Monti move set to challenge intellectual property rights

Date: 03/05/01

By Laurence Frost

THE European Commission is ready to force a market data firm to share a key analysis technique with its rivals, in a move that could have massive implications for intellectual property rights.

Competition chief Mario Monti is set to go ahead with proposals for interim measures against pharmaceutical market research firm IMS Health, compelling it to licence its highly-successful 'brick structure' analysis to competitor NDC.

The compulsory licence would be issued pending a more thorough investigation. But the firm says it is shocked by Monti's plans, which it claims represent an expansion of EU competition policy at the expense of basic principles of intellectual property.

A lawyer studying the case said: "It means companies may be required to disclose any innovations that their competitors can't invent around - like Viagra for example. This has implications for all industries; it stands the case law on its head."

Pharmaceutical firms rely on a handful of specialised companies such as IMS Health to supply accurate sales information, basing the commissions they pay their representatives on the same data.

The copyrighted 'brick structure' is a mapping technique that allows IMS databases to classify sales of pharmaceutical products with a high degree of geographical precision, while still complying with stringent data protection laws.

Under EU law, firms are barred from using their dominance in one market to distort competition in another, in the way that Microsoft is accused of using its

PC operating systems to increase its penetration of the Internet browser market.

But industry-watchers are alarmed that the Commission appears to be breaking new ground by penalising IMS Health for the commercial success of a copyrighted product in its only market.

NDC complained to the Union executive over the firm's refusal to grant a licence for the brick structure, claiming it had become an industry standard indispensable to trade. The move came after NDC lost copyright infringement proceedings brought by IMS Health in a German court last December.

The Commission's intervention could be a source of friction with the German judiciary; an ongoing appeal against December's verdict is likely to see some of the same competition arguments raised. It also goes against the grain of recent reform proposals by the EU executive that would see competition enforcement increasingly left to national courts.

EU officials deny that the line taken on IMS Health signals a toughening of its anti-trust stance. Monti's spokeswoman, Amelia Torres, insisted that the IMS technique had become an essential facility, and should therefore be licenced.

"We've consulted the pharmaceutical industry," she said. "They're telling us this is the structure they want the information to be provided in, that they've helped to create the structure and they would benefit from increased competition."

Torres rejected comparisons with patented products that depend on innovation to dominate a market - including many successful drug treatments. "It's ludicrous to be saying that sort of thing - there are patents protecting those drugs for a number of years," she said. "This is a very special sector."

The European Commission is ready to force a market data firm to share a key analysis technique with its rivals, in a move that could have massive implications for intellectual property rights.