Contemporary Anti-Competitive Practices of Patents Usage

• Author: Oleg Milchenko
• Position: Odessa National Academy of Law, Ukraine
• Pages: 190-197

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Oleg Milchenko

Odessa National Academy of Law,Ukraine

okyoho@gmail.com

Abstract: Intersection of patent and competition laws was discussed widely before.

In fact, this issue is not regulated properly at the moment, b ut the activity of courts around

the world made it possible to limit abusive patent practices which often lea d to restriction of

competition. However, new ti mes raised new issues and to make the patent system relevant

to needs o f today le gislators and judiciary have to pay attention to contemporary problems

in patent law. This article is focused on recently revealed practices of p atent management

which could be dangerous for fair markets.

1. Introduction

The patent system was developed and implemented to protect results of intellectual work of an inventor

and to reward him for his contribution to development of science and technology. In other words, the

patent system serves for encouragement of innovation. In simple language the concept of that system

could be described as an entitlement of an inventor with the right to prevent others from unauthorized

usage of a patented invention for a period of time in response to disclosure of the invention for a public.

And in that concept lies a key issue in balance between pro tection of intellectual p roperty rights and

protection of competition.

However, such quality of patents is seen in positive way because innovative activity could make

positions of existing monopoly power weaker and undermine the m.

1

A patent could be very valuable asset of a company and in fact for high technology company patents

create significant part of its value. Also because of the nature of patents they could be used as effective

tools for gaining market power. And sometimes such activity could violate terms of anti-competitive

legislation.

There were some landmark cases before in which abuse of patent rights was ad mitted as

contravention. For example, Hangards Inc. v Ethicon Inc. where Et hion Inc., which had filed series of

infringement lawsuits a gainst Hangards Inc., was re cognized as being guilty for violation of antitrust

legislation because patent litigation initiated by Ethion pursued an intention to monopolize an industry.

2

In Kobe Inc. v Dempsey Pump Co. court also emphasized unfair nature of litigation started by Kobe Inc.

which was directed on creation of monopoly a nd awarded to the defendant antitrust damages as well as

denied plaintiff’s allegations on infringement.

3

However, there is an important thing in this case that Kobe

Inc. had accumulated over 70 patents pertained to oil pumps. And when Dempsey Pump had introd uced

its own oil pump, Kobe Inc. approached it and its potential clients and indicated prospective lawsuits.

Kobe Inc. threatened Dempse y Pump a nd its partners with a litigatio n and while threatening it used

patents which were already expir ed and this fact was taken into account by the court. So in fact Kobe Inc.

case includes both aspects of anti-competitive behavior as well as misrepresentation activity by using

invalid patents.

There is also another sample o f abusive behavior which is re lated to the drugs market. Pharmaceutical

companies often try to continue a period during which a p atent still be valid by adding i nsufficient

1

McConnel, Brue (2000). Economics: principles, problems and policies, translated from English, 11

th

edition, HaGar,

at 612

2

Chu (1992). An Antitrust Solution to the New Wave of Predatory Patent Infringement Litigation, 33 Wm. & Mary L.

Rev. 1341 at 1358

3

Id at 1361