The Antitrust Hotch Potch

The 1.000.000$ Question

Private parties are often reluctant to challenge EC institutions decisions. The main reasons for this are as follows:

• Restrictive principles re. locus standi;
• Restrictive definition of the acts that can be subject to annulment proceedings;
• Rise of a new "settlement culture" (i.e. through  procedural settlements, commitments, leniency and so on).

That situation is open to criticism, if only because it renders the EU system of judicial protection ineffective.

In light of the CMB judgment, handed down yesterday, we believe that the ineffectiveness of judicial protection could be further aggravated by the Community courts themselves. In certain fields of competition policy such as e.g. Article 82 EC, the CFI and the ECJ have consistently refused to recast the Commission's analysis. The table below shows that the vast majority of annulment actions brought against Article 82 EC decisions have been dismissed by the Court. The standard of judicial review applied by the CFI on Article 82 EC exhibits a strong sense of deference with respect to Commission analysis and, in turn, discourages potential applicants from seeking relief before the Community courts. 

The 1.000.000$ question now: who will be the first in a decade to win an Article 82 EC case before the CFI?

Nicolas / Alexis

 

Repudiation

Down here in Brussels, rumor has it that former CFI President Versterdorf is unhappy of his 2007 Microsoft judgment. Here's an article which seems to comfort that opinion. A few excerpts:

[T]he judgment may have what some might call negative consequences for holders of IPRs, which perhaps might deter investments that otherwise would be made and in turn have negative consequences for competition, in particular if innovation were to be discouraged to the detriment of consumers. As was pointed out at the beginning, even dominant undertakings should be allowed to invest in patents and other IPRs, because even when these investments may incidentally limit the possibilities open to competitors, it normally benefits the consumers in the long run

and

From a purely academic point of view, it may be regretted that the judgment was not brought on appeal before the ECJ so Europe’s highest Court could have its final say in the case. However, sooner or later, either through a direct action or through a reference for a preliminary ruling under Article 234 EC, the ECJ may find the occasion to examine and decide on the delicate balance that must be struck between IPRs and competition law.

The question now: should Microsoft really be seen as part of Vesterdorf's legacy (judgments are adopted collegially by the Court, which consists of several judges).

Nicolas

Slides annual conference of the GCLC

The slides presented by the speakers at the 4th annual conference of the GCLC last week are now available at:

http://www.coleurope.eu/template.asp?pagename=gclcfourthannualdocuments

Nicolas

NMa movie on leniency with English subtitles

This summer's blockbuster?

http://www.nmanet.nl/engels/home/Business_information/Leniency/Film_Clementie_in_kartelzaken.asp

Nicolas

Two new papers on ssrn.com

Revisiting Injunctive Relief: Interpreting eBay in High-Tech Industries with Non-Practicing Patent Holders
Vincenzo Denicolò , Damien Geradin , Anne Layne-Farrar and A. Jorge Padilla

The Supreme Court's 2006 eBay ruling marked a turning point in injunctive relief policy. Unfortunately, there seems to be considerable confusion about the implications of the decision. Some authors, concerned over patent holdup and excessive royalty rates, interpret the eBay decision as giving a green light to district courts to deny injunctive relief to non-manufacturing patent owners. Using an error cost framework, we examine the theory and evidence behind patent holdup concerns as they relate to injunctive relief policy. We find that the holdup theory justifying categorical limitations on injunctive relief rests upon overly narrow assumptions. As a result, categorical limitations are likely to result in substantial false positives, where patent holders with no designs of patent holdup are nonetheless denied injunctive relief. Instead of advocating categories of denial, we argue that the majority opinion in eBay can and should be read as a return to a balancing test, where costs and benefits are weighed carefully before granting or denying a patent injunction.

Elves or Trolls? The Role of Non-Practicing Patent Owners in the Innovation Economy
TILEC Discussion Paper No. 2008-018

Firm structure and the degree of vertical integration lie at the core of a key intellectual property concern currently under debate: "patent trolls." While court opinions and competition agency decisions have focused on "non-practicing" patent holders as the source of anticompetitive exclusion and hold up problems, this view of upstream specialists is far too narrow. In fact, patents in the hands of non-practicing entities can increase competition, lower downstream prices, and enhance consumer choice. We explain why and argue for more business-model-neutral policy when it comes to patent licensing. Clearly, patents are a complex subject that cannot be portrayed as either all good or all bad; tradeoffs will always be involved. Without a better understanding of the many complicated effects of patents in high technology markets, we run the very real risk of misguided policy decisions

Damien

Slides on Alternative enforcement techniques

Please find below an archive file which contains all the slides presented at the LL.M in comp. and IP law/FEB conference, on 5 June 2008.

The conference proceedings will be published by Bruylant, somewhere in early fall 2008.

Download slides_alternative_enforcement_techniques.rar

Nicolas

New paper

Damien has presented the following paper: "What's wrong with royalties in high technology industries" at the George Mason University School of Law and Microsoft Corporation’s second annual conference on The Law and Economics of Innovation: "Patents and the Commercialization of Innovation" on 15 May 2008 in Arlington, VA.

Link to ssrn: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1104315

Here is the abstract:

Over the past few years, there has been an unprecedented degree of interest among competition authorities, scholars, Standard-Setting Organizations (hereafter, SSOs) and trade associations with respect to the level of royalties that are charged by holders of intellectual property rights (IPRs). For instance, in the past two years, the US Department of Justice (DoJ) granted business letter clearance to two SSOs - VITA and IEEE - to implement new IPR policies designed to control the IPR costs. In April 2007, the DoJ and the Federal Trade Commission (FTC) jointly released a report on Antitrust Enforcement and Intellectual Property Rights. But the interest is not limited to the United States. The European Commission is currently investigating the compatibility of certain licensing regimes and conduct within SSOs against EC competition law. Reflecting the debate at the policy level, scholars have produced a large body of legal and economic literature on IPR and standardization issues, including patent hold-up (where the patent holder exploits ill-gotten market power in excessive licensing fees) and royalty stacking (where multiple patents must be licensed and thus the royalty rates stack up to excessive amounts).

Against this background, this paper addresses the issue of whether something has gone wrong with royalties in high technology industries. This paper seeks to answer this question first by looking at a number of concrete scenarios where firms holding IPRs seek to obtain a return on their patent portfolios by licensing them. As will be seen, the behaviour of these firms essentially depends on whether they are vertically-integrated or non vertically-integrated. Vertically-integrated firms engage in research and development activities, patenting at least some of their inventions, and also manufacturing products based on their own innovations and the innovations produced by others. Non vertically-integrated firms, in contrast specialize in one or the other layers of production. Pure upstream firms conduct research and development activities and patent their innovations, but they do not engage in manufacturing. Downstream firms specialize in manufacturing, but do not engage in R&D.

SSRN Ranking of competition law authors

Hereafter is a list of the most downloaded competiiton law authors on SSRN, over the past year.

1. Damien Geradin (College of Europe and Tilburg University) – 4,301
2. David Evans (University College London) – 2,932
3. Spencer Waller (Loyola Chicago) – 2,122
4. Jonathan Baker (American University) – 1,759
5. Keith Hylton (Boston University) – 1,476
6. Phil Weiser (University of Colorado) – 1,436
7. Randal Picker (University of Chicago) – 1,293
8. Josh Wright (George Mason) – 1,287
9. Herb Hovenkamp (University of Iowa) – 1,194
10. Daniel Sokol (University of Florida) – 1,014

Congratulations to Damien! (courtesy of D. Sokol's blog)

Nicolas

Lunch Talk on Deutsche Telekom - New Date - 1 July

The lunch talk with A. Verheyden and S. Ohlhoff has been rescheduled on 1 July (see below for registration form). Hopefully this time, we will not experience IT problems when mailing the programme.

Download microsoft_word_registration_form_34th_gclc_lunch_talk_1_july_2008.pdf

Nicolas

Slides on non-competition concerns under the ECMR

The slides presented by the speakers at the 25 April conference on non-competition concerns under the ECMR can be downloaded below.

Download a_winclkler_industrial_policy_slides.pdf

Download m_van_der_woude_energy_policy_and_the_ecmr.pdf

Download m_van_kerckhove_noncompetition_aspects_under_the_ecmr.pdf

Download r_allendesalazar_spanish_saga_003.pdf 

Download t_jestaedt_data_protection_merger_control.pdf

Nicolas