Chillin'Competition

Relaxing whilst doing Competition Law is not an Oxymoron

Archive for July 2013

A handy copyright infringement

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Capture

(Warning: this is a fairly uninteresting post with no legal content whatsoever, so feel free to skip it. The reason why I’m posting it comes at the last paragraph)

I’d anticipated another post on reverse payments today, but it will have to wait until Monday. With only one week to go before the holidays I’m swamped at work and accumulating significant delays on a bunch of non-work stuff (several articles, book reviews, paper grading, etc.) which, for some reason, I had committed to do before the holidays.

It makes you reflect. This is one of the peculiar features of private practice; you try to do your best in work-related matters and you end up doing all other stuff hastily and sometimes badly. It’s never bothered me that much, but it probably bothers others (the ones you pay less attention to, or the ones that suffer your delays). I don’t know to what extent this is inherent to the profession or to my irrational tendency to embark in all sorts of projects (or most likely both), but it clearly is an area in need of improvement, at least in my case. Tips welcome!

I won’t bore you with details on what keeps me busy and what I’m being unable to do (it actually was my initial plan, but I then I realized that with a too personal post I’d risk ending up appearing as another whining-while-at-the-same-time-bragging lawyer). Actually, even this actual post may be enough to convey that impression, but that’s not the intention. Anyway, let me give you an example of me doing non-work things at the last minute badly and how I resorted to Nico to fix it.

I spent this whole week travelling because of work (right now ,Friday at 16.20, I’m writing from the Court’s library in Luxembourg; by the way, the food was worse today…) and had to lecture yesterday at ERA (Academy of European Law) on the interface between Intellectual Property Article 101. It’s always a challenge to explain the Technology Transfer BER in a way that doesn’t induce people to suicide, but I think I succeeded: only two people tried, one by jumping out of the window, the other by attempting to read the actual guidelines on technology transfer (despite my warnings) 😉

As usual, preparations were done at the last minute. The problem, however, is that I was asked to deliver a fairly detailed ppt in advance (smart trick to force speakers to prepare in advance..). And that was a bit of challenge; so I resorted to Nico.

He has an excellent and incredibly detailed power point presentation on IP and competition law (I hate using power point, and not only because of its lack of interop with 3rd party applications… yes, cheap pun, but I couldn’t avoid it..) so I basically copy-pasted it in a Garrigues template ppt and used it (actually, I didn’t even do the copy-pasting myself; I’ve to thank Rocío de Troya for that).

It ended up being a good idea, as I explained to the students, my use of Nico’s materials was useful to illustrate several concepts that are very relevant to IP law, such as a copyright infringement, free-riding and follow-on innovation (btw, the term “based” that you see in the slide above -the 2nd in my (his) presentation was actually a euphemism).

You most likely don’t give a damn about this story, but put yourself in my shoes: I had to (i) thank Nico and acknowledge his authorship of the materials; (ii) write something quick and light for a summer Friday afternoon; and (iii) minimally and superficially  reflect on the absorbent (for good and for bad) aspects of the profession.. Have a good weekend!

Written by Alfonso Lamadrid

5 July 2013 at 4:39 pm

Collusion?

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Vogel v Me

Vogel v Me.2jpg

Odd pricing pattern.

My book and its main competitor at the FNAC (Vogel, Dalloz) both sell for €48.

Collusive RPM? Tacit, explicit?

At least, this will channel consumer choice on quality only. Not sure I’ll win on this ground :(.

Written by Nicolas Petit

4 July 2013 at 6:50 pm

Reverse payments (Pay for delay settlements) in EU and US antitrust law (Part I)

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I’ve somewhat of a bad conscience for not having been able to cover this topic before (not least because one of you has been pestering me with emails asking when I’d write about it…)(btw, the same person has also gently and repeatedly reminded me to post a link to his new –and actually very interesting (really)- paper, so here it is; titled The Law of Abuse of Dominance and the System of Judicial Remedies).

As you may have read, within a lapse of two days the US Supreme Court (SCOTUS) and the European Commission issued, respectively, an opinion (in FTC v Actavis) and a decision (against Lundbeck and others) addressing reverse payments.

Most of the superficial client alerts analyses I’ve seen merely note the time coincidence and suggest a certain convergence in the US and EU approaches to the issue. The headline goes that the Commission imposed its first fine for this practice, and that the SCOTUS reversed a Circuit clash, holding that reverse payments are subject to the rule of reason and dismissing the “scope of the patent test”. In my view, this reading, although right, is also incomplete and hides a few of the interesting issues that have surfaced in these cases.

If I were to start explaining what reverse payments are, the background to these cases and the content and implications of the opinion and the decision you’d probably be tempted to stop reading after a few lines. In order to avoid that, instead of following the normal structure of a post, this will be a reverse post on reverse payments:

Today we will provide you with some comments on these developments and of why they can be relevant beyond their specific context. Tomorrow (if I’ve time) or on Friday (more likely) we’ll offer you our vision on the background to these cases and an overview of the opinion and the decision. I trust this will enable (i) connaisseurs to skip the background stuff; and (ii) those not initiated in these issues to grasp their relevance and to become interested in reading more about them.

Some reactions to the SCOTUS opinion and to the Commission’s decision

–          Leaving the pharma sector aside, and looking at things from a broader perspective, the underlying philosophy of the Opinion in relation to the IP regulation/antitrust interface (condensed in this statement: “it would be incongruous to determine antitrust legality by measuring the settlements anticompetitive effects solely against patent law policy, rather than by measuring them against procompetitive antitrust policies as well”) appears to be at odds with the principles governing the interface between sector-specific regulation and antitrust established in Trinko . It’s therefore not surprising that Justice Scalia, that wrote the majority opinion in Trinko, has joined Roberst and Thomas in a dissenting opinion here. So, does this signal a change of trend in the way the SCOTUS interprets antitrust law? The 3 dissenting Justices at least do seem to see it that way, and argue in strong terms that the opinion overturns understood antitrust.

–          On a very related but more specific note, although I haven’t read any comments on this point I see common link between these two recent cases on reverse payments and other landmark cases like  Linkline US) and Telia Sonera (one of the most controversial EU cases in recent years). In all these cases some party relied on the idea that “he who can do the most can do the least”. In Actavis and Lundbeck the argument was that a patent holder was entitled to exclude competition provided that it remained within the limits of the “scope of the patent”; and in TeliaSonera and Linkline it was that if refusing to supply would not be deemed abusive, there could be no room to find an abusive margin squeeze.

This argument, however, had only been accepted by the SCOTUS in Linkline, with European Courts taking a different line in the most criticized TeliaSonera Judgment, so it’s not surprising (at least to me) that the Commission has rejected it in Lundbeck, but it’s remarkable that the SCOTUS has taken a different line in Actavis.

By the way, I leave one provoking thought I heard from someone the other day discussing TeliaSonera: “I don’t have an obligation to let anyone into my home, but once they’re inside it would be illegal for me to kick them out violently…”. (I expect some virulent reactions to this; happy to discuss).

–          Are the EU and US approaches converging with regard to reverse payments, or even with regard to the assessment of horizontal agreements more widely? Not really (leave aside the synchronized summer desk cleaning timing coincidence). Sure, both the SCOTUS and the Commission see a margin for potential restrictions of competition in reverse payments, but they have chosen very different approaches. And whereas the theoretical difference does not appear to be large, the practical consequences hugely differ. In the US reverse payments will need to be assessed under the rule of reason –which imposes a very considerable burden on plaintiffs- (as we will explain in our forthcoming post, the Supreme Court has dismissed the “quick look approach” proposed by the FTC). In Europe, on the contrary, the Commission has decided to take the usual “object” shortcut. This is key, for an “amorphous rule of reason” (an expression actually used in the dissenting opinion in Actavis) analysis normally means difficulties for the plaintiff, whereas a “bifurcated” 101(1) / 101(3) analysis generally results in condemnation because of the (anticipated and worrysome) death of Art. 101 (3).

(Interestingly, the FTC wasn’t able to give a satisfactory answer to a very pertinent question asked by Justice Sotomayor at the hearing: “Why is the rule of reason so bad?”)

If you ask me, I would have no objection to the EU solution if Art. 101(3) were an effective possible way out (this was basically the ECJ’s stand in GlaxoSmithkline) and I would have no objection to the US approach if the burden of proof incumbent upon plaintiffs was a bit less burdensome. As things stand, it was probably not feasible to strike the right solution in theory (where I think the SCOTUS’ one is preferable) as well as in practice (where the Commission’s will likely yield better results) for these cases.

To be continued…

Written by Alfonso Lamadrid

2 July 2013 at 6:50 pm