Can a Refusal to License IP Rights be an Abuse of a Dominant Position?

By Nick Cunningham and Mark Daniels

Advocate General Tizzano's opinion in the IMS case delivered on 2 October 2003 could mean that an intellectual property rights holder in a dominant position may have to grant licences to its competitors.

The facts

This case concerns two large US companies which operate in Germany. IMS Health GmbH compiles, interprets and sells medical prescription and sales information for pharmaceutical products in Germany. Its presentation and analysis is based on a brick structure, which combines geographical parameters with structural factors such as the proximity of pharmacies to hospitals and medical practices, the areas covered by medical visitors, and so on. The principal structure has 1,860 bricks, each containing a minimum of five pharmacies (any fewer would pose data protection problems). The IMS data structure has become the industry norm for businesses supplying services and goods to the sector. In particular it is relied upon by the pharmaceutical manufacturers to record sales, reward salesmen, and plan marketing efforts. Although the data structure was devised over many years, with the co-operation and input of the manufacturers, IMS asserts copyright in it.

In October 2000 NDC Health GmbH began to offer services using a data structure based on the IMS structure, although arguing that it offers a better product because its data is more accurate and can be made available online. NDC says that it was obliged to use a structure that is very similar to the IMS structure, because the industry will not accept any other on economic grounds. Some manufacturers have supported NDC in its efforts to launch its competing service.

When sued by IMS in Germany NDC offered to take a licence of the IMS structure, which was refused. NDC then filed a complaint of abuse of dominant position under Article 82 EC with the European Commission (Case Comp D3/38.044) in December 2000.

The Article 82 complaint

The Commission gave its preliminary view and, as an interim measure, ordered a compulsory licence on terms to be determined if not agreed. IMS appealed to the Court of First Instance (CFI), which found that IMS' prima facie case was stronger than NDC's, and so suspended the Commission's interim measure.

The CFI found that the Commission's decision had turned "upon a non-cumulative interpretation of the conditions regarded as constituting exceptional circumstances in Magill" (RTE and ITP v Commission [1995] All ER (EC)...