Challenges facing competition and antitrust law in the context of intellectual property law – outline of the issue

The boundary between competition law and intellectual property law arouses great interest among lawyers and experts around the world. It is no different in the European Union and Poland. There is no relationship of exclusion between the above mentioned areas of law. Both intellectual property law and competition law are essentially part of global innovation system. Intellectual property law encourages competition by replacing existing products with new ones. However, the exercise of intellectual property rights may restrict competition in certain situations. In such cases, the exercise of intellectual property rights is subject to evaluation in the light of competition law rules, as evidenced by the introduction of regulations and provisions in national and international antitrust laws.[1] The relationship between these areas of law can be viewed from different perspectives, treating the case law of Community (European Union) courts as a subject of research, the case law of national competition authorities and courts, prohibition of agreements restricting competition or prohibition of abuse of dominant position, individual antitrust acts, as well as legal acts derivative on the interface between competition law and intellectual property. [2] This work will provide a general overview of the problem using individual examples from these areas of law (cases, laws and practice) from the point of view of European Union law and the law of Poland. At the end I will try to draw the thesis in what kind of situations the activities of those entitled to intellectual property rights may be considered as a violation of the competition rules. In other words which practices in the field of intellectual property rights are relevant from the point of view of competition law and the practices used by courts to deal with the abuse of intellectual property rights limiting competition.

Inetellectual Property Law and Society

Intellectual property law covers a number of different areas of law, including copyright, licenses, patents, geographical indications and other derivative rights. In other words, it protects everything that is immaterial and what man has created with his intellect. It serves to protect human creativity which for many years has been falling in the margin of interest of the law. Man’s creativity is the heritage of society and that is why today it arouses much more interest than it has so far.[3] Nevertheless, the connection between intellectual property rights and society remains a roughly minor issue, and not many scholars deal with this topic. This is surprising because the rights of this area of law are closely related to cultural heritage and cover a large part of culture which creates our society and relationship with the nation or just the opposite, positively affects globalization and cultural exchange between citizens of the world, promotes development and is one of the most dynamic areas of life.[4] Scholars, however, agree in one that the law should be interpreted in a social, cultural and historical context. Intellectual property law is no exception.

Relationship between intellectual property rights and competition law

In order to be able to accurately and unambiguously consider the problem based on practice examples, the relationship between intellectual property law and competition law should be determined at the very beginning. The ambiguity and openness of the word „competition” raises problems in the context of the relationship between competition law and intellectual property law, the scope of which is often crossed and permeated. The lack of a clear line of jurisprudence and common practice, raises the question of how to deal with situations in which the implementation of intellectual property rights interferes in the market and fair competition, and thus doubts concern mainly the basis of competition policy in matters relating to intellectual property rights. The aim and essence of intellectual property rights is precisely protection and a kind of monopoly on the use of rights resulting from intellectual property rights and patents. Therefore, on the basis of the views held in the doctrine, the concepts identified as the „theory of relations between competition protection law and intellectual property law” have been identified and described.[5] These theories are used to organize and clarify issues at the junction of these two areas of law and allow to explain the basis for the decisions taken so far in competition cases related to intellectual property rights. Knowledge of the aforementioned theories is necessary to understand the legislative actions undertaken by individual countries and to understand the decisions of the courts. However, they are not strictly considered in this essay. In the context of competition and consumer rights, intellectual property rights are granted to encourage investment and to promote innovation as well as to provide the consumer with the opportunity to identify a reputable company that provides the product as well as a good quality of the product sought. In this way, consumers have the right to obtain products and services protected by intellectual property rights, with reasonable prices and different from similar products on the market. On the other hand, the main task and purpose of the competition is healthy and desirable economic development and balance on the relevant market. The control and appropriate impact of intellectual property rights on competition is of great importance in the context of maintaining balance and economic stability. In practice, you need a system of intellectual property protection that will leave a loophole for healthy and desirable competition between suppliers of similar or the same products. Legislator can not allow a situation in which the only supplier of the desired product will be the only company with the appropriate patent. This would lead to market pathology and harm the consumer.[6] Technical progress which is promoted by intellectual property law affects the increase of competition at the level of research and development, which positively affects the economic situation and the market. Competitors are thus encouraged to participate in research on new solutions to secure the same position on the relevant market. In line with this approach to the relationship between intellectual property and competition protection, they are equally important for economic development, but it cannot be forgotten that it is not a system without any exceptions to which the legislator must pay attention. It is important to understand that there is no uniform approach to the relationship between competition law and intellectual property law. However, there are significant differences in the doctrine regarding general criteria for resolving conflicts between these two areas. This results in the lack of clear rules for companies interested in technology transfer and signing of license agreements. Hence it can be seen the tendency to define these relations in national and international legislation.

There are some areas, as mentioned above, in which there may be conflicts between these two areas of law. These disputes are considered exceptional situations, because in fact exclusive rights encourage innovation and technology generation in order to benefit the public. One of the organizations that deals with the above problem is the Instituto Nacional de Defensa de la Competencia y de la Protección de la Propiedad Intelectual (INDECOPI)[7]. In this topic, INDECOPI is in a strategic position because it is responsible for the defence of competition and protection of intellectual property, and as a unique global institution combines these two areas of legal interest. This allows to better recognize disputes and develop a unified approach to persistent conflicts. INDECOPI declared that the main disputes between intellectual property and competition are considered as: abuse of a dominant position by the holder of an intellectual property right; obligatory licenses if the abuse of a dominant position took place earlier; and in the event of a public need, an urgent need or an emergency situation in the country. The main idea of the above-mentioned institution is to create a space for research in which specialists and academic staff can exchange experiences, and finally, and with all these information, work on guidelines that will contain recommendations on disputes that may arise between intellectual property and competition.

Perspective of the European Union and Poland

The doctrine assumes that intellectual property rights are a kind of an exception to the principle of freedom of competition, and their mere possession does not violate competition law. This raises one fundamental question, namely when it can be said that the law of competition has been violated within the intellectual property law. The core is the principle that you can not interfere in intellectual property rights to the extent that includes the ordinary exercise of these rights, including, among others, their enforcement and therefore the use of all claims arising from them.[8] According to the position of the Court of Justice of the European Union, it may be considered relatively safe to use intellectual property rights within the limits resulting from their special subject of protection. According to the provisions of the Polish Industrial Property Law, together with obtaining a patent, the entitled person is entitled to the exclusive use of the invention in a profitable or professional manner throughout the Republic of Poland and has the right to demand a third party to stop using the patented invention in this scope without obtaining appropriate consent.[9] However, it should be remembered that the use of intellectual property rights defined in the Act (protection from competition) in specific situations may be considered unlawful and at the same time be sanctioned on the basis of industrial property rights. In particular, it’s about granting a so- called compulsory license. It is very important to remember that in certain situations (in particular where there are no legal grounds for granting a compulsory license), the use of intellectual property rights, or even attempts to obtain them, can be considered as violating the rules of fair competition by using their dominant position by entrepreneur on the market.

This naturally raises the question of how to treat a compulsory license under competition law. Pursuant to the provisions of the Industrial Property Law, in particularly specific cases, a license to use the invention may be granted against the will of the patentee, for example in the case of patent abuse or the refusal to grant a license to satisfy the needs of the domestic market by using a patented invention. It should be recalled here what is the patent abuse. It consists in preventing the use of a patented invention by a third party after three years from the date of patent granting by the Patent Office, if it is necessary to satisfy the needs of the relevant national market, in particular when it is necessary for reasons of public interest and the invention is available only at an inflated price or in insufficient quantity. In the above situations, the patent office may grant a compulsory license, specifying its terms, including the amount of the license fee. In some cases, the use of a patent in a way that violates fair competition by an undertaking with a dominant position on the market may be considered an act of unfair competition in the form of abuse of a dominant position. In such situations, the competition and consumer protection authority may force the patentee to conclude an appropriate license agreement with other companies.[10]

According to art. 102 TFEU, any abuse of a dominant position on the relevant market is prohibited, provided that it is possible that it will harm the trade within the European Union Member States and significantly reduce production, market or technical development to the detriment of consumers. Patent strategies were of interest to the Commission European Union. In its report, the Commission listed a number of measures taken by companies to limit competition.[11] Among the activities listed by the Commissions were for instance reporting of „weak” patents and initiation of patent infringement proceedings. The Commission also included patent settlements in its study. The purpose of monitoring of so-called patent settlements, was to determine the number of such settlements, the conclusion of which results in significant restrictions on entering the market and whose circumstances indicate that they were not manifestly resulting from the dispute.[12]

The essence of the problem is best illustrated by the example of a dispute that arose against the background of the collision between intellectual property rights and the protection of competition. In Case T-321/05 Astra Zeneca v. Commission, the European Commission and later the EU Court found violation of fair competition by abuse of a dominant position. This was due to the incorrect application of regulatory procedures within patent law. This is a precedent ruling that can be interpreted in such a way that entities holding a dominant position on the market can not freely use their rights under the law. The problem may be the fact that the aforementioned ruling did not require to prove that the entrepreneur’s actions are intentional or have been taken with bad faith. It is necessary in this case to accept that an action can be treated as an infringement of competition if it does not serve the implementation of rights and only limits the rights of third parties. With another assumption of the dominant’s operation, the enterprises with dominant position would be exposed to the charge of abuse of a dominant position all the time.[13]

In the jurisprudence of the Court of Justice of the EU, as well as in the practice of courts and national authorities of individual Member States, the abuse of a dominant position is connected with, among others, refusal to grant a license, refusal to execute orders of wholesalers of ordinary size or the filing of multiple patents with respect to the same invention, or the abuse of regulatory procedures.

Summary

In summary, both practice and case law confirm in specific cases the possibility of interference with competition law in areas covered by intellectual property rights. While the „normal” exercise of exclusive rights does not give rise to the risk of a breach of competition law, in the case of offenses outside the scope of protection, the existence of special remedies within patent law can not change the rules of applying prohibitions under competition law. When behaviour falls under rules that include competition law, then it applies regardless of whether the behaviour falls under other laws that are designed to meet other purposes. This approach still raises a lot of controversy, mainly because, for example, industrial property rights have tools and means of protection that can be used in the event of disputes arising from, for example, a patent. It should be noted how the adoption of the risk of abuse of a dominant position in Astra Zeneca also goes beyond the exercise of intellectual property rights and also concerns the incorrect use of procedures to obtain them. Lack of the requirement of intentional actions that may only constitute an incorrect interpretation of legal provisions or an error creates a serious threat to enterprises with a dominant position. This is still a very interesting topic which requires the creation of one and stable practice and jurisprudence by the courts of the Member States and the European Union itself.

 

Author:

Wiktoria Julia Forystek

[1] Rafał Sikorski, Aktualne zagadnienia na styku własności intelektualnej i prawa konkurencji Unii Europejskiej, 4 ZESZYTY NAUKOWE UNIWERSYTETU JAGIELLOŃSKIEGO (2014) p. 129-144 (Pol.).

[2] Dawid Miąsik, Wspólnotowe prawo konkurencji a prawa własności intelektualnej, 6 EUROPEJSKI PRZEGLĄD SĄDOWY (2009), p. 38-46 (Pol.).

[3] William T. Gallagher, What is a „Law and Society” Approach to Intellectual Property?, Golden Gate University School of Law, 2009.

[4] See Friedman, 2005, 1986; Sarat, 2004; Seron and Silbey, 2004.

[5] Dawid Miąsik, Stosunek prawa ochrony konkurencji do prawa własności intelektualnej, LEX (2012), (Pol.).

[6] P. Regibeau and K. Rockett, The relationship between intellectual property law and competition law: An economic approach, (2007).

[7] United Nations Conference On Trade and Development, Convergence between Competition Law and Intellectual Property.

[8] Konrad Kohutek, Małgorzata Sieradzka, Ustawa o ochronie konkurencji i konsumentów. Komentarz, (2014), (Pol.).

[9] Ustawa z dnia 30 czerwca 2000 r.,  Prawo własności przemysłowej [Industrial Property Law], (2020 Dz.U. poz. 286), (Pol.).

[10] Ustawa z dnia 16 lutego 2007 r. o ochronie konkurencji i konsumentów [The Competition and Consumer Protection Law], (2020 Dz.U. poz. 1076) (Pol.).

[11] Dariusz Kasprzycki (red.), Justyna Ożegalska-Trybalska (red.), Aktualne wyzwania prawa własności intelektualnej i prawa konkurencji. Księga pamiątkowa dedykowana Profesorowi Michałowi du Vallowi, (2015), (Pol.).

[12] Dariusz Kasprzycki (red.), Justyna Ożegalska-Trybalska (red.), Aktualne wyzwania prawa własności intelektualnej i prawa konkurencji. Księga pamiątkowa dedykowana Profesorowi Michałowi du Vallowi

[13] Nadużycie procedur regulacyjnych jako naruszenie art. 102 TFUE – uwagi do wyroku Sądu Unii Europejskiej

z dnia 1 lipca 2010 r. w sprawie T-321/05 AstraZeneca v. Komisji. Glosa do wyroku S(PI) z dnia 1 lipca 2010 r., T-321/05, (Pol.).