Diligence obligations in Austria
In Austria, there are no statutory instruments specifying diligence obligations for partnering agreements of life science companies. When parties do not contractually define a specific degree of due care and diligence between them, general contract law applies.
If no contractual provision was made, the diligence of a "prudent business person" (sec. 347 Austrian Commercial Code) is to be applied as a standard. Of course licensor and licensee may expressly agree on which behaviour shall be deemed prudent in a specific situation.
If no obligation to use a licenced technology was stipulated expressly, the rules on the interpretation of contracts have to be applied. The agreement on a minimum use is thereby assumed to be fundamental, so that a lack of a minimum clause must not necessarily be considered an unintended gap, thus excluding the possibility to amend the contract by an obligation of use (according to the Austrian Supreme Court in the only existing relevant decision so far on licenses from 1953). This does not mean that in such a case a minimum use is to be excluded automatically; instead the entire scope of the agreement has to be taken into consideration.
Generally, however, it can be assumed that an obligation to exploit the licence is more likely if the license was granted on an exclusive rather than on a non-exclusive basis. Although the concept of good faith is not embedded expressly in the Austrian civil law, it is accepted as a principle of the Austrian legal system. Consequently, the Austrian legal situation is similar to the German one.
Case law on the diligence obligations in licenses is rare, but a similar consideration can be found in the Austrian copyright law: the interest of a licensor who has granted an exclusive licence is comparable to the interest an author has in the publication of his work. In the Austrian Copyright Act, this situation is expressly addressed by sec. 29;
"Where the right to use a work is not exercised in accordance with the purpose for which it was granted or is exercised only to an extent so inadequate as to prejudice important interests of the author, the latter, provided he is not at fault, may rescind the contract prematurely insofar as it relates to such right to use."
It has to be noted that, despite being attractive, this special rule is not yet necessarily qualified for analogy as there is no existing case law on the subject. For commercially produced cinematographic works, for example, the application of sec. 29 Copyright Act is excluded by law.
In conclusion: Diligence obligations in license contracts have to be evaluated on a case by case basis according to the general rules of interpretation.
