June 16, 2005
On June 15, 2005, the European Commission ended its long-running investigation of AstraZeneca’s behaviour on the "proton pump inhibitor" market by imposing fines of €60 million ($72 million). The level of fines was reduced because of certain novel elements of the case.
This is a major step in the development of the way the antitrust rules are applied to intellectual property rights (IPRs) in the European Union.
The Infringement. According to the EU, AstraZeneca misused the patent system in a number of European countries so as to mislead regulators into granting additional patent protection for its ulcer drug Losec. The purpose and effect of this behaviour was, the Commission found, to prevent the entry on to the market of generic versions of Losec. As such it was found to amount to an infringement of Article 82 of the EU Treaty which prohibits the abuse of a dominant position.
Analysis. The Commission’s full analysis is not yet publicly available. However, the following key points have emerged.
IP/Antitrust Interface. The EU is at pains to point out that its decision is not intended to have a chilling effect on innovation since the conduct complained of was related to the authorisations process and not the right to sell a medicine. However, IP rights holders will see this as a further case which constrains their commercial freedom and increases uncertainty.
Conclusion. Whilst it is encouraging that the EU continues to stress the importance of innovation and the need to reward innovation, this decision does not help that cause. It points to a policy where the antitrust analysis of whether or not any given behaviour is abusive should be assessed on a case-by-case basis. In the real world, that is a recipe for uncertainty and risk-taking.
For more details on the application of the EU Antitrust rules to IPRs, please see "An effects-based approach to technology transfer agreements" [PDF] authored by Gibson Dunn partner David Wood, published in the May 2004 issue of Competition Law Insight.
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