Subject: EU court weighs forced licensing in drug data case

From: James Love <[email-masked]>
Date: Fri, 07 Mar 2003 04:29:38 -0500

This is another important standards case, this time in the European 
Union.  jamie

-------- Original Message --------
Subject: EU court weighs forced licensing in drug data case
Date: Wed, 05 Mar 2003 16:23:34 -0500
From: James Love <[email-masked]>
To: [email-masked]

This case has wider importance for intellectual property and standards
setting.  Jamie

http://www.forbes.com/work/newswire/2003/03/05/rtr897567.html

EU court weighs forced licensing in drug data case
Reuters, 03.05.03, 6:02

By David Lawsky

BRUSSELS, March 5 (Reuters) - The European Union's highest court will
this week consider whether dominant companies must at times be forced to
license their ideas to rivals, and the outcome could be critical to
intellectual property owners across Europe.

The case it is examining involves two U.S. companies which collect data
on drug sales in Germany -- pharmacy by pharmacy, doctor by doctor --
and sell them to pharmaceutical manufacturers.

Collection of this data, vital for drug companies planning their sales
strategies, was worth more than $1 billion globally to IMS Health (nyse:
RX - news - people) of Fairfield, Connecticut and $150 million to
NDCHealth Corp (nyse: RX - news - people) of Atlanta, Georgia -- the two
companies locked in the dispute.

IMS Health sued NCDHealth in Frankfurt, charging that its smaller rival
poached on its intellectual property by copying the design of its
geographic areas in Germany.

The companies combine data from several pharmacies in a single
geographical area, allowing them to report the data anonymously. It is
the design of those geographical survey areas which is at the heart of
the dispute.

The design is important because pharmaceutical companies are reluctant
to switch to a new company which has different, incompatible survey
areas. And the huge variety of drugs on sale and complicated use of
patterns makes this information crucial for the drugs industry.

The outcome of the case will have far reaching implications for
companies that deal heavily in intellectual property, from software to
pharmaceuticals.

It will also play a major role in a related tussle between the European
Commission and one of the companies in a lower court -- a case which has
been suspended until the European Court of Justice (ECJ) rules.

The five-judge ECJ panel will hear arguments on the German case in a
wood-panelled courtroom in Luxembourg on Thursday. It will rule months
later, advising a German court -- and everyone else -- on how to apply
EU law.

DISTRICT MATTERS

The case was triggered when NCDHealth solicited the help of the
pharmaceutical companies, who are its customers, to design its
geographical areas, each made up of several postal codes, to better meet
their marketing needs.

IMS Health, however, has argued it cannot be forced to share its design,
which is protected by copyright.

The ECJ will decide whether the involvement of the customers in the
development of the geographical areas compels licensing.

Over the years, pharmaceutical companies have built up databases based
on IMS Health's 1,860 survey areas in Germany.

NDCHealth meanwhile is selling a product in Germany based on more than
2,000 districts. It says the plan is not derivative of the IMS product.

Drug companies believe it would be prohibitively expensive to throw out
the accumulation of years of knowledge and switch to new survey areas.

The high court will decide whether those switching costs should make a
difference in whether IMS Health's survey areas must be licensed.

It will also decide if EU law requires licensing in cases where
customers reject competing products because of the difference in the
survey area design.

It will then send its decision to a Frankfurt regional court, Langericht
Franfurt Main, which will give the ultimate verdict on the case.

In a related dispute, the European Commission has taken the side of IMS
Health's competitors and argued that the dominant firm must share its
intellectual property to bolster competition.

In July 2001, it ordered IMS Health to license its geographic areas to
competitors, but in October the Court of First Instance suspended that
order until the high court ruling.

IMS Health is active in more than 100 countries, while NDCHealth is
active in four. Only about one-third of NDCHealth's business is in
competing with IMS Health. The remainder is in processing health claims
in the United States.

Copyright 2003, Reuters News Service

-- 
James Love, Director, Consumer Project on Technology
http://www.cptech.org, mailto:[email-masked]
tel. +1.202.387.8030, mobile +1.202.361.3040

-- 
James Love, Director, Consumer Project on Technology
http://www.cptech.org, mailto:[email-masked]
tel. +1.202.387.8030, mobile +1.202.361.3040

-- 
James Love, Director, Consumer Project on Technology
http://www.cptech.org, mailto:[email-masked]
tel. +1.202.387.8030, mobile +1.202.361.3040

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---

From: John C Klensin <[email-masked]>
Date: Fri, 07 Mar 2003 07:42:21 -0500

--On Friday, 07 March, 2003 04:29 -0500 James Love 
<[email-masked]> wrote:

> This is another important standards case, this time in the
> European Union.  jamie
>
> This case has wider importance for intellectual property and
> standards setting.  Jamie
>
>...

James,

In the interest of reducing the amount of irrelevant material 
that gets posted to this already-too-noisy list, I've read both 
of these postings, and my response is "so what".   What I get 
out of this one is that clear provisions that any claimed IPR 
must be licensed, and licensed on fair and non-discriminatory 
terms, are important.  I think we had consensus on that long 
ago, despite a bit of confusion when it turned out that the 
people who were using the term "RF" didn't mean just 
"royalty-free" but also some specific "fair and 
non-discriminatory" terms.

And what I got out of the other one is that lying about one's 
patent and enforcement intentions is really bad.  I think we had 
consensus about that too.

Are you proposing something here, or just adding to the noise?

My apologies for coming down on you in particular (you are _not_ 
one of the major offenders), but one of the problems with the 
IETF process -- or any process that attempts to work through 
issues on an open mailing list -- is that it is possible to 
exclude, all but the most dedicated participants by simply 
creating an overwhelming message volume.  When we do it to 
ourselves in the IETF, it is almost always inadvertent, but it 
still results in a consensus determined largely by the 
combination of those who stay in because they have axes to grind 
with those who have too much time on their hands (plus a few 
long-suffering co-chairs and editors).    It isn't a good way to 
make progress or to get answers that all of us can trust.

It is especially important that this group get wide input from 
the IETF community, but we have reached the point where there 
are a very large number of postings, almost all of them from a 
relatively small group of people So, at the risk of singing an 
old song, would people please consider the notes they are about 
to send.  If they don't really contribute to the discussion, or 
just reinforce an already-settled point, please just forget it. 
And, if they are just nit-picking editorial comments, with 
little or no substantive impact, just send notes to the relevant 
editors, rather than the list.

Just my opinion, of course.

thanks,
     john

---

From: Scott W Brim <[email-masked]>
Date: Fri, 7 Mar 2003 08:38:39 -0500

Also, the issue seems to be whether developers of technology should be
allowed to reap IPR benefit from exclusive relationships.  The IETF
doesn't have to worry about this.  That is, the IETF focuses on the
resulting IPR and licensing terms, not how they came into being.
Individual participants may go after IPR holders' ethics, but let's not
do that here.
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From: "Lawrence E. Rosen" <[email-masked]>
Date: Fri, 7 Mar 2003 10:55:28 -0800

John,

If that is all you got out of the European case, then once again you
have misunderstood the law and the implications.  

> What I get 

That is precisely one of the critical points of any effective patent
policy.  Unless the words "fair" and "non-discriminatory" and
"reasonable" are given substance they are meaningless.  If the free and
open source communities are precluded from practicing industry
standards, then the interpretations of those words are also offensive.  

> consensus about that too.

Not merely "really bad" in a colloquial sense, but behavior that can
result in substantial civil penalties.  Any technology company that pays
no heed to these issues, or that allows its engineers, managers and
officers to act in violation of those mandatory principles of community
and business behavior, is ripe for a lawsuit.  That is why the standards
of behavior must be clearly described in the policies of standards
organizations.

This is not "irrelevant" information, to use your terminology, much as
you may tire of hearing what you're risking by your present policy.
These points are also far from being "already settled" in IETF, although
they may not affect the current draft policies under review.

/Larry Rosen

---

From: Russell Nelson <[email-masked]>
Date: Fri, 7 Mar 2003 14:45:17 -0500

Lawrence E. Rosen writes:
 > policy.

The IPR-WG is only chartered to describe current practice -- not
change it.  There's not even any provision for saying that current
practice is wrong.

I know you find it frustrating that this group cannot currently
improve things, but that's the state of affairs until the charter is
changed.  The consensus seems to be to follow the group's charter:
describe current practice, and afterwards decide about rechartering.

Perhaps it would be best if you looked at the three IDs and put forth
a case for rechartering?  It may be that you'll say "the IETF should
do X", somebody else will say "but we already do X", in which case the
draft is obviously wrong, and rechartering isn't needed for that
particular issue to become official policy.

-- 
-russ nelson              http://russnelson.com | "What Problem Are You Trying
Crynwr sells support for free software  | PGPok | To Solve?" is a service mark
521 Pleasant Valley Rd. | +1 315 268 1925 voice | of Crynwr Software.
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From: Pekka Savola <[email-masked]>
Date: Sat, 8 Mar 2003 00:24:16 +0200 (EET)

> particular issue to become official policy.

Hint: you really should read through the drafts and look whether they try 
to sneak in "modifications" (to the other direction) as "clarifications".

/me runs..

-- 
Pekka Savola                 "You each name yourselves king, yet the
Netcore Oy                    kingdom bleeds."
Systems. Networks. Security. -- George R.R. Martin: A Clash of Kings