U-turn on the U-turn: more comments on the Italian latanoprost antitrust decision

Recently the new decision issued by the Italian antitrust authorities in the matter of the latanoprost case was discussed on this weblog (see earlier posts here and here).

Micaela Modiano (Modiano & Partners) and Anna Maria Stein (Franzosi Dal Negro Setti) now add more information about this important decision, so as to shed some light on why, after the the Italian antitrust authority (Autorità Garante della Concorrenza e del Mercato) had first found that Pfizer had abused its dominant position, and after a first U-turn of the Italian administrative court (Tribunale Amministrativo Regionale) denying that there had been any abuse by Pfizer, the administrative appeal court (Consiglio di Stato) has now taken a further U-turn and instead held that Pfizer has abused its position.

As those of you who have followed this case already know, Pfizer owned a patent with compound claims to, inter alia, latanoprost on which it had filed SPCs and paediatric extensions in various EU countries, but not in Italy. Pfizer had obtained a divisional on the basis of that patent, had validated the patent in Italy, Portugal and Spain and then obtained an SPC and a paediatric extension in Italy on the basis of the divisional patent. At the end of opposition proceedings, the divisional patent had been maintained with claims to the use of latanoprost for a certain therapeutic indication.

The Italian antitrust authority had held that Pfizer had abused its dominant position. Important factors which had led to such decision were the fact that Pfizer had not clearly informed the Italian Patent and Trade Mark Office that the Italian SPC application was based on the divisional while in other EU countries it was based on the parent patent. This was a clear attempt to draw principles from the AstraZeneca case, where AstraZeneca had been found to have intentionally supplied false information to various Patent Offices in an attempt to obtain IP rights and/or or IP right expiry dates to which it was not entitled. It is worth noting that nothing in the SPC Regulation precludes a company from filing an SPC for a product in one country on the basis of one patent and in another country on the basis of another patent, be it a divisional or a wholly different patent. It is also worth noting that Pfizer never made representations to the Italian Patent and Trade Mark Office about the “nature” of its patent, so that the accuracy of the parallel with AstraZeneca appears to be very limited.

The Italian administrative court had in fact denied that there had been any abuse by Pfizer, noting inter alia that Pfizer's behaviour did not include the “quid pluris” (such as an intentional misrepresentation to the Italian Patent and Trade Mark Office) which is necessary for a finding of abuse.

Contrary to this, the Italian administrative appeal court (Consiglio di Stato) has now held that Pfizer did abuse its dominant position. A few of the points made by the Consiglio di Stato to support this position are quite interesting and will probably spur some debate among the lovers (or haters?) of divisionals.

As a first point, even though during the proceedings relating to this antitrust challenge Pfizer had clearly shown that – as is also inevitably based on the provisions of the SPC Regulation - basing the Italian SPC and paediatric extension on the divisional did not lead to an SPC expiry date different from the one achieved by the other SPCs and paediatric extensions which were based on the parent patent, the Consiglio di Stato does not seem to have appreciated this point, since in the decision the court has emphasized that the divisional patent expired in 2009 whereas thanks to the Italian SPC and paediatric extension the expiry date was postponed to 2012 (evidently not realizing that the comparison had to be made among the various SPCs, or the various paediatric extensions, and not between the patent and the SPC/paediatric extension).

Even more notably, on the point of the actual abuse the Consiglio di Stato held that (our English translation):

“Here, we do not discuss a conduct prohibited by patent law, but the anti competitive implications of a number of acts which, in and of themselves, are legitimate [i.e. obtaining a divisional patent and an SPC]. After all, the abuse of a dominant position, attributed to Pfizer, is nothing but the specification of the broader category of abuse of right, whose precondition is in fact the existence of a right, which then is used in an instrumental manner that is not coherent with the goal for which the law acknowledges it – in this specific case, the exclusion of the competitors from the market.”

At this stage, the question that first springs to mind is what other, legitimate, purpose obtaining a patent and an SPC can serve, for the party that obtains such IP rights, if not that of excluding competitors from the market (after all, patents and SPCs, like all IP rights, are exclusive rights). This answer, at least in the view of the Consiglio di Stato, can probably be found in the following passage of the decision (our English translation):

“In the present case, the behaviour adopted by Pfizer by way of the exploitation of the rights connected with the ownership of the main patent and with the position on the market allowed to defer [the entry into the market] of generics of Xalatan, without entailing any concrete use of the same active pharmaceutical ingredient different from the one already protected. The assessment of the [Italian antitrust] authority, who saw in such behaviour a goal going beyond, and differing from, the one that is specific to the patent protection … is therefore fully justified.”

It will not come as a surprise, after reading this passage, that in at least three other passages of the decision the Consiglio di Stato insists on the fact that the grant of the divisional patent was not followed by the marketing of any new product (Pfizer's Xalatan, comprising latanoprost as the active pharmaceutical ingredient, was already on the market when the divisional patent was granted).

Thus what transpires from the decision is that the Consiglio di Stato considered that, for the divisional patent to be legitimate, it had to be accompanied by the marketing of a new product (falling within the scope of the patent). This is in contrast with the fact that, as said above and by definition, patents are exclusive rights and not a permission, let alone an obligation, for the patent owner to implement the invention in actuality. In addition, this is in contrast with the fact that one and the same product can be validly covered by several patents (Markush formula for the active ingredient, salts, polymorphs, process for making the active ingredient, formulation, process for making the formulation, use for a certain therapeutic indication, etc.), none of which require the marketing of a new product for such patents to be valid and non-abusive.

As far as we know, this decision is one of the few decisions on the interaction between divisional patents and antitrust laws in Europe. In addition, the action was started before the Italian authorities as Pfizer's allegedly abusive behaviour was limited to Italy (given that in most other European countries the SPCs and paediatric extensions were based on the parent patent), but throughout the proceedings the parties relied on the case law of the CJEU in the matter of abuse of dominant position and ruled on the basis of Art. 102 TFEU rather than on the exclusive basis of Italian law. It is thus hoped that, if this decision is cited in the future by other authorities ruling on the same issues, this will be done with a view to clarifying whether the exclusive nature of a patent is, in and of itself, a legitimate reason to own a patent or whether each (divisional) patent must be accompanied by a new product for it to be legitimate also from the point of view of competition law.