The impact of article 82 of the EC Treaty on intellectual property rights

Abstract

The title of this dissertation: The impact of Article 82 of the EC Treaty on Intellectual Property Rights denotes an uneasy relationship of conflict between intellectual property rights and the competition rules. Intellectual Property rights are rights relating to the creations of the mind, given by the State to rights owners to encourage the creation and distribution of Intellectual Property and thus contributing to the transfer of technology and to economic development in general. Intellectual property rights include patents, copyright, trade marks, industrial designs and other rights which are widely accepted in all modern legal systems as conferring on the holder the right to benefit from their possession by obtaining a reasonable royalty for accepting to license the right to third parties. This bundle of rights includes the option to refuse to license an intellectual property right even against the payment of a reasonable royalty. This work will seek to outline the proper limits of Intellectual Property Rights in EC law with particular reference to Article 82 of the EC Treaty that prohibits the abuse of a dominant position by one or more undertakings insofar as this may adversely affect trade between Member States. In the first chapter, this study will first examine what is meant by Intellectual Property Rights and then it will trace the case law on the interface between Intellectual Property Rights and the free movement rules, in particular, the emergence of the definition of the specific subject matter of patents and trade marks, thus providing a sound basis for the interface between national intellectual property rights and the Common Market. In the second chapter, this work will explain how Article 82 imposes a broad duty to deal on dominant firms and that in Community law, there is a broad principle that undertakings that enjoy a dominant position must not refuse to supply their goods and services if refusal to supply would have a significant effect on competition. This principle applies to both customers and competitors. As a result, this duty to supply is so wide that dominant undertakings have to justify any refusal to supply. It is not enough to argue that refusal was justified as the undertaking was pursuing its commercial interests. As the holder of an Intellectual Property Right has an automatic legal monopoly on the product/service or idea in question, a corpus of case law has emerged on whether the refusal to license an IPR constitutes an abuse of a dominant position under Article 82. The natural corollary of this line of case law is the legal debate on the extent to which the owner of an IPR can be compelled to grant a license to a third party under Article 82. This work shall examine this body of case law on refusal to license/compulsory licensing in great detail. The third chapter will examine the uneasy relationship between Article 82 and collecting societies and how Article 82 may be applied to the activities of collecting societies. Article 82 has been invoked both by the Commission and in private law actions in domestic courts, several of which reached the ECJ under Article 234EC (ex-Article 177). This work will show how case law has indicated that there is nothing intrinsically wrong with collecting societies, however, the ECJ has condemned collecting societies that imposed excessive royalties or that discriminate against non-nationals. The fourth chapter will deal with a number of miscellaneous cases where the improper exercise of an IPR has resulted in a breach of Article 82. These include the acquisition of an IPR by a firm that is already dominant, thus harming the competitive structure of the market, notwithstanding the fact that the licence fell within the confines of the patent licensing block exemption. This chapter will also examine how the conflict between intellectual property rights and standardization could also give rise to competition concerns. Although this dissertation is based on EC Competition law, in the fifth chapter, reference will also be made to Maltese Competition law on the subject albeit the latter is still in a pre-embryonic stage of development.