Intellectual Property and Competition Law - IPRsonline.org

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ICTSD Programme on IPRs and Sustainable Development17CopyrightWhile much of the literature on IPRs andcompetition law focuses on patents, anticompetitivebehaviour may be based on orfacilitated by other modalities of IPRs.Although the smaller breadth of copyrightprotection as compared to patents would suggestthat individual copyright material is rarely thesource of significant monopoly power (Régibeauand Rockett, 2004, p. 52), copyrights have beeninvolved in important competition law cases, suchas Napster’s digital distribution 86 , Magill and IMSHealth. 87 In many cases, competition authoritieshave focused on market power stemming fromthe concentration of copyrighted materials as aresult of corporate mergers, such as the USD 109billion AOL-Time Warner approved by the FTC inDecember 2000. 88Several studies have shown that copyrightcreates monopoly power and that the majorityof information goods markets follow a pathwayof progressive concentration at both thenational and international levels. It has alsobeen found that several characteristics of suchmarkets – such as the existence of economiesof both scale and scope on the supply sideand network externalities on the demand side– are self-reinforcing and contribute to creatingand strengthening dominant positions andconsolidations in the copyright area (Ramello,2003, 126).As a result, copyrights operate in a significantlyaltered competitive scenario where one“persistent trait is the existence of non-pricecompetition, in which the sunk cost componenthas the dual role of consolidating and increasingdemand and/or creating barriers to entryfor potential competitors” (Ramello, 2003,126-127).The anti-competitive effects of copyrightprotection of software, particularly of interfaces(which allow the inter-operability of differentpieces of software or hardware) have beencentral in several cases, notably involvingthe dominant software provider, Microsoft. 89The main concern in these cases has been thepossible leveraging of the monopoly powerenjoyed in one market to other markets throughthe control of interfaces. Thus, on 24 March2004, the European Commission concluded,after a five-year investigation, that MicrosoftCorporation broke European Union competitionlaw by using its near monopoly in the market foroperating systems (OS) for personal computers(PCs) to take over the markets for operatingsystems for work group servers and for mediaplayers. The Commission ordered Microsoft todisclose to competitors the interfaces requiredfor their products to be able to communicatewith the Windows OS and to offer a version of itsWindows OS without Windows Media Player to PCmanufacturers (or when selling directly to endusers). In addition, Microsoft was fined Euro 497million for abusing its market power in the EU. 90Competition law concerns have also frequentlyarisen in relation to copyright collectingsocieties. Thus, the European Commission openedformal proceedings against the InternationalConfederation of Societies of Authors andComposers (CISAC) and its individual nationalmembers. The Commission’s concerns includedthe fact that the royalty collectors were trying,by various methods 91 , to ensure that each ofthem maintained exclusive access to broadcastroyalties in the countries in which they operate.By obliging commercial users to get a licence onlyfrom the domestic collection society, limited tothe domestic territory, collective societies mayensure a monopoly on their domestic marketsand prevent the new entrants from getting intothe copyright management market. 92 In July2007, CISAC offered to grant multi-territorylicences for performing rights over the Internet,satellite and cable (not including the so-called“mechanical rights” 93 ) in order to settle the casewith the Commission. 94TrademarksThe relationship between competition law andtrademark law was tested in a case decided in2005 by the Canadian Supreme Court, where itexamined whether trademark rights relating toLEGO blocks could be extended on functional
18Carlos M. Correa — Intellectual Property and Competition Lawfeatures, such as the geometrical pattern ofraised studs on the top of the bricks. The lastof LEGO’s Canadian patents on its blocks hadexpired in 1988. The Court held that:“Trademark law should not be used to perpetuatemonopoly rights enjoyed under now-expiredpatents… The fact is... that the monopoly onthe bricks is over and Mega Bloks and Legobricks may be interchangeable in the bins of theplayrooms of the nation – dragons, castles andknights may be designed with them, without anydistinction.” 95A fundamental tension between the goals oftrademark and competition law has also beenobserved in some cases. 96 In the US, some case lawhas dealt with the trademark-antitrust relationship(Chang, 1997). Acquiring a trademark may violateSection 2 of the Sherman Act if a trademark isfraudulently registered or monopolisation orprobability of monopolisation is shown, or Section7 of the Clayton Act, if a threat of substantiallessening of competition is found.Abusive enforcement of intellectual propertyrightsFinally, undue enforcement of IPRs can alsoamount to anti-competitive conduct. In particular,preliminary injunctions may be effectively usedto prevent legitimate competition. This is whycourts in the US and Europe have generally takena very cautious approach towards the granting ofinjunctions in patent cases. 97Enforcement measures should allow the protectionof legitimate interests, but equally protectagainst abuses that may unjustifiably distortcompetition. For instance, in Chile in 1993, a localcompany was sued for infringement of a patenton a certain process (relating to fluconazole)which was not actually used in the country (theproduct was imported from countries where nopatent protection on processes and/or productsexisted). The Chilean law permitted the titleholderto request and obtain a judicial ban onthe activities of the alleged infringer until thecase was finally decided. This allowed the patentholder to block the commercialisation of productsby local companies for several years, during whichthe price of the corresponding medicine increasedsignificantly. Later on the case was dismissed, butnobody reimbursed patients for the higher pricespaid or lack of access to the medicine. There aremany examples of abusive requests of interlocutoryinjunctions in Latin America. In Argentina, forinstance, Bristol Myers Squibb obtained such aninjunction against a local firm on the basis of apatent (AR 017747B1) protecting a formulation ofdidanosine, a drug administered to HIV patientsthat was not developed by Bristol Myers Squibband which is in the public domain. 98In Venezuela, the competition authority found thatLaboratorios WYETH S.A. had abused a patent ona pharmaceutical formulation of venlafaxine tothreaten a local company and block its entry intothe market with a competing medicinal product,thereby violating Article 6 of the Venezuelancompetition law. 99Border measures can also be used with an anticompetitiveintent. One case relating to soymealimports to the European Union is illustrativeof the potential misuse of provisions aimed atprotecting legitimate interests. The EuropeanRegulation 1383/2003 empowers customsauthorities to detain goods suspected of infringingIPRs. Unlike the obligation under Article 50 of theTRIPS Agreement, which is limited to trademarkcounterfeiting and copyright piracy, the Directiveapplies to other IPRs, including patents.Argentina is one of the main world exportersof soymeal produced from soybeans geneticallymodified to resist a particular herbicide(glyphosate). Monsanto did not obtain a patenton its herbicide resistant “RR” technology inArgentina, as it filed the respective applicationafter the expiry of the applicable legal terms.Around 95 percent of soybean currently producedin Argentina is derived from varieties (developedby different companies) incorporating the RRgene. Although Monsanto obtained royalties forthe RR technology under private contracts withseed companies, it tried to obtain an additionalpayment from Argentine farmers, who refusedto pay any extra charge for a technology that isin the public domain. Monsanto then targeted
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