Refusing to license database may not be monopoly abuse, says European Court

At issue in the case was the right of NDCHealth to demand a licence to the marketing database of its larger rival, IMS Health, which makes over a billion dollars a year in data sales. Both are US companies providing information systems to the pharmaceutical industry, although the dispute concerned data gathered in Germany.

IMS Health provides a pharmaceutical tracking service called RPM 1860. A key component of this service is called the "1860 Brick Structure". RPM 1860 helps German pharmaceutical companies track the flow of drug products, dividing the German pharmacy market into 1,860 regional districts.

NDCHealth offers a similar service to its rival, and attempted to break into the German market. However it failed to do so largely because potential customers had become so familiar with the 1860 Brick Structure that they didn't want the German market categorised in any other, incompatible way.

As a result NDCHealth also tried to divide the market into 1,860 regional district segments – and was successfully sued by IMS Health in Germany, on the grounds of breaching regulations that give copyright protection in databases.

However, German courts subsequently ruled that IMS Health could not refuse to grant a licence to NDCHealth to use the copyright in its database, if that refusal constituted an abuse of a dominant position according to Community law. The German court referred questions to the European Court of Justice on the circumstances under which such behaviour constitutes an abuse.

In delivering its judgment late last month the Court of Justice considered it was important to consider firstly whether the brick structure of the IMS Health database was indispensable in order for NDCHealth to carry out business in Germany. The Court considered that this is ultimately for the national court to determine, taking into account whether there are products or services that constitute alternative solutions.

In determining this the Court of Justice considered that the national court may take into account the fact that pharmaceutical laboratories had a high degree of participation in the improvement of the brick structure. The German court may consider that this has created a technical dependency by users on that structure. In such circumstances, it is probable that those laboratories would have to make very significant technical and financial efforts to be able to acquire data presented on the basis of an alternative structure.

After considering this, the Court of Justice went on to discuss the circumstances in which a refusal to licence the database would constitute an abuse of a dominant position. According to the Court, the exclusive right to reproduce the database forms part of the copyright-holder's rights. Accordingly a refusal of a licence cannot, in itself, constitute an abuse.

Nevertheless, the Court considered that the exercise of an exclusive right may, in exceptional circumstances, give rise to abusive conduct. The Court set out three conditions for establishing where the refusal by a copyright owner to give access to a product or service indispensable to carry on business may be regarded as an abuse. These are where:

"the undertaking which requested the licence intends to offer, on the market for the supply of the data in question, new products or services not offered by the copyright owner and for which there is a potential consumer demand;

the refusal is not justified by objective considerations;

the refusal is such as to reserve to the copyright owner the market for the supply of data on sales of pharmaceutical products in the Member State concerned by eliminating all competition on that market."

The Court stressed that it was for the national court to determine whether those conditions were met in the case before it.

The decision in this case is likely to cause wider ripples outside of the pharmaceutical industry in Germany. Microsoft, which was recently fined by the European Commission for breaches of competition law, has called the ruling a "fatal blow" to the Commission's case against it, according to Reuters.

Reuters goes on to report, however, that Commission spokeswoman Amelia Torres explained, "What the court has done is to set out the exceptional circumstances where refusal to grant a license by a company which has a dominant position might be construed as an abuse".

"We believe that these exceptional circumstances, as set out by the court in the IMS case, have been met too in the Microsoft case," she added.

See:

• The text of the ruling