The EC Essential Facilities Doctrine, the Microsoft Case and the Treatment of Trade Secrets
One of the main objectives of the European Community (EC) is to avoid the distortion of competition in the internal market. This aim is to be achieved through the application of the more detailed competition provisions in the EC Treaty, namely the Articles 81 and 82. Article 82 states that any abusive conduct of a dominant undertaking which may affect trade between Member States is prohibited. The European Court of Justice (ECJ) has, through a wide stream of judgements, set the frame for which conducts that may be considered as abusive. These judgements have also led to the development of the so called “essential facilities doctrine” in EC law, which concerns the grant of access to a facility or resource controlled by a dominant firm. The central concept of the essential facilities doctrine is that a dominant firm's refusal to provide access to something it owns or controls, to which the access for other firms is essential in order for them to provide products or services to customers, may be held as abusive and therefore also prohibited. This means that a dominant undertaking may have a duty to share its facilities – which it many times has developed during many years – with competitors. A broad application of the essential facilities doctrine could therefore risk removing incentives for research and innovation, as it would become less fruitful for undertakings to invest in such facilities. On the other hand, if the essential facility is a monopoly asset of a dominant undertaking, a non-application of the essential facilities doctrine could allow the undertaking to set abusively high access prices or to permanently exclude competition on the related market by refusing to share the facility.
The essential facilities doctrine was first developed in cases where a dominant firm refused to supply a physical facility to other firms. In more recent cases, however, the European courts have also held a dominant firm's refusal to license intellectual property (IP) rights as infringing Article 82.6 The reason for such an approach has mainly been that exclusive rights, such as IP rights, give the right-holder a temporary monopolistic position and that a refusal to license therefore may lead to the elimination of all competition on the market as it will be impossible for competitors to enter that market without a license. Thus, in exceptional cases, the exercise of exclusive rights, in means of a refusal to license, has been prohibited by Article 82.
One particular area of refusal to license concerns “interface information” within the information technology sector. Interface information is such information that providers of software need in order to create products which can operate with other programs and systems. This information is many times either protected by IP rights, such as patent or copyright, or kept as a non-patented know-how and thus only protected by its secret nature. In a recent judgement of the European Court of First Instance (CFI) Microsoft was held to infringe Article 82 by refusing to license secret interface information. This case is highly interesting not only because it may clarify the relation between EC competition law and IP rights in essential facilities cases, but also because of the way the CFI equalled secret information – know-how – with other IP rights in its judgement by stating that
“… there is no reason why secret technology should enjoy a higher level of protection than, for example, technology which has necessarily been disclosed to the public by its inventor in a patent-application procedure.”
As mentioned above, one of the main reasons for competition rules to interfere with exclusive rights is that such rights may give the owner a legally protected monopolistic position for a longer period and that it is feared that the exercise of exclusive rights may eliminate all competition in that area from the market. This is however not the case with trade secrets which, once they are revealed, cannot be protected from other's exploitation. One may therefore question if trade secrets in reality endanger competition to the same extent than IP rights.
AT THIS PAGE YOU CAN DOWNLOAD THE WHOLE ESSAY. (follow the link to the next page)