IP FORUM

The Online Journal of the Patent, Trademark and Copyright Research Foundation

Editorial Comments

INTELLECTUAL PROPERTY AND ANTI-TRUST

Earlier this year, the former Chairman of the Federal Trade Commission, Robert Pitofsky, spoke about the relationship between intellectual property rights and anti-trust rules. His article is referred to in our Digest [20050]. It is a reflection of recent concern among anti-trust administrators, corporations and others, about one of the side effects of the increasing importance of intellectual property: that is, the possibility that extending the protection afforded to intellectual property rights may be at the expense of a competitive economy. According to the article, incentives to innovate must be protected, but not excessively: the United States patent system needs to be reviewed from this point of view. So, too, should cases like CSU v Xerox Corporation, which upheld the right of a legitimate holder of an intellectual property right to refuse to license anyone, regardless of intent or of the effect on competition.

More recently, press reports have been suggesting that the pharmaceutical industry has been attacked by "officials of the Commission [of the European Communities] in Brussels". The press reports have not identified the officials; but it seems reasonably certain that the origin of the criticisms is a speech given by Mario Monti, Commissioner for Competition Policy, in Antwerp on 11 October 2001. In his speech, he referred to the question of the boundaries within which a pharmaceutical company could use its intellectual property rights, typically its patents, to prevent potential newcomers from entering the market. "There should not be any misunderstanding," he said. "Research based companies, which have invested vast amounts of money to develop new, innovative medicines are entitled to patent protection. That monopoly right enables them to charge profitable prices in order to recoup their investment; and patent holders will obviously fight tooth and nail to hold on to their monopoly right since every extra day of protection generates monopoly profits. Potential newcomers sometimes complain that they do so in an abusive manner. It is for us to examine these allegations." These comments are not unreasonable in themselves.

They can be taken in conjunction with further press reports, which have announced (prematurely) the victory of intellectual property rights over anti-trust rules, this time in a copyright case, coming before the Court of Justice of the European Communities. In (IMS Health Inc v Commission of the European Communities, the Court considered whether the Commission was justified in imposing interim measures consisting substantially of a requirement that the applicant, IMS, should grant a licence to a competitor, NDS, of its copyright in a scheme for analyzing market trends. There are obvious reminders here of the Magill case (as well as some parallels to the CSU case mentioned above); and the President of the Court has sought to differentiate the circumstances of the Magill case from the circumstances arising here. But there is clearly more to be said on the matter, since the case was concerned at this stage only with the procedural issues. The importance of the substantive issue is the relationship between intellectual property rights and anti-trust rules, as well as the extent to which ownership of an intellectual property right may be used to foreclose the market in a given product or service field. The importance of the procedural issue concerns the conditions on which a Commission decision may include interim measures: in the present case, these conditions were not fulfilled. At the time of writing, the final judgment is awaited.
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