The Relation of Competition Policy
and Intellectual Property in the
European Union – An Introduction
EU-China Workshop on
Application of Anti-monopoly Law in Intellectual Property Area
Changsha, 11. – 12. March 2010
Peter Hoeltzenbein, General Policy Division, Bundeskartellamt
[email protected]
Overview
•
•
•
•
The European Union
European Competition Policy
Intellectual Property Rights (IPRs)
Relation of Competition Policy and IPRs
THE EUROPEAN UNION
The European Union (1)
• 27 countries
• 500 million
people
• 23 official
languages
The European Union (2)
1952
1973
1981
1986
1990
1995
2004
2007
The European Union (3)
Share of world trade
in goods (2007)
Share of world trade
in services (2007)
EU
17%
Others
53.2%
EU
28.5%
United States
14.5%
Others
40.6%
Japan
5.8%
China
9.5%
United States
18.2%
China
5.9%
Japan
6.8%
The European Union (4)
• Not a federal state
• Member States remain independent
sovereign nations
• However, Member States delegate some of
their powers so that decisions on specific
matters can be made democratically at
European level
The European Institutions
• European Parliament
– represents the European people
• European Council
– represents the 27 Member States
• European Commission
– 27 Commissioner, one from each state
– proposes new legislation
– main executive body
Law making at European level
Citizens, interest groups, experts: discuss, consult
European Commission: makes formal proposal
Parliament and Council: decide jointly
National or local authorities: implement
Commission and Court of Justice: monitor implementation
The Single Market
• One of the European Union’s greatest
achievements is the single market
• Restrictions on trade and on free
competition have gradually been
eliminated
• The single market is supported by a strong
competition policy ensuring that free
competition is not distorted
EUROPEAN COMPETITION
POLICY
European Competition Policy (1)
• Prohibition of illegal state aid
– national government interventions must not distort
competition and trade inside the EU
• Merger Control
– concentrations must not impede effective competition
• Antitrust
– Prohibition of anti-competitive agreements
– Prohibition of abuse of dominance
European Competition Policy (2)
• The European Antitrust rules may be enforced
– by the European Commission
– by all 27 National Competition Authorities
• Interpretation of the Antitrust rules
– The European Commission issues detailed (nonbinding) guidance on various topics
– Ultimately, the European Court of Justice interprets
and develops the law on appeal
European Competition Policy (3)
• Cooperation of European competition authorities
within the European Competition Network (ECN)
– Case allocation
• to the authority best placed to take action
– Exchange of information
– Mutual assistance
– Power of the European Commission to claim
competence over a certain case (which rarely happens)
European Competition Policy (4)
• European Antitrust rules only apply where trade
between Member States is affected
– they do not apply to cases with regional or local impact
• All the Member States have national antitrust
laws which resemble the European regime
– and which are only enforced by the respective national
competition authority
INTELLECTUAL PROPERTY
RIGHTS
IPRs (1)
• IPRs are rights to exclude others from exploiting
intangible assets such as
inventions
= patents
creative works
= copyright
signs & names
= trade marks
shapes & forms
= design rights
plant varieties
= plant breeders rights
IPRs (2)
• The owner of an IPR is entitled to
– prevent unauthorised use of his IP
– exploit it
• by using the IP itself and/or
• by licensing it to third parties
• Once a product incorporating IP has been put on
the market within the EU the IPR is exhausted
IPRs (3)
• IPRs are usually limited in time
– patents
= 20 years
– copyright
= 70 years after the author’s death
– trade marks
= renewable every 10 years (if used)
– designs
= up to 25 years
– plant breeders = up to 25 years
rights
Market definition
IPRs usually pertain to two relevant markets
(using a patented technology as example)
 Technology markets
– on which the technology for a certain product or a
certain production process is (or could be) licensed
 Product markets
– on which the products incorporating the technology
are (or could be) offered
IPRs and market power
• IPRs are legal monopolies
• They may (but must not) lead to market power
and sometimes even to an economic monopoly
• This always depends on the number of (potential)
substitutes for the IP
– If you can choose between a number of different
equally suitable technologies (some of which might
even be in the public domain) then there is most likely
no market power
RELATION OF COMPETITION
POLICY AND IPRS
Competition and Innovation (1)
• Competition is said to induce companies to offer
the best products at the lowest price
• Innovation is said to cause markets to change
 improved products and production processes are introduced
 consumer satisfaction increases and production costs decrease
• Innovation is said to be the main source of
increases in economic welfare!
Competition and Innovation (2)
• Competition has mixed effects on innovation
– competition is said to spur innovation - in principle
– however, competition may also be detrimental to
innovation
• copying and free riding may undermine the
incentive to innovate
• there is also little incentive to disseminate
knowledge and know how if it is used to free ride
 Inventions and know how will be kept a secret and not be
shared in order to prevent free riding on innovation efforts
 these effects are highly debated in academia
Patents and Innovation (1)
• Patents are supposed to incentivise innovation
efforts and the dissemination of knowledge
 without the prospect of an exclusive right, few firms would spend
large sums on research and development
 patent applications are published and, even before the patent
expires, the protected invention can be used for research and
development
 patents facilitate the negotiation of licences and the
dissemination of the technology
• This holds true for instance in the pharmaceutical sector
where one medicine is often covered by but one patent
Patents and Innovation (2)
• However, in other sectors (e.g. semiconductor) one
product may be covered by hundreds of patents
– Patents are increasingly used for defensive purposes
– the big companies build up large and highly costly patent
portfolios
• to block products of competitors
• as a bargaining chip in cross-licensing negotiations
• to prevent or defend against infringement suits
• Does the current patent system strike the right
balance for all industry sectors?
Patents and competition policy (1)
• Both IPRs and competition policy ultimately aim
at increasing economic and social welfare
– Competition is the driving force for efficient and
dynamic markets
– Patents (try to) strike a balance between over- and
underprotecting innovator’s efforts
 At the highest level of analysis IPRs and
competition complement each other
Patents and competition policy (2)
• Antitrust issues
– Potentially anti-competitive agreements
– licensing agreements
– settlement agreements
– agreements on standard setting and on the pooling of patents
 the application of competition law is less controversial
– Potentially abusive unilateral conduct
– Misuse of the IPR system
– Patent ambush
– Refusal to deal
 the application of competition law Is more controversial
QUESTIONS?
THANK YOU FOR YOUR
ATTENTION!