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16 October 2017

AIPPI 2017: Panel hears about ‘fishy’ pay-for-delay cases

“We didn’t do these cases because we’re against IP rights, but what we saw is, if you pay very substantial amounts of money to people in order for them not to go onto the market, it’s a bit fishy.”

That’s the view of Christian Vollrath, of the private enforcement unit at the European Commission, who was speaking in a personal capacity on a panel called “The business of IP—IP and competition”, yesterday, October 15, at the 2017 AIPPI World Congress in Sydney.

For Vollrath, pay-for-delay cases are where the two worlds of IP and competition meet.

“In the US, similar types of cases have gone up to the US Supreme Court. Both in Europe and the US, the realisation has been that you simply cannot run these cases purely as patent cases and that there’s a competition angle to it which is important and needs to come out,” he said.

Merger control cases are also within Vollrath’s remit at the European Commission. In this area, he sees industries becoming more concentrated and the number of players in different markets decreasing.

“What does it do to innovation? I understand that patent law and IP law in general is necessary for innovation, but if you end up with very few fish in the pond, the incentive to innovate may not be as strong,” he said.

In December last year, Australia’s Productivity Commission issued a report claiming that IP rights across the spectrum need to be improved in Australia.

For Annabelle Bennett, chancellor at Bond University, the report was worrying.

“The underlying concept was that IP is bad for competition,” she explained, adding that in its response, the Australian government did not accept all of the recommendations.

One of the proposals from the commission was that a “transparent reporting and monitoring system should be put in place to detect pay-for-delay settlements”.

According to Bennett, the government accepts in principle there should be a system of reporting these settlements to a watchdog, and this echoes public sentiment.

“In contrast to the US and Europe, which have arrangements to detect suspect agreements, Australia has taken a ‘see no evil’ approach to pay-for-delay settlements,” claimed the report.

It seems to be a different story in the US where, according to Damian Wasserbauer, founder of Wasserbauer IP Law, unfair competition law is “fairly well settled” and is “seemingly not in as much turmoil as maybe Australia is”.

Currently, the hottest competition topic is the dispute between Qualcomm and Apple.

In August, the US International Trade Commission agreed to investigate Qualcomm’s complaint against Apple amid a battle between the two companies.

Wasserbauer added that in the US the real problem that people are struggling with is the patent ownership issue.

“The fundamental right of a patent is under extreme stress where it can be difficult to even patent … but once you obtain the patent, because of recent changes to the law, there’s endless challenges of inter partes reviews which is a cost and if you get into litigation there’s a cost there,” he said.

The panel was moderated by Erik Ficks, partner and head of IP at Roschier.

The 2017 AIPPI World Congress is taking place between October 13 and 17.

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23 December 2016   Intellectual property rights across the spectrum need to be improved in Australia, according to a report issued by the Productivity Commission, which recommended the introduction of a fair use exception.