In Italy, a remarkable judgment was rendered at the interface between competition law and patent law. According to the highest Italian administrative court, how patent rights in the pharmaceutical industry are invoked can under certain circumstances be contrary to competition rules. This judgment could be important for your company’s divisional and SPC strategy.

The Consiglio di Stato (CdS), Italy’s highest administrative court, upheld the original decision of the Italian competition authority (ICA) to impose a EUR 10.6 million fine on Pfizer for the abuse of its dominant position by misuse of patent and supplementary protection certificates SPC rights. The CdS thus overturned the decision of the court in first instance. The only known precedent in Europe somewhat related to this case was in AstraZeneca where AstraZeneca’s alleged misleading representation of information to a patent office relating to SPCs for medicinal products was held to be abusive and to support unlawful exclusionary behaviour. Here, however, the situation was quite different.

Pfizer held a European patent for Xalatan – a product used to treat glaucoma – containing the active ingredient latanoprost. The patent expired in September 2009. In Italy, this patent had not been extended by a supplementary protection certificate (SPC), allegedly due to oversight. The ICA established that Pfizer obtained a divisional patent for the same product and then relied on this as a basic patent to obtain an SPC for Xalatan in Italy. The acts carried out by Pfizer to achieve this resulted, according to the ICA and upheld by the CdS, in a complex and articulated conduct that amounted to abuse of right and, in particular, anti-competitive behaviour meant to delay the entry of generic products. This is, again according to the ICA and the CdS, confirmed by the circumstance that the divisional patent for latanoprost did not lead to the introduction of a new drug in the market, which circumstance supports the exclusionary intent found by the ICA in the overall assessment (also of internal emails and of Pfizer’s conduct vis-à-vis generic companies). The ICA was also critical of Pfizer having applied for and obtained a paediatric extension for this product which is used to treat a disease that typically affects older people whereas the authorities generally stimulate application for this extension.

The CdS considered that this case does not concern the lawfulness of conduct under patent (and SPC) law, but the anti-competitive effects of a series of acts that are per se unlawful. How rights were used here is artificial, i.e. for a goal which is inconsistent with that for which such rights were granted: in this case the exclusion of competitors from the market.

There is, however, no explicit explanation about how the rights were used contrary to the goal for which they were granted, given that patent rights and SPCs give the holders a monopoly the effect of which is precisely to exclude competitors from the market. In AstraZeneca, there was a finding that information had been misrepresented, which seemed to underlie the finding of abuse. In this case, Pfizer seems to have acted in accordance with the law. This decision seems to suggest that there is no need for such additional reprehensible conduct and even the exercise of lawfully obtained exclusive rights by a company that is in a dominant position (which position the rights holder has) can lead to violation of competition laws. This is a rather unsatisfactory outcome as no clear guidance is provided on why the goal pursued by Pfizer in this case differs from those goals for which the rights were granted.

Though the facts of this case are rather special and it might be difficult to generalise the outcome, this judgment could be important for your company’s divisional and SPC strategy.