Tuesday, April 1, 2008
Posted by D. Daniel Sokol
Alberto Heimler, Chief Economist of Italy's Autorita Garante della Concorrenza e del Mercato discusses Competition Law Enforcement and Intellectual Property Rights in his latest working paper.
ABSTRACT: Antitrust violations in the field of intellectual property rights are particularly difficult to detect because practices like cross licensing, patent pools or refusal to deal are not prohibited as such. Furthermore, more than in any other field of antitrust enforcement, decisions by competition authorities may directly affect the incentive to innovate and therefore antitrust authorities have to exercise great care in what they do. Antitrust laws prohibit behavior that go beyond what patents, copyright and trademarks generally allow. For example price fixing, coordinated output restrictions or foreclosure of innovation are the most important practices to be prohibited by antitrust provisions. Among these, foreclosure of innovation is the most controversial. For example the European Commission in a number of recent cases has suggested that a dominant company abuses its dominant position by refusing access to an essential facility (protected by an intellectual property right) in circumstances when a new product is denied to consumers. The case law developed so far in Europe does not identify precise criteria for defining what is actually "new". From the existing case law, it is only possible to conclude that the Commission does not impose an obligation to license only when the licensee would produce just a replica of the IP protected product/service. Much more straight forward are situations where market foreclosure originates from practices that directly impede the entry of competitors, especially at times when intellectual property rights are no longer available. The problem that arises is the extent of the use of presumptions. However there are no reasons to abandon the general approach that there is a proof of a violation when there is no other explanation for a given behavior than its abusive (exclusionary) objective. For example, this may be the case for reverse payments so common in pharmaceuticals that have no other explanation than to avoid a judgment of patent nullity.