AstraZeneca fine upheld: legal team comments

AZ: probably feeling
a bit blue today ... 

The Court of Justice of the European Union, as expected, dismissed AstraZeneca's appeal against the aggregate of 54.5 million euros which it was fined for abuse of dominant position. The acts to which objection was taken included the making of deliberate misrepresentations to national patent offices in order to secure and sustain SPC protection for its Losec anti-ulcer product.

The decision, in Case C-457/10 P AstraZeneca v Commission, is neatly summarised in the Curia press release here.

Lawyers for Bristows LLP, who have been keeping a watchful eye on this case on behalf of their clients, have been quick to comment.  Said Marie Manley, head of Bristows’ Pharmaceutical Regulatory team:

“The Commission will be delighted with the endorsement to its approach; innovative pharma less so. The pharmaceutical industry is now subject to a set of onerous but not fully clear obligations. Ensuring compliance will require pharmaceutical companies to build in more checks and balances to their internal procedures. Strategic corporate decisions when a product is close to patent expiry should be particularly carefully scrutinised”

Pat Treacy, head of Bristows’ competition team, added:

"The effects of this judgment resonate beyond the pharmaceutical sector. Companies which may be dominant now have an obligation to conduct themselves transparently when dealing with the public authorities. AstraZeneca has been penalised for making arguments that favoured its position when the issue was legally unclear. The Commission, in a position which has been endorsed by the courts, believes that AstraZeneca should have made the uncertainty about the legal position clear to the patent authority. This has wide implications for the way dominant companies conduct themselves".

Correction -- and apologies!

The link to the English translation of the Italian administrative court decision in the Pfizer case, given in the previous blogpost, led erroneously to a document in Italian and not to the English translation. The translation can be found here and the earlier blogpost will be amended accordingly.

Apologies to everyone who has been inconvenienced.  My only excuse is that I was not sufficiently awake to the perils of late-night blogging!

Italian u-turn on latanoprost abuse of dominant position dispute

The SPC Blog is very pleased to thank Micaela Modiano (Modiano & Partners) and Anna Maria Stein (Franzosi Dal Negro Setti),for the following item of news from Italy:

"Recently we reported  he decision of the Italian Antitrust Authority in the latanoprost case. In that decision, the Authority found that Pfizer abused its dominant position as a result of a combination of activities including filing a divisional, validating it only in a part of the designated states, filing an SPC and a paediatric extension based on it and Pfizer's involvement in related litigation in Italy.

Pfizer filed an appeal against this decision. On 3 September 2012 the Italian administrative court competent for this appeal issued its decision on Pfizer's appeal. The appeal decision is very interesting because, while the Italian Antitrust Authority had held that Pfizer's behaviour represented an abuse of dominant position, the Italian administrative court has now decided that this finding is entirely incorrect. In particular, the most noteworthy points of the administrative court decision are -- as regards the issue of abuse of dominant position -- that:

* Pfizer's divisional does not amount to an abusively excluding activity, since it was filed several years before the anticipated market entry of generic companies (i.e. not simultaneously with it), 

* the filing of Pfizer's divisional does not amount to an abusively excluding activity just because it took place when Pfizer realized the more limited protection conferred by the parent patent, 

* contrary to what happened in the AstraZeneca case, Pfizer did not provide the EPO with elusive information when pursuing its divisional, 

* Pfizer's litigation activity was not an abusively excluding activity, given that in most of the relevant litigation Pfizer was actually the defendant rather than the plaintiff, 

* Pfizer's warning letters sent prior to the litigation were not an abusively excluding activity, given that they were sent on the basis of Pfizer objectively having obtained an SPC for Italy; 

* the Antitrust Authority finding is altogether flawed as it appears to be based on the fact that, at the time of the Authority's decision, the divisional patent had been revoked by the EPO Opposition Division, while ignoring that the revocation could be (and was indeed) appealed. That is to say, it was not final at the time, and was indeed overturned by the EPO Board of Appeal.

Thus, while the Italian Antitrust Authority had held that a number of activities which are based on the provisions of the EPC and of the EC SPC and paediatric extension regulations allegedly represented, taken together and in the way in which Pfizer had carried them out, constituted an abuse of Pfizer's dominant position, the Italian administrative court has now held that Pfizer legitimately and non-abusively relied on such provisions simply to obtain the IP rights to which it was entitled.

The new Italian administrative court decision is therefore important as it appears to take away some of the very negative light shed in a blanket-like manner by the Italian Antitrust Authority on divisionals, SPCs and paediatric extensions. The new decision does not necessarily say that one can always and under any circumstance file a divisional, SPC or paediatric extension or sending warning letters or be involved in litigation without ever incurring in anticompetitive behaviour, but it surely says that in this particular case Pfizer merely relied on the available legal provisions to obtain certain rights it was entitled to.

We now wait to discover whether the administrative court decision will now be appealed by the Antitrust Authority"..

For those readers who are actually Italian or read Italian, the original decision is here.  Micaela and Anna Maria are seeing what they can do to get us all an English translation. Thanks!

AstraZeneca v Commission: a reminder

Writing yesterday for the Law Times ("EU court fires warning on antitrust behaviour"), Julius Melnitzer talks about the "clear and perhaps startling message" of the General Court law summer in Case T-321/05 AstraZeneca v Commission (noted by The SPC Blog here) that even acting within the law was no guarantee that one is safe from allegations of abuse of a dominant position. Regarding SPCs, Melnitzer had this to say:

"... European rules also allowed patent holders to apply for a supplementary protection certificate extending the validity of their patents for five years. The term is limited to the lesser of five years from patent expiration and 15 years from the first European marketing authorization.

In its application for Losec, AstraZeneca claimed March 1988 as the first marketing authorization date, but the commission proved that France had issued an authorization in 1987.

“This resulted in [AstraZeneca] gaining an additional period of protection for Losec in some countries and excluded the possibility of generic competition for a period of several months longer than was justified under the [supplementary] system,” ...

Following complaints from two generic manufacturers in 1999, the commission began investigating AstraZeneca’s patent management strategies between 1993 and 2000. In 2005, it decided that both the deregistration of the marketing authorizations and the misrepresentation of the first authorization date constituted abuse of dominance and imposed fines totalling 60 million euros. ...

... [T]he mere fact that AstraZeneca applied for the supplementary certificates didn’t make its conduct abusive. But misleading regulators regarding the date of the “first marketing authorization” took the company’s conduct outside the realm of legitimate competition on the merits.

“The submission to the public authorities of misleading information liable to lead them into error and therefore to make possible the grant of an exclusive right to which an undertaking is not entitled, or to which it is entitled for a shorter period, constitutes a practice falling outside the scope of competition on the merits which may be particularly restrictive of competition,” the court stated.

... [T]he misrepresentation nor the withdrawal of the marketing authorizations, then, was in keeping with “the special responsibility of dominant companies not to impair, by methods falling outside the scope of competition on the merits, genuine undistorted competition.”

While the case arises in the context of the pharmaceutical market, it could well affect conduct in other regulated industries, particularly those in which innovation and patents are significant competitive factors. ...

AstraZeneca has appealed the matter to the European Court of Justice".

No date for hearing the appeal appears yet to have been fixed but, given the extreme length of the General Court's judgment (920 paragraphs), the complexity of the issues and the value of the outcome to the various sectors of the pharma industry, both the parties concerned and the Court of Justice will need a good deal of time to think.

SPCs and anticompetitive conduct: the General Court speaks

Case T-321/05 AstraZeneca v Commission, a complex decision delivered by the General Court of the European Union at the beginning of this month, is not only about SPCs as such -- it concerns the rectitude or otherwise of the Commission's assessment that AstraZeneca, the UK's second-largest pharma company, misled patent officials and flouted antitrust rules in order to keep generic competition at bay with regard to its Omeprazole product.

The General Court upheld most of the Commission's finding but reversed the finding that AstraZeneca breached EU rules by withdrawing market approvals for older versions of its medicine in Denmark and Norway, thus preventing market entry by generic producers and parallel importers. Some interesting comments concerning abuse of dominant position and SPCs can be found in the judgment, which is some 920 paragraphs long. A few examples:

"361 ... the Commission applied Article 82 EC correctly in taking the view that the submission to the patent offices of objectively misleading representations by an undertaking in a dominant position which are of such a nature as to lead those offices to grant it SPCs to which it is not entitled or to which it is entitled for a shorter period, thus resulting in a restriction or elimination of competition, constituted an abuse of that position. The question whether those representations were objectively misleading must be assessed in the light of the specific circumstances and context of each individual case. ...".

"366 ... the Court rejects the applicants’ argument that the existence of specific remedies which make it possible to rectify, or even annul, patents and SPCs granted unlawfully justifies application of the competition rules only where an anticompetitive effect is demonstrated. Where behaviour falls within the scope of the competition rules, those rules apply irrespective of whether that behaviour may also be caught by other rules, of national origin or otherwise, which pursue separate objectives. Similarly, the existence of remedies specific to the patent system is not capable of altering the conditions of application of the prohibitions laid down in competition law and, in particular, of requiring, in cases of behaviour such as that at issue in the present case, proof of the anticompetitive effects produced by such behaviour".

The SPC Blog may return to this decision again, if time and resources permit.