Microsoft and refusal to license: some serious discussion

Here's a report of an event that the IPKat missed last week, for which he thanks his good friend Estelle Derclaye:

"Estelle Derclaye, Lecturer in law at the University of Nottingham, attended the 16 May conference “The Microsoft case (for details of which, click here and here): the IT industry and the future of EC competition law” at the Birmingham Law School. The panellists were Nicholas Banasevic (DG Competition), Mark Powell (White and Case, Brussels), James Flynn (Brick Court Chambers London), Professor Steven Anderman (Dept of Law, University of Essex) and Derek Ridyard (RBB Economics, London). Dr Luca Rubini, a competition law lecturer at Birmingham Law School, was in the chair.

The panel was neatly balanced: Nicholas Banasevic and James Flynn were on the side of the Commission while Mark Powell was on that of Microsoft. Derek Ridyard, being an economist, gave the outsider’s view, and Steven Anderman was sitting as the independent academic.

Nicholas Banasevic’s task was to summarise the case (a difficult task to do in 25 minutes); his clear message was to stress that the case was highly fact-specific, a reassuring fact, especially as it came from the Commission. Mark Powell shed much light on the complex facts, also stressing the danger posed by the new, broader but not clearer test set by the CFI of “limitation of technical development” (erasing de facto the 'new product' condition established in IMS Health) for IPR holders -- especially in terms of the signal that the European court is sending to other jurisdictions such as China, which adopted a provision similar to Article 82 of the EC Treaty in their competition law.

Steven Anderman highlighted the language used by the CFI, “risk of eliminating competition” rather than “likely to or high probability”, which now makes it far easier to establish that this condition is fulfilled in refusals to supply/licence cases. Like Mark Powell he stressed the breadth of the new “limitation of technical development” test. James Flynn gave a detailed account and comment on the tying aspects of the case, which are less intellectual property-specific. Finally, Derek Ridyard explained the economics of tying and stressed the “illogics” and consequent ineffectiveness of the Court’s remedy: if versions of Windows Media Player can now be available on the market bundled or unbundled (with Windows) and the bundled version does not cost less than the unbundled one, then who will buy the unbundled one? On the issue of refusal to license, he also thought that the old test of “new product” was in any case vague (what is a new product? a better one, a cheaper one or, as Derek Ridyard suggested, the same product with a cuddly toy attached to it?). Being largely useless the new test of limitation of technical development does not change the law much in the end.

The presentations were followed by a lively debate, with all speakers giving their opinions. It seemed that they were in general agreement that Microsoft was like Magill, a highly fact-specific case, and that IPR holders should not overly worry (after all Microsoft was a near-monopoly and its IPR were mainly in raw information, on which it had for years recouped its investment). However, as one conference delegate mentioned to Estelle at the drinks, the ruling still leaves lawyers in a difficult position on how to advise clients holders of IPR, as the new test for refusal to license is much less clear than the previous IMS Health one. To conclude, it was a high quality, thought-provoking and well-attended event.”