Intellectual property rights (IPR) in Argentina are protected under the Federal Constitution, which states that 'every author or inventor is the exclusive owner of its work, invention or discovery, for the term provided under the law'.
Competition is equally protected. The Federal Constitution establishes that the authorities will provide for 'the defence of competition against any method of market distortion, and the control of natural and legal monopolies'.
In spite of the potential tensions between these two areas, up to the present they have largely developed independently from one another.
Law No. 27,442 of 2018 (the Competition Law) applies to individuals, corporations and other legal entities engaged in economic activities either in Argentina or outside the country, to the extent that their activities have effects in Argentina. It prohibits conduct related to the manufacture and sale of goods and services that have the object or effect of limiting, restricting or distorting competition or entry into a market, or that constitute an abuse of a dominant position, only if such conduct may harm the general economic interest, a concept associated to economic efficiency and consumer welfare. Hardcore cartels are considered per se illegal, while all other conduct is subject to a rule of reason analysis.
The Competition Law is regulated by Decree No. 480/2018, as well as by certain guidelines (notably, those related to abuse of exclusionary dominance and the control of economic concentrations).
IPRs are locally protected by the following regulations:
- the Federal Constitution, in the terms mentioned above;
- the World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights (WTO TRIPS Agreement), incorporated through Law No. 24,425 of 1995;
- the Berne Convention, incorporated through Law No. 25,140 of 1999;
- the Paris Convention incorporated through Laws Nos. 17,011 and 22,195; and
- various provisions in the Civil and Commercial Code.
In addition, specific laws regulate different areas, as follows:
- patents and utility models are regulated by Law No. 24,481 and amendments thereof, as consolidated by Decree No. 260/1996 of 1996 (the Patent Law);
- specific to the agricultural sector, Law No. 20,247 of 1973 regulates seeds and phytogenetic creations;
- copyright is regulated by Law No. 11,723 of 1933 and complementary regulations passed by Decrees Nos. 41,233 of 1934, 746 of 1973 and 124 of 2009, and amendments thereto (the Copyright Law);
- software protection is regulated by Decree No. 165/1994 of 1994;
- trademarks and trade names are regulated by Law No. 22,362 of 1980 (the Trademark Law) and its Regulatory Decree No. 242/2019; and
- trade secrets are regulated by Law No. 24,766 of 1996.
Law No. 22,426 of 1981 (the Transfer of Technology Law) applies to all transfer, assignment or licensing of foreign technology or trademark agreements signed between a licensor domiciled abroad and a licensee domiciled in Argentina, which have effects in Argentina. These agreements must be filed with the National Institute of Industrial Property (INPI) for information purposes only. There are no specific limitations concerning, for example, the amount of royalties, terms of duration, level of exports or excluding the licensor's product liability, and submission to foreign jurisdiction. However, terms and conditions of the agreements between related parties (mainly between controlling and controlled companies) should be in accordance with the arm's-length principle.
The INPI is the agency responsible for the enforcement of the Patent Law, the Trademark Law and the Transfer of Technology Law.
In addition, Decree No. 274/2019 as regulated by Resolution 248/2019 (Fair Trade) prohibts conducts such as acts of confusion, which may also amount to a trademark infringement, and regulates comparative advertising.
IPRs are not subject to any tailored exemption under antitrust regulations.
II YEAR IN REVIEW
On 22 April 2019, Decree No. 274/2019 modifying the fair trade regime entered into effect. Among other issues, the Decree supplements the provisions of the Competition law with a legal framework that penalises those behaviours affecting the functioning of the market in itself, or the competitive position of a given market player, without necessarily taking into account the consumer protection goals that characterise antitrust regulations or requiring that the infringer has a dominant position. In addition, the antitrust agency, the National Commission for the Defence of Competition (CNDC),2 issued guidelines on matters such as market studies and exclusionary abuse of dominance, and drafted guidelines on leniency.
Few cases have been resolved under the Competition Law in the past 12 months. In June 2019, the Secretariat of Domestic Trade (the Secretariat) rejected a complaint filed against the textile company Alpargatas, claiming that the defendant's opposition to the registration of the plaintiff's trademark constituted an exclusionary conduct. The opposition was found as a legitimate exercise of legal rights, protected under the Noerr Pennington doctrine.
On the judicial front, one significant case is Millennium Pharmaceuticals, in which this company, along with a co-plaintiff, filed a lawsuit against a rival company – Tuteur – requesting it to cease using a patent owned by the plaintiff and to pay compensation for damages. The defendant replied and counterclaimed for damages caused by the plaintiff's 'anticompetitive actions and abuse of rights and intellectual property,', infringements which were the subject of a separate complaint before the CNDC.
In addition, a notable court case decided in the same period but under the former competition law – Law No. 25,156 of 1999 – is Sadaic, where the Appeal Court revoked the fine imposed by the Secretariat to a collective rights organisation, concluding that the tariff variations established by it for the granting of authorisations for the broadcasting of musical and audiovisual works were not disproportionate, abusive or discriminatory.
On the merger control front, the CNDC analysed two important mergers in the agricultural sector (Dow-DuPont and Bayer-Monsanto) that were approved without undertakings.
Lastly, the CNDC carried out a market investigation into the pharmaceutical sector, which resulted in a lengthy report3 that stated that certain structural aspects and practices of the sector were deemed as potentially affecting competition, for which purpose the report concluded that the pharmaceutical sector will continue to be under the CNDC's scrutiny.
III LICENSING AND ANTITRUST
i Anticompetitive restraints
Generally, the terms of a licence agreement are within the scope of the IPRs owner's exclusive rights.
Consistent with Section 40(1) and (2) of the WTO TRIPS Agreement, the Patent Law provides that licensing agreements may not contain restrictive commercial clauses that:
- affect production, commercialisation or the technological development of the licensee;
- restrict competition;
- require exclusive grant-back conditions or mandatory joint licensing; or
- prohibit challenges to the validity of the licence or any other conduct contemplated under the Competition Law.4
In addition, the Patent Law provides for the possibility of granting compulsory licences on antitrust grounds.5
From an antitrust perspective, anticompetitive restraints imposed on licensing agreements will generally be considered as unilateral conducts, and as such, subject to a rule of reason analysis.
Some of the debatable clauses are discussed below.
Downstream products restrictions
The use of price limitations (in particular, the establishment of minimum resale prices) regarding a licence could be considered an anticompetitive practice under Section 3(a) of the Competition Law.6 In certain cases, maximum price restrictions are imposed as a consequence of a merger filing; see, for example, the Grupo Clarín case, in which the parties capped the nationwide retail price at the same price charged in the city of Buenos Aires and its metropolitan area, where they faced increased competition.7
Other types of restrictions, such as contractual quantity limitations and field-of-use restrictions, may have an anticompetitive effect to the extent they are deemed to limit output (particularly if they are combined with territorial restrictions). Territorial and customer restrictions generally do not raise antitrust concerns, as long as they do not involve a horizontal division of territories, markets or clients (e.g., as in a cross-licensing between effective or potential competitors), or the existence of any other anticompetitive goal or effect.8
Non-assertion restrictions and no-challenge clauses
The inclusion of non-assertion restrictions in licence agreements may lead to the imposition of sanctions under the Competition Law, depending on their impact on the market.9 No-challenge clauses are considered restrictive clauses under the Patent Law.
Restrictions on research and development
In an illustrative list of conduct patterns that may be considered anticompetitive, Section 3(e) of the Competition Law addresses potential restrictions on the market through agreements to control or limit research and technological development. Similar conduct patterns affecting licensees are forbidden under Section 38 of the Patent Law.
Research and development (R&D) agreements, generally of an extended duration, may take the form of a cooperation joint venture (ACE) under the Civil and Commercial Code. Agreements creating ACEs must be registered with the Public Registry of Commerce and reported before the antitrust agency, which may examine these under the merger control provisions or as a horizontal cooperation agreement.
Owing to the covid-19 outbreak, several countries have clarified that certain types of horizontal cooperation agreements are temporarily acceptable, although no such rules have been issued by the CNDC, Secretariat or INPI.
Grant-back or feedback provisions
Section 38 of the Patent Law specifically states that these types of clauses shall not be included in licence agreements. Even though they are not particularly addressed in the Competition Law, they could be analysed as a restriction to R&D, considering that they may eliminate the licensee's incentives to develop technology.
Tying arrangements, package licensing and bundling
Section 3(f) of the Competition Law prohibits tying the sale of a good or service to the acquisition or use of another good or service, if the general assumptions provided for in Section 1 (restriction to competition and injury to the general economic interest) are met. The scope of the provision is broad enough to include not only tying agreements, but also package licensing of patents and copyrights. Furthermore, Sections 38 and 44 of the Patent Law prohibit clauses that include compulsory package licensing.
Local case law includes a number of cases concerning broadcasting rights to specific football matches that were sold in combination with other football matches or sports events.
In Servicios de Radio and Televisión de la Universidad Nacional de Córdoba v. Durford Commercial Corporation, the defendant was the exclusive licensee of TV rights for pre-World Cup football matches, and was allegedly charging excessive prices for those events to a free-to-air (FTA) channel and tying them to the sale of different matches, selling them in a package format only.10
The CNDC concluded that the licensor had a dominant position, as substitutability of rights to such football events was quite low. Nevertheless, the CNDC approved the packaged licences, concluding that its prices could not be considered excessive, given that it had to pay substantial sums to purchase the rights from the sports leagues and that the defendant could make a reasonable return on its investment by licensing the events to cable companies (which were willing to buy the entire package, and at a price much higher than that offered by FTA systems). Thus, the CNDC held that the defendant's refusal to license individual matches to the complainant was reasonable.
In addition, in In re MSO Supercanal and others v. Telered Imagen SA and others, the National Commercial Appeal Court confirmed the lower court's decision that stated that the defendants (programmers) abused their dominant position by tying unwanted events to football events (over which they had broadcasting rights) and ordered the unbundling of the programmes and required the licence fee to be set based on the football events alone.11
Similarly, in Fox Sports Latin America12, the plaintiff obtained an injunction aimed at suspending the termination of the contract for the supply of a sports channel for 90 days, which presumably had been tied with another new, unwanted channel, in order to allow the parties to reach a negotiated result. The case was eventually closed in 2016 on lack of merits.
In the Maxiconsumo case13, the plaintiff – a major food producer – argued that the defendant – a wholesale supermarket – had tied edible oil sales with the purchase of pasta and other products manufactured by the defendant and sold in its own stores. The CNDC dismissed the case partly because it did not consider the tying practice duly proved, but mainly because the defendant had no dominant position in the narrowest possible relevant market.
Tying is also sometimes raised as a concern in merger cases, such as in Quilmes/Elaboradora Argentina de Cereales,14 where the buyer – a leading soft drinks bottler – self-compromised to avoid such practices.
ii Refusals to license
Companies have the right to freely choose with whom and under what conditions to market their products, and thus, refusing to sell a certain good or service (or to grant a licence) to a certain customer is not usually a practice that will be considered a violation of the Competition Law.15 Nevertheless, if the refusal is unjustified or implies an abuse of said right and restricts competition, affecting the general economic interest, it will be prohibited. Unjustified refusal to satisfy particular licensing requests is specifically considered under Section 3(i) of the Competition Law and under Section 42 of the Patent Law.
In light of the above, the INPI may authorise the use of a patent without a licence if the potential user has unsuccessfully attempted to obtain a licence from its owner under reasonable commercial terms for 150 consecutive days. The INPI must notify the situation to the CNDC. It is debated whether this disposition applies only to those situations in which the refusal constitutes an abuse by the patent owner, or any time the latter refuses to deal. Even when a literal interpretation of the Section would suggest the latter alternative, legal scholars support the former option, as it is the one in accordance with the TRIPS Agreement and the Competition Law. A patent in and of itself does not necessarily create market power because substitutes for the patented products may well exist.
If the adjudicatory agency of the Competition Law determines that the patentee has engaged in anticompetitive practices, it shall inform the INPI, which then publishes a notice in the Official Gazette, informing third parties that they can make an offer for a licence. The INPI will then consider the offers and decide whether or not to grant a compulsory licence.
Several cases considered under former competition laws examined the issue of refusals to license in an IPR context. For example, in Pramer SCA, a programming company was ordered to continue its commercial relationship with a local cable-TV operator.16 The defendant (who provided approximately one-third of the programming offered in the relevant market), had terminated the contracts due to the plaintiff's failure to pay. The plaintiff filed a claim with the CNDC, alleging that the refusal to license was directed at benefiting an affiliate of the defendant, who was the plaintiff's main competitor in the cable-TV market. The CNDC granted an injunction in favour of the plaintiff, and the parties ultimately reached a commercial agreement.
In order to prevent refusals to license similar to that described above, in some merger cases (e.g., that of Grupo Clarín), the parties were instructed not to refuse the licensing of programming of their affiliates (under normal commercial conditions) to competitors in the pay-TV market.
In the particular case of football events, Law No. 25,342 of 2000 establishes the obligation of football associations and owners of broadcasting rights to matches involving the national team to sell rights to those matches so as to guarantee they will be broadcast nationwide.
Exclusive licensing of sought-after products has been disfavoured by the CNDC. For example, in HBO Ole Partners, the CNDC ordered a programming company to continue supplying its channels to a cable company pending a commercial dispute between the companies, to prevent potential massive transfers of consumers to a rival of the latter.17
In several cases, prospective buyers have argued that the requested price was so high as to amount to a refusal to deal. For example, in MSO Supercanal SA and Supercanal Holding SA v. Dayco Holdings Ltd,18 the defendant held exclusive broadcasting rights to certain football matches of the Argentinian team during the 2002 World Cup. The plaintiff, a broadcasting company, filed a claim with the CNDC arguing that the defendant had refused to accept its offer for the purchase of a non-exclusive broadcasting licence for one particular match. Additionally, the plaintiff requested injunctive relief that would have required the defendant to permit the broadcasting, at market prices, of that match as well as subsequent ones in which the Argentinian team participated.
The CNDC ordered the rights holder to license on 'non-discriminatory terms'. This order was insufficient from the plaintiff's perspective because the parties could not reach an agreement on price. No sanction was ultimately imposed because the court found that the refusal was based on the existence of unpaid debt of the cable company to the programmer rather than any abuse of dominance.
Finally, in Arte Radiotelevisivo Argentino, the plaintiff – an IPTV distributor – filed a complaint against a number of open-air and pay-TV channels, arguing that the defendants' conditions for the sale of their respective channels amounted to a refusal to deal. The case is still under review by the CNDC.19
iii Unfair and discriminatory licensing
A behaviour that directly exploits customers or suppliers, as, for example, through excessively high prices or price discrimination, may be found abusive if performed by a party with a dominant position. This conduct was the subject matter of the SADAIC case.20 SADAIC is a collective rights association that has a legal monopoly to collect royalties from the broadcasting of musical and audiovisual works. The plaintiff, an entity grouping all hotels and restaurants in Argentina, accused SADAIC of arbitrarily increasing the royalties charged to the plaintiff's members for the reproduction of musical works in hotels. The complaint also alleged that SADAIC had discriminated between the hotels, as, in some cases, agreements including substantial discounts had been entered into with some establishments.
SADAIC was ultimately imposed a fine of over 42 million Argentine pesos, representing 10 per cent of its total turnover for secondary reproduction of musical works during the period from 2009 to 2014.
In its final decision, the competition agency recommended the Executive Power to establish a new royalty system based on reasonableness, non-discrimination, transparency and equity criteria. It also recommended a further review of royalty tables or regulations applicable to users carrying out public execution of works and related rights, especially in cases where the same user, category or group of users must pay duties to more than one collective rights association, and the disparity of royalties or their associated formula, or their accumulation, may have an unreasonable impact on economic activity.
Dissatisfied with the Secretariat's decision, SADAIC appealed the resolution before Chamber III of the Federal Civil and Commercial Court of Appeals, which revoked the fine imposed to the association as it concluded that the tariff variations established by the defendant were not disproportionate, abusive or discriminatory because they were well below the thresholds provided by the regulation, and the defendant's tariff structure regarding hotels aimed at compensating tariffs for establishments that share similar characteristics.21 The Court of Appeal was particularly strict when listing the requirements that are to be met by a penalty for 'excessive prices', stating that
In effect, fines for excessive pricing require that competition agencies must be in a position to determine production costs -a stumbling block that increases with intangible assets such as copyrights-, profit margins or reasonable profits -with the problem of considering improvements in efficiency processes-, return rates, an ideal comparison pattern (i.e., a standard objective linked to the specific market, in the absence of a competitive price and the need to avoid purely theoretical comparison values), the percentage above which the hypothetical price would constitute unfair or excessive, the behavior that the defendant could have adopted if there had been a competitive market, etc. Such obstacles, which seem overwhelming in situations such as those analyed herein, in addition to the inability to develop remedies that solve the future (beyond fines, which punish with a view to the past) generate the risk that, with the idea of preventing an abuse, competition authorities end up regulating prices and distorting the market they are responsible for protecting.
The defendant's win, however, may prove to be short-lived because shortly after the court reversal, and following the recommendation of the CNDC, the federal government issued a new regulation effectively capping tariffs that are to be charged by collective rights associations.
iv Patent pooling
Generally, cross-licensing and patent pools will not infringe the Competition Law. They might even enhance competition, as patent pools may increase the number of competitors with the right to use particular inventions. Certain terms cannot be imposed, however, as provided for in Section 38 of the Patent Law. Furthermore, depending on market circumstances, on whether the patents complement or compete with one another, and on the manner in which such conditions are implemented, such arrangements may run afoul of the Competition Law in particular cases.
v Software and trademark licensing
We are not aware of relevant case law involving antitrust issues in software or trademark licensing in Argentina, other than the previously mentioned pay-TV licensing cases, including trademarks.22
IV STANDARD-ESSENTIAL PATENTS
We are not aware of regulations addressing standard-essential patents in Argentina. Notwithstanding this, if a dominant position was identified due to an essential patent holding, a rule of reason approach would be followed by the authority.
Conduct encompassing both exclusionary and exploitative dominant position is under the scope of the Competition Law and, as anticipated, both cases are analysed by the rule of reason approach. Some authors are of the view that the type of exclusionary abuse produced in these cases could be examined under the 'essential facility doctrine'.23
Additionally, under Section 44, the Patent Law lists conduct that, if verified, can lead to the issuance of mandatory licences by the adjudicatory authority.
Decree No. 1474/94 establishes a National System of Quality Standards and Certification, structured in a National Council of Standards, Quality and Certification with two technical bodies under the auspices of the Secretary of Industry: (1) the standardisation body (IRAM), which centralises the analysis and approval of the standards applicable in Argentina; and (2) the certification body (OAA). Notwithstanding this, at present, IRAM has no specific disposition addressing the relationship between the normalisation system created by Decree No. 1474/94 and the IPR system.
A case worth mentioning involving standards is Quilmes, where a brewing company accused its largest competitor of exclusionary abuse of dominance after said company decided to launch a new proprietary returnable bottle to the market. The plaintiff claimed the existence of a de facto industry standard for 970cm3 glass bottles, which were freely interchangeable among brewers, and that the launching of a new format by the dominant player increased the costs to consumers to switch to competing brands (consumers obtained a cash credit by redeeming empty glass bottles of the existing industry standard variety). The CNDC ultimately approved a complex settlement between the parties, whereby, inter alia, both companies agreed to: (1) launch their own proprietary bottles; (2) not transfer the cost of separating and exchanging containers to the sale price; (3) prioritise the interchangeability of standardised containers; and (4) educate and inform retailers.24
Under Section 44 of the Competition Law, the National Competition Authority (ANAC) has the power to adopt injunctions at any stage of an investigation. Similar measures can be issued by a court at the request of the agency.
iii Licensing under FRAND terms
Fair, reasonable and non-discriminatory (FRAND) terms are not specifically established in any regulation. However, these terms can be deduced from Section 44 of the Patent Law. Also, several cases, especially those related to vertical mergers, include FRAND-type provisions in the form of behavioural undertakings.
iv Anticompetitive or exclusionary royalties
There are no specific provisions regulating anticompetitive royalties in the standard-essential patent context. Section 44 of the Patent Law, however, expressly considers excessive or discriminatory royalties as anticompetitive acts leading to compulsory licensing. Such royalties may also be considered in violation of the Competition Law as a type of exploitative or exclusionary abuse of dominance.
V INTELLECTUAL PROPERTY AND MERGERS
i Transfer of IP rights constituting a merger
Mergers and acquisitions must be mandatorily reported for review and approval where the enterprises involved in the transaction (the target company, the acquiring company and companies with a relationship of control with it) have a turnover in excess of 100 million 'mobile units' (each unit currently has a value of 40.61 pesos) in Argentina, unless a specific exemption applies.
In particular, the CNDC has been of the view that the transfer of a trademark constitutes an economic concentration (as long the other requirements established by the Competition Law are fulfilled) when the same is being used at the time of the transfer – as it is associated with a certain turnover25– or, even if the brand is not active by the time of the transfer, if it is deemed to have a market value.26
ii Remedies involving divestitures of intellectual property
The Merger Control Guidelines (approved by Resolution No. 208/2018 of the Secretariat of Trade) establish that, for the purpose of determining market power, the authority will mainly analyse competition through prices; however, it also leaves space for the analysis of other non-price variables, such as product variety, innovation, additional services or quality of the product or service.
Sometimes, the approval of a merger involves the transfer of IPRs. This was the case in the Bayer/Aventis transaction, where the CNDC recommended that the parties transfer and license IPRs over certain active ingredients and brands, on top of the divestment obligations imposed in other jurisdictions.27
A more recent case, involving the merger of Anheuser Bush Inbev (ABI) and SabMiller, was approved upon ABI entering into an agreement with its main competitor in Argentina, which had opposed the merger, whereby ABI would transfer to said competitor all SabMiller brands plus some of ABI's own brands, in exchange for the payment of cash and the early termination of a pre-existing manufacturing and licensing agreement between ABI and said competitor regarding Budweiser, one of ABI's flagship brands.28
Similarly, in the acquisition of the dry pasta business of Mondelez Argentina and Intercontinental Brands by Molinos, comprising four brands and two production plants, the acquirer was ordered to sell one of the brands, which it did, to a viable competitor.29
In this regard, two international mergers – Bayer / Monsanto30 and Dow / DuPont31 – were approved without specific undertakings being imposed in Argentina, in view of the existence of global divestment packages that have had effects within the country.
VI OTHER ABUSES
i Sham or vexatious IP litigation
Even when there is no specific provision addressing sham or vexatious IP litigation as an antitrust infringement, this practice can be considered anticompetitive as a type of exclusionary abuse (Section 3(d)) of the Competition Law).
One case dealing with this conduct in IP litigation is Productos Roche.32 The complaint was brought by a competitor who claimed that Roche, presumably dominant, had deployed a strategy of administrative, judicial and commercial harassment, with the objective of preventing the access and permanence of the plaintiff's competing drug in the market.
In its defence, Roche submitted that it had justified claims on the plaintiff's drug safety, as it had not undergone clinical trials before obtaining the relevant regulatory approval. Given the fact that both the plaintiff's and the defendant's drugs were substitutes, and that doctors might prescribe the drug by identifying its active ingredient and not its trade name, in the event of a harm caused to a patient from the indistinct administration of any of the two products, it would be impossible to determine which drug caused the harm and, therefore, Roche could be subject to potential claims that might also jeopardise its image and prestige.
In its review, the CNDC stated that what characterises sham litigation is the way the exclusionary conduct is carried out; namely, resorting to judicial or governmental mechanisms without a legitimate interest. Furthermore, it stated that, for a conduct to constitute sham litigation, there is no need for the commencement of multiple proceedings given that is the anticompetitive intention, and the claimant's knowledge of the illegitimacy of its claim is what characterises this conduct.
The CNDC suggested that, when the conduct implies the commencement of only one proceeding, the criteria used by US courts could be used; namely:
- the claim should lack basis, meaning that no reasonable claimant could expect to succeed considering the substance of the matter; and
- the claim should reflect the subjective intention of using the proceeding as an anticompetitive weapon.
The first requirement would not be configured if there is at least a probable cause to litigate. Only when the probable cause is not present, the claimant's intention should be analysed.
The CNDC understood that the legitimacy of Roche's claim was based on potential economic or reputational damage, in addition to the fact that there have not been clinical trials performed on Novex. Therefore, the CNDC concluded that Roche's resort to the administrative and judicial proceedings was not abusive, given that it was trying to protect not only its assets and image but also the health of potential patients.
Another interesting case in this area was brought by the CNDC as a consequence of an ex officio investigation against Monsanto, wherein, due to a refusal of a validation of a patent in Argentina over which the soy producers ceased paying the royalties related to the use of this technology, the company filed lawsuits in certain EU jurisdictions aiming to obtain samples of different soy and soy by-product shipments from Argentina in order to determine whether the crop effectively contained the RR gene. Consequently, the respective product fell under the scope of Monsanto's European patents, and was therefore subject to the payment of royalties.
The CNDC initiated an investigation of Monsanto's conduct under the Competition Law, as it deemed Monsanto's judicial claims to be potential anticompetitive practices consisting of sham litigation.33
The Federal Civil and Commercial Court of Appeals of the city of Buenos Aires reversed the CNDC decisions. The Court pointed out the existence of a dilemma between the legitimate constitutional right to petition the government put forward by Monsanto and the constitutional duty of the authorities to protect competition against all forms of market distortion, and decided that there were no grounds to conclude, even on a prima facie basis, that Monsanto's filing of lawsuits was, in fact, conduct that could be deemed as anticompetitive under the Competition Law.34
The Appeal Court's holding in Monsanto was reproduced in the Alpargatas case mentioned above,35 where the CNDC and Secretariat were of the view that the defendant's opposition to the registration of the plaintiff's trademark, even though it had been argued that the plaintiff had been placed in financial hardship, was constitutionally protected.
ii Misuse of the patent process
In this regard, some authors highlight the evergreening strategy commonly used in the pharmaceutical industry in order to avoid or delay the competition of generic products, and thus artificially extending the term of the patent protection by submitting patent requests over certain derivatives or polymorphs of pharmaceutical products that are often the result of generic, routine activities and not inventive ones, as required by the Patent Law.36
This was the issue discussed in Eli Lilly and Company v. Laboratorios Beta SA, where the plaintiff filed proceedings for patent infringement against the defendant, who reconvened for invalidity of the patent. While the first instance court ordered the defendant to refrain from importing, manufacturing and commercialising the products protected by the patents, the Federal Civil and Commercial Court of Appeals overruled the decision. The Court considered that the patent was already disclosed in the United States, and thus lacked the novelty requirement; and did not have substantial differences with another patent previously obtained by the plaintiff, and therefore did not justify legal protection.37
Furthermore, the possession of a 'sleeping patent'38 could also be considered a 'misuse' and an anticompetitive conduct under the terms of the Competition Law. Section 42 of the Patent Law specifically provides for the exploitation of the patent, and thus the lack or restrictive use of a patent, when the objective is solely to impede the commercialisation of the patented product by other parties, will be considered an infringement of the Competition Law.
Additionally, under Section 46 of the Patent Law, where, in the absence of force majeure, three years from the grant of a patent or four years from the patent application have elapsed, and the invention has not been exploited, no serious and real steps have been taken to exploit it, or the exploitation of the invention is discontinued for more than one year, any person may ask the INPI to use the invention without the owner's authorisation. The INPI is required to set a reasonable royalty for such a licence, taking into account the average royalties paid in the specific market area.
Some of the above issues may have been discussed in Millennium Pharmaceuticals and Janssen Cilag Farmacéutica,39 where the plaintiffs filed a lawsuit requesting the defendant to cease using a patent owned by one of the plaintiffs and to compensate them for damages, which was subsequently limited to the latter claim due to the expiration of the aforementioned patent. The defendant replied and counterclaimed for damages caused by the plaintiffs' 'anticompetitive action and abuse of rights and intellectual property', which was the subject of a separate complaint to the CNDC. While the antitrust case has not yet been decided and is not public, the aforementioned court case provides some hints of its content. According to the complainant, the defendants would not be exploiting the patent and would be engaging in a series of exclusionary acts, such as threatening the plaintiff's clients to commence litigation, should those clients sell the plaintiff's allegedly infringing products.
iii Anticompetitive settlements of IP disputes
There are no specific provisions regarding settlement of IP disputes, and therefore, any such settlements must comply with the provisions of the Competition Law and not include any of the specific restrictive clauses identified in Section 38 of the Patent Law.
In addition, under Section 29 of the Competition Law, a settlement agreement of IP disputes between competitors might be notified for voluntary approval before the ANAC. However, the procedure for such notifications has not yet been regulated.
VII OUTLOOK AND CONCLUSIONS
While the Patent Law includes several provisions regulating IPRs and antitrust, there are virtually no relevant cases under the Competition Law (and its predecessors) involving patents, probably because those cases are discussed in jurisdictions with tradition for innovation40 and protection of IPRs from the perspective of the patent owner. The situation is somewhat different as to trademarks.
Such lack of case law also explains why the local authorities are neither focusing on nor prioritising the preparation of guidelines that could assist in the interpretation of overlap between IP and antitrust, something which would nonetheless be welcome in the patent setting, especially in view of the existence of antitrust provisions in the Patent Law and potentially conflicting opinions from the patent and antitrust agencies in a particular case (e.g., Section 82 of the Competition Law provides that no agency other than the ANAC may apply competition law provisions).
1 Marcelo A den Toom is a partner at Bomchil. Acknowledgement is made to Gabriela Castillo Areco, María Florencia García Morato and Nadine Bengtsson, for their contributions to this chapter.
2 Until the formation of the antitrust agency created by the Competition Law (the National Competition Authority), the CNDC acted as an advisory agency to the Secretariat of Domestic Trade, which adjudicates decisions on antitrust matters.
3 Please see the Pharameceutical Market Study No. 4, published by Disposition 113/2019 on December 23rd, 2019, available in Spanish at: https://www.argentina.gob.ar/sites/default/files/im._4_-_medicamentos_-_disposicion_y_anexo.pdf.
4 Patent Law, Section 38 (referencing Law No. 22,262, now replaced by the Competition Law).
5 id., Section 44.
6 In fact, the use of minimum resale prices has been found to be anticompetitive by the CNDC; see In re Tele Red Imagen SA, Televisión Satelital Codificada SA, Video Cable Comunicación SA, Multicanal SA and Cablevisión TCI SA, Secretariat of Competition, Deregulation and Consumer Protection, Resolution No. 28 (26 September 2002), available at http://cndc.produccion.gob.ar/sites/default/files/cndcfiles/353.pdf.
7 Grupo Clarín SA, Secretariat of Internal Commerce, Resolution No. 637, 7 December 2007.
8 See Guillermo Cabanellas De Las Cuevas and Diego S Serebrinsky, Derecho Antimonopolico y de Defensa De La Competencia, Vol. 1, Heliasta, 2005, pp. 530 and 545.
9 Patent Law, Section 44; see also footnote 7, pp. 303, 327 and 328.
10 Servicios de Radio and Televisión de la Universidad Nacional de Córdoba, Secretariat of Industry, Commerce and Mining, Resolution No. 1136, 29 October 1997, available at http://cndc.produccion.gob.ar/sites/default/files/cndcfiles/272.pdf.
11 MSO Supercanal and others v. Telered Imagen SA and others (2002), Federal Commercial Chambers of Appeal, Jurisprudencia Vol. III, Argentina, 2003, p. 502.
12 Fox Sports Latin America S.A., Secretariat of Domestic Trade, Resolution No. 218, 10 August 2016, available at http://cndc.produccion.gob.ar/sites/default/files/cndcfiles/C-1397.pdf.
13 Maxiconsumo S.A., Secretariat of Domestic Trade, Resolution No. 120, 1 April 2019, available at http://cndc.produccion.gob.ar/sites/default/files/cndcfiles/COND%201535.pdf .
14 Cervecería y Maltería Quilmes S.A.I.C.A. y Elaboradora Argentina de Cereales S.A. (Productos Gatorade – c. 364) for notification Article. 8 of Law No. 25.156, Secretariat of Competition, Deregulation and Consumer Defence, Resolution No. 3 (11 March 2002).
15 See Section IV.1 of the CNDC's exclusionary abuse of dominance guidelines, p. 10, available at www.argentina.gob.ar/sites/default/files/guias_abuso_posicion_dominante_mayo_2019.pdf.
16 Pramer SCA, Secretariat of Industry, Commerce and Mining, Resolution No. 445, 30 June 1999, available at http://cndc.produccion.gob.ar/sites/default/files/cndcfiles/318.pdf.
17 HBO Ole Partners, A&E Mundo LLC and WBTV Distribution LLC, CNDC, File No. S01:0261418/2004, 15 September 2005.
18 MSO Supercanal SA and Supercanal Holding SA, Secretariat of Technical Coordination, Resolution No. 112, 24 August 2004, available at http://cndc.produccion.gob.ar/sites/default/files/cndcfiles/437.pdf.
19 File EX2018-11718334-APNDGD#MP, C. 1676, Arte Radiotelevisivo Argentina S.A. y otro.
20 Federación Empresaria Hotelera Gastronómica de la República Argentina for request for intervention of the CNDC (Case No. 1302), Secretary of Trade, Resolution No. 371, 26 June 2018, available at www.argentina.gob.ar/sites/default/files/resolucion_371-2018_0.pdf.
21 Federación Empresaria Hotelera Gastronómica de la República Argentina, Chamber III, Federal Civil and Commercial Court of Appeals, File No. 7971/2018, 20 August 2019, available in Spanish at http://cndc.produccion.gob.ar/sites/default/files/fallos/federacion%20empresaria.pdf.
22 See footnotes 7, 11–13 and 17–20.
23 See Germán Coloma, Defensa de la Competencia, Ciudad Argentina, Buenos Aires, 2003, pp. 228–230, 237, 372 et seq.
24 Cervecería y Maltería Quilmes SAICA y G (Case No. 1412), Secretary of Domestic Trade, Resolution No. 49, 22 May 2013, available at http://cndc.produccion.gob.ar/sites/default/files/cndcfiles/775.pdf.
25 Advisory Opinion No. 10.
26 Advisory Opinion No. 84, 10 January 2001.
27 Bayer AG/Aventis Cropscience Holding SA for notification of Article 8 of Law No. 25,156 (Case No. 352), Secretariat of Competition, Deregulation and Consumer Protection, Resolution No. 45, 11 January 2002, available at http://cndc.produccion.gob.ar/sites/default/files/cndcfiles/329_0.pdf.
28 Anheuser-Busch InBev NV, SA/SabMiller PLC for notification of Article 8 of Law No. 25,156 (Case No. 1375) and Anheuser Busch InBev NV, SA, SabMiller, Compañía de Cervecerías Unidas SA and Compañía Cervecerías Unidas Argentina SA for proposed analysis and divestment of brands, Secretariat of Trade, Resolution No. 136, 14 March 2018, available at http://cndc.produccion.gob.ar/sites/default/files/cndcfiles/CONC-1375.pdf.
29 Molinos SAU, Molinos Río de la Plata SA, Intercontinental Great Brands LLC and Mondelez Argentina SA for notification of Article 8 of Law No. 25,156 (Case No. 1173), Secretariat of Trade, Resolution No. 363, 22 June 2018, available at http://cndc.produccion.gob.ar/sites/default/files/cndcfiles/conc-1173.pdf.
30 Bayer Aktiengesellschaft, Kwa Investment Co. and Monsanto Company for notification of Article 8 of Law No. 25,156 (Case No. 1438), Secretariat of Domestic Trade, Resolution No. 7, 1 February 2019, available at http://cndc.produccion.gob.ar/sites/default/files/cndcfiles/CONC%201438.pdf.
31 The Dow Chemical Company and E.I. DuPont de Nemours and Company for notification of Article 8 of Law No. 25,156 (Case No. 1509), Secretariat of Domestic Trade, Resolution No. 8/2020, 20 January 2020.
32 Productos Roche SAQ e I, Secretariat of Trade, Resolution No. 449, 14 December 2016, available at http://cndc.produccion.gob.ar/sites/default/files/cndcfiles/C-1578.pdf.
33 Secretary of Agriculture, Livestock, Fisheries and Food, CNDC, File S01:0047160/2006, 30 October 2006.
34 Monsanto Company, CN Civ Com, court III [2009–C] LL 61 (2008).
35 Alpargatas S.A.I.C., Secretariat of Domestic Trade, Resolution No. 260, 5 June 2019, available at http://cndc.produccion.gob.ar/sites/default/files/cndcfiles/COND%201702.pdf.
36 Carlos M Correa, Productos farmacéuticos: ¿cuándo se justifica la concesión de una patente?, La Ley, 20 October 2016, edition 2016-F, p. 546.
37 Eli Lilly And Company v. Laboratorios Beta SA for nullity of patents, National Federal Civil and Commercial Chamber of Appeals, court I, 15 March 2016.
38 In Ipesa SA v. Ishihara Sangyo Kaisha Ltd, the Federal Civil and Commercial Court of Appeals, 13 March 2009, affirmed that the legislator has not provided for a patent to be exempt from exploitation if the patent holder does not use it.
39 MillenniumPharmaceuticalsINCyotro, Federal Civil and Commercial Court of Appeals, File No. C. 6428/2015, 24 September 2019.
40 In this regard, it is worth noting that Argentina ranked 73 in the WIPO's 2019 Global Innovation Index. The index is available at: https://www.wipo.int/edocs/pubdocs/en/wipo_pub_gii_2019.pdf.