Posted on April 7, 2021 in
Written by: David B. Honig
Some jurisdictions apply rules on cartels and abuse of dominance to regulate dispute clauses. The European Union (“EU”) provides an interesting example. In its windsurfing case, the European Commission found that a non-contest clause was not valid in violation of the rules on cartels and abuse of dominance77.7 The Commission has taken a firm position that “the public interest must prevail over any other consideration with regard to the guarantee of an essentially free and , therefore, the abolition of a monopoly that could be unduly granted to the licensee.” 78 The European Court of Justice upheld the Commission`s decision and found that the non-appeal clause constituted an illegal restriction of competition79. 80 . Actavis, 133 P. Ct. 2229, 2236; See also Stephen Yelderman, Do Patent Challenges Increase Competition?, 83 U. Chi L. Rev. 1943, 2004-12 (2016) (on the grounds that licensees may have more incentive to challenge patents, at least in some cases). [D] the actions of the licensee do not weigh very heavily when they are weighed against the important public interest in allowing full and free competition in the use of ideas that are in fact part of the public domain. Licensees are often the only people with sufficient economic motivation to question the patentability of an inventor`s discovery.
If muzzled, the public can be constantly called upon to pay tribute to the so-called monopolies, without necessity or justification. We believe it is clear that the technical requirements of treaty doctrine must give way to public interest requirements in the typical situation in which a licence is negotiated after a patent is issued.  Patents are generally considered to be awards for increasing incentives for innovation.211 We do not dispute that awards can influence incentives; However, we have to ask ourselves what incentives are created by patents. The implicit assumption for the analyses of many scientists is the assumption that the patents granted are valid.212 If this is the case, the issuance of patents would effectively reward innovation. In practice, however, a non-marginal number of patents granted is unjustified.213 Increasing the price of unjustified patents does not reinforce incentives to develop patentable ideas. It only reinforces incentives to patent non-innovative ideas, a form of unwanted rent research. The opposite argument can be put forward that the expected harm resulting from the agreements is the most significant when it comes to resolving the disputes at issue. Damage caused by reverse payment agreements is more or less guaranteed.