To Settle or Not To Settle? An Analysis of The Servier Patent Settlement Case and Its Practical Implications
Investigations into patent settlement agreements are still fairly new in the European Union. The European Commission (“Commission”) adopted the Final Report of its inquiry into the pharmaceutical sector in July 2009. Since then, it has published eight reports on the monitoring of patent settlement agreements, and has adopted two infringement decisions (with a third investigation still ongoing). Each of the decisions was appealed and led to a judgment by the General Court (“GC”).
The most recent development is the GC’s judgment in the Servier case. This case is particularly noteworthy because (i) the GC refuted the Commission’s assessment of the product market definition and hence the dominance abuse under Article 102 of the Treaty on the Functioning of the European Union (“TFEU”), which marks the first annulment in many years; and (ii) the Commission’s finding that the settlement agreement between Servier and the generic company, Krka, infringed Article 101 TFEU. On the other hand, the GC agreed with the Commission that the agreements between Servier and the other generic companies each restricted competition “by object”. The GC’s analysis in that context raises fundamental questions about the interplay between competition law and intellectual property rights (“IPRs”).
This article reviews the key takeaways from, and the possible implications of, the Servier case for the pharmaceutical industry. It focuses in particular on some of the key issues from an IP and regulatory perspective. The GC’s ruling is not final yet as the Commission and all the parties have appealed the findings to the Court of Justice (“CJEU”). Two other cases are currently pending before the CJEU: the Lundbeck case and a referral from the UK Competition Appeal Tribunal in the Paroxetine case. Although they all involve patent settlement agreements concluded between originator and generic companies, each of these cases presents its own specificities, and parallels can only be drawn to a limited extent.