[Ip-health] NYT on IMS Refussal to License case

[James Love]

* Mr. Tizzano said a company should have access to a rival's
intellectual property if it planned to offer a different product, or if
the sharing of intellectual property was necessary to create
competition. If the court agrees that it was NDC Health's intention to
offer a better or different product, "that would render a refusal to
grant a license an abuse of IMS's dominant position," he said.


http://www.nytimes.com/2003/10/03/business/worldbusiness/03euro.html?tntemail0

Europe Ruling Could Reduce Power of Dominant Concerns
By PAUL MELLER

Published: October 3, 2003

RUSSELS, Oct. 2 - Paving the way to an important precedent in European
competition law, a senior judge at the European Court of Justice said
Thursday that IMS Health, the largest collector of pharmaceutical sales
and prescription data in the world, might be abusing its dominant
position by refusing to license the way it structures its information
about the German market.

The preliminary finding of Antonio Tizzano, the European advocate
general, would make it harder for dominant companies to use their
intellectual property, like copyrights or patents, to fend off
competitors, lawyers said. The case could have an impact on another suit
pending against Microsoft by the European Commission. In most cases, the
advocate general's opinion forms the basis for a ruling some months
later by fellow judges at the European Court. The specifics of the IMS
Health case will be decided by a German court in Frankfurt, after the
European Court in Luxembourg gives its ruling.

Jacques Bourgeois, a partner in the Brussels office of the law firm of
Akin Gump Strauss Hauer & Feld, said the outcome in this case was
uncertain, but the general legal principle set by Mr. Tizzano regarding
the behavior of dominant firms like IMS Health was unequivocal.

The case was brought by a rival, NDC Health, based in Atlanta. IMS
Health is based in Fairfield, Conn.

"In the IMS case it all depends on whether the Frankfurt court decides
that NDC intends to use the database structure to offer a different or
better product than IMS, and whether there exists a reasonable
alternative to IMS's database structure for NDC to use instead," Mr.
Bourgeois said.

Mr. Tizzano said a company should have access to a rival's intellectual
property if it planned to offer a different product, or if the sharing
of intellectual property was necessary to create competition. If the
court agrees that it was NDC Health's intention to offer a better or
different product, "that would render a refusal to grant a license an
abuse of IMS's dominant position," he said.

IMS Health, however, drew a different conclusion. "The opinion supports
IMS's core position: that a license of intellectual property is neither
required nor appropriate if the licensee intends to use that
intellectual property to produce substantially the same goods or
services as those already marketed by the I.P. owner," the firm said,
using the initials for intellectual property.

It added that if the European Court did follow Thursday's opinion, then
IMS Health would seek "substantial monetary damages" from NDC Health for
having used its database structure when the case returns to the
Frankfurt court.

The broader issue of how intellectual property can be used as a tool to
abuse a dominant position may affect the outcome of the European
Commission's antitrust lawsuit against Microsoft, lawyers said.
Microsoft refuses to license computer code to companies like Sun
Microsystems and I.B.M. that would allow them to create server operating
software that could interact with Microsoft's dominant Windows operating
system, said Thomas C. Vinje, a partner in the Brussels office of the
law firm of Morrison & Foerster. "In this sense, today's opinion could
have an impact on the Microsoft antitrust case," Mr. Vinje said.

If the commission can prove that there is no reasonable alternative to
Windows for rival software makers, "then a refusal by Microsoft to
license the necessary parts of Windows could be an abuse of its dominant
position," Mr. Bourgeois said.

Tetra Pak, the Swedish packaging company that owns sole rights to sell
brick-shaped cartons for drinks, may also find its use of intellectual
property to fend off rivals challenged if the European Court supports
Thursday's opinion, Mr. Bourgeois said.

"Tetra Pak would argue that you don't have to sell your drinks in
bricks; you can use bottles, for example,'' he said. "But if you could
define the distribution of drinks in brick shapes as a separate market,
then there may not be a reasonable alternative to the ubiquitous Tetra
Pak carton shape. According to today's opinion this too could be a
qualifying circumstance that would render the refusal to license the
carton design an abuse of Tetra Pak's dominant position." Tetra Pak is a
unit of Tetra Laval.

--
James Love, Director, Consumer Project on Technology
http://www.cptech.org, mailto:james.love@cptech.org
tel. +1.202.387.8030, mobile +1.202.361.3040