Update 7 July 2020 | The COVID-19 pandemic has been progressing worldwide. In an effort to control its expansion, public authorities have taken restrictive measures that impact both people and companies on their territory. In this context, IP Offices have adopted decisions to secure their users’ rights and the safety of their staff. Here are the key takeaways from these recent decisions.
I. COVID-19 MEASURES TAKEN BY INTERNATIONAL AND REGIONAL IP OFFICES
This section focuses on the main International and Regional IP Offices in Europe, namely the World Intellectual Property Office (WIPO), the European Patent Office (EPO), the European Union Intellectual Property Office (EUIPO) and the Benelux Office for Intellectual Property (BOIP).
Measures taken by the WIPO
1. All time limits under the Madrid System that concern the IP Office of a Contracting Party that is closed due to the COVID-19 pandemic are automatically extended to the first subsequent day on which that Office reopens.
2. Holders and applicants who have failed to meet a time limit may request the WIPO to continue processing the international application, subsequent designation, payment or request concerned, by presenting the official form MM20 within two months from the expiry of the time limit, without any reason or evidence needed (the form is available here).
3. The International Bureau of the WIPO has provided an interpretation of the COVID-19 pandemic as an excuse for delays in meeting PCT time limits which relate either to the submission of documents or to the payment of fees. However, this interpretation does not apply to international patent applications.
4. The International Bureau of the WIPO has announced that users of the Madrid System (trade marks) and the Hague System (industrial designs) will be excused from failure to meet a time limit due to the COVID-19 pandemic, provided they make a request for relief within six months from the expiry of the time limit concerned. This measure applies to time limits for the transmission of a communication, the submission of information to correct an irregularity and the payment of fees. However, this measure does not apply to the payment of the second part of the individual designation fee through the International Bureau.
5. The processing of applications and other IP and related systems has not been affected by the pandemic. However, the International Bureau of the WIPO will only receive and transmit documents via email until further notice. Therefore, applicants, holders and their representatives are strongly encouraged to provide an email address and use electronic communication services.
6. All events and meetings organized or co-organised by WIPO until the end of May will be postponed and, should that not be possible, cancelled.
Measures taken by the EPO
1. All time limits expiring on or after 15 March 2020 in proceedings under the European Patent Convention (EPC) and the Patent Cooperation Treaty (PCT) were extended until 2 June 2020.
2. All oral proceedings scheduled until 14 September 2020 before the EPO Examining and Opposition Divisions are postponed until further notice unless they have been confirmed to take place by videoconferencing.
3. The EPO Boards of Appeal have resumed the holding of oral proceedings to a limited extent from Monday 18 May 2020. Concerned parties will be contacted accordingly. They will be requested to confirm as soon as possible their ability to attend in person and the absence of travel restrictions.
4. All EPO organised live events until 14 September 2020 have been postponed until further notice. Participants will be contacted on an individual basis and, where possible, be informed of the news dates. The EPO will otherwise continue its other activities without interruption.
5. Professional representatives and users are encouraged to make use of the EPO online services.
Measures taken by the EUIPO
1. All time limits expiring between 9 March 2020 and 17 May 2020 inclusive were automatically and with immediate effect extended until 18 May 2020. This applied to time limits set by the EUIPO and those imposed to the EUIPO by the EU framework on trademarks and designs. This did not apply to time limits before other authorities, such as the time limit to bring an action before the General Court against decisions of the EUIPO Boards of Appeal.
2. As of 18 May 2020, extensions have come to an end. Nevertheless, parties are reminded that they may request :
- a six months extension of a time limit set by the EUIPO before that time limit expires and if exceptional circumstances justify it. Exceptional circumstances include (1) difficulties arising from measures taken by public authorities against the pandemic and (2) sickness of the party or its representative. The EUIPO may subject the extension to the agreement of the other party. Additional extensions may also be granted upon request.
- a six months suspension of the proceedings before the EUIPO if exceptional circumstances justify it. In that case, exceptional circumstances also include the financial difficulties preventing the party from obtaining or securing continued professional representation before the EUIPO that are cause by the pandemic. In trademark proceedings, the suspension may be extended upon joint request for a total maximum of two years. In design invalidity proceedings, the suspension will be granted for periods of six months regardless of the period requested by the parties.
- the continuation of proceedings within two months of the expiry of the unobserved time limit, even without giving any justification, provided that the omitted act is carried out in the meantime and a fee of 400 euros is paid. However, this option is not available in design proceedings and does not apply to certain time limits, including the time limit to file an appeal against a decision of the Boards of Appeal before the General Court.
- the reinstatement of rights when a time limit to perform a procedural act was missed, despite taking all due care required by the circumstances. A request must be submitted within two months of the removal of the cause of non-compliance and no later than one year after the expiry of the missed time limit. Evidence must be provided that all due care was taken, that the omitted act was carried out in the meantime and that a 200 euros fee was paid. However, it is not applicable to certain time limits, including the time limit to file an appeal against a decision of the Boards of Appeal before the General Court.
Procedural time limits for lodging appeals at the General Court remained unchanged. Parties are however reminded that, in the event of unforeseeable circumstances or force majeure, they may request an extension to the General Court on the basis of Article 45 of the Protocol on the Statute of the Court of Justice. By contrast, in ongoing proceedings, the CJEU has specified that time limits are automatically extended by one month until further notice. However, this does not apply to time limits for instituting proceedings before the CJEU.
3. With the ending of the extension period, the EUIPO Executive Director confirmed that the last of the 21 000 delayed EU trade marks were published in the Bulletin. In addition, the EUIPO has gradually sent approximately 1.000 letters that were delayed due to the pandemic.
4. From 8 June 2020 on, all communications to the EUIPO can be carried out online. A “Reply” button is now available for all e-communications where a reply is permitted. A “Fax Alternative” option has been added as an additional fall-back solution.
5. All meetings and events taking place in March have been postponed until further notice. The participants having incurred expenses will be fully reimbursed by the EUIPO.
6. The EUIPO has guaranteed that it is “business as usual” for all its activities, thanks to its digital tools and its teams working from home. It has put in place a dedicated monitoring committee to follow the situation and take further measures where necessary. In the first phase of the return plan, 70 volunteers have returned to work on the EUIPO premises, while the rest of the staff continues to telework.
Measures taken by the BOIP
1. From 16 March 2020 to 25 May 2020 (“BAU date”), the BOIP has not withdrawn any requests or procedures for not meeting a given deadline.
An additional period of one month calculated from the BAU date has been given for all requests and procedures whose deadlines (1) have expired between 16 March 2020 and the BAU date, or (2) were less than one month from the BAU date, hence until 25 June 2020.
The BOIP has specified that:
- All time limits that were set to expire between 16 March 2020 and 24 June 2020 have expired on 25 June 2020, including time limits for payments and time limits to file an opposition against a trademark application ;
- All time limits that were set to expire on or after 25 June 2020 have remained unchanged ;
- All time limits set from 25 May 2020 onwards will remain unchanged, even if they were set to expire before 25 June 2020.
It is important to note that this extension does not cover time limits to bring an action before the Benelux Court of Justice.
2. Until further notice, the register may not reflect the accurate status of certain trademarks. This is because the IT system of the BOIP applies the provisions of the Benelux Convention on Intellectual Property automatically.
3. The telephone accessibility of the BOIP was restored on 15 May 2020. Its staff will nevertheless continue to work from home as much as possible.
4. During the month of June 2020, it was possible to file i-DEPOTs free of charge. This system allows the applicant to have legal, date-stamped proof of an idea within minutes of the filing.
II. COVID-19 MEASURES TAKEN BY NATIONAL IP OFFICES
This section focuses on the measures adopted by several national IP Offices, namely the US IP Office (USPTO), the German IP Office (DPMA), the UK IP Office (UKIPO), the French IP Office (INPI), the Italian IP Office (UIBM) and the Belgian IP Office (OPRI).
Measures taken by the USPTO
1. Time limits expiring between 27 March 2020 and 31 July 2020 concerning the petition for restoring priority or benefit rights in relation to patent applications and the payment of the associated petition fees to the USPTO are extended until 1 August 2020, provided that the filing or payment is accompanied by a statement that the delay was due to the COVID-19 outbreak. Until further notice, patentees may file initial patent term extension applications may be filed through the USPTO patent electronic filing system.
2. For small and micro entities only, the USPTO has also extended time limits expiring between 27 March 2020 and 29 September 2020 concerning the payment of certain fees (including basic filing fees, search fees, examination fees, late filing surcharge, basic national fee, issue fee and maintenance fee) until 30 September 2020.
3. In other cases, the USPTO will grant relief to those who need it on a case-by-case basis. Applicants should file a “petition to revive” in the forms prescribed if (1) they were unable to submit a timely response or fee in response to an Office communication, (2) they missed the 36-months statutory deadline for filing a Statement of Use resulting in an abandoned application or (3) they missed a statutory deadline resulting in a cancelled/expired registration. With regard to proceedings before the Trademark Trial and Appeal Board, if the COVID-19 outbreak has prevented or interfered with a filing, parties can make a request (in ex parte appeals) or motion (for trial cases) for an extension or reopening of time, as appropriate.
4. Oral hearings at the Patent Trial and Appeal Board (PTAB) and Trademark Trial and Appeal Board (TTAB), interviews of patent examiner and trademark examining attorneys and meetings will be solely conducted by phone or videoconference until further notice. Although the USPTO offices will remain closed to the public until further notice, its activities will nevertheless continue without interruption.
5. Under the new COVID-19 Prioritized Examination Pilot Program :
- Small or micro entities may file a request for prioritized examination, without payment of the typical fees, in relation to patent applications covering a product or process that is subject to U.S. Food and Drug Administration approval for use in the prevention and/or treatment of COVID-19. Up to 500 qualifying patent applications will be accepted for prioritized examination and exempted from the usual fees.
- Applicants may file petitions to advance the examination of trademark applications covering medical products and services linked to the prevention and/or treatment of COVID-19. Such petitions may be filed free of charge.
6. The filing of plant patent applications and follow-on documents is temporarily permitted via the USPTO patent electronic filing systems until further notice. Filers are reminded that only registered users may benefit from that option.
7. The USPTO will accept copies of handwritten signatures (instead of originals) for correspondence relating to “registration to practice before the USPTO in patent cases, enrollment and disciplinary investigations, or disciplinary proceedings” and payments by credit card “where the payment is not being made via the USPTO electronic filing systems”.
8. The USPTO launched the COVID-19 Response Resource Center in order to provide improved access to its initiatives, programs and IP-related information concerning the COVID-19 outbreak. To access this Center, click here.
Measures taken by the DPMA
The DPMA has confirmed its ability to perform its activities, but its services should come with delays. During the COVID-19 crisis, the following measures will be applicable:
1. All time limits prescribed by the DPMA with regard to all pending IP procedures were extended until 4 May 2020. However, this extension did not apply to time limits provided by German law, as the DPMA competence does not extend to those time limits, nor to time limits in connection with applications or requests concerning the international registration of trademarks. Any person who has failed to meet a time limit imposed by law due to the current situation may request to benefit from the option of re-establishment of rights. The unit in charge will check these requests on an individual basis.
2. Hearings and oral proceedings were cancelled ex officio until 30 June 2020. From 1 July 2020 on, the DPMA has started to gradually grant access to invited individuals. If the number of infections does not rise uncontrollably, hearings and orals proceedings will take place at the DPMA from that date. To this day, the DPMA has not issued any further guidance in that regard.
3. The DPMA can no longer guarantee the immediate transfer of international design applications to the WIPO. Applicants are advised to file such applications directly to the WIPO.
Measures taken by the UKIPO
1. The UKIPO has declared that from 24 March 2020 and until 29 July 2020, all days are considered “interrupted days”. All time limits that expire on an interrupted day are automatically extended to the next day. As a result, the first “normal day of operation” will be 30 July 2020, when all time limits that benefited from an extension will expire. This extension applies to all time limits set out by the UKIPO or by UK statutory rules.
2. From 30 July 2020 to 31 March 2021, the UKIPO has announced temporary fee changes to support businesses. In particular, fees for extension, reinstatement or restoration will be zero.
3. No physical hearings will be booked or take place until further notice. These hearings will be operated via telephone, videoconference or other virtual methods.
4. The time limit for responding to examination reports has been automatically extended to four months for all UK trademark applications. However, that time limit remains two months for UK design applications, although extensions may be requested by applicants.
5. With its staff currently working from home, the UKIPO is now able to process paper forms, faxes and paper correspondence in a limited capacity.
That being said, the UKIPO is currently unable to issue letters in relation to renewals. This may result in some users experiencing shorter timeframes from receipt of their letters to the expiry of the renewal period. Users are therefore encouraged to proactively manage their renewals rather than relying on these letters.
The address firstname.lastname@example.org can be used instead of faxing, posting or delivering documents by hand at the UKIPO. Forms should be sent in separate e-mails, accompanied with a fee-sheet if a fee is due. New applications should be made using the UKIPO online system, as delays should be expected for any other form of filing. Electronic signatures on forms and other documents will be accepted..
Measures taken by the INPI
1. The INPI buildings will remain closed to the public until further notice. In the meantime, its staff remains available by phone and e-mail. Its online services remain fully functional, whereas official copies of documents may only be provided by the INPI in a pdf format signed electronically. Finally, its trainings will remain suspended, with the exception of online webinars.
2. After the first measures taken by the INPI on 16 March 2020, the French Government has adopted an ordinance n°2020-306 on 25 March 2020 (as consolidated on 15 May 2020) that extends all time limits expiring between 12 March 2020 and 23 June 2020 to:
- 23 July 2020 if the initial time limit was one month; or
- 23 August 2020 if the initial time limit was two months or more.
The INPI has communicated that this extension applies to all time limits prescribed by the French Code of Intellectual Property, including time limits applicable to trademark opposition proceedings and to the renewal of IP rights. However, this extension does not apply to time limits prescribed by International and European legal texts such as priority deadlines for an international extension, time limits applicable to the payment for the filing of a patent and time limits for the filing of a supplementary protection certificate.
In proceedings where a suspension was requested or comes to an end, a letter will be addressed to the parties with the date on which the procedure is to be resumed. As a rule, the following will apply :
- If a suspension is requested or renewed between 12 March 2020 and 23 July 2020 inclusive, it will be calculated from 24 June 2020 inclusive in its entirety.
- If a suspension requested jointly by the parties ends between 12 March 2020 and 23 July 2020 inclusive, the number of days of suspension remaining on 12 March 2020 will be calculated from 24 June 2020 inclusive.
The INPI has also clarified the impact of the extension period on opposition proceedings:
- The time limits to file an opposition that were due to expire before 12 March 2020 have not been extended.
- The time limits to provide reasons for an opposition filed before 12 March 2020 have been extended until 23 July 2020.
- The time limits to file an opposition that were due to expire between 12 March 2020 and 23 July 2020 have been extended until 23 August 2020.
- The time limits to provide reasons for an opposition filed between 12 March 2020 and 23 July 2020 have been extended until 23 September 2020.
3. All notifications sent by the INPI Trade mark and Design Department to its users will be accompanied by an e-mail copy until further notice. This measure applies to certain notifications relating to opposition proceedings, namely (1) the opposition notification, (2) the notification setting a time limit for providing proof of use of the earlier trademark, (3) the draft decision notification and (4) the decision notification. Parties are reminded that notifications are also available on the INPI online portal and that they should check the e-mail address communicated to the INPI to avoid e-mail delivery failures.
4. All notifications that were not answered in time between 12 March 2020 and 23 June 2020 will remain on hold until the end of the extension period. To ensure the efficiency of the decision-making process, parties are advised to inform the INPI if they do not want to answer to a notification, or if they do not intend to benefit from a time limit extension.
Measures taken by the UIBM
The Italian Decree-Law No. 23 of 8 April 2020 provides for the following measures:
1. All time limits relating to administrative proceedings at UIBM pending on 23 February 2020 or commenced after that date are suspended until 15 May 2020. This does not apply to time limits applicable to appeals before the Board of Appeal, nor to time limits applicable to international patent and trademark applications (first filings and renewals).
2. All IP rights expiring between 31 January 2020 and 31 July 2020 remain valid until the 90th day following the end of the state of emergency. The UIBM will promptly inform users about that date. After that date, it is the responsibility of the interested party to take action in order to obtain their maintenance or renewal.
The UIBM has also taken its own internal measures to face the pandemic:
1. The UIBM offices have been closed from 12 March 2020 and until further notice, but its staff remains active. The processing of paper documents forwarded by post will only be possible upon the reopening of the UIBM offices. Applicants and holders are advised to use the electronic filing system.
2. The release of authenticated copies has been temporarily suspended. Applicants and holders may only receive simple copies by email. All requests in that regard must be addressed to the following address: email@example.com.
3. The filing of international patent applications may still be made through the ePCT platform on which the UIBM is fully operational. The filing of international trademark applications should be made via a dedicated certified legal e-mail address: firstname.lastname@example.org. In addition, applications in paper format have to be sent to the UIBM as soon as possible.
Measures taken by the OPRI (Belgium)
1. After announcing that it was prepared to accept, as far as possible and on a case by case basis, individual requests for extension of time limits, the OPRI has stated that it does not currently have a legal basis to grant time limits extensions before the Office in the event of a crisis.
2. Since 1 July 2020, the OPRI has resumed its normal functioning with regards to notifications. Previously, the OPRI had decided to stop sending legal notifications to its users, that would have the effect of setting a new binding time limit sanctioned by a loss of rights in the event of non-compliance. On 25 May 2020, the OPRI had resumed sending such notifications to its users, accompanied by an e-mail copy as a courtesy measure. Since 1 July 2020, the OPRI has stopped practising this courtesy measure, and therefore resumed its normal functioning in that regard.
3. The search service “EPOQUE” provided by the OPRI Information Section has remained suspended until 25 May 2020. Since then, searches may only be conducted through that service in limited amounts as a first step.
4. With its staff working from home, the OPRI has urged users to give preference, where possible, to electronic channels of communications. Applicants and holders are advised to use the OPRI online filing tool (eOLF) or its fax number (+32 2 277 52 62). The use of emails is recommended as well, except for the filing of formal acts.
In the last months, IP Offices around the globe have taken measures to secure their users’ rights in the midst of the COVID-19 outbreak. Although most Offices have announced the extension of procedural time limits, these announcements call for caution: depending on the case, those extensions may be limited to some instances of the Office concerned, or to some provisions of the legal texts applicable. Therefore, we advise IP professionals and companies to take extreme care in the way they handle IP assets in these troubled times.
For any question, please contact the authors:
The information presented in this site is not legal advice or opinion. You should seek advice from a legal counsel of your choice before acting upon any of the information in this site.
Our IP team has again been highly recognised in Silver Band for its expertise in patents by iAM Patent. The department is ranked in Silver with the following mention:
“Complex global patent litigation is meat and drink to the lawyers at Simont Braun, who conjure up ingenious solutions to contentious challenges in the life sciences, medical device, electronics sectors. Fernand de Visscher recently played a hand in a high-profile matter for weapons manufacturer FN Herstal, ensuring that his client could keep its key product on the international market. He also teamed up with colleague Eric De Gryse to represent OGI Systems, a diamond and gemstone manufacturer, in parallel infringement proceedings which are also ongoing in Israel and India. They both possess significant trial strength and an intuitive feel for the intricacies of each brief, giving every angle the attention it deserves to cover all bases and construct bulletproof arguments.”
Fernand de Visscher and Eric De Gryse are also individually ranked in Silver for their experience and capabilities.
Thank you to our clients and peers for your trust!
Emmanuel Cornu, Eric De Gryse, Julie Kever and Romain Meys authored the Belgian chapter on Trademarks in the International Comparative Legal Guides 2020, providing a high-level and easy-to-read overview of the key issues and legal principles applicable to this field.
The Belgian chapter is available here.
For any question in this area, do not hesitate to contact the authors.
Companies are in principle free to establish in Europe the distribution system that best serves their interests, including selective distribution where their products are put on the market through qualified distributors only.
However, recent fines imposed by the European Commission confirm that licensing and distribution systems must nevertheless comply with Article 101 and 102 TFEU which respectively prohibit anti-competitive agreements and abuses of dominant position.
Under Article 101 TFEU, agreements whose object or effect is to restrict cross-border sales in Europe, are in principle not allowed. In conformity with some EU regulations and case law, such agreements may benefit from an exemption under Article 101, § 3 TFEU in well-defined hypotheses only.
Under Article 102 TFEU, unilateral measures by which a dominant company restricts cross-border sales in Europe, are in principle not allowed either. Such restrictions may only be considered legal if the company is in fact not in a dominant position, or is in a dominant position but can objectively evidence that these restrictions are justified by, and proportionate to, a legitimate business behaviour, a legitimate public interest or efficiency considerations.
Nike and Sanrio: agreements restricting cross-border sales in Europe
Early 2019, Nike and Sanrio were both fined by the Commission under Article 101 TFEU, which prohibits agreements between companies that may affect trade between Member States and whose object or effect is to prevent, restrict or distort competition.
During more than ten years, licences had been granted in Europe by Nike for the manufacture and distribution of products featuring the brands of football clubs and federations, and by Sanrio for the distribution of products featuring Hello Kitty characters.
In both cases, the Commission found that the agreements concluded by Nike and Sanrio were in breach of EU competition rules because they imposed restrictions on cross-border sales by licensees in the form of direct measures (such as clauses prohibiting these sales) and indirect or additional measures (such as audits to ensure compliance with these restrictions).
These recent decisions confirm that, after having paid less attention to them for some years, the Commission has decided to focus increasingly on vertical agreements in particular to fight illegal restrictions of cross-border sales in Europe. Such restrictions are regarded as “by object” and cannot enjoy the de minimis regime.
Regarding selective distribution systems, the Commission considers that the appointed distributors should be free to sell actively and passively to all end-users, everywhere, offline or online. Therefore, such vertical agreements restricting (active or passive) sales by members of a selective distribution system cannot benefit from an exemption under Article 101, § 3 TFEU.
More generally, in conformity with the CJEU case law, the Commission considers that the licensing of IP rights in the context of a distribution agreement cannot justify the imposition on licensees of restrictions to sell the licensed merchandise across borders (see, in particular, CJEU, judgment of 6 October 2009, C‑501/06 P, C-513/06 P, C-515/06 P and C‑519/06 P, GSK, para. 59 to 61).
Based on these elements, it appears increasingly difficult for agreements restricting cross-border sales in Europe to benefit from an exemption under Article 101, § 3 TFEU.
In general, and in conformity with Article 4, b), of the (block exemption) Regulation n°330/2010 (applicable to vertical agreements), there are only four hypotheses where vertical agreements (distribution systems) containing cross-border sales restrictions may still benefit from an exemption, namely when (further to complying with the other exemption requisites in the Regulation):
- the agreement restricts active sales into the exclusive territory of an appointed distributor, without restricting the sales by the customers of the distributor concerned;
- the agreement restricts sales by a wholesaler to end-users, in order to keep the wholesale and retail level separate;
- the agreement restricts sales by an appointed distributor (selective distribution) to an unauthorised distributor in a selective distribution territory;
- the agreement restricts sales of components by an appointed distributor to a competitor of the supplier.
Furthermore, in selective distribution systems, territorial restrictions are not allowed at the end-users level and between appointed distributors either (letters c) and d) of said Article 4).
Based on the above, companies are advised to refrain from concluding agreements whose object or effect is to restrict cross-border sales in Europe, except in the cases where they may benefit from an exemption based on Regulation n°330/2010.
Under Regulation n°316/2014 (applicable to technology transfer agreements), a vertical technology transfer agreement imposing some territorial restrictions on sales may also benefit from an exemption in this respect, provided the other exemption requisites are complied with, but only in well-defined hypotheses, and depending on whether the parties are competing undertakings or not. It is a complex regime requiring a detailed analysis of the market situation and the contractual provisions or practices at stake.
One can simply note here that also under this regulation, in selective distribution systems, a vertical technology transfer agreement may not restrict sales (active or passive) to end-users by a non-competing licensee operating at the retail level (letter c) of Article 4, § 2).
AB InBev: unilateral measures restricting cross-border sales in Europe
Early 2019, AB InBev was fined by the Commission under Article 102 TFEU, which prohibits abuses of a dominant position that may affect trade and prevent or restrict competition.
During approximately eight years, the market strategy of AB InBev had consisted in restricting the possibility for Belgian retailers to buy Jupiler beer at lower prices in the Netherlands in order to maintain higher prices in Belgium.
After finding that AB InBev was in a dominant position on the Belgian beer market, the Commission concluded that it had abused its market power by taking unjustified unilateral measures, such as the modification of the packaging of its products supplied in the Netherlands to make them harder to sell in Belgium.
In that context, the Commission underlined that such restrictions of cross-border sales would also qualify as an infringement under Article 101 TFEU if they resulted from an agreement between independent companies irrespective the supplier was dominant or not.
This decision confirms the scrutiny of the Commission as regards restrictions of cross-border sales, be it on the basis of Article 101 or 102 TFEU, as well as the difficulty for dominant companies to justify the imposition of such restrictions.
In that regard, the Commission and the CJEU have gradually recognised that companies can rely on three categories of “objective justifications” to establish that their behaviour is, in fact, not abusive, namely:
- a legitimate business behaviour, such as the protection of one’s own commercial interests (see CJEU, judgment of 14 February 1987, C-27/76, United Brands, para. 189);
- a legitimate public interest objective, such as environmental concerns (see Commission, decision of 21 October 1997, 97/745/EC, Port of Genoa, para. 21);
- efficiency considerations, showing that the exclusionary effect may be counterbalanced by advantages in terms of efficiency which also benefit the consumer (see CJEU, judgment of 15 March 2007, C-95/04, British Airways, para. 86).
These justifications are, however, very uneasy to invoke in practice. The proportionality test is of the essence. For example, regarding cross-border sales, the CJEU found that a pharmaceutical company had abused its dominant position by refusing to supply patented medicines in order to impede parallel trade, and took the view that the company had not adopted a “legitimate business behaviour” even in the presence of a State intervention in fixing the prices for pharmaceuticals (see CJEU, judgment of 16 September 2008, C-468/06 to C-478/6, Sot. Lélos kai Sia, para. 70 to 77).
Based on the above, dominant companies should be extremely cautious in imposing unilateral measures aiming – or having as an effect – to restrict cross-border sales in Europe, except in the very few cases where they may rely on the doctrine of “objective justifications”.
The information presented in this site is not a legal advice or opinion. You should seek the advice of a legal counsel of your choice before acting upon any of the information in this site.