Jorge Padilla, Douglas H. Ginsburg and Koren W. Wong-Ervin ‘Antitrust Analysis Involving Intellectual Property and Standards: Implications from Economics’ (forthcoming, George Mason Law Review)

The paper, which can be found here, provides an overview of the economics of innovation and IP protection, licensing, and compulsory licensing, with specific applications to standards development and standard-essential patents. The authors also propose principles based on their economic analysis that courts and antitrust agencies can apply at each stage of an antitrust inquiry. The paper concludes with a summary of the approach to IP applied in China, the European Union, India, Japan, Korea, and the United States. The paper covers a lot of ground (and is quite long). I will try to summarise the argument as much as possible, but, to make it easier to read, I will also attempt to flag the specific topics addressed at each point, so that you may focus on those matters of greater interest to you. The paper is structured as follows: Section II summarises the relevant economic literature. While consumers gain from increases in static efficiency in the short run, economics teaches us…

Ariel Ezrachi on ‘EU Competition Law Goals and The Digital Economy’ (2018) Report for BEUC – The European Consumer Organisation

This paper  can be found here. I have already reviewed it in an earlier post. At the time, I focused on the article’s overview of the goals of EU competition law. However, the article also contained a detailed discussion of the impact that the digital economy may have on these goals. I was unable to review this discussion then, so I propose to do it here. Competition policy is one of several instruments used to advance the goals of the European Treaties. According to the European Commission, competition on the market is protected as a means of enhancing consumer welfare and of ensuring an efficient allocation of resources. This notwithstanding, EU competition law has also consistently been held to protect ‘not only the interests of competitors or of consumers, but also the structure of the market and, in so doing, competition as such.’ Moreover, a genuinely indigenous objective is worthy of note, namely that of promoting European market integration. In addition…

Jorge Padilla and John Davies ‘Another look at the economics of the UK CMA’s Phenytoin case’ in Excessive Pricing and Competition Law Enforcement (ed. Yannis Katsoulacos and Frédéric Jenny, 2018, Springer)

In this book chapter, the authors criticise the CMA for relying on the same evidence of a gap between prices and costs in its assessment of each of market definition, dominance and abuse. When coupled with the absence of analysis of comparator prices – which, the authors argue, the CMA replaced with a failed search for justifications for a price-cost gap when finding that the price was ‘unfair in itself’ – this could serve as a precedent for a fragile and unreliable approach to assessing excessive pricing. The paper is structured as follows: Section 2 describes the framework for assessing excessive pricing under European law (and its British equivalent). The paper builds on United Brands‘ two-step test, and particularly the requirement that am excessive price must exceed the “economic value” of the product to such an extent that the price bears “no reasonable relation” with that value. The legal test set out by the ECJ is as follows. First, the test…

Robert O’Donoghue ‘The Political Economy of Excessive Pricing in the Pharmaceutical Sector in the EU: A Question of Democracy?’ (2018) CPI Antitrust Chronicle

This paper, which can be found here, argues that antitrust enforcement against excessive pricing by medicines runs against democratic choices reflected in the dense and intricate regulatory network that applies to the pharmaceutical sector. The paper is structured as follows: The paper begins with a quick overview of excessive pricing cases in the EU. There have only been a handful of excessive pricing cases in the EU. The rare cases that have been brought have fallen into rather specific categories: (i) cases involving copyright management societies in the EU, with de jure or de facto unregulated monopoly positions in each national territory; (ii) parallel trade or market integration cases, where the excessive price was a tool to discourage or prevent parallel trade; and (iii) cases where the main issue was exclusionary conduct, and the further concerns about pricing were really the corollary of other abusive practices. In fact, under EU law there has never been a truly standalone finding of excessive…

Margherita Colangelo and Claudia Desogus ‘Antitrust Scrutiny of Excessive Prices in the Pharmaceutical Sector: A Comparative Study of the Italian and UK Experiences’ (2018) World Competition 41(2) 225

This article, which can be found here,  pursues a comparative analysis of the recent case law on excessive pricing in the pharmaceutical sector, examining in particular the Italian and UK experience. The paper is structured as follows: Section 2 begins with a brief review of the existing literature on excessive prices in the EU. This section reviews the arguments for and against competition authorities intervening when prices are too high. On the one hand, it is argued that high prices should not be the subject of competition law intervention because such intervention may affect innovation incentives and dynamic efficiency; because high prices will attract competitors and, hence, will tend to self-correct; because there are high probabilities and costs of mistaken intervention; and because this is a task that should be left to specialised regulators. On the other hand, it is argued that correcting high prices directly increases consumer welfare, which is the goal of competition law; that high prices are not…

Peter Georg Picht  ‘FRAND determination in TCL v. Ericsson and Unwired Planet v. Huawei: Same same but different?’ Max Planck Institute for Innovation & Competition Research Paper No. 18-07

This paper, which can be found here,  compares Unwired Planet/Huawei – a UK case reviewed here, and which appeal was discussed last week – and TCL/Ericsson, a US case. TCL deals with Ericsson-owned SEPs and Ericsson-granted licences, while Unwired Planet focuses on SEPs acquired by Unwired Planet from Ericsson. While looking at similar sets of facts, the courts arrived at different conclusions regarding how to determine FRAND royalty rates. This paper argues that this difference arises from the courts’ take on two core approaches in FRAND royalty calculation – “top-down” and “comparable prior licences” (‘Comparables’). Unwired Planet can be said to have favoured a ‘Comparables’ approach, while TCL looks more favourably at the top-down approach. The paper contends that both methods are important in FRAND licensing, it is unlikely that either a top-down or Comparables approach will – or should – prevail as the obviously best approach to complex cases. The paper is structured as follows: Section II provides the…

When is a licence FRAND? The Court of Appeal judgment in Unwired Planet v Huawei

This judgment – which can be found here – is on appeal from Unwired Planet v Huawei judgment on the licensing of Standard Essential Patents (SEP) that I reviewed here. The Court of Appeal begins by explaining the link between the potential for anticompetitive abuse of SEPs and the imposition of FRAND licensing terms. After all: ‘the potential for anti-competitive behaviour is obvious. The owner of a SEP has the potential ability to “hold-up” users after the adoption and publication of the standard either by refusing to license the SEP or by extracting excessive royalty fees for its use, and in that way to prevent competitors from gaining effective access to the standard and the part of the telecommunications market to which it relates.’ It then moves on to review the factual background of the case and the High Court’s decision. In short, Unwired Planet acquired patents from Ericson that cover many of the foundational technologies that allow mobile devices…

Sophie Lawrance and Edwin Bond on ‘Reverse-payment’ patent settlement agreements: non-cash value transfers are not immune from competition law scrutiny’ (2018) Journal of Intellectual Property Law & Practice 13(7) 552

This article – which can be found here – argues that a non-cash value transfer – particularly commitments by the producer of a branded drug not to launch a generic version of its drug – is able to bring a pay-for-delay agreement within the scope of the antitrust prohibition of reverse-payment patent settlement agreements. It does so as follows: The paper first looks at the law in the US as regards non-cash value transfer settlements. In its landmark 2013 FTC v, Actavis decision, the US Supreme Court held that pharmaceutical patent settlements which involve ‘large’ and ‘unexplained’ reverse payments may breach the antitrust rules. However, and as a result of the Supreme Court’s lack of detailed guidance, the lower US courts have in the last few years found themselves considering a fairly basic question: what constitutes a ‘payment’? While a couple of US district courts concluded that patent settlements that do not involve a cash transfer could not constitute unlawful…

Ashish Bharadwaj ‘A note on the neglected issue of reverse patent holdup’. (2018) Journal of Intellectual Property Law & Practice 13(7) 555

The purpose of this article – which can be found here – is to provide a comparative analysis of EU, US and Indian case law on reverse patent holdup in the context of standard essential patent licensing. The piece is structured as follows: The paper begins with a discussion of patent holdup and reverse holdup in general terms. Technological standards have become ubiquitous. Such standards foster interoperability, avoid inefficient rivalry between competing systems and facilitate competition in downstream product markets. It has been held that firms that commit their patents to a standard – and thereby own standard essential patents (SEPs) for the purposes of that standard – often abuse their dominant position by demanding excessive royalties or by seeking injunctive relief against infringers of their essential patents. Owning a SEP provides its holder with a certain amount of market power, because users of the standard must reach a licensing agreement with the patent holder. Theoretically, a SEP holder can…

Jessica C. Lai and Vikas Kathuria on ‘Restrictive Conditions” in patent law and the competition law interface’ (2018) Journal of World Intellectual Property law 21 256

This paper – which can be found here – examines the IP-competition interface in New Zealand, and compares it with Australia, India and the UK. A first section provides an overview of the interaction of IP and competition law in New Zealand. Section 66(1) of the Patents Act 1953 makes void any contractual condition that could be said to amount to patent-tying or to a patentee attempting to control a purchaser, lessee, or licensee’s ability to trade with third parties (the ‘restrictive conditions’). This provision is substantively similar to historical provisions in the UK which sought to ‘prevent a patentee from abusing his monopoly by placing restrictions on the acquisition and use of products other than the patented products.’ Any prohibited contractual condition also acted as a defence to patent infringement. In its 1949 Patents Act, the UK introduced a provision that allowed a vendee, leasee or licensee to terminate a contract related to a patent or patented invention that was no…