The afternoon at the Global Congress Combating Counterfeiting and Piracy included two sets of Boardroom Dialogue Discussions. In the first set, one was “Competition law and building respect for IP.” It was moderated by Josef Drexl, Director of the Max-Planck-Institut für Immaterialgüterund Wettbewerbsrecht in Germany. He asked the first panelist, Thomas Kramler, Deputy Head of Unit of the European Commission Directorate General for Competition – Why is EC such an active enforcer, while other competition authorities, such as the US FTC, have been less so?
Kramler disagreed that the US and the EU are moving in different directions. He thinks there is more convergence. The two are in agreement that antitrust & IP share the same basic goal of increasing consumer welfare. They agree that there is no presumption of market power that exists just because a firm has patents or other IP. Just having a patent or other IP does not necessarily make you a dominant company.
In the US Microsoft antitrust case, Microsoft argued that it had IP rights for both its browser and its operating system, but the court said it didn’t have a right to do anything it wanted with its intellectual property. The EU Microsoft case was about its refusal to give its competitors the information they needed to be interoperable with Microsoft’s operating system. Microsoft claimed the information was its intellectual property, but a judge told them they needed to share the information in order to fuel further innovation on both sides. The cases ended similarly, with Microsoft being told to share. This is evidence to Kramler that there is some sort of convergence in views in the US and the EU.
Kramler also said that recent trends in patenting suggest anticompetitive actions. More applications are being received for IT, telecom and pharmaceutical patents, and this is because of strategic patenting – sometimes for the purposes of blocking the entry of rivals, and sometimes with patents that are not valid. This shows that there is a need for patent reform, and it leads to more antitrust cases.
João Marcelo de Lima Assafim from Universidade federal do Rio de Janeiro was the next panelist, and Drexl asked him to describe IP and competition law issues in Brazil. Assafim noted that IP is sometimes used to block competition in Brazil, and that the courts sometimes have a hard time responding to this. They have no guidelines for competition law, and lack expertise. This is a problem for investors, who would benefit from clear rules and guidelines for negotiating contracts.
Mireille Buydens, Attorney-at-Law and Professor at the Université Libre de Bruxelles was next, and Drexl asked her how IPRs can be used against small and medium sized enterprises. One way she described was when a big player is confronted with an SME competitor and uses patents – including follow on patents of dubious value – to start legal actions in different jurisdictions at the same time. This harms the SME competitor at three levels. It exhausts the SME financially; diverts time and energy from running the company to litigations; and impacts the SME’s image in the market. At the end of the day, the big firm may lose, but it can take years to get a decision. “Even if you lose,” she said, “actually you’ve won.” One solution to this in Europe is a community patent, because then there’s one patent and one litigation, though costs could remain high. Another possible solution could be found in competition law, if we established that filing a sham patent case is an abuse of dominant power.
Another problem is tied to Article 7 of the EU Enforcement Directive, and it is based on old EU law. Before a trial begins, the plaintiff asks for a visit to the premises of the alleged infringement to collect information. An expert trained by the plaintiff visits the infringer (who is not informed of the visit ahead of time), then the expert describes in detail everything he or she sees. This is often used as a weapon to get access to trade secrets. The EU directive has tried to address this by explicitly protecting trade secrets, but this is difficult to accomplish in real life.
Hassan Qaqaya, Head of UNCTAD’s Competition and Consumers Policies Branch was the final speaker on the panel. Drexl asked him to identify specific conflicts between competition and IP law in developing countries, and how TRIPS provisions that allow compulsory licenses for competition remedies apply. He said that the challenges for developing countries are different. Most developing countries have embarked on major reforms in the last 20 years, but they are still a work in progress. There’s sometimes a tension between enforcement of the IP laws and policies. Often the government wants to do more or less than the law allows. IP law generally predates competition laws, so when the IP law was written there was little concern for how it would effect competition. When competition law is introduced at a later stage, there’s the issue of how to reconcile one with the other. (In some other cases, developing countries have laws that handle both competition and IP in the same statute.) In most developing countries, competition agencies are relatively young, so they lack experience. Competition agencies that do have the ability to address questions often lack criteria and methodology needed to assess IP competition cases. This needs to be strengthened. If there are no competitive markets, we won’t see innovation.
