1. International Summer Seminar „Copyright in motion“ Essential facility as an intersection between Competition Law and IP Law Barbora Kralickova Institute of State and Law Slovak Academy of Sciences barbora.kralickova@savba.sk Paris – 11. July 2012 barbora.kralickova@savba.sk

2. Structure of the Presentation 1.Introductory remarks on Competition Law - IP Law relationship and essential facilities doctrine 2.Could IP rights/copyright be perceived as an “essential facility”? 3.How Slovak and Czech Competition Act deal with application of essential facilities doctrine to IP rights?

3. 1. Introductory remarks: How is mutual Competition Law – IP Law relationship? On a first look – co-existence or convergence is not possible at all Competition Law is a public law discipline and its main goal is protection of free competition on the market/between undertakings active on the market

4. 1. Introductory remarks: How is mutual Competition Law – IP Law relationship? Intellectual Property Law is a private law discipline and its main goal is support of the human’s creative activities as well as innovations Connection of such different legal disciplines is their common goal – to promote innovation, economic development, competitiveness, consumer welfare

5. 1. Introductory remarks: How is mutual Competition Law – IP Law relationship? Despite the common goal – conflict between Competition Law and IP Law is not excluded Through enforcement of IP rights can therefore come to breaching of competition rules Such cases are not an exception – case law of European/national courts

6. 1. Introductory remarks: How is mutual Competition Law – IP Law relationship? Enforcement of IP rights can break: restriction to constitute a prohibited agreement restriction to abuse the dominant position

7. 1. Introductory remarks: What is essential facilities doctrine? form/practice of abusing of dominant position developed in the USA, since 1970´s applied also in EU law legal definition of this form of abusing of dominant position is missing core principles – can be find in case law of EU courts and European Commission

8. 1. Introductory remarks: What is essential facility? “a facility or infrastructure, without access to which competitors cannot provide services to their customers” (European Commission’s decision 94/19/EC Sea Containers vs. Stena Sealink) Case law of EU courts and European Commission – as essential facility can be perceived telecom networks, gas distribution systems, oil pipelines, power lines, harbors, airports

9. 1. Introductory remarks: What is essential facilities doctrine? Fundamentals of essential facilities doctrine: Out of the specific character of essential facility, when an undertaking who owns or administers the essential facility prevent other possible competitors from having access to such facility, under the circumstances that the access to such facility is indispensable for supplying, it is considered as an abuse of dominant position

10. 1. Introductory remarks: What is essential facilities doctrine? Duty for dominant undertaking not only to restrain from anticompetitive behavior, but also to actively support the competition on the market by allowing other potential competitors have access to essential facility essential facility doctrine – legal tool having polemic character by its nature it interferes into the principle of contractual freedom and into the right to freely dispose with the propriety

11. 2. Could IP rights/copyright be perceived as an “essential facility”? Possibility to apply the essential facilities doctrine to IP rights– excluded until the Magill case (European Commission decision - December 1988, upheld by EU courts) various cases within case law of EU courts and European Commission – IMS Health, Microsoft case law shows that application of essential facilities doctrine to IP rights is being nowadays accepted

12. 2. Could IP rights/copyright be perceived as an “essential facility”? Is this attitude right? Could be a facility consisting fully or partially of IP right considered as “essential” for purposes of Competition Law? Questions regarding the wisdom and aim of essential facilities doctrine

13. 2. Could IP rights/copyright be perceived as an “essential facility”? When thinking about application of essential facilities doctrine to IP rights, it is needed to take into account 2 sources of tension within law it brings: 1.The tension between Competition Law and IP Law with respect to “monopolist’s” right to engage in exclusionary practices 2.The tension within IP Law itself between the need to provide exclusive rights so as to preserve the incentive to creative and the need to insure access so as to facilitate the creation of new intellectual products

14. 2. Could IP rights/copyright be perceived as an “essential facility”? Application of essential facilities doctrine to IP rights – strengthens the conflict between the fundamentals of IP Law and Competition Law Taking into account the fundamentals of IP rights – patent owner, author or other owner of IP right does not underlie to any duty to share its right with others in the meaning, how it perceives the essential facilities doctrine within Competition Law Resulting into breaching of this rule within IP Law??

15. 2. Could IP rights/copyright be perceived as an “essential facility”? Essential facilities doctrine – most convincingly applied to physical infrastructure (port owner who also owns a port ferry and who must/may/should allow a competing ferry to use the port) Doubtful of the utility of the notion in the field of IP rights

16. 2. Could IP rights/copyright be perceived as an “essential facility”? IP rights – limited scope as to compared to scope of exclusivity granted by property law in tangible object IP rights – cover only certain aspects of exploitation of the protected subject matter, subject of various exceptions (broad fair use exception) and limitations Copyright – cover only one specific way in which information is expressed, not the idea itself revealed by the words as expressed

17. 2. Could IP rights/copyright be perceived as an “essential facility”? Sharpest controversies – related to copyright over utilitarian materials such as maps, databases, interfaces, timetables, lists Consequences – will the future case law show

18. 2. Could IP rights/copyright be perceived as an “essential facility”? Conclusion: It might be tempting to apply the essential facilities doctrine in cases like Microsoft on the ground, that IP Law does not go far enough to insuring adequate access to intellectual products Perhaps the essential facilities dctrine can be viewed as a method for imposing a duty to share one’s intellectual property, in cases in which intellectual property law does not, but hypothetically should, impose such obligation

19. 2. Could IP rights/copyright be perceived as an “essential facility”? The fact, that product consist in whole or in part of intellectual property does not provide a compelling reason to resort to the essential facilities doctrine and to rely on its so far still uncertain contours

20. 3. How Slovak and Czech Competition Act deal with application of essential facilities doctrine to IP rights? Slovak and Czech Act on Protection of Competition: Both regulate relationship between IP Law and Competition Law Both went similar way in the effort to harmonize SK/CZ national law with European law after entering into EU Both suppose that enforcement of IP rights can break the restriction to constitute a prohibited agreement or restriction to abuse the dominant position

21. 3. How Slovak and Czech Competition Act deal with application of essential facilities doctrine to IP rights? Difference - in the approach how Slovak and Czech legal orders regulates the relationship between IP rights and Competition Law Particularly problematic area = abusing of dominant position by enforcing of IP rights in the Czech legal order

22. 3. How Slovak and Czech Competition Act deal with application of essential facilities doctrine to IP rights? Slovak Competition Act – no. 136/2001 § 8: “(3) Essential facility is a place, right, device or infrastructure together with services connected to this infrastructure, which are helpful to provide economic activities on a market, which is closely connected to that market, on which is the owner of essential facility active.”

23. 3. How Slovak and Czech Competition Act deal with application of essential facilities doctrine to IP rights? (4) Owner or administrator of the essential facility pursuant to this Act is also the holder of a right, if the right is being considered as an essential facility pursuant to subparagraph (3).” accepts as an essential facility also an IP right

24. 3. How Slovak and Czech Competition Act deal with application of essential facilities doctrine to IP rights? Czech Competition Act – no. 143/2001 § 11 (1) f) before its amendment by Act no. 340/2004 (before 2.6.2004): (as an abuse of dominant position it is being considered) “refusal to provide other competitors for an adequate compensation the access to its own transmission networks and those other competitors could not out of legal or other reasons operate on the same market, on which are dominant

25. 3. How Slovak and Czech Competition Act deal with application of essential facilities doctrine to IP rights? undertakings active, without the common utilization of such facility, which (e. g. dominant undertakings) at the same time will not be able to prove, that such common utilization is out of operational or other reasons possible or it could not be expected from them. was not sure whether also IP rights could be perceived as essential facility

26. 3. How Slovak and Czech Competition Act deal with application of essential facilities doctrine to IP rights? Czech Competition Act – no. 143/2001 § 11 (1) f) after its amendment by Act no. 340/2004 (after 2.6.2004) added: “.. same applies also to the refusal to provide other competitors for an adequate compensation access to use the IP right or access to networks, which are owned or used by the dominant undertaking on a different legal ground, if such usage is indispensable for taking part in the competition on a same market, on which is dominant undertaking active, or on the other market.”

27. 3. How Slovak and Czech Competition Act deal with application of essential facilities doctrine to IP rights? important legal step, certain that also IP right could be perceived as an essential facility

28. 3. How Slovak and Czech Competition Act deal with application of essential facilities doctrine to IP rights? Is it the best solution? Concerns regarding the protection of the exclusive position of IP owners on a main market = “…such usage is indispensable for taking part in the competition on a same market, on which is dominant undertaking active, or on the other market.”

29. 3. How Slovak and Czech Competition Act deal with application of essential facilities doctrine to IP rights? Main market = market on which products/services protected by IP rights are sold, they can be perceived as essential facility Protection granted by IP rights is one of the fundamental impulses to promote innovation

30. 3. How Slovak and Czech Competition Act deal with application of essential facilities doctrine to IP rights? The amendment threatens such protection! Consequences = allows competitors of IP owner abusing the institute of essential facility and having access not only to secondary market, but also to this main market!

31. 3. How Slovak and Czech Competition Act deal with application of essential facilities doctrine to IP rights? Goal of such current legislation = to protect competition on the market or impeach the solely subject-matter of IP rights?? Final result = possible restriction of competition through restriction of innovative activities??

32. Questions for discussion: The future of considering IP rights as an essential facility? Can be a “right” considered as an essential facility? Possible consequences for the area of copyright? ….

33. Thank you for your attention! Barbora Kralickova Institute of State and Law Slovak Academy of Sciences barbora.kralickova@savba.sk