Luxembourg, 03/05/2004 (Agence Europe) - In a long-awaited judgement, the Court of Justice defined three conditions to be met by an undertaking whereby any refusal on the part of that company to grant a licence for a brick structure protected by copyright may be judged abusive use of a dominant position, judged illegal under European law.
The Fifth Chamber of the Court, composed of Judges Jann, Timmermans and von Bahr, specified these conditions at the request of the Landgericht Frankfurt which, before decreeing, had sent it the IMS Health versus NDC Health case which it had before it, both companies being specialised in the sale of pharmaceutical products and healthcare for the clients of pharmaceutical laboratories.
The three conditions are: refusal must be an obstacle to the appearance of a new product or service for which there is a potential consumer demand; there must be no objective justification for the refusal; and the refusal must be of a kind that rules out all competition on the market concerned. Under these three conditions, the refusal by an undertaking is abusive and hence illegal. It is up to the Landgericht to apply these conditions to the case in hand.
It would seem that lawyers and the Commission give this ruling great importance for two reasons. It meets the question of principle over which lawyers in European law were at loggerheads, and which was to fix the conditions whereby a refusal to grant a copyright licence is abuse of dominant position. The ruling could have an impact in the affair concerning Microsoft, which the Commission has urged to reveal its interoperability code. A code covered, according to Microsoft, by its intellectual property right (see Commission comment below).
The German company IMS Health had perfected a 1860 brick structure in 2000, and a derived 2847 brick structure corresponding to geographical sections of German territory based on different parameters including postal codes.
A former IMS manger had founded the company Pharma Intranet Information (PII), which had tried to sell 2201 brick structures. The potential customers used to IMS structures were reticent about this so PII decided to work with brick structures - 1860 and 3000 brick structures - very similar to those of IMS. The company NDC then bought up PII and it is now NDC that is part of the process.
At an IMS request for interim measures, Landgericht Frankfurt had provisionally banned NDC from using 1860-3000 brick structures pending the ruling on the substance of the case by this same Landgericht. It provisional decision had been confirmed in appeal. The appeal jurisdiction had felt that the brick structure used by IMS was a database within the meaning of the German law on copyright.
Before enacting on the substance of the case, the Landgericht had sent the dossier to the Court of Justice. It felt that IMS Health could not refuse to grant NDC a licence if this refusal constituted abuse of dominant position under Community law. It had asked the Court what the conditions were that make behaviour by an undertaking like IMS constitute abuse of dominant position. The Fifth Chamber has now given its response.
The case seen by the European Commission side
Observers consider that the Commission, which was only a contributor and not party to the case, could consider that, in future, IMS fulfils the conditions stipulated by the Court. The Commission could consider that NDC proposes new products (use of computer), that IMS' refusal is not objective and that its refusal excludes competition.
The Commission had dealt with the matter directly in a procedure parallel to that which is unfolding in Germany. On 3 July 2001, it had taken an interim decision ruling that IMS should grant its rivals a licence for use of the 1860 brick structure. The Commission felt that the 1860 brick structure created by IMS had become a de facto norm. IMS had reacted by making an interim request upon the EU Court of First Instance President, Bo Vesterdorf, for the Commission decision to be suspended, which was done by interim ruling on 26 October 2002. The Commission's appeal against this order had been rejected by the president of the Court of Justice on 11 April 2002.
The Commission, however, then withdrew its provisional decision of 3 July 2001 after recent development of a third procedure, in Germany, before the German Court of Appeal, which no longer allows the Commission to note that IMS is the only owner of the brick structure on which it holds copyright.
Commission is pleased with Court ruling
The Commission is pleased with the Court of Justice ruling confirming its positions, it was announced by the spokesperson for Commissioner Monti. Amelia Torres welcomes the fact that the Court had defined the exceptional circumstances in which an undertaking's refusal to grant a licence can be abuse of dominant position. Drawing a parallel between the IMS affair and that concerning Microsoft, the spokesperson recalled that the Commission had never suggested that a company should be allowed to "clone" a creation. It stresses, however, that when the refusal to grant a licence leads to preventing the arrival on the market of new products, exceptional circumstances may be invoked to encourage the company to diffuse information.