu No. 00222 on January 20, 2001
Passed by the 688th Commissioners' Meeting on January 13, 2005
Promulgated by Order (94) Kung Fa Tzu No.094001290 on February 24, 2005
Promulgated by Order (94) Kung Fa Tzu No.0940006979 on August 26, 2005
Passed by the 807th Commissioners' Meeting on April 26, 2007
Promulgated by Order (96) Kung Fa Tzu No.0960003850 on May 8, 2007
Passed by the 900th Commissioners' Meeting on February 4, 2009
Promulgated by Order (98) Kung Fa Tzu No.0980001569 on February 24, 2009
Amended by the 1057th Commissioners' Meeting on February 8, 2012
Promulgated by Order Kung Fa Tzu No. 1011560284 on March 12, 2012 and made retroactive to February 6, 2012
Amended by the 1213rd Commissioners' Meeting on February 4, 2015
Promulgated by Order Kung Fa Tzu No. 10415601198 on February 16, 2015
Amended by the 1293rd Commissioners' Meeting on August 17, 2016
Promulgated by Order Kung Fa Tzu No. 10515606031 on August 24, 2016

1. [Purposes]

The Fair Trade Commission (hereinafter "the Commission") adopts the Guideline in order to review technology licensing arrangement cases, to make the applicable provisions of the Act more concrete, to clarify the criteria for enforcement, to benefit the industry in following the Act, and to improve in handling related cases.

2.[Definitions]

1. Technology Licensing Arrangement referred to in the Guideline means arrangement that involves the licensing of patents, know-how, or combination of the two.
2. Patents referred to in the Guideline mean invention or new utility model patents which have been obtained in accordance with the Patent Act of Taiwan. These Rules, however, shall apply mutatis mutandis to licensing arrangements for subject matters for which patents have not been obtained in Taiwan when such arrangements result in restraint of competition within relevant markets.
3. Know-how referred to in the Guideline means methods, technologies, manufacturing processes, formulas, computer programs, designs, or other types of information that may be used in production, marketing, or management of which meet the following criteria:
   1. The information is not generally known by those who familiar with the given area.
   2. The information has actual or potential economic value because of its secret nature.
   3. The owner has adopted reasonable protective measures.
4. The term "goods" as used herein shall include services.

3.[Fundamental Principle]

In its review of technology licensing arrangement cases, the Commission does not presume that a licensor, as a result of owning a patent or know-how, has market power within a relevant market.

4.[Steps for Review and Analysis]

1. In reviewing technology licensing arrangement cases, the Commission will first examine the licensing arrangements with respect to Article 45 of the Act to see whether an arrangement is a proper conduct in connection with the exercise of rights under the Patent Act. If the arrangement oversteps the scope of proper exercise of rights under such laws and contravenes their legislative purpose of protecting invention and innovation, shall be reviewed under the Act and Rules.
2. In reviewing technology licensing arrangements, the Commission will not be restricted by the particular form or wording of such arrangements, but will emphasize on possible or actual restraint of competition created by such arrangements in the following relevant markets:
   1. "Goods markets" to which the goods manufactured or provided through use of the licensed technology belong.
   2. "Technology markets" defined by technology that is substitutable with the licensed technology.
   3. "Innovation markets" in which research and development of relevant goods may take place.
3. In reviewing technology licensing arrangements, in addition to the reasonableness of the provisions of such arrangements, the Commission shall consider the following factors:
   1. The market power of the licensor with regard to the licensed technology.
   2. The market position of the parties to the arrangement at a relevant market and the status of that market.
   3. The degree of influence to which the licensing arrangement will increase opportunities for utilization of the technology or exclude competition.
   4. The degree of difficulty of access to the relevant market.
   5. The length of the term of limitations under the licensing arrangement.
   6. International or industry precedents applicable to the relevant market.

5.[Examples of subject matters not in violation of the Act]

The following kinds of technology licensing arrangement stipulations do not intrinsically violate the provisions of the Act on restraint of competition, with the exception of those improper matters to be found after reviewed in accordance with Point 5(3) and 5(4):

1. Limitations clauses that restrict the scope of practice by the licensee to manufacture, use, or sales.
2. Restrictions on the term of a licensing arrangement that fall within the term of validity of the patent itself. Restrictions on the term of a licensing arrangement prior to public disclosure of know-how, which, through no circumstance imputable to the licensor, has been disclosed and lost its status as a trade secret are also acceptable.
3. Stipulations that, for ease of calculation, fees for licensed technology that is part of a manufacturing process or that subsists in component parts are to be calculated on the basis of the quantity of finished goods manufactured or sold that employ the licensed technology, or the quantity of raw materials or component parts used that employ the licensed technology, or the number of times such materials or parts are used in the manufacturing process.
4. Stipulations that the licensee shall continue to pay fees after expiration of the patent term for use already made of the licensed technology, where the fees for use of a licensed patent are paid in installments or on a post-paid [running royalty] basis. Stipulations that in the event of public disclosure of the know-how and loss of its status as a trade secret through no circumstance imputable to the licensor, the licensee must continue paying licensing fees.
5. Stipulations that the licensee shall grant non-exclusive license to the licensor with respect to any improvements in or new applications of the licensed technology.
6. Stipulations that the licensee shall, to the best of its ability, manufacture and sell goods using the licensed technology.
7. Stipulations that, during the licensing period or after the expiration of the term of the licensing arrangement, impose on the licensee the obligation to maintain the secrecy of any know-how that retains the status of a trade secret.
8. Clauses that, in order to guarantee the licensor a minimum amount of revenue from licensing fees, require the licensee to produce a minimum volumes of goods employing the licensed technology, to employ the licensed technology a minimum number of times in the manufacturing process, or to sell a minimum quantity of goods manufactured with the licensed technology.
9. Requirements that the licensee shall maintain a certain level of quality with respect to the goods, raw materials, or component parts of the goods that employ the licensed technology insofar as is necessary to ensure effective utilization of the licensed technology and maintain a certain level of quality in the licensed goods.
10. The licensee shall not transfer or sublicense the licensed technology.
11. The licensee shall not continue to use the licensed technology after the expiration of the term of the licensing arrangement insofar as the licensed patent remains valid or the licensed know-how remains a trade secret.

6.[Examples of Prohibitions on Technology Licensing Arrangements]

Arrangements between parties who are in competition concerning technology licensing, in which through contract, agreement, or other form of mutual understanding they jointly determine the price of the goods employing the licensed technology, or restrict on quantities of goods, trading partners, trading regions, or areas of research and development, thus mutually restricting each other's business activities in a manner sufficient to influence the functions of the relevant market are prohibited. 
Licensing arrangement content that involves any of the circumstances listed as the following acts which is likely to restrain competition in relevant markets is prohibited:

1. Restrictions on a licensee, during the licensing period or after the expiration of the term of the licensing arrangement, with respect to research and development, manufacture, use, sale, or adoption of competitive technology on competing goods.
2. Restrictions on the use of the licensed technology or the trading counterparts of a licensee in order to achieve the goal of market segmentation or are irrelevant to the scope of licensing.
3. Mandatory requirements that the licensee purchase, accept, or use other patents or know-how not needed by the licensee.
4. Mandatory requirements that the licensee assign back exclusively to the licensor any improvements to the licensed patent or know-how.
5. Restrictions on the licensee's free use of the technology in question or required payment of fees or royalties after extinction of the patent or after the know-how has been publicly disclosed through no circumstance imputable to the licensor.
6. Restrictions on the price at which the licensee may sell goods manufactured or produced with the licensed technology to a third party.
7. Restrictions on the licensee's ability to challenge the validity of the licensed technology.
8. Refusal to provide the licensee with information on the content, scope, or valid term of a patent. 
9. Restrictions involving distinctions between regions in which the licensing is applicable within the territory of Taiwan during the valid term of a patent; likewise, regional restrictions on the use of know-how before the know-how is publicly disclosed or loses its status as a trade secret through no circumstance imputable to the licensor.
10. Ceilings restricting the quantity of goods that may be manufactured or sold by the licensee, or the number of times the know-how or patented technology may be used.
11. Requirements that the licensee must sell goods through the licensor or a person designated by the licensor.
12. Requirements that the licensee pay licensing fees based on the quantity of a particular type of good manufactured or sold irrespective of whether the licensee used the licensed technology.

Requirements for the licensee to purchase raw materials or component parts from the licensor or a person designated by the licensor, where such requirements are unrelated to reasonable and necessary efforts to assure effective utilization of the licensed technology, to maintain the reputation of a trademark associated with the licensed technology or to maintain the secrecy of the know-how involved, and where such requirements are likely to restrain competition in relevant markets are prohibited.
Licensing arrangements that, without justification, give discriminatory treatment to licensees with regard to the terms of the arrangement or licensing fees, where such discriminatory treatment would be likely to restrain competition in relevant markets are prohibited.

7.[Penalty]

Monopolistic Party, in technology licensing arrangements, which meets the exemplified behaviors stated in item 2 to item 4 in Point 6 may be in violation of Article 9 of the Fair Trade Act. 
An enterprise, which meets the descriptions set forth in Point 6 (A), is in violation of Article 15 of the Fair Trade Act. 
An enterprise, which meets the descriptions set forth in Point 6(B), may be in violation of Article 20 (v) of the Fair Trade Act. 
An enterprise, which meets the descriptions set forth in Point 6 (C), may be in violation of Article 20 (i) of the Fair Trade Act.
An enterprise, which meets the descriptions set forth in Point 6(D), may be in violation of Article 20 (ii) of the Fair Trade Act.