The Spanish National Markets and Competition Commission (CNMC) confirmed that a
pursuit of legal actions for anti-competitive purposes may be an abuse of a dominant position, specifying the required exceptional circumstances according to the EU case law.
The CNMC has fined the pharmaceutical company MERCK SHARP AND DOHME (hereinafter “MERCK”) 38,934,000 euros for abuse of dominance in the vaginal contraceptive rings sector, by virtue of the provisions of articles 2 of the Law on the Defence of Competition (LDC) and 102 of the Treaty on the Functioning of the European Union (TFEU), according to its
Decision S/0026/19 rendered in October 21st, 2022.
Seizure-description
Under the pretext of enforcing its patent rights, MERCK requested the Commercial Court No. 5 of Barcelona to carry out fact-finding proceedings (named “seizure-description” according to Directive 2004/48/EC) to request the cessation of the manufacture and marketing of INSUD PHARMA's "ORNIBEL" vaginal ring in Spain.
This petition was filed in June 2017, based on an alleged infringement of the European patent EP 876 815 B1 and its Spanish patent ES 2171283 ("ES'283"), which protected the first combined hormonal contraceptive vaginal ring called "NUVARING".
The purpose of the seizure-description proceedings was to verify the technical characteristics and the manufacturing process of the ORNIBEL vaginal ring, for which it was necessary for MERCK to prove that (i) the infringement of the patent was presumable and (ii) that there were no other means of verifying the existence of the infringement other than the seizure-description.
Interim injunction
Three months later, and prior to having a decision on the request for seizure-description, MERCK applied to the same Court for an interim injunction inaudita parte in the same prohibition action, that is without hearing INSUD PHARMA.
Although the interim injunction was granted by
Order no. 203/2017 in September 2017, it was only in force during four months due to its revocation by
Order of 12 December 2017. Indeed, the Court found that there were serious doubts that the ORNIBEL vaginal ring infringed MERCK’s patent as it did not reproduce the essential technical characteristic of ES'283, without prejudice to their verification in the main proceedings.
MERCK brought an appeal against the Commercial Court’s order, but it was totally dismissed by the Court of Appeal of Barcelona according to the
Order 145/2018, issued on November 13th, 2018, since (i) the alleged patent was already expired when solving the appeal, after April 9th, 2018 and (ii) there was no prima facie case.
According to the Court of Appeal, at no time MERCK submitted evidence of a strong probability of a patent infringement. However, INSUD PHARMA successfully challenged the sufficient prima facie case initially accepted by the Court by analysing the product by a prestigious entity, submitting an expert report made by an expert in the field and stating that the vaginal ring ORNIBEL does not require cold storage, contrary to the patent’s teaching.
All in all, the Court confirmed that there was no special urgency to justify the preliminary measures providing that the patent was near to its expiration date, and there were not enough early indications justifying the continuation of the interim injunction.
In parallel to the CNMC’s fine, MERCK shall be responsible for the
payment of the damages caused as a result of the prohibition of the manufacture and commercialization of the vaginal ring ORNIBEL, which have yet to be quantified. It is claimed to have caused damages in the rest of Europe, since INSUD PHARMA’s manufacturing was paralyzed in the sole factory, located in Spain.
Abuse of dominance
Along the above-mentioned decisions, both Courts pointed out some relevant aspects about the plaintiff’s strategy and its conduct through the different procedures which were lately considered by the CNMC as a basis for considering an abuse of MERCK’s dominant position.
The CNMC confirmed that MERCK abused its dominant position for almost two years comprised between the filing of the seizure-description petition and the date of expiry of the patent, according to the following main facts:
(i) Lacking necessity of engaging a seizure description; proof of that is that the expert’s report filed with the petition of interim injunction was based on public information previously available, and not on the results of the seizure-description.
(ii) Misuse of the interim injunctions proceedings, in which the seizure-description played a key role in order for the Court to grant the requested interim measures requested.
(iii) Other procedural acts as concealing data in the legal proceedings, reproval of the judicially appointed expert's performance in favour of MERCK, etc.
(iv) Engagement of legal proceedings in other European countries, including Germany, Poland, Finland, Sweden, Norway and Belgium, which were not held by the Courts.
According to relevant EU case law (T-111/96, T-119/09 and C-373/17), a restrictive interpretation shall be carried out on a case-by-case basis to analyse whether there has been an
exceptional abusive litigation, which requires that:
(a)
It cannot reasonably be considered that the legal action is intended to enforce the plaintiff’s right: and therefore, it can only serve to harass the defendant.
The CNMC clearly found that the seizure-description lacked due case in so far as it did not meet the objective need to obtain evidence of the patent infringement stemming from the fact that the content of the request was not suitable to prove the evidence (e.g. there were no other proof request different from a documentary proof, as it could be experimental proof, not ideal to prove a patent infringement) and there were other means to verify the existence of the patent infringement (as carrying out experimental tests on its own).
Neither were the preliminary measures considered as intended to enforce MERCK’s patent rights based on the lack of impartiality of the plaintiff’s judicial expert, evidenced when not reaching out the defendant to obtain necessary information about the allegedly infringing product, disobeying the injunction ordering the expert to hear the defendant.
(b)
The action serves an anti-competitive purpose: that is, to eliminate other competitors based on the intentionality of the operator, as a relevant e when assessing the abuse of a dominant position according to EU case law (C-395/96 and C-396/96; C-457/10; C-201/19 and C-176-19 P).
The CNMC concluded that MERCK’s intention was directed to foreclose and delay the entry of its main competitor INSUD PHARMA into the market.
Overall, the CNMC’s decision advocates for a
responsible use of the procedural remedies as specific as those protecting intellectual property rights and completely rejects any abusive use of them, confirming the EU Court of Justice criterion which considers the abusive litigation as an abuse of dominance.