Intellectual Property and Competition Law - IPRsonline.org

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ICTSD Programme on IPRs and Sustainable Development15that claim the technology of others, or that areotherwise frivolous” (Sankaran, 2000).Sham petitioning may form the basis for a claimunder antitrust laws. Moreover, whether thepetitioning is a “sham” or not, no immunityprotects one who attempts to enforce apatent that is known to be invalid or procuredby inequitable conduct (Sankaran, 2000). InAustralia, legislation passed in implementing theFTA signed with the US provides for the impositionof penalties of up to 10 million Australian dollarson pharmaceutical patent holders that are foundto have filed frivolous suits to extend theirpatents and prevent generic copies of patenteddrugs from being marketed.The granting of a US patent is often invokedbefore smaller patent offices in developingcountries as evidence that the invention meetshigh patentability standards. The pro-patentapproach promoted by the US PTO has led manypatent offices to apply very loose criteria toestablish novelty and inventive steps, particularlyin the pharmaceutical field where patents aregranted in some cases with regard to, inter alia,pharmaceutical formulations 74 , combinations ofknown products 75 , optical isomers 76 , polymorphs 77 ,salts of known substances 78 and variants ofmanufacturing processes. Presenting drugs inslightly different ways to secure new patents andlayering several patents on different aspects ofthe drug to secure perennial monopoly rights isone of the main ways that pharmaceutical firmsemploy to artificially extend the patent life oftheir drugs (Glasgow, 2001). 79 As a result, thereis a proliferation of pharmaceutical patents overa myriad of minor modifications (Correa, 2001),while the development of new chemical entitieshas drastically decreased since the 1990s. Suchentities account for a small fraction 80 of thethousands of patents obtained every year aroundknown drugs, including those in the publicdomain.In view of the distortions caused by wronglygranted patents, the OECD has recommended amore active role for competition law enforcingagencies:“… to strive to limit the anti-competitiveaspects of IPR while respecting its necessity. Itappears that the wisest course of action for anagency wishing to influence IP policy is either tochallenge the validity of invalid or overly broadpatents through litigation or by requestingpatent re-examinations, or to open a dialoguewith the IP agency and take an advisory role (orboth)” (OECD, 2005, p. 16).Although the OECD suggests that “[F]or severalreasons, such as a lack of relevant technicalexpertise and limited resources, it does notappear to be prudent for competition authoritiesto assume responsibilities related to the initialreview of IP applications” (OECD, 2005, p. 7),the direct intervention of such authorities maybe contemplated where they may contribute toimprove the functioning of the IPR system.In the US, courts have considered that extendingpatent rights beyond the scope of the grantviolates the antitrust laws. 81 The FTC hasintervened in some cases of fraudulently obtainedpatents. In the 1960s it challenged agreementsbetween Pfizer and American Cyanamid relatingto tetracycline patents and ordered thecompulsory licensing of the patent in question ata fixed royalty. 82 Pfizer and American Cyanamidwere found to have made mis-representationsto and withheld essential information from thepatent examiner, thereby deceiving him intogranting a patent that otherwise would not havebeen approved (Azcuenaga, 1995).In a more recent case, the FTC also found andcondemned practices aimed at deceiving the USpatent office to unduly obtain patent protection:“Through Bristol’s [Bristol-Myers SquibbCompany] decade-long pattern of alleged anticompetitiveacts, Bristol avoided competitionby abusing federal regulations in order to blockgeneric entry; deceived the US Patent andTrademark Office (PTO) to obtain unwarrantedpatent protection; paid a would-be generic rivalover USD 70 million not to bring any competingproducts to market; and filed baseless patentinfringement lawsuits to deter entry by generics”(FTC, 2003b) 83 .
16Carlos M. Correa — Intellectual Property and Competition LawSimilar abuses were found and condemnedin Europe. Thus, the European Commissiondetermined that AstraZeneca misused governmentprocedures in order to exclude generic firmsand parallel traders from competing againstits product Losec. The abuses consisted, inparticular, in the misuse of the patent system byknowingly making misrepresentations to patentoffices with a view to extending the basic patentprotection for Losec. The misleading information“was initially provided by AstraZeneca in thecontext of its applications to several patentoffices in June 1993 and December 1994 withinthe EEA [European Economic Area] for extraprotection for omeprazole (the active substancein AstraZeneca’s product Losec) in the form of socalledsupplementary protection certificates.” 84In Canada, the Intellectual Property EnforcementGuidelines state that:“If an IP owner licenses, transfers or sells the IPto a firm or a group of firms that would havebeen actual or potential competitors without thearrangement, and if this arrangement creates,enhances or maintains market power, the Bureaumay seek to challenge the arrangement under theappropriate section of the Competition Act.”The Competition Bureau intervened in an AppealCourt case involving three pharmaceuticalcompanies, Eli-Lilly, Shionogi and Apotex,around the question of whether the assignmentof a patent can constitute an agreement orarrangement to lessen competition unduly,contrary to section 45 of the Competition Act.In accordance with Sheridan Scott, CanadianCommissioner of Competition:“This is a critical question which brought intoplay the relationship between the CompetitionAct’s authority vis-à-vis the Patent Act. A lowercourt judge had, in effect, held that a simpleassignment of a patent in whatever circumstanceswould not run afoul of the Competition Actbecause the assignment of patents is expresslyauthorized by section 50 of the Patent Act andParliament must be taken to have understoodthat patents confer market power.If this interpretation had stood, the capacity ofthe Competition Act to deal with cases involvingintellectual property, for example, where acompany buys up all the competing intellectualproperty thereby creating a true monopoly,would have been seriously compromised, andthe effects may have carried over to other formsof property and related laws” (Scott, 2006).On appeal, the Federal Court of Appeal foundthat the right to assign a patent recognised bythe Patent Act:“does not immunize an agreement to assign apatent from section 45 of the Competition Actwhen the assignment increases the assignee’smarket power in excess of that inherent in thepatent rights assigned” (Scott, 2006).While the FTC has advanced some proposals to dealwith the anti-competitive effects of patent grantsand a bill to reform the US patent law and increasepatent quality is pending before the Congress 85 ,the OECD has suggested a number of measuresagainst the patenting of trivial inventions:i) stricter examination: low-quality applicationswould be deterred by a low probability beinggranted; ii) reduction of fees once a patentis granted (as opposed to rejected): such adiscount would encourage self-selection bypatentees so that the number of low-qualityapplications would decrease; iii) second-tierpatent protection: enhance the use of so-calledpetty patents or utility models systems as analternative to standard patents for minor andless novel inventions (such a system has beenworking for a long time in many countries; itwas recently modernised in Australia); and iv)setting up a credible public domain alternative:for example, encouraging firms to publicisetheir inventions on dedicated Internet sites atlow cost when the only purpose for patentingis to avoid others patenting first (a practicereferred to as defensive patenting) (OECD,2004, p. 29).
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