[Ip-health] IMS Health, Magill and the ECJ

[ds20@uow.edu.au]

=0D
Dear Sean=0D
IMS Health is being viewed as providing an opportunity for=0D
non-patent holder to use patented product if it is required=0D
for innovation. The analysis below suggests that in the=0D
present circumstances, such hopes are too forlorn. I had=0D
discussed the collateral damages by the monopoly holder=0D
where they have captured the regulatory agencies. In this=0D
respect, the analysis below would provide a better picture=0D
regarding our expectations.=0D
Advocate General of EC, Gulman=E2=80=99s opinion in Magill was to=0D
recommend that the Court of Justice should set aside the=0D
decision of the Commission. He insisted that =E2=80=9Cthe aim of=0D
copyright is precisely to give the proprietor the=0D
possibility of restricting competition and that possibility=0D
must also be afforded to a dominant undertaking.=E2=80=99. [1995]=0D
ECR I-743 at para 63] although he agreed that under special=0D
circumstances refusal to license can invite the application=0D
of Article 86, the refusal to license resulted in the=0D
frustration of a new product-the comprehensive TV guide-was=0D
not a special circumstance where the new product competed=0D
with that of the copyright holder because the right to=0D
refuse a license must be regarded as necessary to provide a=0D
reward for its creative effort even if its product was=0D
inferior to that of its competitors. In his view, it would=0D
only be abusive to refuse a license if the new product did=0D
not compete with a precinct of the copyright holder. Gulman=0D
also justified the exploitation by the copyright holder to=0D
exploit derivative markets as he found it normal for=0D
copyright holder to exploit derivative market ([1995] ECR I-=0D
743 at para 40).  The Court or Justice in Magill did not=0D
agree with the Advocate General=E2=80=99s opinion although it=0D
admitted that refusal to grant license by a copyright holder=0D
even in a dominant position cannot in itself constitute=0D
abuse of a dominant position. (1995] ECR I-743 at para 49).=0D
However, the special circumstances of the case of Magill as=0D
there was no actual or potential substitute for a weekly=0D
guide and the TV companies prevented the emergence of new=0D
product which they themselves did not offer which was an=0D
abuse under Article 86(b), i.e. =E2=80=98limiting production,=0D
markets or technical development to the prejudice of the=0D
consumer=E2=80=9D ( 1995) ECR I-743 at para 54).=0D
The decision in Magill was drastically narrowed down by the=0D
ECJ in Oscar Bronner (Oscar Bronner v. Mediaprint [1998] ECR=0D
1 7791, para 45-51). The Advocate General Jacob had stated=0D
in Oscar Bronner v. Mediaprint [1998] ECR 1 7791  that=0D
=E2=80=9C50. It is therefore clear that the Commission considers=0D
that refusal of access to an essential facility to a=0D
competitor can of itself be an abuse even in the absence of=0D
other factors, such as tying of sales, discrimination vis-=C3=A0-=0D
vis another independent competitor, discontinuation of=0D
supplies to existing customers or deliberate action to=0D
damage a competitor (although it may be noted that in many=0D
of the cases with which it has dealt such additional factors=0D
are to greater or lesser extent present). An essential=0D
facility can be a product such as a raw material or a=0D
service, including provision of access to a place such as a=0D
harbor or airport or to a distribution system such as a=0D
telecommunications network. In many cases the relationship=0D
is vertical in the sense that the dominant undertaking=0D
reserves the product or service to, or discriminates in=0D
favor of, its own downstream market. It may however also be=0D
horizontal in the sense of tying of sales of related but=0D
distinct products or services.=E2=80=9D=0D
The ECJ rejected this argument.=0D
The British Court categorically rejected the limitation of=0D
the Magill decision when it said that =E2=80=9CIt does not follow=0D
that other circumstances in other cases will not be regarded=0D
as exceptional.=E2=80=9D (Intel corp. V. VIA Technologies [2002]All=0D
ER (D) 346)=0D
In the interim order of IMS Health, the Commission of the=0D
European Communities which was subsequently canceled by the=0D
Court of the First Instance, the Commission observed that =E2=80=9C=E2=80=
=A6=0D
IMS had no objective justification for refusing to grant a=0D
licence for the 1860 brick structure to NDC and Azyx. The=0D
Commission considered that there was a prima facie case of=0D
behavior constituting an abuse under Article 82. The=0D
Commission considered that there were =E2=80=98exceptional=0D
circumstances=E2=80=99 within the meaning of the phrase used by the=0D
European Court of Justice in Magill (Joined Cases C-241/91 P=0D
and C-242/92 P. Radio Telefis Eireann (RTE) and Independent=0D
Television Publications Ltd. (ITP) v Commission, [1995] ECR=0D
p. I-0743), read in conjunction with Ladbroke (Case T-504/93=0D
Tierce Ladbroke SA v Commission, [1997] ECR p. II-923) and=0D
Bronner (Case C-7/97 Oscar Bronner GmbH & Co. KG v=0D
Mediaprint Zeitungsund Zeitschriftenverlag GmbH & Co KG.=0D
[1998] ECR p. I-7791. The use of the 1860 brick structure=0D
was considered as being indispensable to carrying on=0D
business on the relevant market because there was no actual=0D
or potential substitute for it.=E2=80=9D=0D
The Commissions interim order in IMS Health (Decision=0D
2002/165/EC was also based on a risk of intolerable damage=0D
to the public interest within the meaning of the La Cinq=0D
judgment (Case T-44/90 La Cinq, [1992] ECR p. II-1).=0D
The Court of First Instance canceled the interim order of=0D
the Competition Commission with the observations=0D
=E2=80=9CThe inherently exceptional nature of the power to adopt=0D
interim measures would normally require that conduct whose=0D
termination or amendment is targeted by such measures fall=0D
clearly within the scope of the Treaty competition rules.=0D
However, the characteristics of the refusal to license at=0D
issue in the present proceedings as abusive turns, prima=0D
facie, on the correctiveness of the Commission=E2=80=99s=0D
interpretations of the case law concerning the scope of=0D
the =E2=80=9Cexceptional circumstances.=E2=80=9D It is this case law that=
=0D
explains the clearly special situations in which the=0D
objective pursued by Article 82 EC may prevail over that=0D
underlying the grant of intellectual property rights. In=0D
this context, where the abuse nature of the applicant=E2=80=99s=0D
conduct is not unambiguous having regard to the relevant=0D
case law and where there is a tangible risk that it will=0D
suffer serious and irreparable harm if forced, in the=0D
meantime to license, to license its competitors, the balance=0D
of interests favors the unimpaired preservation of its=0D
copyright until judgment in the main action.=E2=80=9D (Order of the=0D
President of the Court of First Instance, IMS Health Inc. v.=0D
Commission of the Eur. Communities (Oct 26, 2001), at=0D
http://curia.eu.int.).=0D
Similar decision was made in the USA by the Fifth Circuit in=0D
DSC Communications Corp. v. DGI Technologies, Inc. 81 F.3d=0D
597 (5th Circuit. 1996) where it observed where there seemed=0D
to an extension of a leverage from a copyrighted product to=0D
a second product market. This issue was regularly taken up=0D
by various Courts in the USA including the US Supreme Court.=0D
Except for the Court of Appeals of the Federal Circuits,=0D
which as its practice ignored or twisted the US supreme=0D
Court=E2=80=99s decision in Eastman Kodak Co. v. Image Technical=0D
Servs., Inc., 504 U.S. 451, 479 n. 29 (1992) (quoting Times-=0D
Piscayne Publishing Co. v. U.S., 345 U.S. 594, 611 (1953) as=0D
only tying case ignoring the fact that it was a also a=0D
monopolization case. The US supreme Court had said that =E2=80=9CThe=0D
Court has held many times that power gained through some=0D
natural and legal advantage such as a patent, copyright, or=0D
business acumen can give rise to liability if =E2=80=98a seller=0D
exploits his dominant position in one market to expand his=0D
empire into the next.=E2=80=9D=0D
=0D
The European Court of Justice along with other institutions=0D
is not judicial institutions. Just like Court of Appeals=0D
with Federal Circuit in the USA, these are purpose driven=0D
political institutions. They have nothing to do with=0D
judicial norms, judicial discipline and judicial manners.=0D
Have you seen any judicial decisions by the Court of Appeals=0D
for the Federal Circuits? Starting from its earlier judgment=0D
in Roche Products v. Bolar Pharmaceuticals (Roche Products,=0D
Inc. v. Bolar Pharmaceuticals Co. 733 F. 2d 858) where=0D
Federal circuit falsified the observation of the Court of=0D
Claims decision in Pitcairn (Pitcairn v. United States, 212=0D
Ct. Cl. 168; 547 F.2d 1106) to limit experimental use of the=0D
patented products to philosophical purposes only to its=0D
decision in State Street State Street Bank & Trust Co. v.=0D
Signature Financial Croup, 149 F.3d 1368 (Fed Cir. 1998)=0D
extending patenting to algorithms and computer programs on=0D
the e basis of the governments directive where the change in=0D
the PTO Guidelines by deleting the paragraph 703=0D
recommending rejection of business methods as a patentable=0D
subject was passed faithfully as a judicial decision by the=0D
Court of Appeals for Federal Circuit. The US Appeals Court=E2=80=99s=0D
decision in State Street is most importantly based on   US=0D
Patent and Trademark 1996 Examination Guidelines for=0D
Computer Related Inventions which reads=0D
=E2=80=9COffice personals have had difficulty in properly treating=0D
claims directed to methods of doing business. Claims=0D
shouldn=E2=80=99t be categorized as methods of doing business.=0D
Instead such claims should be treated like any other process=0D
claims.=E2=80=9D=0D
Previous to the above amendment the Manual of Patent=0D
Examining Procedures (MPEP) had specifically banned business=0D
methods being a patentable item. The relevant provisions=0D
read=0D
=E2=80=9CThough seemingly within the category of process or method,=0D
a method of doing business can be rejected as not being=0D
within the statutory classes See Hotel Security Checking Co.=0D
v. Lorraine Co., 160 F.467 (2nd Circuit, 1908) and In re=0D
Wait, 73 F.2d982=E2=80=9D (the above paragraph 706.03(a) was deleted=0D
in the 1996 edition of the Manual of Patent Examining=0D
Procedures.)=0D
Use of Patenting Guidelines becomes most perverted in Howard=0D
Florey (Howard Florey/Relaxin [1995] EPOR 541) where the=0D
question of morality and public order was dealt with most=0D
perfunctorily by insisting that only those inventions would=0D
be covered which =E2=80=98would universally be regarded as=0D
outrageous=E2=80=9D and =E2=80=9Cso abhorrent that the grant rights would b=
e=0D
inconceivable=E2=80=9D (EPO Guidelines(C-IV), 3.1).  The Opposition=0D
Division ignoring the decisions of the European Court or=0D
Justice in Van Duyn and Bouchereau=0D
(Yvonne Duyn v. Home Office, Case 41-741974 ECJ CELEX LEXIS=0D
2033, 1974 ECR 01337, para 19, Regina v Pierre Bouchereau,=0D
Case 30-77, 1977 ECJ CELEX NEXIS 3160, ECR 1977, p 0199, =E2=80=9C=E2=80=A6=
=0D
a recourse by a national authority to the concept of public=0D
policy presupposes, in any event, the existence, in addition=0D
to the perturbations of the social order which any=0D
infringement of the law involves =E2=80=A6=E2=80=9D (Bouchereau, para 34))=
=0D
used the EPO Guideline as confirming patenting of genes=0D
producing relaxin based on the protein sequence, not even on=0D
sequence of nucleotides. The Advocate General in Netherlands=0D
v. European Parliament, Case 377/98 (Netherlands (supported=0D
by Italy and another) v European Parliament and another=0D
(supported by the European Commission Case C-377/98) even=0D
argued that concept of morality in  the European Union has=0D
to be changed in view of the decision of the EC Appellate=0D
Board in Plant Genetic(Plant Genetic Systems, Boards of=0D
Appeal of the European Patent Office, Case No. 0356/93 =E2=80=93=0D
3.3.4 dated 21.2.1995).=0D
=0D
This is remarkable as it is against the very canon of=0D
judicial hierarchy and judicial discipline and confirms that=0D
the tendency to use judicial forum for pushing a policy=0D
perspective and policy objective and in the process=0D
overturning a judicial decisions of the higher court. The=0D
tendency is identical to that followed by the PTO and the=0D
Court of Appeals for Patent in the USA and it appears that=0D
European Court of Justice and the European Patent Office are=0D
virtually replicating the judicial lawlessness shown by the=0D
Federal Court of Appeals for Patents in the USA specifically=0D
created to extend the monopolization in the name of=0D
innovation and other institutions.=0D
=0D
=0D
In re Independent Serv. Org. Antitrust Litig. (=E2=80=9CXerox=E2=80=9D), 20=
3=0D
F. 3d 1322 (Fed. Cir. 2000); SEE ALSO Townshend v. Rockwell=0D
International Corp., 200 U. S. dist. Lexis 5070, at *26 (N.=0D
D. Cal. Mar. 28, 2000) (=E2=80=9CBecause a patent owner has the=0D
legal right to refuse to license his or her patent on any=0D
terms, the existence of a predicate condition to a license=0D
agreement cannot violate the antitrust laws.=E2=80=9D)=0D
United States v. Microsoft, 253 F. 3d 34, 63 (D.C. Cir.=0D
2001) (dismissing as =E2=80=9Cfrivolous=E2=80=9D Microsoft=E2=80=99s copyri=
ght=0D
argument and stating that =E2=80=9Cintellectual property rights do=0D
not confer a privilege to violate the antitrust laws=E2=80=9D).=0D
=0D
I on my part do not expect anything from such institutions=0D
as they are too obligated to industries in the European=0D
Union.=0D
Daya Shanker=0D