Transcript Part 1 - LONDON IP SUMMIT

IP RIGHTS IN THE
ANTITRUST HURRICANE –
How competition law increasingly affects
your IPR strategy
The London IP Summit
Dr. Bertold Bär-Bouyssière, LL.M.
Rechtsanwalt & Attorney-at-Law (NY)
14 October 2014
Part 1
In the Good Old Times …
IPR/AT – A complex relationship
 Diverging policy objectives
 IPRs grant "legal monopolies" – allow the holder to
charge prices above cost to ensure return on R&D
investment
 AT fights monopolies and aims at bringing prices close to
cost
 Balancing out AT and IPR
 The ambition should be to reconcile the legal monopoly
conferred by patents with the aims of competition law by
finding an appropriate balance.
 To which side does the pendulum swing?
Peaceful coexistence … ?
 IPRs versus AT
 "Existence" and "exercise" of property right (Deutsche
Grammophon)
 "Subject-matter" and "essential function" of property
rights (Volvo)
 AT can interfere with the exercise of IPRs where it is:
 Outside the subject matter or,
 Within the subject matter but goes beyond the essential
function of the IPR (RTE)
Trouble brewing … ?
"It is of course a longstanding topic of debate in economic and
legal circles how to marry the innovation bride and the competition
groom. In the past some have argued that such a marriage will
unavoidably lead to divorce because of conflicting aims of IPR law
and competition law. But I think that by now most will agree that for
a dynamic and prosperous society we need both innovation and
competition.
Contrary to what some might think, competition is a necessary
stimulus for innovation. IPR law and competition law have a
complementary role to play in promoting innovation to the benefit of
consumers. I therefore firmly belief in this marriage and, like in all
good marriages, the real question is how to achieve a good
balance between both policies."
(Excerpt from a speech of Mario Monti, "The New EU Policy on Technology
Transfer Agreements", Ecole des Mines, Paris 16 January 2004)
Is there a new mission statement for DG
COMP?
"Most merger cases that raise concerns are resolved
with remedies that preserve competition in the markets
at risk. In innovative markets, we face the additional task
of preserving innovation."
Joaquín Almunia , Competition Policy in times of Restructuring (London 22 June
2012)
Innovation as policy objective
 "I hope that Google seizes this opportunity to
swiftly resolve our concerns, for the benefit of
competition and innovation in the sector."
antitrust
Statement of Vice President DG COMP Almunia on the Google
investigation, 21 May 2012
Policy soundbites
"But the protection of intellectual property – like any
other form of legal protection – may also find limits in
the interest of the general public. …
Seeking an injunction in such [FRAND]circumstances
can clearly be anti-competitive as it prevents innovative
products from coming to the market to the detriment
of the general public."
Joaquin Almunia, IBA 17th annual competition conference, Florence,
13 September 2013
What should be the policy goals?
 In the technology sectors, the EC tends to favor
follow-on innovation over incumbent resistance – to
bring more new and innovative products to the market.
 In the pharmaceutical sector, cheap generic entry
tends to trump follow-on innovation, for short-term
financial reasons.
 Which type of competition should competition law
protect?
 Dynamic competition (long term consumer welfare)?
 Static competition (short term consumer welfare)?
 Competition in the market vs. competition for the market?
… Limited interference ….
 Competition law can (should) only interfere with
property (including IPRs) in "exceptional
circumstances." (Volvo, essential facilities cases)
 The factors that amount to "exceptional circumstances"
are "highly dependent on the specific economic and
regulatory context in which the case arises." (AG
Jacobs in Syfait)
 How exceptional do exceptional circumstances
have to be?
… A hidden agenda …?
The 2011 UK Hargreaves-Report ("Digital Opportunity")
finds that patent proliferation leads to patent thickets and
creates "obstruction to innovation." Solutions should
be found by reforming the IPR system.
By contrast, a recent study for the EC suggests that
competition law should be used to arrive at quicker
results, as legal reform takes too much time.
"The idea is, that the more informed antitrust attitude
towards some forms of licensing arrangements might
help private IP owners get around patent thickets more
efficiently."
P. Regibeau and K. Rockett, "Assessment of potential anticompetitive conduct in
the field of intellectual property rights and assessment of the interplay between
competition policy and IPR protection", November 2011, COMP/2010/16.
Policy soundbites
"When addressing the role of competition policy in
supporting innovation, one must deal with the seeming
conflict between competition and the protection of
intellectual property rights.
In fact there is no such conflict. IPR policy and antitrust
are complementary. Antitrust enforcement does not
question the use of IPR but it must fight the abuse of
IPR."
Joaquín Almunia , Competition Policy in times of Restructuring (London 22 June 2012)
"Strategic" use of patents
“Of course, the
Commission will
continue to keep a
close eye on the
behaviour of all
market players in the
sector, particularly
the increasingly
strategic use of
patents".
Joaquín Almunia, 13 February 2012, on the
acquisition by Google of Motorola Mobility
Part 2
Nowadays …
1. Acquiring/extending IPRs
1. Acquiring/extending IPRs
Forms of abusive conduct
 Abuse in case of "misleading statements" (Losec I SPC)
 Abuse in case of "strategic use of patent system"
(Latanoprost – SPC on divisional patent)
 Abuse in case of "unmeritous patent filings"
(Boehringer Ingelheim)
 Abuse in case of simple use of procedure for bad
reasons (Losec II -switch)
2. Using IPRs
2. Using IPRs
Saying "no" - a refusal to license …
 a refusal to license to prevent competition by clones on
a product market
 a refusal to license which blocks research into followon innovation and improvements
 a refusal to license which blocks the marketing of an
improvement
 a refusal to license IP which protects a de facto
standard
 a refusal to give information necessary for
interconnection and interoperability
 a refusal to sell products on the basis of IP rights
Policy soundbites
"An obligation to supply - even against fair remuneration may undermine undertakings' incentives to invest and
innovate. …
At the same time, there is always a balance to be drawn.
An obligation to supply may be justified in exceptional
circumstances, as the Microsoft interoperability case
showed.
We may also have to look at the terms and conditions of
supply. … .
Sometimes, intervention may prove necessary."
Alexander Italianer, Competition and innovation, Fordham Competition Law Institute Conference
21 September 2012, New York
Saying ”No” – Lowered Intervention Threshold
From Magill/Bronner/IMS ("new product")…
…to Microsoft ("technical development")…
… to EC's Article 102 Guidance Paper
("consumer harm")
 Abusive to refuse an API license for generic use in territories
w/o IPR protection (Glaxo)
Saying ”no” – The EC Guidance Paper
 EC likely to intervene where:
 Refusal is likely to lead to consumer harm
Consumer harm may arise where foreclosed
competitors are prevented from bringing
innovative goods or services to market and/or
where follow-on innovation is likely to be
stifled (e.g. where foreclosed undertaking does
not intend to limit itself essentially to duplicating
the goods or services already offered by the
dominant undertaking on the downstream
market, but intends to produce new or improved
goods or services for which there is a potential
consumer demand or is likely to contribute to
technical development)
3. Enforcing IPRs
3. Enforcing IPRs
Pursuing infringers
 The "smartphone wars" – FRAND context
 Outside FRAND context – “vexations litigation” ?
The Pharma Sectory Inquiry found that there were
nearly 700 cases of reported patent litigation with
generic companies, which on average lasted nearly
three years. The generic companies ultimately won
more than 60% of these cases.
 Is the EC diluting the Promedia standard?
"If the owners of a technology that are part of a standard for
mobile devices have pledged to license it on FRAND terms to
manufacturers that need it, they cannot bring rivals to court
when they are willing to license the technology on those very
same terms. …
Again, I believe that these decisions strike the right balance.
They protect the interests of patent holders and, at the same
time, the interests of the companies that need the patented
technology to keep manufacturing their devices.
Holders of standard-essential patents are entitled to a fair
remuneration. On the other hand, the companies that use the
technology are entitled to do so without the threat of anticompetitive injunctions."
Joaquin ALMUNIA, IBA 18th Annual Competition Conference, Florence, 19 September 2014
Insert filename here
Date of presentation
24
4. Settling disputes over IPR
4. Settling disputes over IPR
Is a patent only a "probabilistic" right ?
Probabilistic or presumption of validity ?
"When granted by a public authority, an
intellectual property right is normally assumed
to be valid and an undertaking’s ownership of
that right is assumed to be lawful. The mere
possession by an undertaking of an exclusive
right normally results in keeping competitors
away, since public regulations require them to
respect that exclusive right." (AstraZeneca C-457/10)
 A granted patent is valid until a challenge is
successful!
"Pay for delay"
 Assuming there is a
 Genuine dispute between the parties;
 Genuine uncertainty about the patent situation;
 Genuine certainty that patentee is determined to
litigate:
 In the EC's view, the settlement eliminates that
genuine uncertainty and gives certainty about the
delayed generic entry.
 This may also apply where the settlement agreement
remains within the scope of the patent.
 When is a patent settlement a "reverse payment patent
settlement"?
Policy soundbites
"I strongly support Intellectual property rights, and I believe that
patents are vital for innovation. … However, in some cases
patent holders may want to distort the system and exclude rivals
thanks to their deep pockets rather than the strength of their
patents.
This is why our enforcement work is guided by the search of a
good balance between the rewards for past discoveries and the
incentives to continue innovating. At the same time, our action
makes sure that prices for medicines are not kept artificially
high."
Joaquin ALMUNIA, IBA 18th Annual Competition Conference, Florence, 19 September 2014
Insert filename here
Date of presentation
29
EVERYTHING MATTERS
Dr. Bertold Bär-Bouyssière, LL.M.
Partner
DLA Piper UK LLP
Tel (Direct line): + 32 2 500 15 35
[email protected]