[Ip-health] TRIPS Council (November 2018): Statement of the Brazil on competition policy

Thiru Balasubramaniam thiru at keionline.org
Mon Nov 12 02:24:56 PST 2018


https://www.keionline.org/29193

TRIPS Council (November 2018): Statement of the Brazil on competition policy

Posted on November 12, 2018 by Thiru

On 9 November 2018, the Brazil delivered the following statement on IP and
competition policy at the WTO TRIPS Council under agenda item 13 on
Intellectual Property and the Public Interest: Promoting Public Health
Through Competition Law and Policy (an item co-sponsored by Brazil, India,
and South Africa).

Brazil provided the recent example of the Bayer-Monsanto merger as an
example of its competition authority, CADE, preventing “the concentration
of economic power generated by IP rights, as well as potential abuses of
dominant position by IP rights holders.”

Brazil noted,

“In the merger filing between Bayer and Monsanto, CADE had the opportunity
to address intellectual property rights issues as they pertain to the sale
of goods and tangible assets. The merger involved the seeds and
agricultural defensives markets. The analysis undertaken by CADE
highlighted the importance of IP rights for the companies involved, who
heavily rely on patents and plant varieties protection. Bayer and Monsanto
are active in all those areas, which gave rise to competitive concerns
related to increased entry barriers and market concentration deriving from
IP rights. CADE conditioned approval of the merger on remedies that
addressed the competitive concerns caused by the concentration of IP
rights. For the merger to go through, the companies were required license
certain patented seed traits and protected plant varieties.”

The full text of Brazil’s intervention is reproduced below.
------------------------------

IP and Public Interest

I would like to thank South Africa for circulating document IP/C/W/649. The
communication builds on documents IP/C/W/630 and IP/C/W/643, with the goal
of expanding the discussions on the complex interplay between intellectual
property and public interest. The debate on the relation between
intellectual property and competition lies at the heart of the IP system
and is certainly of interest to this Council. This is an issue that has
been attracting increased attention in international forums, as evidenced
by the discussions held in September at the WIPO Advisory Committee on
Enforcement.

Mr. Chairman,

Intellectual property and antitrust law have common objectives: to
stimulate economic development, promote innovation and foster competition.
However, these two disciplines deploy different methods to achieve these
same objectives, which, at first, may seem contradictory. Antitrust law
stimulates economic development by promoting competition and preventing
abuse of dominance and exclusionary practices, whereas intellectual
property stimulates innovation by creating exclusive rights, which prevent
competition and use of immaterial goods by unauthorized third parties.

For a long time, the two fields were considered incompatible. However, the
debate has evolved to consider that antitrust and intellectual property are
complementary, even though there may be a tension between them. A dynamic
analysis of the competition process shows that intellectual property is not
by itself harmful to competition. Rather, exclusive rights granted under IP
laws promotes competition between companies, which are compelled to invest
in research and development in order to innovate and keep up with the
market.

Therefore, antitrust and intellectual property should work together towards
their common goals. This is particularly true in the context of the new
economy, in which innovation, knowledge and intellectual property rights
are a central part of the competition dynamics. It does not mean, however,
that the two fields will remain without conflicts. In the concrete economic
reality, there is growing attention from competition authorities to the
relationship between the two areas, because there is also an increasing
possibility to the abuse of IP rights in innovative and digital markets.

Mr Chair,

In the last session of the Council we presented a case of sham litigation
involving a drug used against breast cancer. Our competition authority,
whose acronym in Portuguese is CADE, imposed a fine of 36.6 million reais
or 10 million US dollars on the defendants(empresa).

I would like now to mention two other cases decided by CADE, the first one
regarding the use of auto parts industrial design rights in the aftermarket
and the second involving a merger filing.

The “Anfape Case”, as it came to be known, was filed by the National
Association of Independent Manufacturers of Automobile Parts against
original equipment manufacturers. The plaintiff alleged that the defendants
had abused their dominant position and their IP rights over automobile
spare parts by exercising their industrial design rights in the
aftermarket, thus effectively monopolizing the aftermarket. Certain
original manufacturers filed legal claims in the judiciary to safeguard
their intellectual property and preclude the independent manufacturers from
commercializing auto parts without properly licensing the industrial
design. ANFAPE argued that those injunctions intended to prevent
independent manufacturers from effectively competing in the aftermarket and
argued that the industrial design was restricted to the primary market. The
decision by CADE held that the Brazilian Industrial Property Law did not
restrict the enforcement of the industrial design protection to the
aftermarket. The registrations were obtained lawfully and the means used to
enforce the IP rights were reasonable, so there was no trace of sham
litigation. For this reason, no abuse in the exercise of the IP rights was
identified and the case was closed. This understanding reveals CADE’s
balanced position when confronting intellectual property matters, achieved
after careful consideration of the issues.

In the merger filing between Bayer and Monsanto, CADE had the opportunity
to address intellectual property rights issues as they pertain to the sale
of goods and tangible assets. The merger involved the seeds and
agricultural defensives markets. The analysis undertaken by CADE
highlighted the importance of IP rights for the companies involved, who
heavily rely on patents and plant varieties protection. Bayer and Monsanto
are active in all those areas, which gave rise to competitive concerns
related to increased entry barriers and market concentration deriving from
IP rights. CADE conditioned approval of the merger on remedies that
addressed the competitive concerns caused by the concentration of IP
rights. For the merger to go through, the companies were required license
certain patented seed traits and protected plant varieties. This merger
analysis shows that competition authorities can effectively and timely
intervene to prevent the concentration of economic power generated by IP
rights, as well as potential abuses of dominant position by IP rights
holders.

Mr. Chairman,

Policy coherence between the IP system and competition must be strengthened
in order to promote to the full extent innovation and access to
technologies. Article 8(2) of the TRIPS Agreement provides flexibilities
for governments to adopt competition law measures to prevent abuse of
intellectual property rights, including IP rights related to the life
sciences.

Abuses of intellectual property rights, such as reverse payment agreements
and anticompetitive licensing practices, may favor undue extension of the
market power granted by a patent. These practices impact both traditional
and innovative companies, stifling competition and harming consumers. One
way to deal with these practices is through the improvement of the patent
system, for example by carefully designing patentability requirements.
While some changes may indeed decrease or eliminate abuses, they should be
implemented cautiously to avoid unforeseen outcomes.

Competition law, on the other hand, may be useful in situations where
changes to IP policies are ineffective in dealing with these types of
practices. In the pharmaceutical industry, competition policy benefits
consumers in the form of increased access to affordable medicines by
detecting, halting and correcting anti-competitive practices, without
harming the dynamic competition effect granted by IP rights. Furthermore,
countries should be able to retain freedom to utilize to the full
flexibilities available in the TRIPS Agreement to ensure access to
medicines. It is also important that technical assistance and capacity
building contribute to the delivery of more effective policies on
potentially abusive practices in the pharmaceutical sector in support of
access to medicines.

The relationship between antitrust and intellectual property is complex and
there are still many issued to be addressed by authorities. As new
competitive strategies related to new businesses arise, there will be a
growing number of antitrust cases involving IP rights. The core issue is to
determine the optimal level of competition law intervention in the field of
intellectual property rights. We must fine tune enforcement work to ensure
competition and intellectual property laws each play their complementary
role in encouraging innovation and enhancing consumer welfare.


-- 
Thiru Balasubramaniam
Geneva Representative
Knowledge Ecology International
41 22 791 6727
thiru at keionline.org


More information about the Ip-health mailing list