the italian way to antitrust judicial review: a few oddities of the pfizer case

THE ITALIAN WAY TO ANTITRUST JUDICIAL REVIEW: A FEW ODDITIES OF THE PFIZER CASE Cristoforo Osti* Keywords: Antitrust, EU, Abuse of Dominant Position, Patents, Judicial Review, Commitments Abstract: The note deals with the Pfizer case, where the pharmaceutical company was condemned for an abuse of dominant position relating to otherwise lawful patent practices which, in the Authority's representation, had delayed without merit entry by generic producers. The note takes this opportunity to comment on the system of judicial review of the Italian Competition Authority's antitrust decisions, comparing it with the equivalent system at the EU level. The note also reviews more in-depth the judgment with reference to both those areas where the Court decided to take a specific position and in those where it omitted doing so.

1. INTRODUCTION Antitrust enforcement in any given system is only as good as its judicial review. The reason being, quite naturally, that judicial review represents the last and defining act of any antitrust case, no matter how and where initiated and, perhaps less intuitively but no less *Lawyer.

The author was involved at some stage in the litigation under review. This is an excellent reason not to go into the merits of the case. In any case, the author’s views, at least in so far as they go beyond what stated in the court briefs, do not necessarily represent Pfizer’s position.

DOI: 10.12870/iar-11058

importantly, that the quality of any agencydriven antitrust enforcement is greatly influenced by the stringency of judicial review: as shown in the European Commission’s recent history, in fact, nothing contributes to raising the quality of an agency’s practice, as a demanding and non-deferential judicial scrutiny. The judicial review of all decisions made by the Italian Antitrust Authority (ICA) – solely responsible for administrative antitrust enforcement in the Italian legal system – is exclusively reserved to the administrative courts, more precisely, to one lower (the Regional Administrative Tribunal for the Latium region), and one higher administrative Court, the Council of State, both sitting in Rome. This solution, adopted in 1990 by the Italian legislator, has been criticized for granting exclusive judicial review to a non-specialized, poorly equipped, formalistic body of judges, whose history, role and selection process, furthermore, do not provide a full guarantee of neutrality vis-à-vis a Government body such as the ICA. Such perception has not been improved by the tendency of such courts to emphatically enunciate that the scope of their antitrust judicial review is indeed very limited. It does not come as a surprise, then, that the Italian system should have been the subject of the leading case in the area of European Human Rights and antitrust judicial review (the

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Menarini case), the European Court in Strasbourg having disposed of the issue by stating - over the strong dissent of one of their own - that, no matter how national Courts define the scope of their own review, as long as, in practice, their review is full and extends to both legal and factual issues, everything is in order under the European Convention of Human Rights. If, however, one should move from sweeping generalizations to a pragmatic assessment of the pros and contras of the Italian process of legal review, at least in the framework of the viable alternatives in that system, one may rather dryly remark that (i) specialization of courts carries with it some dangers which are no much less preoccupying than the ones of a generalized review, (ii) the Italian system simply does not harbor courts standing out as facially more efficient than the administrative courts, which actually do not perform badly if compared with the rest of the court system (iii) formalism can be combated from the inside and, again, the availability of efficient evidencegathering solutions within the overall court system in Italy is sparse to say the least. While the issue of neutrality may be a harder nut to crack and should be left for another day, the bottom line is that both the Latium Tribunal and the Council of State have in the past produced at least a handful of antitrust decisions which, both in terms of quality and of attention to the relevant issues of fact and law, do not compare badly with both the equivalent judgments of other Member States’ jurisdictions and even, to a certain extent, with those produced by the European Union Courts.

That this can be so, however, does not necessarily mean that it will always, or perhaps even predominantly, have to be so. Of this, coming to the topic of this note, is the Pfizer case indeed a stern reminder. In fact, if there is one rather significant point which the European Court of Human Rights seems to have overlooked, it is the difference between a de iure and a de facto exacting standard of legal review. While a Court, again, can churn out splendid judgments, conceding that it is not bound to operate under a legal requirement to perform an in-depth and complete review, does in practice give it the possibility to produce some rather nonchalant decisions, without infringing on any specific legal standard.

2. THE PFIZER FACTS This comment will not deal at length with the merits of the case before its reaching the courts of review, including because the case may still not be definitively over. The gist of the case is Pfizer having obtained an original patent on an invention for the treatment of glaucoma and having then filed for a supplementary protection certificate (or SPC) limited to a number of European countries, not including in Italy. Why Pfizer (or rather, Pharmacia, to which did the original patent belong before it would be acquired by Pfizer) should have not filed for an SPC on the original patent (as it could have) does not clearly emerge from the file: Pharmacia may have not been interested in the Italian market,

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or it may have just forgotten to file in such respect. Following this, Pfizer, which had in the meantime requested, for totally unrelated reasons, a divisional patent (i.e., a patent on claims further than the ones described in the application for the original patent) on the same active ingredient covered by the ‘original’ patent, applied, as far as Italy was concerned, for an SPC on the basis (not of the original but) of that divisional patent. In such a way Pfizer was able to obtain an SPC, and thereby an extension of the patent protection period in Italy, for the same period as in the other European countries. This is so as the divisional patent having being awarded much later than the original one, on grounds of a lengthy and complex administrative European Patent Office (EPO) litigation, this made it still possible to file for a divisional-patent related SPC while the period for an original-patent related SPC had by then already expired. It was exactly such applying for (and obtaining) an SPC related to the divisional patent, without the introduction of any “new product”, distinct from the one covered by the original patent, on the market, which led the ICA to believe that Pfizer had engaged in an abusive, foreclosing market conduct. Being a case dealing with an abuse of dominant position via patent practices, and there not being evidence of any fraudulent or misleading practice (the EPO finally assessed the divisional as wholly valid), the case would therefore seem to represent a variation of (or a further addition on) the second prong of the AstraZeneca Court of Justice case: this, to briefly remind the reader, concerned AstraZeneca requesting that

the marketing authorization regarding a specific packaging of its drug be withdrawn, which allegedly did not benefit it in the least but had the sole effect of making the entry of generics more burdensome and lengthier. A situation where the dominant firm utilizes a patent in a way which is completely legal under the IP laws, save that, the exclusionary effect of the patent being the only purpose of its use, such conduct would still infringe on antitrust laws. It would seem that the Pfizer case, as said, could be a variation of the AstraZeneca one, as the latter case is hardly ever mentioned in the IAA’s decision, and never in the judgment under review. Which is one of the few oddities of the case. Including because, no matter whether the case is or isn’t a species of the AstraZeneca genus, it is definitely the leading case not to mention the only case concerning abuses via patents (let alone pharmaceutical patents) ever rendered by the Court of Justice or the General Court. Which would lead to think that the Italian agency – and the Courts of review - should have taken better notice. Before the closing of the procedure, Pfizer had offered commitments to end it without an infringement decision. The commitments consisted, essentially, in (i) offering a free license on the patent in dispute to any interested party and (ii) accepting the claims put forward by the generic companies in any ongoing litigation. As the litigation concerning the divisional was still ongoing at the EPO level, Pfizer reserved, however, the right to have the divisional declared valid (as it then in fact was), even though, after the offer of a free license to any third party, the economic content 117

of the patent would come down to zero. Pfizer also reserved the right to deny or withdraw the patent license in case of improper or unsafe use by the licensee. The ICA, in rejecting the proposal, remarked, with a rather lawyerly take, that there was a contradiction between granting a free license to all third parties and accepting the genericists’ claims in the ongoing litigation, and that Pfizer’s reservation regarding the improper use of the patent would further subject the generic producers to Pfizer’s discretion. The main peculiarity regarding the commitments phase is, however, that Pfizer had presented such commitments without receiving any problematic comments from the ICA, that this had posted such commitments on its website for comments (thereby performing the so-called “market test”), where it received critical comments from (and only from) the generic producers and their trade association, while an independent think-thank had commented favorably. After which the ICA did not seemingly engage in any further analysis of the case, nor did it consult with or even let Pfizer know of its reservations. After months of total silence, essentially out of the blue, did the ICA serve on Pfizer a decision stating that the Commitments had been rejected for such and such reason. This while Pfizer may very likely have been willing to complement, modify and/or clarify them had it known of the ICA’s concerns. Yet another curious peculiarity had been the time lapsed between the taking of the decision by the ICA’s meeting and its service on Pfizer, of approximately 90 days.

It should also be recalled that between the Council of State appeal judgment and the ICA’s decision, the court of first instance (the Latium Administrative Tribunal) had issued a judgment on the case, where, in short, it scathingly criticized the ICA’s decision for sheepishly following the generic companies unsubstantiated allegations, for illogically rejecting Pfizer’s commitments offer, and for articulating a standard of abuse of dominant position which, in essence, did not make sense. One of the peculiarities of the Council of State judgment’s is, in fact, that it takes so little notice of such an affirmative decision. Finally, it should be remarked that before the end of the appeal, the Council of State issued an order, where it asked the parties (essentially, Pfizer) whether the divisional had ever lead to putting on the market a different or enhanced product, or a new use of the same product, or to any activity typical of a divisional patent and not already covered by the original patent. Pfizer had replied that a divisional patent cannot by definition cover a new or enhanced product (for which you would need a new original patent), and that in the specific case the divisional patent covered the correct dosage for administering the product, i.e., the one which obtains the most effective treatment while minimizing any negative side effects.

3. THE ITALIAN

JUDICIAL REVIEW OF ANTITRUST DECISIONS

The way the Italian administrative court procedure works, the appealing party (whether a private party appealing against a negative 118

decision of the ICA or, as in this case, the ICA appealing against an unfavorable judgment of the lower court) and its counterparty will normally exchange an appeal brief, a reply, a response and a counter-response. Sometimes, as in this case, the Court having issued an order requesting further clarifications, another set of brief and counter-brief may follow. In total, at least potentially, and actually as a matter of fact in the Pfizer case, hundreds if not thousands of dense, complex, fact elucidating and case-citing pages. It comes as a surprise then, to the reader conversant in US - or even EU-style antitrust litigation, to apprehend that the hearing for such cases - and more specifically the hearings (one on the merits, and one following the abovementioned order of the Court) in the Pfizer case – do not last normally more than twenty minutes to a half-hour. The underlying assumption being that the Court has read all the papers and that, in the lack of any new fact of decisive importance occurring after the filing of the final brief – which normally takes place only a few days before the hearing itself – there is really nothing more of interest to the Court to be informed about. And since, as said, there usually isn’t a new significant event to report about, hearings tend to consist of the timepressed lawyers trying in the few minutes allotted to them to squeeze in all the relevant facts and legal theories, or at least those which they consider relevant, not to say essential, given the time granted. To which normally no question or comment follows, the President of the Court pronouncing the formula “It will be decided”, which vaguely recalls memories of

that Ite, missa est, long used in a different procedural context. In the US system, as well known to all antitrust (and non-antitrust) practitioners, the hearing in court represents the veritable apex of the proceedings. In such context, which normally takes hours and often days, the judges sitting on the Court almost literally shoot at the appearing lawyers all kinds of different legal and factual questions. Such occurrence is therefore extremely important and precious both for the judges, as it allows them to clarify each and any of the theories or doubts which they may have encountered through the reading of the briefs, as well as for the lawyers, as it allows them to summarize or expand, comment and complement any of the theories expounded in their briefs. Such dialogue, furthermore, helps the judges in communicating to one another, through the questions raised by each of them and the replies obtained by the lawyers in court, and, through such process, in building gradually a consent, among at least the majority of them, from which the judgment itself will thereafter originate. In the European Union Courts, a day – and sometimes, several days – will be granted, normally, to each of the parties in the case, they being heard separately, in order to explain and clarify any of the elements contained in their briefs. And each lawyer appearing before the EU courts knows that, after the few minutes accorded for a general and introductory exposition, he or she will be subject to a painstaking interrogation, based on a list of questions prepared by the reporting judge – and often supplemented by the remaining

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judges – which, he or she being unaware of them prior to the hearing, will represent both his or her greatest opportunity to prevail, and his or her greatest risk of losing the case. Be it as it may, a case as new and as complex as Pfizer - new and complex in the European context and even more so in the Italian one was indeed decided after a hearing consisting of a few introductory remarks by the lawyers representing both the Agency and all remaining parties, and no questions posed. Which is one of the few oddities of the case.

4. FURTHER ITALIAN

PECULIARITIES OF THE ANTITRUST JUDICIAL

REVIEW

Antitrust, it is known, is made of a few extremely brief and extremely vague rules. Extremely brief as, in our case, Article 102, which is all there is in terms of rules, is composed of just a few lines. Extremely vague as the only command emanating from, again, Article 102, is that an abuse of a dominant position is prohibited, without any hint to what should be considered an abuse. A few examples are given (tying, discrimination, unfair prices or conditions, limiting production or markets “to the prejudice of consumers”) which, however, are neither exclusive nor very explanatory in themselves. If follows that antitrust is, in essence, judgemade law. It consists, in other words, entirely of case-law. An even cursory survey of any Court of Justice case, will make it clear to any reader that comparing with, distinguishing

from, extending to and limiting the scope of the instant decision vis-à-vis the judgments previously rendered by the Court in the same or in similar circumstances, is the defining feature of the Court’s mode of operation. Which applies to the General Court as well (in which case the precedents, obviously, emanate from both the General Court and the Court of Justice). This is no trivial matter as it is, in short, it incarnates nothing less than the rule of law principle in any system where the law is judgemade. We are used to teaching our students, at least as a first approximation, that the principle of the rule of law (or of the certainty of law as it is more widely known in the non-common law systems) can be pursued in two different ways: while continental European systems have chosen to create written rules enshrined in codes binding on all, common-law systems pursue the same objective via the principle of stare decisis, or judicial binding precedents. The Court of Justice has always stopped short of accepting that its precedents may be binding (except, that is, in the actual case on the lower or the national courts), which would be difficult to fathom in the EU, where the majority of national systems are non-common law based. The difference between basing, as it does, its decision on a review of precedents and recognizing their binding authority is, however, often, almost imperceptible. Including because at any time where the Court decides to depart from it precedents it usually finds it necessary to justify itself and state the reason why it is doing so. As the incremental accretion of judge-made law is the essence of the EU antitrust law ruling, an

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almost equally important part of the decisionmaking process is represented by the description of the parties’ representations. In other words, no thorough interpretation would be possible, in a system where the interpretation of the Court’s decision is the basis for accessing the legal rules, if we were kept unaware of what was the position taken by the parties, which prompted the Court to decide in a certain way. Knowing what the parties submitted is, in short, an essential component of deciphering the true import of what the Court decides. It is for such reason that both the Court of First Instance and Court of Justice’s judgments contain such extended case citations and such detailed descriptions of what the plaintiff, the defendant, and the parties possibly joining, have maintained vis-à-vis each legal issue considered. Besides representing the basis for a correct interpretation of judge-made law, such attitude also contributes to what we may define as he democratic legimitacy of the Courts. A Court which, to paraphrase the title of a very fortunate book, takes both its own precedents and the parties seriously, is a Court which shows it deserves to play the very sensitive role and to obtain the very special consideration, which the community normally grants and recognizes to it.

5. THE COURT PERFORMANCE IN THE PFIZER CASE Bearing in mind, therefore, that (i) the hearing plays almost no role in the Italian administrative judicial system, (ii) antitrust is a purely case-based branch of the law and (iii) the consideration of the parties representation is an essential component of such mode of producing legal rules, let us focus our attention on the judgement itself. And we know of no better way to do this than to compare the actual judgment with the one rendered by the Court of Justice in essentially the same area, i.e., as more than once remarked, the AstraZeneca decision. Which we will do, with the reader’s permission, graphically1:

no. of pages

Pfizer

AstraZeneca

12

38

no. of citations of 5 precedents

38

no. of pages where the 2 parties’ position is described

6

Which are some of the few oddities of the case.

The documents have been compared after being transcribed in the same format. The number of pages where the parties’ position is described is reported approximately. Citations include those made when describing the parties’ position. 1

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The difference between the two documents, in both size and depth of review, is striking to say the least. While no court is, or should be, subject to an obligation to review in depth any and each issue raised by any party, no matter how insignificant the extent to which this should be adequately done is obviously a matter of proportions. A representation of the Court’s attitude in our case is represented in the table below:

Pfizer’s Position

Judgment

Market Definition The market definition is flawed: beta-blockers are The ICA made reference to the criteria used by replaceable with analogues of prostaglandins, as the European Commission. The scope of the shown i.a. by the industry regulation, which Court’s review is limited to errors in the prescribes replacement of the higher-price with the reasoning, in the grounds given or in the lower-price product. procedure, and to manifest errors of assessment, none of which is the case here. Commitments Not true that commitments could not eliminate The patent had expired and the conduct had effects as the patent was still running at the time produced irreversible harm to competition they were offered. already. No contradiction existed between commitments 1 Offering a free license on the patent was in and 3: the intent and effect was to waive the patent conflict to waiving to all claims in the pending in all its practical applications without renouncing litigation with generic producers. as a matter of principle to the legal action pending before the EPO. Keeping a right to refuse the patent license for Offering a free license to everybody is not the improper use was no “subordination” of third same as renouncing the license. parties, but in fact a mere protection of Pfizer’s brand name and reputation. The ICA had already accepted similar clauses in 122

cases involving pharmaceuticals. Once the Agency admits a party to the market test, they have a duty to motivate rejection. The decision rejecting commitments was correctly and fully grounded. It was reviewed in both instances, and it is evident that no violation of Pfizer’s right of defense occurred. Comments in market test added nothing to what the ICA already knew. Pfizer was heard, it had access to the file and participated in the commitment procedure; The only negative comments were those received thereafter, it submitted briefs and participated in by Pfizer’s competitors, which were not credible; no the final hearing. It clearly emerges that Pfizer’s potential customers and no consumers submitted participation was effective throughout the comments. The comments received by third parties procedure: as a consequence, Pfizer’s claims are favorable to the acceptance of the commitments clearly unfounded. were not even considered in the decision. The dissent of one commissioner over the rejection of commitments was not even mentioned in the final decision. The decision rejecting the proposed commitments already anticipated the ICA’s convincement of Pfizer’s liability. The delayed communication of the decision rejecting commitments gave Pfizer an extremely tight deadline to reply to the SO and, by doing so, it hurt Pfizer’s right of defense. “Commitment Ambush” After a long procedure the ICA issued its decision rejecting the commitments without even priorly informing Pfizer or giving it the chance to modify or complement the commitments already offered. By doing so it renders moot and pointless the whole commitment procedure, which exists for a purpose. No reason why one should spend months of work in cooperation between the parties and then dispose of it without any attempt to obtain satisfactory commitments.

No mention or position taken

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Violation of Article 5 of Regulation 1/2003. This is contrary to the Commission’s Best Practices. The principle of good administration was violated as: i. Decision requesting commitments issued without requesting comments, modifications or further comments; ii. The commitments were declared not manifestly unfounded but then the ICA rejected them on the basis of third parties’ comments which added nothing to what was already in the file. The practical effectiveness of EU law (as the principle is interpreted in the case-law of the Court of Justice) was violated by the way the ICA handled the procedure. Request for referral to the Constitutional Court Issue of constitutionality raised for violation of principles of good administration and loyal no mention or position taken cooperation. Request for referral to the Court of Justice The principles of good administration, loyal The issue is irrelevant to the decision of the cooperation and access to justice are both case, hence the Court has not obligation to refer fundamental principles under EU law and principles it to the Court of Justice. enshrined in the ECHR. In case of doubt the Court should refer the question to the Court of Justice. Errors in the Procedure The ICA should have suspended the procedure pending the EPO decision on the validity of the patent. The timing and quantity of documents shows the ICA didn’t really do any in-depth, serious inquiry into the facts of the case. The ICA did not do an independent inquiry, but just followed what genericists kept telling them, without even double-checking for truthfulness of the facts and ground of the legal theories. A list of elements is given, which show how the ICA just

no mention or position taken

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followed the checking.

genericists’

allegation

without

The minutes of the ICA meeting during which the decision was issued were drafted only two months after the meeting, without justification. Abuse Extending the Duration via the obtainment of an SPC Pfizer’s conduct cannot have extended and did not The divisional extended the original patent’s extend the duration of the patent (original + expiry (2009) duration by two years, and even divisional + SPC + pediatric extension), as the three through the pediatric extension into 2012. aggregate maximum duration is the same be it that This shows Pfizer was aware of the effect of the the SPC (and the pediatric extension thereafter) is divisional. Pfizer’s defense also conflicts with its been obtained on the original or on the divisional warning letters in 2009 to competitors patent. concerning their potential entry before the new patent expiry in 2011, and with Pfizer stating its conduct only aimed at obtaining what due, i.e., a valid protection until in 2011 (not 2009). Absence of a ‘new product’ Not putting another product on the market is not Pfizer’s conduct enabled it to postpone the only not required, but even impossible given the entry of competitors, without any concrete way the divisional works, i.e. that it pertains to utilization of the active ingredient, different different claims referring to the same product (you from the one protected by the patent, or the would need a ‘new’ original patent otherwise). putting on the market of any further product: this confirms the foreclosing potential of the conduct at stake. The Agency’s assessment, identifying in such request a goal further to, and other than the one proper to patent protection – which was active already – is therefore fully justified. In this case, the divisional covered the correct dosage for administering the product, i.e., the one which obtains the most effective treatment while minimizing any side effects. Abuse of right There cannot be an “abuse of right” as: Pfizer’s abuse is a specification of the broader i. the objective of the divisional was simply category of abuse of right, which presupposes overcoming the objections of the EPO, in that the right be used in a way not consistent order to expedite the application process with the goal for the attainment of which the regarding the original patent; law recognizes it. The founding elements of ii. the SPC was obtained exactly for the abuse of right are the existence of the right, the purpose for which the legislature accords it, possibility to exercise it in different, noni.e, helping in recovering the time run predetermined ways, the fact that its exercise, during the authorization process. while formally compliant with the legal

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framework, is performed in practice in a way Given the above, Pfizer’s “only objective” could which can be sanctioned on the basis of a legal not be foreclosing genericists. That genericists may or extra-legal principle, the lack of proportions be foreclosed by the granting of a patent cannot be between the benefit to the owner of the right a “further” objective, as it is the very essence of a and the harm to its counterparty. patent. AstraZeneca Must keep in mind that AstraZeneca is an exceptional case. The Agency’s decision does not even mention AstraZeneca or ITT Promedia. The AstraZeneca case was not applicable as (regarding the first count) there was no misleading conduct and (regarding the second count), there was no abuse of right as clarified above.


The allegedly exclusionary conduct in AstraZeneca was subsequent (and not prior to, as in our case) to the expiration of the patent and aimed at obtaining a de facto further protection. Other pleas The divisional was granted at the end of long and transparent proceedings, which the genericists could participate in and many of them actually did. The timing of the divisional request is inconsistent with the theory that the divisional was requested to remedy the lack of a SPC.


In any event you don’t have an obligation to use a patent if you don’t want to. Registering the SPC only in Italy was no indication of Pfizer’s intent, as it would have been impossible to apply for it in those other European countries were the SPC had already been granted on the basis of the original patent since you legally can obtain only one SPC for each patent. Litigation When it alleged that Pfizer had committed abuse by The exclusionary strategy followed by Pfizer litigating against the generic companies, it included sending warning letters to its completely ignored the principles dictated by the competitors, the ensuing litigation, the

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Court of Justice in the ITT Promedia case (that in order to represent an abuse the litigation should at least be meritless and its only purpose must be anticompetitive).

intervention on the industry regulator: all this was precisely assessed by the ICA on the basis of written evidence, which lead to consider that a fine would be deserved.

Most of genericists joining in the present case weren’t even involved in the alleged litigation. Only one of them received a letter but didn’t do anything until six months later, so clearly the letter was not the reason of its withholding entry. Makes a wrong of being at the receiving end of litigation as this was actually initiated by the genericists, not by Pfizer. Writing a letter to the industry regulator, reminding them of the expiry date of the patent cannot be an abuse of dominant position, as it essentially represents the exercise of one’s right. Ability to exclude In order for there to be an abuse pursuant to Article 102, you have to show that the conduct was at least able to keep the genericists out of the market, and here no such evidence has been given. Effects In fact, the genericists have entered as soon as they materially could, and much earlier than the expiry of the patent itself. This emerges from (a) the time materially required to enter, (b) the time when they obtained their Marketing Authorization, (c) the statements once released by the genericists themselves of the moment when they were planning to enter.



The Agency does not explain why the genericists should first have waited to enter as deterred by Pfizer’s conduct, and then they could have entered the market earlier without waiting for the end of the litigation or the expiry of the patent protection. Pediatric Extension The pediatric extension corresponded to a real The exclusionary strategy followed by Pfizer pediatric use of the drug for the purpose of treating included … filing for a pediatric extension. glaucoma in infants.

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Legitimate Justification In the worst case scenario, obtaining a divisional patent for the sake of keeping the full protection granted by the law, cannot fail to be a “legitimate no mention or position taken justification” for the conduct under review. Fines The duration considered for calculating the fine was The fine was based on the duration and the too long: it commenced when the divisional request gravity of the infringement, and does not appear was submitted (while it has been demonstrated that disproportionate with regard to the such request at least at the time had a different anticompetitive effects of Pfizer’s conduct. purpose) and not when the patent was obtained or even better validated; it ended after entry and therefore at a time when Pfizer had already long lost its alleged dominant position. The fine is disproportionate in view of the lack of any effects.

6. CONCLUDING REMARKS The above table shows the realities of the case. Several of Pfizer’s pleas, including some of the most significant ones, were simply ignored by the Court. Most of the others received a cursory and non-argumentative reply, which normally boiled down to remarking that “the ICA was right in considering that…”, followed by whatever the ICA had held. A few, finally, are based on a rather clear misunderstanding of the facts or of the underlying legal theories. This is all the more striking as the Court’s case was preceded by the lower court’s judgment which had concluded, in a very straightforward and unqualified way, that the ICA’s decisions, including its commitments decisions, were not only wrong at law but also unsupported by evidence, that the ICA had done nothing more

than follow sheepishly what the genericists had been telling them, and that the decision was likely to be based on the ICA’s perceptions in the initial stage of the procedure, when it appeared that Pfizer’s divisional patent could have been obtained in an illegal or misleading way as a matter of IP law: which having been cleared in the later development of the procedure, had left the ICA with nothing in their hands. Hence the lower Court’s quashing the decision. This, one would have surmised, would have raised the bar of the higher Court’s subsequent scrutiny. Which clearly has not been the case. The gist of the Court’s case is the theory of the abuse of right. Such theory, virtually unknown in the common law world, has been controversially recurred to in several continental European systems (abus de droit, abuso di diritto, Rechtsmissbrauch) as well in some Asian systems fashioned thereafter. It is modeled after certain principles of Roman 128

property law and medieval law. Its use in the area of antitrust law, is unheard of. While the second prong of AstraZeneca may in a way be represented as an abuse of right (in particular in what pertains to the lack of proportion between benefits reaped and harms inflicted), the Court of Justice never qualifies it as such. Not to mention that, as said, the Italian Court never cites AstraZeneca. What is even more interesting, the ICA itself had never in its decision even mentioned the theory, and it actually never even referred to its general framework: the ICA’s decision was rather based on Pfizer excluding the genericists by postponing the patent’s expiry, recurring to litigation, creating “legal uncertainty” on the part of the genericists as to the appropriate time to enter the market legally and generating (at the same time) “reliance” in them as to the possibility to enter the market. Which all has nothing to do with the abuse of right and was, once again, never qualified as such by the Agency. Now, even irrespective of whether it makes sense to transplant a tort law theory (in itself already controversial) into antitrust law, without even mentioning what its connection to whatever antitrust theory could be, Pfizer had raised a number of objections to the possible application of the abuse of rights theory: that the divisional had been filed for in a situation which demonstrably had nothing to do with prolonging the duration of the patent; that the SPC had actually been obtained for exactly the reason why the legislature had provided for it, i.e., recovering the time of protection lost in the authorization process, and that keeping the genericists out of the

market was not the purpose of Pfizer’s conduct, but rather its consequence, actually an inevitable one, as exclusion of competitors is the inevitable result of the exercise of a patent rights. In other words, if you want to build a theory of harm based on a patent-related practice, you have to come up with something more convincing than the exclusion of competitors, which is the inherent content of any patent. Pfizer had also maintained that at the end of the day requesting a divisional could not extend the duration of the patent, since, no matter whether you obtained a SPC (and possibly, later on, a pediatric extension) on a divisional or on an original patent, the aggregate maximum duration of the patent protection would be the same. This rather substantial point goes entirely missed in the Court’s judgment. Its statements in this regard (which are reported almost verbatim in the table above) are far from clear. Either the Court is saying that, in the specific circumstances of the case, had Pfizer not requested a divisional, it could not then had filed for an SPC and it could not have extended its patent protection (which is true but sort of dodges the main question, i.e., whether doing so represented an abuse) or, perhaps more likely, the Court’s statement is based on a serious misunderstanding of IP law. The Court seems to be saying that extending the duration (two more years for the SPC and six months for the pediatric extension) from the expiry of the original patent is where the abuse lies. Which ignores the fact that the same extension (i.e., SPC and pediatric extension) could have been requested on the original patent with exactly

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the same effect, and could definitely not represent an abuse. In other words, the Court seems to proceed on the belief that the normal expiration date would have been 2009, while in fact it was 2012. As said, filing for a SPC related to a divisional patent and then for a pediatric extension, was the way for Pfizer to recover for Italy nothing more than the full protection afforded to the original patent (which had been lost for unrecorded reasons, possibly just because the seller, Pharmacia, had not even thought of or had forgotten about it). Again, Pfizer had clarified the point in dozens and possibly hundreds of pages. The Court would have had the option to clarify any outstanding doubt during the hearing(s). Or it could have appointed an IP law expert to resolve this (and other) issues of IP law. Or it could have referred the case to the Court of Justice (which is competent not only on the antitrust counts but also for interpreting the European Patent Convention on which all the patents in the case were based). But it never did. Which are some of the few oddities of the case. Yet one of the few oddities of the case is that the ICA never really gave material evidence that the genericists had been kept out of the market. Both as they did in fact enter before the expiry of the full protection period, and because for a number of practical reasons they would not (and according to some evidence, did not even plan on) entering the market before they actually did. Including because the allegedly exclusionary litigation had actually been initiated by the genericists themselves.

Pfizer had made reference to that Court of Justice case-law holding that for a conduct (the more so for such a non-descript and generally unqualified conduct as the one under review) to represent an abuse it should at least have an ability to restrict competition. To which the Court, as per the above table, never replied. Also, while commitments formed part of the Court’s brief judgment, the Court never reviewed Pfizer’s main contention, i.e., that issuing a decision rejecting commitments without even notifying the parties that it intended to do so (as provided for, by way of example, in the EU Commission’s best practices), and possibly giving it a chance to modify and complement them, was a violation of the essential principles which should regulate the activity of an agency. This is a significant example of what was considered right at the beginning of this comment, i.e., that a stringent judicial review is essential if we want Agencies to perform well. The signal which the Court is giving to the ICA, no matter whether its legal reasoning (or rather, the absence thereof) may or may not be correct, is that the ICA in the future will be able to get away with a lot, precisely in area as sensitive and as broadly discretionary as the one of commitments. Finally, while the Court completely ignores the request for a referral to the Constitutional Court (the principles called in question regarding the ICA’s activity are, i.a., constitutional principles), it argues that no referral to the Court of Justice is in order as the point of law is, basically, irrelevant for the decision of the case. Now, one would have thought that in an area as new, as complex and

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as sensitive as the one of abuses by means of patent practices where, furthermore, the issue was mainly the interpretation of a (never cited) Court of Justice case, and where the uncertainty was high also in view of a rather scathing decision from the lower court, the Pfizer case would have been the ideal candidate for a Court of Justice referral. That this should not have been at least seriously considered, is one of the few oddities of the case.

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REFERENCES ICA, A431 – Ratiopharm/Pfizer, provv. n. 23194, 11 gennaio 2012, in Boll. n. 2, 2012. Tar Lazio, 3 settembre 2012, n. 7467, Pfizer Italia s.r.l., Pfizer Health A.B., Pfizer Inc. c. Agcm. Cons. di Stato, sez. VI, 12 febbraio 2014, n. 693, Agcm c. Pfizer Italia s.r.l., Pfizer Health A.B. e Pfizer Inc.

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