An Administrative Court annuls the decision of the Italian Competition Authority against Pfizer on an alleged patent procedures misuse

Pfizer was the owner of the primary patent EP0364417 for the active ingredient of latanoprost used in the production of the glaucoma medicine Xalatan. It extended the patent protection for Xalatan in Italy until January 2012 by applying for a SPC and then for a pediatric extension on the basis of the divisional patent EP198 granted in 2002. By the decision made in the Ratiopharm/Pfizer case the Italian Competition Authority (ICA) condemned Pfizer for violation of Article 102 TFEU. The ICA considered that Pfizer abused its dominant position in the market for glaucoma medicines based on latanaprost by deliberately misusing patent application procedures. In doing so, Pfizer sought to extend the patent protection for Xalatan in Italy with the ultimate objective to frustrate or delay the market entry of manufacturers of generic drugs.

Pfizer appealed the ICA decision to the Regional Administrative Court for Latium (Regional Administrative Court for Latium, Pfizer v Italian Competition Authority et al., Case 7467/2012). On appeal it contended that the ICA wrongly rejected the set of commitments it had offered under the commitments procedure in Article 14-ter of the Italian Competition Act. It also contended that the ICA erred in considering the filing of the divisional application as unlawful.

The Court upheld the Pfizer’s appeal and annulled the challenged decision of the ICA. Quite surprisingly, considering its heavy reliance on commitments procedure to close competition infringement investigations, the ICA rejected as unsuitable the set of commitments offered by Pfizer. In particular, Pfizer offered to grant a non exclusive license for the divisional patent to any applicants without requiring the payment of any royalties. Pfizer also offered to terminate all the proceedings commenced against manufacturers of generics. For the ICA  those commitments were unsuitable to resolve the competition problems created by Pfizer as it believed that the EPO had revoked the divisional patent. Instead, as it will be explained later, the patent was still valid and the Pfizer commitments were fit as indicated by the replies by some respondents to the market test questions.

As for the issue of divisional patent application, the Court observed that when the dominant undertakings had allegedly abused its dominant position by commencing administrative and judicial proceedings to protect its rights, to establish an infringement of Article 102 TFEU is necessary to demonstrate that that firm pursued an exclusionary intent. The ICA inferred that Pfizer acted with such an intent from the fact that it filed the divisional application 13 years after the original patent application, when generic manufacturers were about to enter the market. The Court rejected this piece of circumstantial evidence, noting that the divisional application was filed well before the market entry of generics.

More importantly, the Court held that in filing the divisional application, Pfizer sought to extend the term of its primary European patent in Italy. In other words, Pfizer only acted to protect its legitimate rights and interests and, accordingly, such actions could not be considered as part of an exclusionary anti-competitive strategy. 

Additionally, what the Court seems to believe is that the ICA based its negative decision for Pfizer on the revocation of the divisional patent EP 168 made by the EPO in 2010. Consequently, the ICA was convinced  that Pfizer cheated on the EPO to obtain the granting of the divisional patent. However, this was not correct. Indeed, the ICA mistakenly ignored that the revocation order was temporary and was then reversed in 2012 when the EPO Board of Appeal upheld it. In a quite annoyed mood, the Court said that the ICA should have considered whether to suspend the investigation against Pfizer until the conclusion of the procedure pending before the EPO.

Pfizer is a welcome development for IP owners and the protection of inventions. Patent owners can use tools in patent law, such divisional applications, to extend protection for their patented products with a lower risk of being imposed heavy competition fines. Such conducts can be presumed to be legitimate business actions and should not attract the attention of competition authorities. However, competition law may kick in when a patent procedure misuse occurs. This may be the case when the patent holder submits misleading information to the patent authorities as in AstraZeneca or when the patent holder pursues an exclusionary intent. It is upon to the ICA to demonstrate such anticompetitive intent, which may not be an easy task, especially if the quite high evidentiary standard set out by the Pfizer Court is taken into consideration.
Finally, Pfizer is consistent with the EU case law regarding the nature of Article 102 TFEU infringement. Whereas the abuse of a dominant position is an objective concept, EU Courts stated that the subjective element of the exclusionary intent may be of relevance to prove an abusive conduct (CJ, Case C-62/86 AKZO v Commission [1991] ECR I-3359).