IP Summit 2013 (Paris) 9 December 2013
No inherent conflict between IP protection and competition policy I thank the organisers of this 8th IP Summit for their kind invitation to come to Paris today. Your conference gives me the opportunity to talk about the connection between intellectual property and competition policy. This issue, grown in importance with the rise of the knowledge economy, is becoming even more crucial in the current juncture. There are signs that Europe is rebounding from this long crisis. There are many views on how to sustain the upswing, but everyone agrees that we must invest more and better on research and innovation. This means, among other things, designing public policies and legal systems to protect, promote and reward innovation. How to do so? From time to time I have heard opinions in the IP community expressing fears that competition policy enforcement and the protection of IP rights have mis-aligned objectives. Of course, I don’t share this view.
In their different ways, both the patent system and the system that enforces competition law in the EU pursue common goals. A well-functioning IPR system can in fact promote competition by encouraging firms to invest in innovation. And both competition policy and the intellectual-property protection system do contribute to create the right framework for innovators. As a competition authority, we intervene only when the IP rights are abused or used as a cover-up for anti-competitive practices – which is clearly the exception, not the rule.
Competition policy, IPs, and standards
We sometimes see in our practice that such abuse takes the form of a refusal to license. Refusing to licence a patent or other IP rights can lead to such negative impacts on competition that it is justified to oblige the holders to license out their IPs. I will recall here the landmark cases involving Magill in the 1990’s on TV listings, IMS Health in the pharmaceutical sector, and subsequently Microsoft. In all these cases, the European Courts have upheld our decisions establishing that refusing to license an IPR by a dominant company may constitute an abuse of dominant position. But the Courts have also made it clear that refusing to licence can be an infringement of competition law only in ‘exceptional circumstances’; that is, when a company needs access to the IPR to enter the market and effective competition would be eliminated if the license were not granted. And this jurisprudence draws a clear boundary for our enforcement work.
Over the years, we have also seen another problematic area; the use of patents in standard-setting processes. Here, the Rambus case of 2009 is a good example. The case revolved around a so-called “patent ambush”. Rambus had failed to disclose that it had patent rights on certain kinds of memory chips before technical standards involving these same chips were adopted. As a result, the industry was never given the choice to select another technology and Rambus obtained a standard-essential patent, which it could have used to extract higher royalties. In the end, a commitments decision allayed our competition concerns.
In addition to our decisions, we have also given guidance on standardisation processes in our 2010 antitrust guidelines on co-operation agreements, which devote a whole section to them. These Horizontal Guidelines set out the criteria under which the Commission will not take issue with standard-setting agreements. These criteria include clear rules on disclosure and FRAND commitments. The underlying principle of these rules is that prevention is better than cure. To the extent possible, industries should avoid creating opportunities for abuse by individual companies. And the best way to do it is building good safeguards when establishing standard-setting organisations and deciding on their procedures. Here to read more.