Wednesday, January 16, 2008

European Commission Hands 110th Congressional Majority & Presidential Contenders a New Political Issue - Bashing Private Intellectual Property Rights

The following article demonstrates indirectly how the ‘failure to work’ doctrine in international intellectual property (patent) law has been squeezed down from 4 years under the Paris Convention for the Protection of Industrial Property (Patents) to practically zero years, and then used as a justification by governments to declare a compulsory license if there is found to be a ‘lack of adequate competition’.

Pursuant to Article 5 of the Paris Convention, the ‘failure to work’ doctrine essentially affords each member country “the right to take legislative measures providing for the grant of compulsory licenses to prevent the abuses which might result from the exercise of the exclusive rights conferred by the patent”.

However, within the European Union, it appears that a company’s indigenously (internally) developed know-how (as opposed to know-how and technologies acquired by means of merger & acquisition), especially in the healthcare or information technology sectors, is deemed to be a ‘public’ good – or in the international context, a ‘global public good’ (GPG).

Consequently, if the medical or healthcare-related knowledge or technology is unique in the marketplace without peer, and the holders of the patents to such know-how or technologies impose conditions for licensing or refuse to license the patent altogether, the EU Commission’s Antitrust Directorate is empowered to deem (i.e., to invoke a legal presumption of 'monopoly' against) the holders of the patents to such know-how or technology as operating an illegal ‘monopoly’. This makes it easier for governments to recommend the use of antitrust remedies to ‘break’ the monopoly via the issuance of compulsory licenses even though there is NO predatory behavior by the company and NO unreasonable contractual or market behavior by U.S. legal standards.

Emerging country governments, such as the Government of Brazil, are now basing their policies of ‘universal access to healthcare’ and ‘universal access to knowledge’ (A2K) on this approach to patents law. Such approach has also been embraced by many Majority members of the 110th United States Congress.

EU Probes Pharmaceutical Industry
On Dwindling New Patents, Drugs

The Wall Street Journal Europe

January 16, 2008 9:17 a.m.

BRUSSELS -- European Union investigators raided drug companies in several countries as the bloc's antitrust watchdog launched a wide investigation of potentially anticompetitive practices in the industry.

Neelie Kroes, the EU antitrust chief, said the industry-wide inquiry would examine whether large companies are abusing their market power to prevent competitors from bringing new drugs to market, or whether companies were colluding to restrain competition. [THIS AMOUNTS TO A 'WITCH HUNT' – CORPORATE CITIZENS IN CONTINENTAL EUROPE ARE DEEMED ‘GUILTY’ UNTIL PROVEN ‘INNOCENT’ – PRECISELY THE OPPOSITE SITUATION IN AMERICA DUE TO THE U.S. CONSTITUTION]

AstraZeneca PLC, GlaxoSmithKline PLC, Sanofi-Aventis SA, and Pfizer Inc. said they were among the companies contacted, although the commission did not name the companies searched Tuesday and early Wednesday, nor where they were located.

The EU's so-called sector inquiries are broad-brush examinations; they don't necessarily lead regulators to bring antitrust cases, but can result in substantial fines. Recent sector inquiries have focused on energy markets and payment-card systems. Both eventually resulted in antitrust action -- most recently in the EU's declaring unlawful a type of interbank fee set by MasterCard.

Mrs. Kroes cited figures indicating that the number of new drugs launched annually has declined from an average of 40 in the late 1990s to 28 between 2000 and 2004. "The pharmaceutical markets are not working as well as they might," she said. [THIS IS ANOTHER ‘MARKET FAILURE’ WHICH THE EU REGULATORS WISH TO ‘CORRECT’ THROUGH GOVERNMENT INTERVENTION/REGULATION ANATHEMA TO EXCLUSIVE PRIVATE PROPERTY RIGHTS]

The pharmaceutical sector inquiry seems likely to reanimate a debate about the intersection of competition policy and patent law. EU officials say one concern is that companies are "misusing" patent laws to block new drugs made by rivals. Such misuse might entail overbroad patent filings or specious lawsuits. The officials say that if the companies in question are "dominant," then any abusive behavior falls under their jurisdiction as a violation of EU monopoly rules.[THERE DOES NOT NEED TO BE REALLY AN ‘ILLICIT’ ACTIVITY – JUST THE MERE PRESENCE OF INNOVATION LEADERSHIP AND NO DESIRE TO LICENSE THE TECHNOLOGY...]

Another potential violation is more straightforward -- collusion between companies, for instance, agreeing not to enter each other's markets, or taking payment not to launch a competing drug. [THIS IS A LEGITIMATE ‘CONCERN’ IN THOSE INSTANCES WHERE IT CAN BE DEMONSTRATED BY CLEAR & CONVINCING EVIDENCE]

The EU has taken on alleged patent abuses before. In 2005, the Commission fined AstraZeneca €60 million ($89 million) for trying to block generic-drug makers from coming out with versions of its blockbuster ulcer drug Losec. The Commission said AstraZeneca gave "misleading" information to national patent offices that led them to wrongly extend the company's patents on Losec. AstraZeneca has appealed the case.

Under EU regulations, commission officials can raid the premises of businesses operating in Europe, whether or not they are European companies.

The EU began the sector inquiry with unannounced inspections -- triggering the first ones within hours of the commission's decision Wednesday to authorize the inquiry. In earlier sector inquiries, EU officials had begun more politely, with requests for information.

--Dow Jones Newswires contributed to this article.

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