The U.S. company Bayer used "patents" to abuse its market dominance
Abstract: There is an "innate" contradiction between the legal protection of patent rights and antitrust laws. The author of this article Through translation, this article introduces the case of Bayer Company in the United States. It will analyze whether Bayer Company's behavior constitutes monopolistic behavior and how to balance the relationship between antitrust and intellectual property protection. It is hoped to provide additional information for the judicial practice of domestic antitrust law. A reference example.
Keywords: Patent rights, antitrust, abuse of market dominance, Bayer Company
Foreword
There are certain differences between the legal protection of patent rights and antitrust law Contradiction, when there is a contradiction between the two, how to balance the relationship between the two and which one should be given priority has always been a controversial issue in the industry. my country's "Anti-Monopoly Law" has been promulgated and implemented on August 1, 2008, but so far, there have been few domestic patent and anti-monopoly cases. The author of this article introduces the case of Bayer Company in the United States through compilation and translation, and analyzes whether Bayer Company's behavior constitutes monopolistic behavior and how to balance the relationship between antitrust and intellectual property protection. I hope to provide judicial guidance for domestic antitrust laws. Practical work provides another reference example.
1. Introduction to the case
This case originated from an agreement signed between Bayer Company and three drug manufacturers represented by Barr in 1997 to resolve patent litigation disputes. Settlement Agreement", which involves a patent related to the active ingredient CIPRO of antibiotics. Bayer Company is in order to make Barr stop the invalidation request lawsuit filed by the patent, and at the same time to effectively exclude three pharmaceutical manufacturers including Barr from competing with it to sell CIPRO related products, and finally signed the agreement.
Bayer Company is the owner of the CIPRO patent (the patent was obtained on June 2, 1987, and the protection period expired on April 9, 2004). On December 6, 1991, Barr issued an announcement, In accordance with the U.S. Hatch-Waxman Act3, the company has submitted a brief new drug application to the U.S. Food and Drug Administration (FDA) to seek expiration of Bayer's patent
1 Bayer case content is based on Lexis English Database translation and editing. Case database numbers: 2006 WI App 102, *; 293 Wis. 2d 770, **; 718 N.W.2d 251, ***; 2006 Wisc. App. LEXIS 405
2 Three drug manufacturers: Barr Laboratories, Inc. ("Barr"), Hoechst Marion Roussel, Inc. ("HMR") and The Rugby Group ("Rugby")
3 The Hatch-Waxman Act in the United States provides some incentives to support the development of generic versions of drugs whose patents have expired, while allowing patent owners to make up for time lost in the U.S. Food and Drug Administration (FDA) approval process.
Case Analysis
Being able to be licensed to sell CIPRO generic products, Bayer will have forty-five days to sue Barr for patent infringement in accordance with the US Hatch-Waxman Act. On January 16, 1992, Bayer Company sued Barr in the administrative district of southern New York, accusing Barr of infringing its patent. The FDA suspended the review and approval of Barr's application. During the defense period, Barr united with Rugby (one of the three drug manufacturers). ) filed a counterclaim against Bayer Company for patent invalidation and implemented it for the public.
Before the case entered the court of first instance, that is, on January 8, 1997, Bayer negotiated with Barr and finally signed a "settlement agreement" with three drug manufacturers.
The agreement divides the entire CIPRO product market in the United States for at least six years. The agreement includes: Bayer will pay Barr and HMR a total remuneration worth approximately $398 million. In exchange, Barr will recognize the validity of the CIPRO patent and promise It does not compete with Bayer in the U.S. CIPRO and CIPRO-related product market. Based on this agreement, Bayer Company maintained its monopoly position in the CIPRO and CIPRO-related product market in the United States. From January 1997 to December 1998, the price of CIPRO products sold by Bayer Company increased by 16.7%, becoming the largest US market leader in CIPRO products. One of the largest increases in prescription drug prices; internal sales documents show that the company's taxes and profits increased significantly after signing the agreement. From 1998 to 1999, Bayer's state taxes paid from the CIPRO project increased from $834,620,400. It increased to $1,042,473,100, an increase of 25%, and its net profit increased from $756,265,800 to $921,631,900, an increase of 22%.
On November 6, 2000, the appellant started litigation on behalf of himself and the consumer groups in Wisconsin, USA, who recognized CIPRO products because of the CIPRO trademark. The appellant claimed that due to the antitrust "settlement agreement" formed by the conspiracy between Bayer Company and Barr and other manufacturers, the market sales price of CIPRO and CIPRO-related products was fixed, which resulted in the residents of Wisconsin in the United States having to pay more than they had not. When such an agreement exists to purchase CIPRO and CIPRO-related products at much higher prices, this behavior substantially harms the interests of the people of Wisconsin and has a negative impact on the state, violating Wisconsin's Antitrust Law Chapter 1334.
The first-instance state court held that CH133 only applied to intrastate trade and dismissed the lawsuit on this ground. The court of second instance held that CH133 not only applies to intrastate trade, but also applies to interstate trade under certain circumstances. The court ruled that the first-instance court made an error in its understanding of Wisconsin’s antitrust laws and should support the plaintiff’s claim that the defendant violated Wisconsin’s antitrust laws. The second-instance court overturned the first-instance court’s judgment.
After the case was appealed, the U.S. Supreme Court held that the second-instance court was correct in finding that the first-instance court’s understanding of Wisconsin’s antitrust laws was wrong, and the plaintiff should sue the defendant for violating Wisconsin’s antitrust laws. , and to support the plaintiff’s claim that the defendant’s conduct materially harmed the interests of the people of Wisconsin and had a negative impact on the state. However, price fixing and monopolistic behavior are legal within the validity period of the patent, but are illegal outside the validity period and violate Wisconsin's antitrust laws.
2. Case Analysis
In this case, the CIPRO patent was valid during the period from January 8, 1997, the date of signing the contract to April 9, 2004, the date of expiration of the patent protection period. During the period, Bayer Company, as the owner of CIPRO patented products, in the process of exercising this exclusive right, the "Patent Law" gave Bayer Company the right to produce or sell CIPRO products within a limited time period and within a certain geographical scope. Monopoly status, this monopoly right is granted as Bayer Company discloses its inventions to the public
4 Wisconsin Stat. § 133.03: (1) Any restriction on interstate commerce or with foreign countries or commercial contracts, associations in the form of trusts or other forms of association, or conspiracy, are illegal. Any person who enters into the above-mentioned contract or engages in the above-mentioned combination or conspiracy shall be guilty of a felony. In the case of an individual, a fine not to exceed $100,000 will be imposed and in the case of other participants, a fine not to exceed $50,000 will be imposed. (2) Any person who monopolizes or attempts to monopolize, or joins with others to conspire to monopolize commerce or commerce between states or with foreign countries, shall be guilty of a felony. In the case of an individual, a fine not to exceed $100,000 will be imposed and in the case of other participants, a fine not to exceed $50,000 will be imposed.
5 Monopoly means that operators or their interest representatives abuse the dominant market position they already have, or seek or seek and abuse the dominant market position through agreements, mergers or other means to eliminate or restrict competition. Seeking excessive profits is an act that should be regulated according to law.
The price or compensation created by monopoly rights legitimizes its purpose of obtaining monopoly profits. In other words, this stage is to protect monopoly in a legal way. This protection can reduce people's desire to deprive others of their property through violence and fraud, thereby motivating people to engage in more production and business activities and create more social wealth.
However, after the expiration of the CIPRO patent term, that is, since April 9, 2004, Bayer Company has lost its exclusive monopoly rights on CIPRO products. If Bayer Company continues its usual practice after this point in time, Monopolistic behavior may lead to abuse of market dominance by using expired patents. Because, when the patent expires, as operators of CIPRO products or representatives of their interests, they no longer enjoy a legally protected monopoly position. Since then, Bayer's monopolistic behavior has been subjectively seeking excess profits, and objectively excluding or restricting competition. The purpose of the behavior is to maintain or improve the market position and obtain excess monopoly benefits. The consequences of the behavior are to the essence of market competition. Sexual damage or possibility of damage, therefore, has certain illegality. After the expiration of the patent protection period, manufacturers such as Bayer and Barr still fixed prices in accordance with the content of the "Settlement Agreement" and eliminated competition, which fully complied with the elements of monopolistic behavior.
Furthermore, after the expiration of the patent protection period, Bayer's monopolistic behavior is an abuse of market dominance, which is specifically manifested as monopoly high prices. As the operator of CIPRO products, Bayer already has great influence in the CIPRO-related product market. In order to further eliminate competition, it signed a "resolution agreement" with three drug manufacturers including Barr to re-allocate resources and interests. Distribution enables it to occupy almost the entire market share in CIPRO-related product markets and related geographical markets, and no other competitor can compete with it. Due to the high barriers to market entry or exit in the pharmaceutical industry, CIPRO products, as one of the most commonly used antibiotics, have a high degree of market concentration. The more consumers rely on them, the higher the market dominance of Bayer. The company relies on its dominant market position to sell its CIPRO products at a price that is much higher than the average social profit rate, thereby grabbing excess monopoly profits.
This monopolistic high-price behavior not only substantially harms the interests of consumer groups, but also causes it to lose or greatly reduce its internal motivation to improve management and promote technological progress through equal competition, and hinders the growth of social welfare. , losing the overall welfare of society. At the same time, this behavior also trampled on the rules of equal trading, destroyed the order of fair competition, plundered social assets, and infringed on the interests of other operators. Therefore, if Bayer Company still has a long-term and stable monopoly position under the expiration of patent rights, it may lead to low social and economic benefits. Therefore, at this stage, the use of its market dominance to hinder competition is Behavior should be regulated by the Anti-Monopoly Law.
3. Conclusion
The U.S. Bayer case given in this case at least shows that the patent owner’s market dominance and monopolistic high-price behavior are legal during the validity period of the patent. During this period, under the premise of safeguarding the interests of the public and maintaining effective market competition, we will give them the greatest possible protection. However, this protection is not indefinite or unlimited. The same behavior outside the validity period of the patent Continuation may constitute monopolistic behavior, which is illegal and should be regulated by the Anti-Monopoly Law.