Intellectual Property and Competition Law - IPRsonline.org

ICTSD Programme on IPRs and Sustainable Development19the importation of Argentine soymeal intoEurope, on the basis of two patents (EP0218571and EP 546090) that protect the gene and geneconstructs, as well as the transformed cells,in a soybean plant. Despite the fact that thepatents cannot extend to industrially processedproducts where the genes in question, even ifhypothetically found intact, cannot performtheir functions 100 , Monsanto obtained ordersfrom customs authorities in several Europeancountries to detain the importation of Argentinesoymeal. It filed lawsuits against importers inthe Netherlands, Denmark and Spain, that werebound to deposit substantial guarantees to getthe imported soymeal dispatched.This case illustrates an attempt to expand thelegal powers conferred by patents through anoverly broad interpretation of patent claims.If these attempts were successful, they couldhave a major adverse effect on competition insecondary markets (e.g. shirts made out of Bt(Bacillus thuringiensis) cotton), as the patentowner would exercise undue market power onproducts not covered by patents.In the US, the concept of “sham” litigationmay be applied in cases of abuses of legalprocedures. Sham suits violate Section 2 of theSherman Act or Section 1 of the same Act ifdone collectively. Section 2 of the Sherman Actmay be applied when a legal action is based onfraudulently acquired IPRs or on an obviouslyincorrect legal theory, on valid rights thatare known to be unenforceable or where theplaintiff knew that there was no infringement.In Grip-Pak Inc. v. Illinois Tool Works Inc. 101Judge Posner stated that “litigation could beused for improper purposes even when thereis probable cause for the litigation; and if theimproper purpose is to use litigation as a tool forsuppressing competition in its antitrust sense,it becomes a matter of antitrust concern.” 102As mentioned above, in re IndependentService Organizations Antitrust Litigation, thecourt held that where the patent was obtainedthrough fraud or where a lawsuit to enforcethe patent was a sham, a patentee’s right torefuse to license its intellectual property rightmay be limited. 103In Professional Real Estate Investors, INC., etal, v. Columbia Pictures Industries, INC., et al.,however, the Supreme Court set a high standardto admit the existence of sham litigation. JusticeStevens held that:“the distinction between “sham” litigationand genuine litigation is not always, or only,the difference between lawful and unlawfulconduct; objectively reasonable lawsuitsmay still break the law. For example, amanufacturer’s successful action enforcingresale price maintenance agreements, (footnoteomitted) restrictive provisions in a license touse a patent or a trademark, (footnote omitted)or an equipment lease, (footnote omitted)may evidence, or even constitute, violationsof the antitrust laws. On the other hand, justbecause a sham lawsuit has grievously harmeda competitor does not necessarily mean that ithas violated the Sherman Act… The rare plaintiffwho successfully proves a sham must still satisfythe exacting elements of an antitrust demand.”In accordance with this decision, hence, anantitrust violation should be determined inaddition to the existence of sham litigation.Nevertheless, Justice Stevens cautioned that“I would not, however, use this easy case as avehicle for announcing a rule that may governthe decision of difficult cases, some of whichmay involve abuse of the judicial process.” 104In sum, abusive practices can often be foundin the acquisition and enforcement of IPRs.Governments can apply competition laws or othermeasures to prevent and punish such practices,which have a significant deleterious effect oncompetition and social welfare. Intellectualproperty right law may, in particular, containspecific provisions and remedies to deal withsuch abuses. In fact, the TRIPS Agreement doesnot limit but requires governments to ensurethat abuses committed through the enforcementof IPRs be subject to adequate control. 105