Regulations Of EU Competition Law On Intellectual Property Related Abuse Of Dominant Position

Since the first day they came into being, intellectual property law andcompetition law have been intertwined; they not only share a common objective butalso have some conflicting or contradictory aspects. Their common goal rests inencouraging innovation and enhancing consumer welfare. The conflicting aspects,however, are mainly that they have distinct ways of stimulating innovation andpromoting consumer welfare. Briefly, antitrust law is to attain the above aims throughopposing competition restrictions and maintaining effective market competition, forrestricting competition could damage the real or potential competition. As for theintellectual property law, it can achieve the same goal by means of granting certainways to restrict competition such as protecting patent, giving the holder a period ofexclusive right. Although intellectual property law protects the holder’s exclusiveright, there is no fundamental difference between intellectual property rights andcommon property rights because the intellectual property rights also possess thepossibility of restricting competition, and inevitably would be bounded by antitrustlaw. In other words, the holder has the right to obtain a competitive advantage even amonopolistic position by inventions or innovations protected by intellectual propertylaws. On the other hand, as the nature of market economy is competition, which isalso a means to boost innovation, antitrust law do not permit the intellectual propertyholders to severely hinder, restrict or distort market competition by means of theirmonopolistic positions.With respect to the issue whether competition law should intervene in theintellectual property rights, there exist two kinds of sharply different views. The first type is opposing intervention. They hold that even a particular intellectual propertyright leads to some monopoly power, its exclusive right ought to be protected and freefrom inspection; the application of competition law can only cause negative impact onthe stimulation mechanism of the intellectual property system. Besides,the possibilityof making mistakes and its price when policymakers fight against competitionrestrictions determine the cost of condemning competition behaviour is higher thanthat of remitting restricting competition behaviour. Therefore, they propose that lawexecutors do not interfere with the innovation markets related to intellectual property.When US dealt with the intellectual property monopoly in Microsoft case, theirattitude was not to intervene. American economics circle reached an unprecedentedconsensus to denouncing US antitrust laws when Microsoft faced to be charged aswell as the danger of being split due to monopoly. Contrary to the above-mentionedviewpoint, the European Commission always upholds intervention arguments, whosetheoretical base is complementarity. Such theory believes that the fact of theexclusivity granted by intellectually property laws does not imply that there is aninherent conflict between intellectual property and competition rules. In effect, thesetwo legal systems both deem consumer welfare promotion and efficient resourcesallocation as their principal goals. Innovation is an essential and dynamic componentof an open competitive market. Intellectual property stimulates firms to invest indeveloping new products and technologies to boost dynamic competition whilstcompetition law can improve a firm’s innovation through introducing competition.Consequently, the two laws are necessary for more innovation and appropriatecompetition. Apart from the intellectual property protection, a firm’s innovation alsoneeds competitive pressure from other firms. If there is no intellectual property rightprotection,a competitor can compete through emulation while not investing in betterproducts; without competition pressure,it cannot be ensured that the holder willfurther invest in innovation after having gained monopoly profits. Especially in thefields of high technologies that are developing so rapidly, a firm is readily able tohave the whole market to itself if it possesses a standard, de facto or legal. Then thefirm may exclude the competition that formerly exits in the market, and engage in rentseeking actions for expanding intellectual property. Accordingly, in a state ofcompetition a competitor can hope to reap the prospective monopoly benefits byinvesting in innovation. To the contrary, in a state of monopoly the dominant firm canenjoy the monopoly profits without keeping investing in innovation. Therefore, the interventionism contends that competition law should take a hand in intellectualproperty area once the competition is restricted.In recent years, MNCs have been abusing their intellectual property, such asrefusing licenses, excessive pricing, mandatory package licenses, and patent thickets,etc. in order to acquire market dominant positions, to expel competitors, henceendangering local enterprises’ development as well as harming consumers’ welfare.Theoretically, the intellectual property abuses not only happen in MNCs but alsoamong domestic enterprises. However, as our domestic enterprises are comparativelydisadvantaged in intellectual property, the abuse issue is more likely to happen inMNCs and have more influences, for they have more advanced technologies and moreintellectual property rights. For those reasons, such cases usually disclosed innewspapers are primarily related to MNCs.Actually, it does not follow that there is no intellectual property abuse in China.Just for lack of relevant regulations, some cases are able to escape being revealed andpunished. So how to avoid our intellectual property system straying away from itsoriginal purpose and becoming a tool for innovation monopoly is a key matter that ourantitrust law needs to resolve. Excessive protection inevitably results in power abuses.For the time being,our self-dependent innovation ability is at a low level,ourtechnologies not so advanced,and our intellectual property protection can only goforward,we are compelled to strengthen our antitrust laws when confronted with theoutside powerful intellectual property competitions. Strong intellectual propertyprotection and intense antitrust laws are just like the two sides of a coin; they are twomajor pillars for our technological development and further economic development.Therefore both should be emphasized and well developed. However, relative to theintellectual property protection, our intellectual property antitrust seems to be morestriking and urgent. But our country has a lot to go regarding its intellectual propertyrelated antitrust law. How to find a balance point between protecting competition andmaintaining intellectual property, to keep the incentive mechanism of the intellectualproperty while having effective market competition, is an imperative issue to besolved.Concerning the international experiences, the primary purpose of the EUcompetition law is to realize a unified internal market, and regulate actions impairingfree flow of goods and restricting free competition etc, by using intellectual property.As a result, European Court of Justice has established a series of principles and cases on regulating intellectual property abuses. EU mainly applies competition laws toregulate the intellectual property abuses, while US adopts a looser attitude towardsthose phenomena. In a sense what EU has done is now more suitable to China.So as to the regulations on abusing dominant positions, our antitrust law borrowsmore from EU competition laws. But our antitrust law only offers one provision inprinciple on intellectual property related antitrust, and its concrete contents too little.Consequently, the use of antitrust law in intellectual property turns out to be aformidable matter both in theory and in practice. Fortunately, as for the abuse ofdominate market position in intellectual property; EU has accumulated quite a fewcases as well as some experience in administrative enforcement. It has providedenforcement guidelines for article102of TFEU, and has abundant academic results.All this gives us some reference for our legislation and enforcement in the abuse ofdominant market position in intellectual property. Furthermore, the more economicanalysis method that EU has been exploring also has some meaningful reference forus in this respect. Based on the above knowledge, this dissertation made a study ofEU antitrust regulations on the abuse of dominant market position in intellectualproperty, whose contents are as follows.The first chapter, starting with the relationship between intellectual propertyprotection and competition law, analysed the subject from the perspectives ofeconomics and competition law, compared the strengths and weaknesses of differentschools, reviewed the history that some advanced countries how treated their relations,and in the end established certain basic stances regarding whether competition lawcould handle issues in intellectual property.The second chapter explored in-depth the general method that EU competitionlaw regulates the abuse of dominate position in intellectual property. It continued toexpound the traditional formalistic analysis method in EU competition case laws aswell as the more economic analysis in article102of TFEU that EU committee hasbeen appealing to adopt, and finally made a comparative study of whether the moreeconomic analysis method could be applied to the abuse of dominate position inintellectual property.The third and fourth chapters analysed the specific actions involved in the casesof the abuse of dominate position in intellectual property in EU,discussed constitutiverequirements and judgment standards separately,and pointed out some concreteweaknesses in the treatment of some cases handled by EU Commission and European Court of Justice. Refusal to licensing is a typical behaviour listed by EU intellectualproperty related competition law,and it could also constitute the abuse of dominateposition in intellectual property in exceptional cases,so some relevant typical casessuch as IBM case,Volvo case,Renault case,Magill case,IMS Health case andMicrosoft case were mentioned. New product standards, secondary market andessential facilities criteria and so on were explored in detail. The abuse of patentsystem is a new type if the abuses of dominate position in intellectual property. TheEuropean commission’s pharmaceutical industry survey report and the latest case bothshow a positive attitude to regulate such behaviour, which has some merit but also hassome problems left over. This issue was also examined.The last chapter considered our country’s legislation in intellectual property,theinternational intellectual property levels,the relationship between the intellectualproperty protection and economic growth,as well as the status quo of the abuses ofdominate market position in intellectual property and the intellectual property antitrustlegislation in China,on the basis of drawing on experiences from EU,the dissertationput forward some suggestions as to perfect the intellectual property related abuse ofdominant position regulations from principles to concrete analysis methods inChina,in hope for providing some helpful references for the formulation of guidelineson IP-related Antitrust Enforcement.