Patently Unfair? Two views on the IP vs Competition law debate

Intellectual Property (IP) and competition law are generally considered distinct specialisms. One involves conferring monopoly power on products or processes. The other scrutinizes, mitigates or prevents such monopoly power. How the two interact has never been more contentious with patent settlements coming under fire from a competition law perspective. Charlotte Tillett, a specialist in patent litigation, and Gustaf Duhs, a specialist competition lawyer, both from Stevens & Bolton, square up to discuss the latest developments and to discuss their opposing (personal and not necessarily deeply held) views on the arguments.

Gustaf Duhs: A hot topic in competition law at the moment is so called “pay for delay” agreements. This is a form of patent dispute settlement agreement in which a generic manufacturer agrees to keep its generic product out of the market of the originator for a specified period of time in return for payment or other consideration. I’ll come on to the competition law issues - but what is the IP angle?

Charlotte Tillett: Let’s not forget the framework within which IP law operates, and the purpose of it. As a system, the patenting process encourages invention and investment in innovation, rewarding those inventors for their disclosure with a limited monopoly for the life of the patent, or at least whilst it remains a valid publication. Given that the product or process is subsequently made freely available to the public to benefit from on expiry, the short term monopoly is arguably a small price to pay for technical progression. We should keep in mind that it is rare an inventor will benefit financially for the full 20-year life of a patent. In the pharmaceutical industry in particular, a recent Deloitte report put the average drug development time at 14 years, meaning that even with a possible 5-year Supplementary Protection Certificate extension, a patent is already well into its lifecycle by the time it hits the consumers’ shelves, and the inventor sees a return on its often considerable investment in time and money. Given the key role that IP plays in encouraging innovation, competition enforcement should play a very limited role in intervening.