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Legal Remedies Against Abuse, Misuse, and Other Forms of Inappropriate Conduct of IP Right Holders

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Compulsory Licensing

Part of the book series: MPI Studies on Intellectual Property and Competition Law ((MSIP,volume 22))

Abstract

The abuse (or misuse) defence against various forms of dysfunctional enforcements of IP rights appears to be, at first glance, an efficient remedy, which surely entails faster effects than the lengthy prosecution of a compulsory licence. At a closer look, however, the legal consequences of an abuse defence are quite unclear. International law—to the extent that it addresses issues of abuse—does not offer guidance. Furthermore, it’s questionable whether approaches of equity, primarily known in common law countries (notably the denial of an injunctive relief in case of an inappropriate lawsuit), provide convincing results—apart from the fact that civil law systems mostly lack such approaches anyway. We rather need an intermediate solution between unrestricted enforcement and non-injunction. Particularly, more balance may be achieved through monetary compensation to the right holder: In case enforcement of an IP right proves to be abusive, this right should still not become valueless to its holder by denial of injunctive relief; rather, a downgrade of the right in terms of a “liability regime” may be justified. Indeed, the compulsory licence permits usage against payment to the right holder. If its current conception is deemed to be too complex in practice, and if it is illusory that the abuse defence constitutes a convincing alternative, the legal setting of the compulsory licence should be modified.

R.M. Hilty is Professor of Law and Director of the Max Planck Institute for Innovation and Competition.

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Notes

  1. 1.

    For the range of this provision, see Sect. 4.2 below.

  2. 2.

    See Sect. 5 below.

  3. 3.

    The following differentiation can be found at www.differencebetween.net/language/difference-between-abuse-and-misuse.

  4. 4.

    Heinemann (2002), pp. 53–54; for a critical view on the relation between patent and antitrust law, see also Lemley (1990), pp. 1599–1632; see also note 25 below.

  5. 5.

    Kesselheim (2007), pp. E307–E308; cf. Judge Posner’s backlash against patent misuse: Roberts (2012), http://www.washingtonpost.com/business/technology/famous-judge-spikes-apple-google-case-calls-patent-system-dysfunctional/2012/06/08/gJQAM1bQOV_story.html; another famous problem of exploiting IP rights is “patent trolls”: Hilty (2012), p. 25; Chien (2009), pp. 1573–1615.

  6. 6.

    E.g. Leo Stoller, called “Mr. Trademark Abuse”, Moynihan (2005), http://www.nytimes.com/2005/07/04/business/04stealth.html?pagewanted=all&_r=0. Especially problematic are trademark applications that are just made to file suit against a future applicant. Cf. German Federal Supreme Court (BGH) 2001, GRUR, p. 242—Classe E. Article 52(1) b of Council Regulation (EC) No 207/2009 is a possible tool against such behaviour.

  7. 7.

    Cf. Case C-529/07—Lindt & Sprüngli/Franz Hauswirth [2009], ECR I-04893.

  8. 8.

    Cf. the curious practice of the U.S. Patent and Trademark Office (PTO): Lemley and Moore (2004), p. 63.

  9. 9.

    This is an attempt to extend the period of a patent protection beyond its actual term. There are some different forms of “evergreening” (cf. Darrow 2010, p. 132; Mueller and Chisum 2008, p. 1106), but generally a patent holder files an ancillary variation of the already patented innovation. Such variations often cannot be deemed an invention in terms of Art. 27(1) TRIPS; however, if a nearly identical patent is granted (e.g., due to insufficient examination), the effect is a “reset of the clock” as regards the protection period; Chalmers (2007), pp. 31–32.

  10. 10.

    Although “evergreening” does not lead to a temporal extension of the old patent (Darrow 2010, p. 131), it decreases, especially for generic companies, the possibility of stepping into the market of a special product: Kesselheim (2007), pp. E308–E309.

  11. 11.

    Lemley and Shapiro (2007), p. 1992; Ohly (2008), p. 791.

  12. 12.

    Industry standards become problematic if they cannot be practised without using a related patent (essential patent) and if the patentee asks for excessive royalty rates; thus, the industry standard is commercially blocked: von Meibom and Nack (2009), p. 511. Notable examples of dysfunctional use of “standard-essential” patents can be found in the mobile phone industry, e.g. in litigations between Samsung and Apple (see only BBC News Technology 2012, http://www.bbc.co.uk/news/technology-20812871) or between Motorola and Apple (see Kanter 2013, http://www.nytimes.com/2013/05/07/technology/07iht-google07.html?_r=0); see also Lemley and Shapiro (2007), pp. 1994–1998; related to Standard-Setting Organizations, Lemley (2002), pp. 1889–1980.

  13. 13.

    The “boom” of “junk patents”-related business methods mainly occurred during a period of one decade, after the State Street decision (State Street Bank & Trust Co. v. Signature Financial Group, Inc., 149 F.3d 1368 [Fed. Cir. 1998]), leading to lots of legal conflicts; see Liu (2011), pp. 401–406. The Bilski decision (in re Bilski, 545 F.3d 943, 88 U.S.P.Q.2d 1385 [Fed. Cir. 2008]), however, raised the bar again, Liu (2011), p. 405.

  14. 14.

    Leading cases on the European level were Case C-241/91 P and 242/91 P—RTE (Magill) [1995], ECR I-743; Case T-201/04—Microsoft [2007], ECR II-3601; Case C-418/01—IMS Health [2004], ECR I-5039. More recently, the German Federal Supreme Court (BGH) stated that the assertion of an injunctive relief may—under specific circumstances—constitute an abuse of a dominant market position: BGH 2009, GRUR, pp. 694–698 para. 27; for further details, see Körber (2013), pp. 185–188, 221. According to the European Commission, the threat of injunction (or an enforcement) may impede effective competition and therefore may be considered as an abuse (COMM., 13.2. 2012, COMP/M.6381, para. 107). As to the differences between EU antitrust law and the four-factor test according to the US jurisdiction (point 5, below), see Körber (2013), pp. 225 et seq.

  15. 15.

    See, however, chapter “Mandatory Licensing Under Patent Law and Competition Law: Different Concerns, Complementary Roles” by Hanns Ullrich and chapter “Refusal to License as an Abuse of Market Dominance: From Commercial Solvents to Microsoft” by Matthias Lamping (in this volume).

  16. 16.

    See Sect. 5 below.

  17. 17.

    Further information: Pflüger (2011), Paris Convention, introductory remarks 7.

  18. 18.

    Art. 29(2)a Österreichisches Patentgesetz 1852, reproduced in von Kleinschrod (1855), pp. 151–152; the rule has its origin in Art. 21d, e Kaiserliches Patent vom 31. März 1832, reproduced in Alex Historische Rechts- und Gesetzestexte Online, available at http://alex.onb.ac.at/cgi-content/alex?aid=jgs&datum=1019&page=14&size=45.

  19. 19.

    Art. XXIII Law of May 24, 1854 (Belgium), reproduced in Abbott (1886), p. 46; Trimble (2012), p. 514 note 6.

  20. 20.

    See Bodenhausen (1968), p. 69; Pflüger and Prüfer-Kruse (2011), p. 232.

  21. 21.

    A few examples can be found in the French Copyright Law (Art. L. 121-3, L. 122-9, L. 111-3 Code de la Propriété), Carré (2012), p. 397.

  22. 22.

    Motion Picture Patents Co. v. Universal Film Co., 243 U.S. 502.

  23. 23.

    Morton Salt Co. v. G.S. Suppinger Co., 314 U.S. 488.

  24. 24.

    E.g., The United States Court of Appeals for the Federal Circuit defines patent misuse as to “impermissibly broaden the ‘physical or temporal scope’ of a patent grant with anticompetitive effect”; Windsurfing Int’l, Inc. v. AMF, Inc., 782 F.2d 995, 1001 (Fed. Cir. 1986). For more on the history of the misuse doctrine, see Gordon and Hoerner (2000), pp. 1–35; Feldmann (2003), pp. 402–421; Bohannan (2011), pp. 479–486.

  25. 25.

    The question basically is whether the misuse doctrine applies in case of anti-competitive effects of behaviour only; cf. Feldmann’s title “The Insufficiency of Antitrust Analysis for Patent Misuse”, Feldmann (2003), pp. 399–449; Cotter (2011), pp. 460–468; Bohannan (2011), pp. 490–495; Trimble (2012), pp. 516–517.

  26. 26.

    E.g., § 242 German Civil Code. But related to IP, only few cases are known. Once, however, the Jena Court of Appeal denied injunctive relief because of dysfunctional conduct of the right holder based on § 242 German Civil Code. OLG Jena (Court of Appeal), MMR 2008, 408, 413.

  27. 27.

    See Sect. 4.1 above.

  28. 28.

    It should be noted, however, that the grant of a compulsory licence does not depend on the abuse of an IP right by its right holder in the narrow sense of the term. Rather—and typically—compulsory licences are intended to avoid dysfunctional effects of the IP systems, regardless of the conduct of the right holder—whose non-use of a patent, e.g. as a matter of principle, may not be deemed an abuse.

  29. 29.

    This ultimately leads to “over-protection” of the right holder to the detriment of competitors: Hilty (2012), pp. 12, 13.

  30. 30.

    547 U.S. 388 (2006). In 2007, the District Court, E.D. Virginia, to which the case returned, finally denied the injunctive relief, 500 F. Supp. 2d 556 (2007). More about this case and its impacts: Elrefaie (2010), pp. 221–242; Phillips (2009), pp. 416–434; Petersen (2008), p. 23; Trimble (2012), pp. 518–520; O’Melinn (2008); pp. 119–131. Cf. the discussion about the subject matter: Ohly (2008), pp. 789–790.

  31. 31.

    Nevertheless, also in civil law countries, it is disputed whether a judge should weigh interests of parties in an IP case under special circumstances, in particular if an IP right is inflexible and can therefore be used abusively, e.g. in the German copyright law, Hoeren and Herring (2011), pp. 502–503.

  32. 32.

    See also Ohly, seeking a proportional approach to injunctive relief in patent law in order to avoid economic damages, Ohly (2008), p. 796. Although infringement should generally trigger an injunction, there may be exceptions: Ohly (2009), p. 266; see also Kraßer (2009), p. 875, calling for a denial of injunctive relief under special circumstances. Also in competition law, proportional remedies (including injunctive relief) are postulated: Köhler (1996), pp. 82, 89.

  33. 33.

    Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights.

  34. 34.

    Relating to the case-by-case approach, see also Sect. 2 above, last part. In addition, according to Recital 24 of the Enforcement Directive, measures, procedures, and remedies against further infringements depend on the particular case and must be justified by the circumstances: Ohly (2009), p. 265.

  35. 35.

    For further reflections on these three criteria, see Ohly (2009), pp. 257–274.

  36. 36.

    Emphasis added. Art. 11 refers to Art. 44 I TRIPS: Walter and Goebel (2010), para. 13.11.4. Furthermore, it calls to mind 35 U.S.C. § 283, to which the Supreme Court referred in the eBay v. MercExchange case.

  37. 37.

    Emphasis added. von Mühlendahl (2007), p. 377.

  38. 38.

    Another view refers to Art. 102(1) Council Regulation (EC) No 207/2009 of 26 February 2009 on the Community trade mark (former Art. 98(1) Council Regulation [EC] No 40/94 of December 1993), which requires injunction in case of an infringement of the Community trademark “unless there are special reasons for not doing so”. According to the ECJ, however, this exception must be interpreted strictly; cf. case C-316/05—Nokia v. Wärdell, [2006] ECR I-12083, para. 30; Ohly (2009), p. 266.

  39. 39.

    One may even argue, based on the Latin phrase expressio unius est exclusio alterius, that the denial of injunctive relief would only be possible under the narrow conditions of Art. 12—without alternatives; see Ohly (2009), p. 264; Bently and Sherman (2009), p. 113 note 105.

  40. 40.

    See Sect. 5 above.

  41. 41.

    See Sect. 6 above.

  42. 42.

    See Sect. 5 above.

  43. 43.

    See “eBay’s effect on copyright injunctions: When property rules give way to liability rules”, Phillips (2009), pp. 411–416. Fundamental on property and liability rules were Calabresi and Melamed (1972), pp. 1089–1128; see also Merges (1996), pp. 1293–1393; Lemley (2012), pp. 463–486.

  44. 44.

    For more on this, see chapter “Ancillary Orders of Compulsory Licensing and Their Compatibility with the TRIPS Agreement” by Richard Li-dar Wang, in this volume.

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    Reto M. Hilty

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    Reto M. Hilty

  2. Institutum Iurisprudentiae Academia Sinica, Taipei, Taiwan

    Kung-Chung Liu

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Hilty, R.M. (2015). Legal Remedies Against Abuse, Misuse, and Other Forms of Inappropriate Conduct of IP Right Holders. In: Hilty, R., Liu, KC. (eds) Compulsory Licensing. MPI Studies on Intellectual Property and Competition Law, vol 22. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-54704-1_18

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