Ai df iIPlii iAntitrust defense in IP litigations: from ...fordhamipconference.com/wp-content/uploads/2010/08/Casucci... · intellectual property rightsby right holders or the resort

A i d f i IP li i iAntitrust defense in IP litigations: from Orange Book (D) to Samsung

vs Apple (IT)vs Apple (IT)

Fordham, 12 April 2012

Giovanni F. Casucci

W W W.C A S U C C I .B I Z

TRIPs

Article 8 PrinciplesPrinciples

1. Members may, in formulating or amending their laws and regulations, adopt measures necessary to protect public health and nutrition, and to promote the public interest in sectors of vital importance to their socio-p p peconomic and technological development, provided that such measures are consistent with the provisions of this Agreement.

2. Appropriate measures, provided that they are consistent with the provisions of this Agreement may be needed to prevent the abuse ofprovisions of this Agreement, may be needed to prevent the abuse of intellectual property rights by right holders or the resort to practices which unreasonably restrain trade or adversely affect the international transfer of technology.


EU Treaty

Art. 102 EU Treaty

Any abuse by one or more undertakings of a dominant position within the internal marketor in a substantial part of it shall be prohibited as incompatible with the internal marketin so far as it may affect trade between Member States.

S h b i ti l i t iSuch abuse may, in particular, consist in:

(a) directly or indirectly imposing unfair purchase or selling prices or other unfair tradingconditions;

(b) li iti d ti k t t h i l d l t t th j di f(b) limiting production, markets or technical development to the prejudice of consumers;

(c) applying dissimilar conditions to equivalent transactions with other trading parties,thereby placing them at a competitive disadvantage;

(d) ki h l i f bj b h h i f(d) making the conclusion of contracts subject to acceptance by the other parties ofsupplementary obligations which, by their nature or according to commercial usage,have no connection with the subject of such contracts.


EU Treaty

CONFLICTS

A) ABUSIVE AGREEMENTS (art. 101 Eu Treaty)Licenses aiming to limit abusively the competition Reg 772/04 on Tech Transfer Reg. 772/04 on Tech Transfer Compulsory Licenses (IT and Biotech) Specific Policies (ETSI)

B) UNILATERAL ABUSIVE BEHAVIORS (art. 102 Eu Treaty)Imposing performances abusing of an IPr EC C i i t IP d h ti l t (2009) EC Commission report on IP and pharmaceutical sector (2009) Patent settlements (II Report of EC Commission) Essential facilities, NPE and balance of interests


(A)

WWW.ETSI.ORG


(A)


(B)

B) UNILATERAL ABUSIVE BEHAVIORS (art. 102 Eu Treaty)Imposing performances abusing of an IPr:

B-1) EC Commission report on IP and pharmaceutical sector (2009)

B-2) Patent settlements (II Report of EC Commission)

B-3) Essential facilities, NPE and balance of interests


(B-1)

Opening of the inquiry (January 2008)

On 15 January 2008 the European Commission launched an inquiry into competition in the pharmaceuticals sector. The inquiry is a response to indications that competition in Europe's pharmaceuticalsThe inquiry is a response to indications that competition in Europe's pharmaceuticals markets may not be working well: fewer new medicines are being brought to market, and the entry of generic medicines sometimes seems to be delayed. The inquiry will therefore look at the reasons for this.

In particular, the inquiry will examine whether agreements between pharmaceutical companies, such as settlements in patent disputes, have blocked or lead to delays in market entry. It will also look into whether companies may have created artificial barriers to entry (through the misuse of patent rights, vexatious litigation or other means) The sector inquiry does not aim to establish Infringements of EC competitionmeans). The sector inquiry does not aim to establish Infringements of EC competition law by individual companies (Articles 81 and 82 EC).

The inquiry's findings will, if necessary, allow the Commission or national competition authorities to focus any future action on the most serious competition concerns, and to


identify remedies to resolve the specific competition problems in individual cases.

(B-1)

Results of the inquiry (July 2009)

The inquiry has contributed significantly to the debate on European policy for pharmaceuticals in particular for generic medicinespharmaceuticals, in particular for generic medicines.

On the basis of a sample of medicines that faced loss of exclusivity in the period 2000 to 2007 in 17 Member States, the inquiry found that citizens waited more than seven months after patent expiry for cheaper generic medicines, costing them 20% in extra spending.

Generic delays matter as generic products are on average 40% cheaper two years after market entry compared to the originator drugs. Competition by generic products thus results in substantially lower prices for consumers. The inquiry showed thatthus results in substantially lower prices for consumers. The inquiry showed that originator companies use a variety of instruments to extend the commercial life of their products without generic entry for as long as possible.

The inquiry also confirms a decline of novel medicines reaching the market and points to certain compan practices that might contrib te to this phenomenon F rther market


to certain company practices that might contribute to this phenomenon. Further market monitoring is ongoing to identify all the factors that contribute to this decline in innovation.

.

(B-1)

Results of the inquiry (July 2009)

Reacting to the findings the Commission will apply increased scrutiny under ECReacting to the findings, the Commission will apply increased scrutiny under EC Treaty antitrust law to the sector and bring specific cases where appropriate. The use of specific instruments by originator companies in order to delay generic entry will be subject to competition scrutiny if used in an anti-competitive way, which may constitute an infringement under Article 81 or 82 of the EC Treaty. Defensive patenting strategies that mainly focus on excluding competitors without pursuing innovative efforts will remain under scrutiny. To reduce the risk that settlements between originator and generic companies are concluded at the expense of consumers, the Commission undertakes to carry out further focused monitoring of settlements that limit or delay the market entry of generic drugs. In the case of clear indications that alimit or delay the market entry of generic drugs. In the case of clear indications that a submission by a stakeholder intervening before a marketing authorisation body was primarily made to delay the market entry of a competitor, injured parties and stakeholders are invited to bring relevant evidence of practices to the attention of the relevant competition authorities.


.

(B-2)

2nd Report on the Monitoring of Patent Settlements(period: January-December 2010)

Published on 6 July 2011

(1) As announced in the Commission's Communication concluding the pharmaceuticalsector inquiry on 8 July 2009, it is considered important to continue monitoring the patent settlements between originator and generic companies. This second round of monitoring is a follow-up to the first monitoring exercise concluded in 2010. The main objectives of the monitoring exercise are to better understand the use of this type of agreements in the EU and to identify those settlements that delay generic market entry to the detriment of the European consumer possibly in violation of European competition law.

(2) Patent settlement agreements as examined in this context are commercial agreements(2) Patent settlement agreements, as examined in this context, are commercial agreementsto settle actual or potential patent-related disputes, e.g. questions of patent infringements or patent validity. They are concluded in the context of patent disputes, opposition procedures or litigation where no final adjudication has been handed down. Although the content of individual settlements will vary according to the circumstances of the case, the common aim

f ttl t i t d th di t


of a settlement is to end the disagreement.

(B-2)

2nd Report on the Monitoring of Patent Settlements(period: January-December 2010)

Published on 6 July 2011

(4) However, as pointed out in the Final Report of the sector inquiry (hereinafter: "FinalReport"), some patent settlements in the pharmaceutical sector may prove to be problematic from a competition law perspective. Of particular interest are settlements that may lead to a delay of generic entry in return for a value transfer (e.g. a payment) by the originator company to the generic company Other examples of possibly problematic agreements relatecompany to the generic company. Other examples of possibly problematic agreements relate to settlements that contain restrictions beyond the exclusionary zone of the patent, meaning that they would reach beyond its geographic scope, its period of protection or its material scope, e.g. beyond the patent claims. Such agreements would not appear to be directly related to any IP rights granted by the patents concerned. Furthermore, problematic agreements include settlement agreements on a patent for which the patent holder knows that it does not meet the patentability criteria. An example for this would be a situation where the patent was granted following the provision of incorrect, misleading or incomplete information. Ultimately, it may be the consumer in such cases who pays the price for such a delay in market entry and therefore any benefits to society identified above are more than


delay in market entry and therefore any benefits to society identified above are more than outweighed by the negative effects of the agreement between potential competitors. In this context, obviously, an assessment of each individual case would be necessary.

(B-2)


(B-3)

April 2011


(B-3)

N.P.E.only royalties

collectors


(B-3)


(B-3)

NOKIAcases


(B-3)


(B-3)


(B-3)

Reg EU 1383/03 – Custom Enforcement


(B-3)


(B-3)

[…] the patent proprietor who asserts a claim for injunctive relief based on his patent, although the defendant is entitled to be granted a license under the patent in suit, only abuses his dominant position on the market and only acts in bad faith if two conditions are met: Firstly, the party wishing to obtain a license must have made an unconditional offer to conclude a license agreement which the patent proprietor cannot reject without unreasonably obstructing the party wishing to take a license or without violating the prohibition of discrimination, and the proposed licensee must stay bound by this offer. And secondly, the proposed licensee has to comply with the obligations on which the use of the licensed subject matter depends according to the license agreement still to be concluded, if he already uses the subject matter of the patent before the patent proprietor has accepted his offer. This means in particular that the proposed licensee has to pay the royalties resulting from the contract or ensure their payment.


(B-3)

. aa) The fact that the proposed licensee must have made an offer on acceptable contracting terms that the patent proprietor cannot refuse without discriminating the proposed licensee against similar companies without objective reason or without unduly obstructing him is to ourwithout objective reason or without unduly obstructing him, is, to our knowledge, generally recognized, because the patent proprietor with a dominant position on the market is not obliged to offer to permit the use of the invention; only if he declines an offer to conclude an agreement on non-restraining or discriminating terms does he abuse his dominant position onrestraining or discriminating terms, does he abuse his dominant position on the market. He does not have to tolerate the use of his patent by a company who is not ready to enter into a license agreement on such terms and conditions.


(B-3)


(B-3)

“FRAND defence“FRAND-defence6.18 On the basis of the foregoing, it must be concluded that SK infringed upon EP 238. This means that the (injunctive) relief sought by Philips must in principle be awarded.

6.19 SK’s argument that it is entitled to a license under EP 238 on Fair Reasonable and Non-Discriminatory (herafter: FRAND) terms, cannot lead to a different conclusion. To the contrary of SK’s belief, the alleged entitlement to a FRAND-license is not a permit to infringe upon Philips’ patent rights. If the alleged entitlement would have actually been converted into a license SK would naturallyentitlement would have actually been converted into a license, SK would naturally be free to use the patented technology. However, as long as SK does not have a license, there is in principle no ground to allow SK the use of the patented technology, nor to prevent Philips from enforcing its patents.

6.20 A system wherein the existence of a mere entitlement to a “compulsory license under cartel law”, as SK qualifies its claim, would prevent a patentee from enforcing its rights, also does not suit the system for compulsory licenses as envisaged by the legislator. The rights to a compulsory license as arranged for in article 57 Dutch Patent Act are also not valid before a license agreement has


article 57 Dutch Patent Act are also not valid before a license agreement has actually been concluded, or before a Court decision which has res judicata has been obtained [..].

(B-3)

6.21 Allowing the use of patented technology or preventing the enforcement of a patent right on the basis of a mere entitlement to a FRAND-license, would moreover lead to legal uncertainty. As long as th ll d titl t i t t d i t t l li it ithe alleged entitlement is not converted into an actual license, it is uncertain for both parties if the alleged entitlement is justified, let alone that it is clear what the license terms will be. There will be frequent cases of such uncertainty, as parties regularly will have diff t i i di th t th ti hi hdifferent opinions regarding the answer to the question which terms, and especially which royalty rates, are FRAND. Therefore, also in view of legal certainty a system is desirable wherein the right to enforce a patent only strands after a party actually has a license.


(B-3)

6.25 The Court is aware that with the abovementioned ruling it deviates from the criteria which have been developed for the assessment of so-called FRAND-defences by the German Bundesgerichthof (herafter: BGH) in the Oprange Book decision (BGH 6 May 2009, KZR 39/06, b9 7936).According to the BGH, in an infringement case the defence that the defendant is entitled to a FRAND-license holds weather if – in sum – the defendant has unconditionally offered the patentee to take a FRAND license and the defendant is already executing the conditions thereof, in so far as it concerns the royalty obligations if so wanted by putting up security From the foregoing it followsobligations, if so wanted by putting up security. From the foregoing it follows that the court is of the opinion that this decision of the BGH applied to the Dutch situation (i) flies in the face of patent law (compare findings 6.19 and 6.20) (ii) brings about legal uncertainty (compare finding 6.21) and (iii) is un-necessary for the protection of the legitimate interests of the d f d t ( fi di 6 22 d 6 23) [ ]”defendant (compare finding 6.22 and 6.23). [..]”


(B-3)


(B-3)

[…]

On the contrary, the prejudice that the Samsung companies would suffer if the preliminary measures would be rejected during the present phase, would exclusively rely - as previously described in the preceding paragraphs – on the amount of the royalties not perceived, assuming the claimant assumption on the infringement will be confirmed on the merit f h I h h ll d j di fof the case. Is correct to assert that the alleged prejudice of

Samsung can be considered as a mere credit right, that can be adequately satisfied at the end of the merit proceeding.


(B-3)

Balance of interests:

AVOID

practices which unreasonably restrainpractices which unreasonably restrain trade (art. 8 Trips)


• GIOVANNI F. CASUCCI

• Attorney at Law• Director of Master ICE on Intellectual Property “IDEACINA”, • Member of the permanent Faculty of MIP Politecnico di Milano• Coordinator of Trade Fairs and Design Commissions of C.N.A.C.

National Authority for Anti Counterfeiting• External IP Expert at IPR2 program, Beijing• Member of IBA LES AIPPI and ECTAMember of IBA, LES, AIPPI and ECTA.


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Ai df iIPlii iAntitrust defense in IP litigations: from ...fordhamipconference.com/wp-content/uploads/2010/08/Casucci... · intellectual property rightsby right holders or the resort