European General Court Judgment Supports Commission Precedent Regarding a Dominant Firm’s Abuse of the Patent Process

July 6, 2010

On 1 July 2010, the European General Court, the EU’s second highest court and formerly the European Court of First Instance, handed down its decision in Case T-321/05 AstraZeneca v Commission.  The General Court, for the most part, upheld the Commission’s decision that AstraZeneca, the Anglo-Swedish group, had abused its dominant position contrary to Article 102 of the Treaty on the Functioning of the European Union.  It did, however, reduce the fine imposed on AstraZeneca by the Commission from EUR 60 million to EUR 52.5 million. 

The case dates back to an investigation into omeprazole IP rights in early 2000.  The Commission found in June 2005 that from 1993 – 2000 AstraZeneca had blocked or delayed market access in a number of EU and EEA Member States for generics of  Losec capsules – a drug used to treat acid related disease such as stomach ulcers.  

The Commission found that, in making deliberately misleading representations to the patent offices in Germany, Belgium, Denmark, Norway, the Netherlands and the UK, in order to secure extended patent protection for Losec through supplementary protection certificates, AstraZeneca had abused its dominant position.

The Commission also found that AstraZeneca had misused national medicine agency rules and procedures by selectively deregistering market authorizations for Losec capsules in Denmark and Norway.  This allowed AstraZeneca to prevent generic products being marketed, since it was a requirement for generic sales that there was a pre-existing market authorization for a corresponding product (though the law has since changed). 

For the most part the General Court rejected AstraZeneca’s grounds of appeal.  It did however reduce AstraZeneca’s fine by EUR 7.5 million to reflect the Commission’s lack of proof of deregistration in Denmark and Norway.

The Court found that the Commission failed to establish a causal link between deregistration of the marketing authorization in Denmark and the exclusion of parallel imports.  As regards Norway, the Court held that the Commission was not entitled to find that the deregistration of the Losec capsule marketing authorization caused a fall in parallel imports — the fact that the Norwegian authority upheld the parallel import licenses for Losec capsules also tended to show that the fall in parallel imports was not necessarily caused by the deregistration of the marketing authorizations. 

There is little comfort for the pharmaceutical sector in the judgment.  It is true that the reduction in the fine serves as a message to the Commission that it is no longer acceptable for it simply to assert, without evidence, that reductions in parallel trade result from a unilateral commercial practice. From now on, the Commission will need  to establish the causal link between a pharmaceutical company’s actions and any reduction in parallel imports.   

On the other hand, the General Court’s support for the Commission’s novel and controversial application of the abuse of dominance rules to the patent process is likely to strengthen the Commission’s resolve to continue its investigations into licensing and other practices of pharmaceutical companies, both branded and generic. 

Gibson, Dunn & Crutcher LLP

Gibson, Dunn & Crutcher lawyers are available to assist in addressing any questions you may have regarding these issues.  Please contact the Gibson Dunn attorney with whom you work, any member of the firm’s Antitrust and Trade Regulation Practice Group, or any of the following:

Peter Alexiadis (+32 2 554 7200, [email protected])
Andrés Font Galarza (+32 2 554 7230, [email protected])
David Wood (+32 2 554 7210, [email protected])

James Ashe-Taylor (+44 20 7071 4221, [email protected])
Philip Rocher (+44 20 7071 4202, [email protected])
Charles Falconer (+44 20 7071 4270, [email protected])  

Michael Walther (+49 89 189 33 180, [email protected])  

New York
Peter Sullivan (212-351-5370, [email protected]

Los Angeles
Daniel G. Swanson (213-229-7430, [email protected])

San Francisco
Gary R. Spratling (415-393-8222, [email protected])

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