Article 82 EC and Strategic Patenting – Patent Thickets, Defensive Patents, and Follow-on Patents

1. Article 82 EC and Strategic Patenting – Patent Thickets, Defensive Patents, and Follow-on Patents 14 January 2009 Stephen Mavroghenis

2. Article 82 EC and Strategic Patenting Behaviours • Commission’s description of originator patent strategies • Originators develop strategies that extend the breadth and duration of their patent protection • Originator intent is to delay or block market entry of generics and competing originators • Strategies: - Patent thickets or clusters - Secondary or follow-on patents - Defensive patenting

3. Before the Preliminary Report DG Enterprise commissioned study of 8 July 2007 on strategic use of patents and implications for enterprise and competition policy

4. Before the Preliminary Report cont. Patents do not have the same role to play in all technology areas and this must be taken into account when applying the competition rules

5. Patent Thickets / Patent Clusters Clusters formed when originators file numerous broad and “weak” patents around the original molecule patent Preliminary Report Originator - Generic

6. Preliminary Report Originator - Generic cont. • Divisional patent applications • Divisional is formed when parent patent application is split into one or several narrower patent applications

7. Preliminary Report Originator - Generic cont. • Effects of Clusters and Divisionals • Increases uncertainty about patent rights: generics uncertain if they can enter market without infringing a cluster patent or a divisional

8. Preliminary Report Originator – Originator • Defensive patenting • Defensive patenting occurs when originators maintain and use patents without intending to develop and/or commercialise them but solely to block entry of competing products

9. Preliminary Report Originator – Originator cont. • Divisional patent applications • Divisionals interfere with R&D: Originators often challenge such divisionals to clear their paths for research

10. Patent Thickets/Clusters • When clustering is only aimed at excluding competition and not safeguarding a viable commercial development, this is not in line with the underlying objectives of the patent system and is anti-competitive • But is it anti-competitive?

11. Patent Thickets/Clusters cont. • Strong patent protection promotes ex ante incentives to innovate • If the invention is new, involves an inventive step and is susceptible to industrial application it is patentable • Competition law should not second guess

12. Patent Thickets/Clusters cont. • When does multiple patenting shift from the lawful to the unlawful?

13. Secondary or follow-on patents • Commission’s concerns are that secondary patenting delays competition in products based on same original invention

14. Secondary or follow-on patents cont. • Patenting throughout life of a product is not novel and not restricted to the pharmaceutical sector

15. Secondary or follow-on patents cont. • There does not appear to be any justifiable consumer welfare reasons to intervene against secondary patents to facilitate generic entry

16. Secondary or follow-on patents cont. • Consumer benefit? • Difficult to distinguish lawful from unlawful behaviour • Commission authority?

17. Defensive Patenting • Defensive patenting occurs when originators maintain and use patents without intending to develop and/or commercialise them but solely to block entry of competing products

18. Concluding Thoughts • High hurdle to demonstrate patent strategies are abusive • Interferes with patent regime itself and its very rationale • Effects of a firm’s patenting strategy on others’ innovation incentives should “primarily be addressed through the design of patent law” and proper role for competition policy is to prevent the misuse of intellectual property directed at product markets, which the report concedes is “very challenging”