Articulation of competition law and intellectual property law, technological agreements

by | Mar 3, 2017

Community texts on competition law:

 

  • Articles 101 to 109 TFEU (former 81 to 89 of the TCE), relating to competition law.

 

  • Council Regulation (EEC) No. 4064/89 of December 21, 1989 on the control of concentrations between undertakings;
  • Council Regulation (EC) No. 1310/97 of June 30, 1997 (amending Regulation (EEC) No 4064/89 on the control of concentrations between undertakings);

 

  • COMMISSION REGULATION (EU) No 330/2010 of 20 April 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices;

 

  • Council Regulation (EC) No. 1/2003 of December 16, 2002 on the implementation of the competition rules provided for in Articles 81 and 82 of the Treaty 101 and 102 currently);

 

  • Council Regulation (EC) No. 139/2004 of January 20, 2004 on the control of concentrations between undertakings;

 

Community texts relating to research and development:

 

  • Commission Regulation (EU) No 1217/2010 of 14 December 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to certain categories of research and development agreements development. “This regulation provides an exemption for certain categories of research and development agreements and, in doing so, aims to ensure effective protection of competition and to guarantee sufficient legal certainty for the parties to research and development agreements”.

 

  • COMMISSION REGULATION (EU) No 1218/2010 of 14 December 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to certain categories of specialization agreements

 

  1. The case of technology transfer agreements

 

A technology transfer agreement is an agreement by which one party authorizes another to use its technology (patent, know-how, software) for the production of new products.
This type of agreement is considered to be “pro-competitive”, since it stems from the sharing of intellectual property, which is considered a factor of economic growth.
Technology transfer agreements are governed by a regulation:
  • REGULATION (EU) Noh COMMISSION 316/2014 of 21 March 2014 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of technology transfer agreements (replaces Regulation (EU) No 772/2004 of April 27, 2004):

 

  • bilateral licensing agreements concluded between firms with limited market power are, under certain conditions, deemed not to have anti-competitive effects. This text has been widely criticized because it uses market shares as criteria. Thus, agreements between firms are considered lawful or not depending on whether or not they lead to the control of 20 % of the sector concerned (if the agreement is made between competing entities); and 30 % (if it concerns non-competitors). However, in the fields of technology and innovation, this criterion seems inefficient, due to the complexity of the products targeted and because we are rather in market shares which remain potential.
  • In order to avoid a violation of free competition rules, not all technology transfer agreements benefit from an exemption.
  • Research and development agreements will now only fall under this regulation if the block exemption regulations for R&D agreements (1217/10) and on specialization agreements (regulation 1218/2010) are not applicable.
  • Previously, the aforementioned regulation of 2004 provided for a possibility of exemption concerning the passive sales restrictions inserted in a technology transfer agreement between non-competitors (art. 4, §2, b, ii). From now on, this regulation aligning itself with regulation 330-2010 on vertical restraints, excludes the exemption in all cases of passive sales restrictions.
  1. Licenses
In this respect, the principle of compulsory licenses imposed by the competition authorities is central because it involves calling into question a property right.

 

The Court of Justice had moreover perfectly understood this in the Magill case (ECJ, 6 Apr. 1995, Radio Telefis Eireann (RTE) and Independent Television Publications Ltd (ITP) v. Commission of the European Communities, C-241/91 P and C-241/91 P).
It had underlined the exceptional circumstances of this case by imposing very strict conditions on the granting of compulsory licenses. In particular, the refusal of a license had to prevent the appearance of a new product corresponding to consumer demand.
In another judgment, the Volvo judgment (CJEC, 5.10.1988, Volvo/Veng, case 238/87), the Court recognizes that the refusal to grant a license thus allowing the licensees to compete directly with the holder of the property right intellectual property (by authorizing them to sell the same spare parts as those which it sells, in this case) cannot as such constitute an abuse of the dominant position which it may hold on the market for these spare parts.

 

It follows from the comparison between the Volvo and Magill judgments that when the application for a license does not allow the appearance of a new product, but simply to compete with the holder of the intellectual property right (by offering an identical good), the CJEU accepts that the holder of the intellectual property right refuses to license.
On the other hand, when the refusal to license aims to unjustifiably prevent the creation of a new product, which would compete with the products of the holder of the intellectual property, IThe refusal to dismiss constitutes an abuse of a dominant position.
But over time, these conditions have eased and there is now total uncertainty.
Since the Microsoft case (TPI, 17 September 2007, Microsoft Corp. v. Commission, T-201/04), it suffices that the license allows a “better” product for compulsory licenses to be possible.
It is to transform the competition authorities into evaluators of innovation and this is not their role.
  1. abuse of dominant position
Commits an abuse of a dominant position (sanctioned by all the national laws of the Member States and, in Community law, by Article 102 of the TFEU Treaty), a company in a dominant position on a market (monopoly or quasi-monopoly) which , possessing a skill that cannot be recreated, refuses access to it to a third party without a legitimate reason.
We can cite the example of a dominant company on a market thanks to the patents it holds, and which engages in predatory methods (predatory pricing for example) against a competitor.
The central point is to examine whether or not the company is dominant in a market, whether through a patent or through the effectiveness of its commercial communication.

 

The outline of a patent on an innovation is vague and subject to controversy. It is then that, in a context favorable to patent holders (as in the United States), companies can pass as infringers which in all good faith did not at all feel that they were infringing.
Let us add that the number of patents taken out by an inventor is counted by tens or even hundreds. Involuntary counterfeiting is then greatly multiplied.
In a AstraZeneca v. Commission judgment of 1er July 2010 (C-457/10 P), with regard to the concept of abuse of a dominant position, the General Court confirmed its case-law according to which, to constitute such an abuse, a behavior must not necessarily affect competition directly. He also insisted on the objective nature of this concept, which does not require the establishment of an intention to harm. In the present case, it therefore mattered little whether or not the impugned practices resulted from deliberate behavior on the part ofAstra Zeneca.
  1. Europe and intellectual property rights

 

The Court of Justice of the European Communities had previously had occasion to recall several principles:

 

  • In the absence of Community harmonization of intellectual property rights, it is up to each Member State to establish its own national legislation (Parke Davis judgment (29 February 1968, C-24/67)).

 

  • An intellectual property right does not necessarily confer a dominant position on a market. To apply competition law to the holder of an intellectual property right, it is necessary to carry out a case-by-case analysis of the market or markets and of the position of the holder of the intellectual property right in this or these markets (Deutsche Grammophon judgment (8 June 1971, C78/70)).
MR.

Breach of software license is not infringement

Patent law and employee inventions

 

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