Colleague Sophie van Loon Obtains Doctorate on Friction between IP- and Competition Law
Intellectual property rights ('IP rights'), such as
copyrights and patents, are a valuable asset to undertakings, since
they invest in the development of products in which such rights are
vested, like software or medicines. The exclusive IP right protects
these investments and the intellectual efforts on which they are
based; others may be prohibited from using or applying the
intellectual property. An undertaking may share its IP rights with
third parties by means of licenses, but may also decide to keep
these 'to itself'.
What happens if a product or application in which an IP right is
vested becomes so successful that it becomes impossible for other
undertakings that do not have this right to engage in competition?
The court or competition authority may then intervene. It may order
the IP rightholder to grant a compulsory license on the basis of
(European) competition law, which prohibits the abuse of a dominant
position. However, such interventions are controversial, because
they prevent undertakings from using their own IP rights. A
potential threat of this is that undertakings will be less inclined
to invest in research and development, because of the risk that
they will have to share their inventions with others.
In her dissertation 'Refusal to License as Abuse of a
Dominant Position. Intellectual Property, Article 82 of the EC
Treaty and the Obstruction of Innovation', Sophie van Loon
deals with the question of when an undertaking abuses its dominant
position if it refuses to grant an IP license to other
undertakings. In this connection Sophie has made an extensive
analysis of the case law of the European Court of Justice on this
subject matter. In a number of high-profile cases, the European
Court of Justice has expressed opinions on refusals of licenses and
Article 82 of the EC Treaty (the prohibition on abuse of a dominant
position): Volvo/Veng, Magill and IMS
Health. The European Court of First Instance has also
expressed an opinion on this issue: in 2007 it held that Microsoft
had to share copyright-protected information on its operating
system Windows with others.
In the analysis of this case law Sophie has identified several
interesting issues.
First of all, there appears to be a controversy between the
methods used in competition law to determine whether an undertaking
occupies a dominant position on the one hand, and the starting
points of the IP system on the other hand. In competition law, the
question of whether there is a dominant position depends on the
question of whether an undertaking can behave independently on the
relevant market. This market is determined on the basis of
consumers' preferences for certain products and the extent to
which consumers regard these products as interchangeable. However,
because it is precisely IP rights that make certain products not
interchangeable (the rightholder may prohibit others from making
the same products), in 'IP cases' the relevant market is
often defined very narrowly. As a consequence, the undertaking with
the IP right will more easily occupy a dominant position than other
undertakings. Because the idea of the IP system is to reward
investments in inventiveness and creativity, it seems contradictory
to punish the same efforts by automatically ascribing a dominant
position within the meaning of competition law to the IP
rightholder.
A second finding is that Sophie thinks that the refusals to
license should be assessed differently from refusals to supply.
It is sometimes argued in literature that the refusal of an IP
license may be regarded as a 'refusal to supply intellectual
property'. However, Sophie is of the view that IP rights have a
special status, so that other criteria apply to the assessment of
refusals to license. The decisive criterion to the question of
whether there is abuse of a dominant position she found in her
dissertation is the criterion of a 'new product'. According
to this criterion, a refusal to license may only constitute an
abuse if the IP system obstructs itself; i.e. when innovation is
impeded because IP rights stop the introduction of a new product.
Although the European Court of Justice also uses this 'new
product' criterion in its case law on refusals to license, it
is not fully clear yet what substance should be given to it. Sophie
makes a number of suggestions for this in her dissertation, in
hopes that the courts will apply the new product criterion more
often in conflicts about refusals to license.
The main conclusion Sophie draws in her dissertation is that the
courts should exercise the greatest restraint in conflicts about
refusals to license, and should only order undertakings to share
their IP rights with others in the event of a serious innovation
impediment.