Are vertical restrictions on the use of trademarks in online search advertising always anticompetitive? The European Commission’s Guess decision

(by Elias Deutscher)[1] Can the owner of a well-known brand lawfully prevent its independent retailers from using its trademarks and brands to advertise their products on Google? This question has major implications, in particular, for small- and medium-size retailers who largely benefit from the reduced costs of online search advertising and the new sales channels offered by online distribution. For quite some time, issues surrounding the use of trademarks as keywords in paid online search advertising have stirred considerable controversy amongst trademark and IP lawyers. Recently, this question also came into the focus of competition law enforcers. In the Case AT. 40428 Guess,[2] the European Commission assessed for the first time the legality under European Union (‘EU’) competition law of a vertical agreement whereby a trademark proprietor restricted the ability of its licensed distributors to use or bid for its brand names and trademarks as keywords in Google AdWords.

Clinton’s proposed ban on pay-for-delay deals would do little to lower drug prices

(By Farasat Bokhari)[1]  Banning “pay-for-delay” deals that postpone the production of less-expensive generic drugs is a key action point in Hillary Clinton’s comprehensive plan to lower prescription drug costs. Eliminating these deals could, indeed, save Americans billions of dollars on medications. An even more productive strategy would be to stop drug makers from producing “authorized” generics.

General Court’s pay for delay judgment in Lundbeck – some guidance, but worries remain

(by Sven Gallasch) On 8 September, the General Court handed down its eagerly awaited decision in Lundbeck – the first ever European judgment concerning so-called pay for delay settlements. The Commission’s decision in this case was heavily criticised by practitioners as well as academics like myself for taking the view that agreements in question would constitute a ‘restriction by object’. In a previous blog I argued that the Commission might have pushed it too far by finding this kind of agreement an object restriction, especially in the light of the Court of Justice’s decision in Groupement des Cartes Bancaires, where it was held that such restrictions should be interpreted ‘restrictively’. It is therefore perhaps surprising that the General Court has rejected every one of the 10 arguments (by my count) put forward by Lundbeck, and has upheld the Commission’s decision in its entirety – even the level of the fine.

Why have Mylan launched a generic EpiPen?

(by Farasat Bokhari) In a new development surrounding the controversy of price hikes of Mylan’s lifesaving drug EpiPen, the manufacturer announced that it will introduce a generic version, and sell the new drug at half the price of its branded version. Mylan has increased the price of its EpiPen injections from about $100 in 2009 to over $600 this year and will sell the generic at $300, and has come under scrutiny and strong criticism from public and government officials alike.  Mylan are not alone in increasing drug prices in recent times. For instance, Martin Shkreli increased the price of Daraprim by 5000 percent in 2015. However, that was to do with a hit-and-run opportunity that arose out of its orphan drug status, and the speed with which a rival generic could gain approval to enter the market (see my earlier post, ‘The Economics of a $750 Pill’).

Leaving aside the issue that the generic is still three times more expensive than the original 2009 price, this announcement has left some puzzling over why, or rather how, such a move makes any sense.  To paraphrase the incredulity expressed by Richard Quest of CNN, why would anyone pay $600 for a drug when the exact same product by the same company is also available for $300?  How does Mylan stand to gain anything from this move?

The Economics of Pay To Delay Deals

(by Farasat Bokhari) On Friday 12 Februrary 2016, the UK’s Competition and Markets Authority (CMA) issued drug manufacturer GlaxoSmithKline (GSK) a £37.6 million fine with an additional £7.4 million imposed on partner drug manufacturers for engaging in a so-called ‘pay for delay’ or ‘pay to delay’ deal that lasted from 2001 to 2004 for its antidepressant drug Seroxat. As discussed in a recent blog by my colleague, Sven Gallasch, GSK have not admitted wrongdoing and may challenge the findings by arguing the arrangement was pro-competitive. Between 2000 and 2010 there were 57 pay to delay deals in the EU, and 66 just between 2008 and 2010 in the US. The US Federal Trade Commission (FTC) says these deals cost US consumers $3.5 billion a year, but have attempted to challenge them with mixed results.[i] Pay to delay cases are relatively new in Europe and the GSK case is the first fine for the practice to be imposed by the CMA.

This blog discusses some of the key issues and incentives surrounding pay to delay deals and is aimed at stimulating further discussion.