Final credits roll on the Hollywood movies pay-TV saga

The curtain has come down on the long running Hollywood movie/pay-TV licencing saga (see here). 

Plot synopsis

This epic has seen Sky and major Hollywood movie studios do battle with the Commission over exclusive territorial restrictions in copyright licences (see here). 

Midway through, Paramount offered Commitments to the Commission, removing these restrictions in its pay-TV licence agreements (here). The ending was never in doubt once French Film Producer Canal+ lost its challenge before the CJEU (here).

In the final act, the Commission (cast as sheriff of the Digital Single Market), has accepted formal Commitments from Disney, NBCUniversal, Sony Pictures, Warner Bros. and Sky to remove all restrictions on unsolicited (or “passive”) sales.  

Characters and chronology

US film studios typically license films to a single pay-TV broadcaster in each Member State.

In July 2015 the Commission sent a Statement of Objections finding that clauses in film licences for pay-TV between Disney, Fox, NBCUniversal, Paramount Pictures, Sony Pictures, Warner Bros. and Sky UK breached EU competition law. 

These clauses required Sky UK to block access to the studios' films through its online pay-TV services and/or through its satellite pay-TV services to consumers outside its licensed territory (UK and Ireland) (so-called "geo-blocking"); and required some of the studios to ensure that broadcasters outside the UK and Ireland are prevented from making their pay-TV services available in the UK and Ireland.

Crucially, these clauses restrict the ability of broadcasters to accept unsolicited requests (so-called "passive sales") for their pay-TV services from consumers located outside their licensed territory. 

Last stand – the Commitments 

In July 2016 the Commission accepted a series of Commitments from Paramount (see here) to remove all restrictions on passive sales, and in March 2019 the Commission accepted similar Commitments from Disney, NBCUniversal, Sony Pictures, Warner Bros. These specify that: 

  • When licensing its film output for pay-TV to a broadcaster in the EEA, each committing studio will not (re)introduce contractual obligations that prevent such pay-TV broadcasters from providing cross-border passive sales to consumers that are located in the EEA but outside of the broadcasters' licensed territory (no "Broadcaster Obligation");
  • When licensing its film output for pay-TV to a broadcaster in the EEA, each committing studio will not (re)introduce contractual obligations that require the studios to prevent other pay-TV broadcasters located in the EEA from providing passive sales to consumers located in the licensed territory (no "Studio Obligation");
  • Each committing studio will not seek to enforce or bring an action before a court or tribunal for the violation of a Broadcaster Obligation and/or Studio Obligation, as applicable, in an existing agreement licensing its output for pay-TV.
  • Each committing studio will not enforce or honour any Broadcaster Obligation and/or Studio Obligation in an existing agreement licensing its output for pay-TV.

Similarly, Sky will: 

  • neither (re)introduce Broadcaster Obligations nor Studio Obligations in agreements licensing the output for pay-TV of Disney, Fox, NBCUniversal, Paramount Pictures, Sony Pictures and Warner Bros.; and
  • not seek to enforce Studio Obligations or honour Broadcaster Obligations in agreements licensing the output for pay-TV of Disney, Fox, NBCUniversal, Paramount Pictures, Sony Pictures and Warner Bros.

The commitments will apply throughout the EEA for five years and cover online and satellite pay-TV and video on demand services.

The critics’ review

The Commitments have allowed the Commission to reprise its role of as the sheriff of the Digital Single Market and scourge of geo-blocking.  

However, while the Commission is able require the elimination of contractual territorial sales restrictions it cannot alter the fact that copyright law is national, rather than harmonised at the EU level, as illustrated by the copyright carve-out in the Geo-blocking Regulation (see here). 

Therefore, it seems likely that anything other than a pan-EU licence will leave the broadcaster exposed to the risk of infringement proceedings if it sells into countries not covered by the licence. 

Chancellor’s Spring Statement: Digital Advertising Market Study

Presenting his Spring Statement this afternoon, Chancellor Philip Hammond welcomed the Furman review, an independent review of competition in the digital economy. Following its recommendation he has written to the CMA asking it to carry out a market study of the digital advertising market (see here). The Chancellor also announced that the government will respond to calls in the review (and, indeed, from elsewhere) to update the UK’s competition rules for the digital age. This focus on digital and the tech sector is in line with recent  announcements in the UK and other jurisdictions (here and here).

The Furman review found that the major digital platforms have become increasingly dominant and there has been little scrutiny and no blocking of platform acquisitions (Google/YouTube, Facebook/WhatsApp) (see here).

The review recommended:

  • Setting up a digital markets unit (the Unit) tasked with fostering greater competition and consumer choice in digital markets (likely to be based in the CMA). 
  • A digital platform code of conduct, based on a set of core principles, which would apply to conduct by digital platforms that have been designated as having a ‘strategic market’ status.
  • The Unit should pursue personal data mobility and systems with open standards where these will deliver greater competition and innovation.
  • The Unit should be able to impose measures where a company holds a strategic market status and have enduring market power over a strategic bottleneck market (this is akin to ‘significant market power’ test applied to telecoms).
  • Updating merger policy and legislation to ensure that it can be more forward-looking and take better account of technological developments.
  • Clarify the standards for blocking or imposing conditions on a merger. 
  • The CMA undertake a market study into the digital advertising market encompassing the entire value chain, using its investigatory powers to examine whether competition is working effectively and whether consumer harms are arising.

Reflections

The recommendations of the Furman review and the request for a market study into the Digital Advertising Market Study are major developments for the digital economy. The shape of the proposals reflects existing telecoms regulation, particularly the suggestion that conditions might be imposed on incumbents’ ‘significant market power’. As mentioned above, the UK is not the only European jurisdiction grappling with these issues. For example, the EU is still in the process of implementing recommendations and developing policies in pursuit of the ‘Digital Single Market’  (see our previous posts here, herehere and here). The possible review of EU merger thresholds to deal with and review the possible competition consequences of so-called ‘killer acquisitions’ has also been discussed widely in Brussels. The recommendations in the Furman report, and the Chancellor’s embrace of the need for CMA involvement, bring into focus the wider question of how the UK will navigate the imperative of a pan-European approach to the digital economy with the political turbulence created by Brexit…

CLIP of the month: Competition restraints in online sales after Coty and Asics - what’s next?

This month’s CLIP comes from the Bundeskartellamt’s thought-provoking series of papers on ‘Competition and Consumer Protection in the Digital Economy’. In this paper the German competition authority considers the extent to which manufacturers and brand owners can impose vertical restraints on retailers in e-commerce markets.  Referring to the German Federal Court’s judgment in Asics and the European Court of Justice’s ruling in Coty, the BKartA suggests that restrictions on the use of online marketplaces always require case-by-case assessment.  In its view, the assessment may vary depending on the nature of the products and consumer preferences in the relevant geographic market.  “Especially with regard to products marketed on a large scale”, the BKartA “doubts whether restrictions on platforms and other internet distribution channels increase inter-brand competition to an extent that outweighs the considerable restrictions of intra-brand competition”. Such comments suggest that the German competition authority will continue to take a strict approach to enforcement in this area.

At the end of the paper, the BKartA also comments on the “dual role” of online platforms such as Amazon.  As we discussed here, this is an issue which has recently been taken up by the European Commission.  The Commission is considering whether competition concerns may arise if Amazon collects sensitive data about products sold via its Marketplace and then exploits that data to enhance its own online retail offerings.  As Commissioner Vestager put it in September 2018:

The question here is about the data […] Because if you, as Amazon, get the data from the smaller merchants that you host – which can be, of course, completely legitimate because you can improve your service to these smaller merchants – do you then also use this data to do your own calculations: as what is the new big thing, what is it that people want, what kind of offers do people like to receive, what makes them buy things?

Whilst the Commission’s investigation is still at the preliminary, information-gathering stage, it will be an important one to watch.  If the Commission does end up concluding that Amazon’s conduct is contrary to the competition rules, that could signal an important development at the intersection of data and antitrust enforcement. 

OxFirst's Third IP and Competition Forum: Creating the Missing Link in the Digital Economy

This week Bristows is sponsoring, and I have the privilege to be speaking alongside fellow Bristows partner Myles Jelf and a host of luminaries from the world of SEPs and FRAND at OxFirst’s Third IP and Competition Forum in Brussels.  The Forum will be addressing a range of issues such as the EU’s position on FRAND licensing and SEPs, the role of the judiciary in patent governance, and evolutions in case law on SEPs around the world.  

I will be speaking on recent case law in light of the Huawei v ZTE decision, including the Court of Appeal’s recent Unwired Planet v Huawei decision (on which we reported here), which will be compared with the approach taken in cases elsewhere in Europe.   A copy of my slides can be found here in case of interest.  

The General Court’s judgment in Krka – some welcome clarity over licensing in the context of patent settlements

We reported on this blog about the General Court (GC)’s judgment in Servier on the day on which that judgment was handed down, noting in particular the rejection of the Commission’s novel approach to market definition. 

In this post, we focus on the analysis applied in one of the parallel judgments issued to the generic companies which were party to the infringements of Article 101.  While the finding of a ‘by object’ infringement was maintained in relation to the settlement agreements between Servier and other generic companies, the Krka judgment involved a full annulment of the relevant part of the Commission decision.  

What were the Commission’s findings?

The case concerned a patent settlement and licence agreement between Servier and Krka in relation to Perindopril, a cardiovascular medicine used (primarily) to treat hypertension). The settlement agreement put an end to UK patent litigation between Servier and Krka in October 2006, following the grant to Krka of a marketing authorisation for Perindopril earlier in the year. At the time there was no generic Perindopril in Western European markets, but Krka had launched its generic Perindopril “at risk” in certain central and eastern European (CEE) markets. On the same day as the settlement agreement, Servier and Krka entered into a royalty-bearing licence agreement in relation to the CEE markets where Krka had already entered.  This licence accorded Krka ‘sole’ licensing rights (i.e. while Servier itself also remained on the market, it committed not to grant licences to others).  

In its decision, the Commission treated the combination of these agreements as a form of market sharing arrangement.  According to this view, Krka obtained the licence in return for refraining from launching its generic product in a number of other European markets, notably the UK. The Commission considered that: (i) Servier and Krka were at least potential competitors at the time of entering into the agreements; and (ii) the sole licence which permitted Krka access to the CEE markets constituted an inducement to Krka to enter into the settlement agreement, under which it agreed to refrain from competing in the 18 restricted markets.

Findings of the GC

The GC rejected the Commission’s analysis that the mere conclusion on normal market conditions of a licence agreement could amount to an inducement, even if linked (whether legally and/or temporally) to a settlement agreement containing restrictive clauses. In the view of the GC, this would lead to a paradoxical outcome: the wider the scope of a licence agreement, the greater the inducement, and thus the easier it would be to find a restriction by object.

However, it accepted that a ‘side deal’ may amount to an inducement which renders any restrictive provisions in the linked settlement agreement unlawful where the side deal “serves as a vehicle for the transfer of value from the originator to the generic company”.  In that case, the restrictions in the settlement are considered not to reflect the parties’ recognition of the validity of the patent but rather to be the result of a (significant) inducement.  However, the GC went on to note that the Commission has to discharge its burden of proof that this is indeed so.  

In this case, the settlement itself did restrict Krka’s market access in the UK and other Western European markets while relevant patents remained in force; it was also clear that the licence agreement counted as a ‘side deal’ as it was temporally linked (the two agreements had been concluded on the same day; by contrast, a later assignment of patent by Krka to Servier was held not to be ‘indissociable’ from the settlement agreement).  A key question for the GC was therefore whether any value had in fact been transferred to Krka under the licence agreement.  The licence granted by Servier was royalty-bearing at the rate of 3%.  The GC emphasised that it was for the Commission to demonstrate that this rate was abnormally low, and thus not a commercial rate if it wished to prove that Krka had been induced to give up its other markets.  The GC found that the Commission had not demonstrated that this was the case – in fact, the Decision acknowledged that the rate was fair, albeit relatively low. 

The Decision was therefore annulled, insofar as it concerned restriction of competition by object.

The GC also reviewed the Commission’s conclusions that the agreement had an ant-competitive effect.  It again disagreed with the Commission’s conclusions, finding that absent the agreements, Krka would not have entered the French, Dutch and UK markets, based on Krka’s assessment of the strength of the ‘947 patent. The GC noted that, at the time of entering into the agreements, Krka was the subject of an interim injunction in the UK and that it was “very unlikely” that without a licence agreement Krka would enter other markets “at risk”. 

As with the cases concerning the other agreements between Servier and generic companies, the Court has sent an important message on the role of the concept of restrictions of competition ‘by effect’ under EU competition law.

The Court emphasised that where an agreement has been put into effect, it is not sufficient for the regulator to rely on the existence of ‘potential’ effects on competition.  To do so effectively obliterates the distinction between object and effect restrictions.  The GC conducted a careful analysis of past cases in which the consideration of effect restrictions has been limited to a consideration of potential effects, and distinguished this case from those earlier examples, which tended to concern preliminary references, or decisions in which no fine had been imposed.

Comment 

Whatever the ultimate outcome of any further appeals to the CJEU on the treatment of patent settlement agreements as restrictions of competition by object in the other Servier cases, in Lundbeck (where hearings have taken place within the past week) or in Paroxetine, the approach of the GC to side deals in the Krka case is to be welcomed. The GC has dialled back the risk of concluding a licence agreement where there is a link to a settlement of litigation, provided the licence itself can be demonstrated to be on commercial conditions.   

This sensible approach is likely to enhance the possibilities for companies in litigation to resolve those differences in a way which provides benefits to both parties, rather than requiring a total capitulation by one side or the other.


3rd Annual W@Competition Conference

For those of you with an interest in IP/tech issues, you may find the upcoming 3rd Annual W@Competition Conference of interest, in particular the session being chaired by our own Pat Treacy on excessive pricing (including in the Pharma sector) and the use of data as payment.  The conference is taking place on Thursday 21 February in Brussels and more information can be found here.

CLIP of the month: Competition law and innovation - where do we stand?

This month’s CLIP is an editorial in the Journal of European Competition Law and Practice written by leading  LSE economist Pablo Ibanez Colomo.  Pablo writes regularly and is a co-founder of the superb Chillin'Competition blog.  This particular article looks at the latest developments in the evolving relationship that exists between competition law and policy and innovation.  The debate of these issues in some ways came to a head in the Commission’s Phase II decision in Dow/DuPont in which the Commission delved more deeply into speculative research poles when considering overlaps not just of products on the market, but of those in an earlier stage of development.  In this article, Pablo looks at the tension that can exist between the legal framework and an economic assessment of the relationship between market concentration and innovation.  Looking beyond the field of merger control, Pablo also considers the ongoing Commission investigation into alleged collusion between German car manufacturers where the alleged collusion itself was in respect of future developments and innovation of clean emission technologies (see our own comment on this investigation: “The Cartelization of Innovation – a new emissions scandal?”).  It is clear that this topic is far from stale and that we can look forward to further developments across merger control and anti-trust decisions in the year ahead.

High Court rejects application to discharge CMA search warrant

In its judgment yesterday, the High Court rejected an application by Concordia to have a CMA search warrant discharged in relation to two specific drugs (Carbimazole and Hydrocortisone).

Background

The CMA was granted warrants under section 28(1)(b) of the Competition Act 1998 by Mann J on 5 October 2017 following a without notice and private application.  The warrant applied to documents relating to an ongoing CMA investigation into alleged anti-competitive behaviour in respect of a number of pharmaceutical drugs.  The legislation itself provides that the CMA should be granted warrants where it suspects that relevant material might be otherwise concealed or destroyed.  Unusually, the CMA was seeking a warrant despite the fact that Concordia had been subject to, and was cooperating in, an ongoing investigation in respect of both Carbimazole and Hydrocortisone for some 18 months as at the date of the warrant and that Concordia had responded to numerous section 26 notices during this time.  When granting the warrant, Mann J stated that he was satisfied that the application was focussed on “different types of abuse”.  The fact that Concordia would have been on notice from the first formal section 26 request and therefore had already had ample time to destroy or conceal evidence was not sufficient to conclude that no such documents existed on Concordia’s premises.

The warrants themselves were executed on 10 October 2017 and Concordia applied to have the warrant discharged in respect of Carbimazole and Hydrocortisone on the same day.  The reasons given were that there could be no basis for the CMA to conclude that there was a risk that relevant documents would be concealed or destroyed as Concordia had been co-operating fully with the CMA in its ongoing investigation, a fact that had not been raised before Mann J.  Further, the CMA had sought to widen the investigation by suggesting that it was investigating other potential abuses, whereas in fact the CMA had only ever been investigating one particular alleged abuse (i.e. market sharing).

In the interim, the Court of Appeal had given its judgment that in hearing the main application to vary, the High Court must be able to review all relevant materials including any that are subject to public interest immunity. The Court of Appeal also stated that the appropriate time for the court to form a definitive view on what material is subject to public interest immunity (and therefore should be withheld from Concordia) is when the application to vary is made.  On 12 December 2018, having heard arguments from the CMA in a closed hearing, the High Court held that the majority of the CMA’s requests for public immunity interest redactions were properly made and could not (consistent with the Court of Appeal’s view) be disclosed to Concordia, whether into a confidentiality ring or otherwise.

The Judgment 

Finding that Concordia’s application must fail, Marcus Smith J stated that this was primarily as a result of reviewing the material that was properly protected by public interest immunity (and which therefore had not been made available to Concordia).  This material made clear that the focus of the CMA’s ongoing investigation had shifted and that the scope of the document retrieval methodology was no longer appropriate in view of the type of documents and the range of custodians at issue.  In particular, the CMA had taken the view that whilst it was co-operating, Concordia’s response was incomplete and that there remained relevant material within Concordia that would not be caught by the proposed methodology.

Turning to the question of whether the CMA was indeed investigating a different abuse to that it had been following in the course of the ongoing investigation, Marcus Smith J stated his belief that Mann J was not using the term “in a technical way”.  Rather, the term was used to describe the reasonable suspicion raised by the CMA that Concordia may have deliberately framed its search methodology with a view to ensuring that relevant materials were omitted.  If that were the case, then it was reasonable for the CMA to also conclude that a further, targeted section 26 notice might well lead to concealment or destruction of relevant material.

Comment

It remains to be seen whether the CMA will seek to make more use of its section 28 powers to investigate under a warrant without notice. Historically, the CMA has preferred either to proceed under section 26 (on notice information requests) or by using its section 27 powers which enables the CMA to conduct unannounced visits without a warrant. The main practical difference for a company facing a section 28 investigation rather than a section 27 is that in the former the CMA has the power to conduct its search itself, whereas under section 27 the CMA must ask for relevant information to be brought to it.  It is certainly the case that the facts were unusual, particularly given that the decision to seek a warrant was taken despite the ongoing investigation and the fact that Concordia had been co-operating.  It also remains to be seen how the CMA will deal with its reasonable suspicion that Concordia might continue to conceal or destroy relevant materials in the context of any eventual infringement decision. 

Canal+ finds copyright is no match for the EU single market

The EU General Court (GC) has rejected an appeal brought by Groupe Canal+ (a French pay-TV broadcaster) against commitments proposed by Paramount, and accepted by the Commission, to address competition concerns related to cross-border access to pay-TV content (see here – only available in French). 

The GC found that: (i) the commitments proposed by Paramount addressed the Commission’s competition concerns in relation to its content distribution licence with Sky UK; and (ii) that the competition-infringing provisions could not be justified on the basis of copyright protection.

The key competition law issue arose from provisions in the Paramount/Sky UK licence which guaranteed Sky UK absolute territorial exclusivity in the UK and also prevented Sky UK from making its pay-TV services available to consumers in other parts of the EEA in response to unsolicited requests (i.e. a restriction of “passive sales”, the bête noire of competition law).

Background 

In 2014 the Commission began investigating certain clauses in licensing agreements between the six major Hollywood studios (Paramount Pictures, Disney, NBCUniversal, Sony, Twentieth Century Fox and Warner Bros) and pay-TV broadcasters which prohibited the broadcasters from providing content via satellite or online streaming outside their specific EEA member states.

In 2015 the Commission sent a statement of objection to Sky UK and the six Hollywood major studios which considered that bilateral licences that prevented Sky UK from offering access to its pay-TV services to EEA customers outside the UK and Ireland breached competition law (see here). 

In 2016 Paramount gave commitments to the Commission in order to close the investigation.  Paramount committed to stop using clauses preventing broadcasters from responding to unsolicited requests from consumers based elsewhere in the EEA and agreed not to enforce any existing restrictions. These commitments were accepted by the Commission on the basis that they would last for five years (see here).  The Commission Decision accepting the commitments laid out the basis for the infringement; however, as is typical for the commitments process, it did so rather briefly.

Canal+ also had a contract with Paramount and appealed the commitments decision before the GC on the basis that: (i) territorial exclusivity is essential for the production of European cinema, which is mainly financed by TV channels; and (ii) territorial exclusivity is necessary to protect intellectual property rights.

The GC’s findings 

The GC rejected the Canal+ appeal in its entirety. 

It considered that the Commission’s commitments decision established competition concerns under Article 101(1) TFEU and that these were sufficiently addressed by the Decision.  The GC noted that the commitments did not prohibit the granting of exclusive broadcast licences to pay-TV broadcasters; rather, it prohibited only absolute territorial exclusivity.

The GC rejected the argument that territorial exclusivity is necessary to protect intellectual property rights. In particular, it found that copyright owners are free to demand a premium in exchange for a pan-EEA licence. However, if a premium is paid to guarantee absolute territorial exclusivity this is irreconcilable with the imperative of the EU single market. 

Arguments that the relevant clauses promote cultural production and diversity and that their abolition would endanger the cultural production of the EU were also rejected.

Finally, the GC rejected the Canal+ argument that the commitments violate the interests of third parties (such as Canal+) as third parties could still sue Paramount for breach of contract.

Comment

The case is a further illustration of the Commission’s determination to tackle measures that undermine the EU single market, such as absolute territorial protection. Consequently, the use of copyright arguments to justify partitioning the single market will be given short shrift. 

The approach of the GC may also encourage the Commission to press ahead with the pending case against the remainder of the Hollywood studios – despite evidence of considerable concerns (including among politicians) about the impact of any decision on the economics of European TV/cinema.

Having said that, it is unclear what the actual impact of the commitments given by Paramount will be: given the national nature of copyright, anything other than a pan-EU licence will leave the broadcaster exposed to the risk of infringement proceedings if it sells into countries not covered by the licence. 

Partial annulment of Servier decision by the General Court – some good news for pharma innovators at last

The General Court has today handed down its judgment in the long-running Servier patent settlement case.  

It remains a rare event that the European Courts annul Commission decisions under Article 101 and, in particular, Article 102.  In this case, the General Court has partially annulled the 900 page decision.  In doing so, it has – subject to the outcome of further appeals – considerably reduced the range of competition law risks facing pharmaceutical companies.

Of particular note for innovators is the complete annulment of the fine for abuse of dominance.  The General Court has found that the Commission has failed to substantiate the alleged relevant market, and thus wrongly found that Servier held a dominant position in the EU.  

In the Decision, the Commission had held that perindopril, a treatment for hypertension, was a relevant market in itself.  This was despite it being one of a large class of drugs (‘ACE inhibitors’) with an essentially identical mode of action, and in relation to which clinical guidance existed which treated the products as substitutable.  The General Court has held that the Commission was wrong to rely on Servier’s promotional materials to claim that differences existed between the different members of the class of drugs, under-estimated the amount of switching which took place between different ACE inhibitors (in some cases driven by cost considerations on the part of organisations such as Clinical Commissioning Groups in the UK) and attributed too much importance to price in its analysis.  In its decision, the Commission had carried out a so-called ‘natural events’ analysis, which found that the only significant impact on sales volumes was sustained when perindopril generics entered the market.  The General Court has held that this paid insufficient attention to clinical decision-making, something the Commission had explicitly ruled out when considering what was relevant for market definition.

Although the particular market definition in this case is of limited relevance to third parties, the Commission’s failure to demonstrate that perindopril competed only with generics of the same drug has significantly wider implications for competition authorities’ ability to bring future abuse of dominance cases which rely on artificial differentiations between drugs with an equivalent mode of action.  Subject to the outcome of any appeal by the Commission to the Court of Justice, the position should now revert back to that established in AstraZeneca, which focuses on prescribers’ considerations as to the different therapeutic uses of the different drugs.  While a first in class product may still give rise to a dominant position in a period before further similar products come to market, a later drug is likely sit within the same relevant market, and will therefore be less likely to gain a dominant position (subject to market share growth, and specific factors which may indicate that a separate market in fact exists in a given case).  

As well as annulling the Article 102 portion of the case in its entirety, the General Court has also annulled the fine in relation to one of the anti-competitive agreements identified by the Commission, which was alleged to consist of a withdrawal from litigation in the UK in return for the grant of a licence in another Member State.  This annulment will also be welcome news to the pharmaceutical industry, as it may permit greater flexibility for companies wishing to enter into licensing agreements in tandem with settlements.  Provided any licensing agreement remains an arm’s length arrangement, at commercial rates, the risk that this will be categorised as an ‘inducement’ to settle the litigation now appears lower.

We conclude with a welcome recognition from the General Court of the value of patent protection and of patent settlements: “…intellectual property rights are protected by the Charter of Fundamental Rights, to which the Treaty of Lisbon has conferred the same legal value as the Treaties. …As regards patents, … when granted by a public authority, a patent is presumed to be valid and an undertaking’s ownership of that right is presumed to be lawful. The General Court emphasises, lastly, the importance of settlement agreements, since the parties to a dispute should be authorised, indeed encouraged, to conclude settlement agreements rather than pursuing litigation. The General Court concludes that the adoption of settlement agreements in the field of patents is not necessarily contrary to competition law.

Case T 691/14, judgment of 12 December 2018, press release here, full judgment (currently available only in French) here.