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Published online by Cambridge University Press: 27 October 2017
This article uses the issue of compulsory licensing of copyright to explore the relationship between intellectual property law (specifically copyright law) and competition law in the EU. It takes as its starting position the proposition that competition law is the ultimate restraint on the monopoly potential of intellectual property with intellectual property rights (IPR) located in competition law. However, it argues that it is too simplistic to cast the approach of the European Court of Justice (ECJ) in the IMS case purely as one of competition law being allowed to trump copyright. Instead, it sees the judgment as an example of doctrinal compromise for both legal subsystems with competition law placing limits on the invocation of copyright as the basis for a refusal to deal, while suggesting a remedy in the form of compulsory licensing which runs contrary to its conceptual roots in private law and notions of freedom of contract.
1 Case C–418/01 IMS Health v NDC Health [2004] 4 CMLR 28.
2 Case COMP/C–3.37.792, Microsoft, C(2004)900 final.
3 Fligstein, N and Mara-Drita, I, ‘How to Make a Market: Reflections on the Attempt to Create a Single Market in the European Union’ (1996) 102 American Journal of Sociology 1, 14CrossRefGoogle Scholar.
4 Braithwaite, J and Drahos, P, Global Business Regulation (Cambridge, Cambridge University Press, 2000) 56 Google Scholar. See ch. 7 generally for an outline of the development of personal property including intellectual property since Roman times in the context of globalisation.
5 See eg Crampton, PS and Facey, BA, ‘Revisiting Regulation and Deregulation through the Lens of Competition Policy’ (2002) 25 World Competition 25 CrossRefGoogle Scholar; Marsden, P, A Competition Policy for the WTO (London, Cameron May, 2001)Google Scholar; Nottage, H, ‘Trade and Competition in the WTO: Pondering the Applicability of Special and Differential Treatment’ (2003) 6 Journal of International and Economic Law 23 CrossRefGoogle Scholar; Chao, Yang-Ching et al (eds), International and Comparative Competition Law and Policies (The Hague, Kluwer, 2001)Google Scholar.
6 Maher, I, ‘Competition Law in the International Domain: Networks as a New Form of Governance’ (2002) 29 Journal of Law and Society 112 CrossRefGoogle Scholar.
7 Cadot, O, Grether, JM, and Melo, J de, ‘Trade and Competition Policy: Where Do We Stand?’ (2000) 34 Journal of World Trade 1 CrossRefGoogle Scholar.
8 Intellectual property rights are usually divided into two categories: industrial property rights (patents, designs and trade marks) and rights in artistic and literary works (copyright), see Braithwaite and Drahos, above n 4, at 56. This paper is primarily concerned with copyright.
9 Sufrin and Jones point out that a monopoly under IP law is not necessarily the same as a monopoly under competition law—for them to be co-extensive requires the product protected by the IPR to be co-extensive with what in competition law is termed a relevant market. Thus if the relevant market is only that of the IP protected product then the two monopolies are the same, but if the IP protected product is simply part of a wider market then there may be no dominance under Art 82 EC: Sufrin, B and Jones, A, EC Competition Law: Text, Cases and Materials (2nd edn, Oxford, Oxford University Press, 2004) 763 Google Scholar.
10 At least in the EU see Cases C–241/ & 242/91P RTE and Others v Commission [1995] ECR I–743.
11 See generally Peeperkorn, L, ‘IP Licences and Competition Rules: Striking the Right Balance’ (2003) 26 World Competition 527, especially at 527Google Scholar.
12 See the brief account and related references in Bently, L and Sherman, B, Intellectual Property Law (2nd edn, Oxford, Oxford University Press, 2004) 32 Google Scholar.
13 Where a myth is neither real nor true but is supported by faith and belief rather than fact, and hence cannot really be argued against, its value is that it provides an illusion of certainty: see Macdonald, S, ‘When Means become Ends: Considering the Impact of Patent Strategy on Innovation’ (2004) 16 Information Economics and Policy 135 CrossRefGoogle Scholar, at 138. He argues that patents are used now as a form of asset management with a prodigious growth in patenting in terms of numbers and scope. The aim is to ensure the holder profits from products developed by oth ers based on the patent with the patent seen as a source of revenue separate from any question of rewards for intensive R&D.
14 Towse, R, ‘Copyright as an Economic Incentive’ in Innovation, Incentive and Rewards: Intellectual Property Law and Policy (1997) 5 Hume Papers on Public Policy 32 at 34Google Scholar.
15 Laddie, H, ‘Copyright: Over-strength, Over-regulated, Over-rated?’ in Innovation, Incentive and Rewards: Intellectual Property Law and Policy (1997) 5 Hume Papers on Public Policy 1 Google Scholar.
16 ‘The great issue of the present is, first and foremost, whether copyright can survive the Internet, so as to be anything more than a distraction’? Cornish, W, Intellectual Property: Omnipresent, Distracting, Irrelevant: (Oxford, OUP, 2004) 50 CrossRefGoogle Scholar. See generally Lessig, L The Future of Ideas: the Fate of the Commons in a Connected World (New York, Random House, 2001)Google Scholar, especially ch 11; Waelde, C, ‘Intellectual Property and the Internet’ in Innovation, Incentive and Rewards: Intellectual Property Law and Policy (1997) 5(3) Hume Papers on Public Policy 64 Google Scholar.
17 Cornish, above n 16, at 28.
18 Provided they do not constitute arbitrary discrimination or a disguised restriction on trade. See Art 28 and 30 EC. Art 30 extends to copyright: see Case 78/70 Deutsche Grammophon v Metro [1971] ECR 487.
19 Arts, 81 and 82 EC prohibiting restrictive practices and abuse of dominance respectively.
20 The reasoning of the ECJ was first articulated in Cases 56 and 58 Etablissements Consten SA & Grundig-Verkaufs-GmbH v Commission [1966] ECR 299, paras 49–50. See also para 10 of Case 78/70 Deutsche Grammophon v Metro [1971] ECR 487.
21 Art 14(2) EC inserted by the Single European Act 1986.
22 Art 3(g) EC.
23 Wilks, S and McGowan, L, ‘Competition Policy in the European Union: Creating a Federal Agency?’ in Doern, G Bruce and Wilks, S (eds), Comparative Competition Policy: National Institutions in a Global Market (Oxford, Clarendon Press, 1996) 225–268 Google Scholar.
24 Case 14/68 Walt Wilhelm v Bundeskartellamt [1969] ECR 1.
25 For a detailed analysis of changes in some national competition regimes see Drahos, M, Convergence of Competition Laws and Policies in the European Community (The Hague, Kluwer, 2001)Google Scholar.
26 Case 6/64 Costa v ENEL [1964] ECR 585. For an overview see MacCormick, N, Questioning Sovereignty (Oxford, Oxford University Press, 1999)CrossRefGoogle Scholar; Witte, B de, ‘Direct Effect, Supremacy and the Nature of the Legal Order’ in Craig, P and Búrca, G de (eds), The Evolution of EU Law (Oxford, Oxford University Press, 1999)Google Scholar.
27 The doctrine applies to distribution. It was first applied to copyright in Case 78/70 Deutsche Grammophon v Metro [1971] ECR 487. There are a number of exceptions in relation to exhaustion: see generally, Goyder, D, EC Competition Law (4th edn, Oxford, Oxford University Press, 2003)Google Scholar ch 13.
28 See eg Case 15/74 Centrafarm BV v Sterling Drug [1974] ECR 1147.
29 Case 24/67 Parke, Davis & Co v Probel and Centrafarm [1968] ECR 55.
30 For a discussion of the evolution of the competition rules on patent licensing see Maher, I, ‘Competition Law and Intellectual Property Rights: Evolving Formalism’ in Craig, P and Búrca, G de (eds), The Evolution of EU Law (Oxford, Oxford University Press, 1999)Google Scholar.
31 Commission Reg 772/2004 on Technology Transfer Agreements [2004] OJ L123/11.
32 Reg 1/2003 on implementation of Art 81 and 82 [2004] OJ L1/1.
33 There is an EU trade mark see Dir 89/104 on trade marks [1989] OJ L40/1 and Reg 40/94 on the Community Trade Mark [1994] OJ L11/1; for harmonisation of the term of copyright protection see Dir 93/98 [1993] OJ L290/9 as well as directives on software, cable and satellite broadcasting, rental and lending, and ‘neighbouring rights’. Copyright in the information society, resale royalty rights and data bases are also governed by EC directives: see the introductory discussion in Bently and Sherman, above n 12, at 43–52.
34 Jacob notes that the days are long gone when states could create their own IPRs regardless of the corresponding laws in other countries, going so far as to suggest that harmonisation would be necessary even if there were no EU: see Jacob, R, ‘Industrial Property—Industry’s Enemy?’ in Innovation, Incentive and Rewards: Intellectual Property Law and Policy (1997) 5(3) Hume Papers on Public Policy 17 at 22–23Google Scholar.
35 European Council, Presidency Conclusions, Brussels (25 and 26 Mar 2004) Doc/04/01, para 21.
36 Anderman, S, ‘Does the Microsoft Case offer a New Paradigm for the “Exceptional Circumstances” Test and Compulsory Licenses under EC Competition Law?’ (2004) 1 Competition L Rev 7 Google Scholar at 21.
37 See generally, Maher, I, ‘Regulating Competition’ in Parker, C, Scott, C, Lacey, N and Braithwaite, J (eds), Regulating Law (Oxford, OUP, 2004)Google Scholar.
38 See Jacob AG in Case C–7/97 Oscar Bronner GmbH & Co KG v Mediaprint Zeitungs und Zeitschriftenverlag GmbH & Co KG and Another [1998] ECR I–7817, para 47 drawing on the judgment of the US Seventh Circuit Court of Appeals in MCI Communications v AT&T, 708 F 2d 1081 (7th Cir 1983) at 1132.
39 Verizon Communications Inc., v Law Offices of Curtis V Trinko, LLP 540 US 682, (2004).
40 See Pitofsky, R, Patterson, D and Hooks, J, ‘The Essential Facilities Doctrine under US. Antitrust Law’ (2002) 70 Antitrust LJ 443, especially at 450Google Scholar.
41 Aspen Skiing Co v Aspen Highlands Skiing Corp, 472 US 585, 610 (1985).
42 The Commission first referred to essential facilities in Sealink/B&I Holyhead Interim Measures [1992] 5 CMLR 255.
43 See eg Pitofsky, Patterson and Hooks, above n 40, which, despite the title in fact discusses the IMS case. See also the response: Marquardt, PD and Leddy, M, ‘The Essential Facilities Doctrine and Intellectual Property Rights: A Response to Pitosky, Patterson and Hooks’ (2002) 70 Antitrust LJ 847 Google Scholar.
44 D Geradin, ‘Limiting the Scope of Article 82 of the EC Treaty: What Can the EU Learn for the U.S. Supreme Court’s Judgment in Trinko in the wake of Microsoft, IMS and Deutsche Telekom?’ (2004) 41(6) CMLRev 1519–1554.
45 Killick, J, ‘IMS and Microsoft in the Cold Light of IMS’ (2004) 1 Competition LRev 23, at 46Google Scholar.
46 Art 7 of Reg 1/2003, [2003] OJ L1/1 states that when there is a breach of Art 82, then the Commission can require the undertakings concerned to bring the infringement to an end. This is sufficiently broad to go beyond mere prohibition.
47 Case 322/81 NV Nederlandsche Banden-Industrie Michelin v Commission [1983] ECR 3461, para 57.
48 Zoja had ended its supply contract but sought supplies subsequently. On the facts it was clear that even if the contract had never been terminated, CSC would have not renewed it with Zoja, so nothing turned on the termination by Zoja.
49 Cases 6 and 7/73 Istituto Chemioterapico Italiano SpA and Commercial Solvents Corp v Commission [1974] ECR 223.
50 Case 27/76 United Brands v Commission [1978] ECR 207.
51 See eg Sea Containers Ltd/Stena Sealink [1994] OJ L15/8.
52 Cases T–374–375, 384 & 388/94 European Night Services v Commission [1998] ECR II–3141.
53 Case C–241/ & 242/91P RTE and Others v Commission [1995] ECR I–743.
54 C–7/97 Oscar Bronner GmbH & Co. KG v Mediaprint Zeitungsund Zeitschriftenverlag GmbH & Co KG and Another [1998] ECR I–7817.
55 See Crowther, P, ‘Compulsory Licensing of Intellectual Property Rights’ (1995) 20 European L Rev 521 Google Scholar; Korah, V, ‘Patents and Antitrust’ (1997) 4 Intellectual Property Quarterly 395 at 401Google Scholar.
56 Case 238/87 AB Volvo v Erik Veng [1988] ECR 6211 concerned design rights for car spare parts, and the Court held at para 9 that the refusal would be abusive only if there was an arbi trary refusal to supply to independent repairers, if prices for spare parts were fixed at an unfair level or a decision was taken not to produce spare parts for cars still in circulation.
57 Bronner v Mediaprint, above n 38.
58 The CFI in an earlier case concerning a refusal to license a betting company to reproduce broadcasts of races in its shops had also found that there was no obligation to deal as access to the broadcasts was not essential: see Case T–504/93 Tiercé Ladbroke SA v Commission [1997] ECR II–923.
59 At para 57.
60 At para 69.
61 COMP D3.38.044—NDC Health/IMS Health: Interim Measures [2002] OJ L59/18. See eg the discussion in Korah, V, ‘The Interface between Intellectual Property and Antitrust: The European Experience’ (2001) 69 Antitrust LJ 800 Google Scholar and a reply by Fine, F, ‘NDC/IMS: In Response to Professor Korah’ (2002) 70 Antitrust LJ 247 Google Scholar.
62 NDC Health/IMS Health: Interim Measures above n 61, at para 150. In fact, some of IMS’s clients had written to it asking it to make the brick structure available to others so as to allow competition to develop.
63 See Killick, above n 45, at 30.
64 For a succinct summary of the facts see Case T–184/01 IMS Health Inc v Commission, 10 Mar 2005 (not yet reported).
65 See above n 61.
66 Case T–184/01R IMS Health v Commission [2001] ECR II–3191. This was only the second time in EC law that a Commission interim decision had been suspended on an ex parte basis, see F Fine, above n. 61, 254. Confirmed on appeal: see Case C–481/01 P(R) NDC Health v IMS Health and Commission [2002] ECR I–3401.
67 NDC Health/IMS Health: Interim Measures above n 61. The original interim decision was still challenged before the CFI, which held that there was no need to give a decision, see Case T–184/01 IMS Health v Commission, 10 Mar 2005 (not yet reported).
68 Anderman, S, ‘Does the Microsoft Case offer a New Paradigm for the “Exceptional Circumstances” Test and Compulsory Licenses under EC Competition Law?’ (2004) 1 Competition LRev 7 at 13Google Scholar.
69 Case T–201/04 R Microsoft Corporation v Commission, 22 Dec 2004, para 206.
70 See Tizzano AG in the case. See also Derclaye, E, ‘The IMS Health Decision and the Reconciliation of Copyright and Competition Law’ (2004) 29 ELRev 687 at 694Google Scholar.
71 Above n 44. In this case the issue was related to products although it seems, in an appropriate case, the requirement would be framed in terms of services rather than products.
72 Lang, J Temple, ‘European Competition Law and Compulsory Licensing of Intellectual Property Rights -a Comprehensive Principle’ (2004) 4 Europarättslig Tidskrift 558 Google Scholar. He also mentioned the practical problem of the potential licensee having to describe the new product to the IPR holder in order to show why a licence has to be granted.
73 For a discussion of how copyright law could address the appropriation of an industry standard as in this case see Ong, B, ‘Anticompetitive Refusals to Grant Copyright Licences: Reflections on the IMS Saga’ (2004) 26 EIPR 505 Google Scholar.
74 Lang, J Temple, ‘Anti-competitive Non-pricing Abuses under European and National Antitrust Law’ in Hawk, B (ed), Fordham Corporate Law Institute (2003) 235 at 272Google Scholar.
75 COMP/C–3/37.792 Microsoft, C(2004)900 final.
76 At para 763. See Killick, above n 45, at 37.
77 Ibid, at 32.
78 See eg Korah, above n 61.
79 At para 692.
80 See above n 59 and accompanying text.
81 See above n 69 at para 220.
82 Anderman, above n 36, at 16.
83 For a positive assessment of the use of leverage theory in the EC Microsoft decision see R Peritz, ‘Re-thinking U.S. v. Microsoft in light of the E.C. Case’, New York Law School Paper 04/05 at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=719745 (last visited 1 June 2005).
84 See para 58 ff and Derclaye, above n 70, at 693.
85 H Collins coined the term ‘productive disintegration’ in relation to the impact of public law regulation on modern contract law. Contract law has proved doctrinally robust, and hence the reconfiguration of legal reasoning in the field has been productive—hence his term productive disintegration, see Collins, H, Regulating Contracts (Oxford, Oxford University Press, 1999) 46 Google Scholar.
86 Case C–109/03 KPN Telecom BV v OPTA, 14 July 2004 (not yet reported).
87 25 Nov 2004.
88 Case C–53/03 Syfait v GlaxoSmithKline AEVE, 28 Oct 2004.
89 Killick, above n 45, at 38.
90 Judgment delivered 31 May 2005, not yet reported.