PEMBATASAN TERHADAP PERSAINGAN UNTUK MEMBENTUK PASAR DALAM KASUS STANDARD ESSENTIAL PATENT (SEP) (PERBANDINGAN HUKUM PERSAINGAN USAHA DI INDONESIA DAN UNI EROPA)

The role of patents is complex when dealing with the problem of technological interoperability in cases where patented technology becomes standard. In such cases, a balance is needed between the protection of the interests of the inventor, i.e. the standard essential patent (SEP) holder, and of users who need the technology to enter the market. There is a susceptibility to restrictions on competition to create markets (competition for the market). Market dominance can be created by the adoption of SEP holder technology as a standard and hence, a key for other business actors to enter the market. With the potential for the formation of a dominant position in the relevant market, the competition law intervention is required when patent abuse occurs, as it appears typical in the pharmaceutical and information technology industries. The normative research examines how competition law in the European Union deals with SEP cases in comparison to Indonesian competition law.

Compulsory licensing in favor of patentholders of dependent pharmaceutical inventions

The article analyzes the conditions for issuing a compulsory license in favor of the patent holders of dependent pharmaceutical inventions on the basis of Paragraph 2, Article 1362 of the Russian Civil Code. The criteria for the relevance of a dependent invention to important technical advancements with significant economic advantages are disclosed. An analysis of the emerging Russian court practice on the issuance of compulsory licenses in the pharmaceutical market, meanwhile, showed that Russian courts lack a clear understanding of when a patent holder can and cannot apply for a compulsory license. The author proves that compulsory licensing is an effective mechanism to prevent abuse of the right (first of all, to standard-essential patent) in the markets of complex innovations (IT, electronics and telecommunications). At the same time, its implementation on the pharmaceutical market can lead to negative consequences: discourage pharmaceutical companies to invest in the development of new drugs, register breakthrough drugs in Russia; reduce foreign investment in the pharmaceutical sector. In this case, the provision of compulsory licenses should be interpreted as an exceptional tool. The issuance of a compulsory license in favor of the owner of the dependent invention can be justified only if such an invention represents a genuine innovation, an important step in the development of pharmaceuticals. The licensee must offer the market a new drug with improved characteristics: increased therapeutic efficacy and (or) safety, which has no available alternatives.

The case of the missing royalty stacking in the world mobile wireless industry

We build an equilibrium royalty stacking model that links the number of standard-essential patent (SEP) holders with the equilibrium quantity, price and cumulative royalty. We show that all observable implications of the theory are inconsistent with the data from the world mobile wireless industry. In this industry, the number of SEP holders grew from 2 in 1994 to 130 in 2013. Royalty stacking theory predicts falling or stagnant output, rising selling prices, and rising or stagnant quality-adjusted prices. By contrast, between 1994 and 2013 worldwide yearly device sales grew 62-fold, at an average rate of 20.1% per year, and both selling and quality-adjusted prices fell fast over time. Controlling for technological generation, the real average selling price of a device fell between -11.4% and -24.8% per year. Similarly, under conservative parametrizations, royalty stacking theory predicts royalty yields, which are more than an order of magnitude larger than the observed average cumulative royalty yield charged by SEP holders in practice, which hovers between 3% and 3.5%. A theory based on Lerner and Tirole’s (2015, J. Political Econ., 123(3), 547–586) within-functionality competition yields observable implications consistent with the observed facts. If all the technologies protected by SEPs have meaningful substitutes that cap the royalty that any SEP holder can charge, then the cumulative royalty is independent of demand parameters in the downstream market and can be as low as the observed average cumulative royalty yield. Moreover, if the product market is competitive and technological progress is fast, then prices follow costs, quality-adjusted prices protractedly fall, and sales grow fast.