On 6 July 2015 and 8 July 2015, the World Trade Organization (WTO) conducted a trade policy review of the European Union. All members of the WTO are subject to review under the Trade Policy Review Mechanism (TPRM). As noted by the WTO secretariat, the “basis for the review is a report by the WTO Secretariat and a report by the Government of the European Union” (Source: Trade Policy Review – European Union, July 2015).
The report by the WTO secretariat (WT/TPR/G/317) provides 212 pages of detailed information on the European Union’s economic environment, trade and investment regime and trade policies and practices. In relation to abuse of dominant position, standards essential patents and licences given on “fair, reasonable and non-discriminatory (FRAND) terms”, the Secretariat report noted:
3.170. One issue relating to the application of the rules on abuse of dominant position is anticompetitive behaviour as it relates to intellectual property. The request for a preliminary ruling lodged by a German court in 2013 is interesting in this regard. The case centres around the conduct of standard-essential patent (SEP) holders who have given a commitment to grant licences to third parties on fair, reasonable and non-discriminatory (FRAND) terms. In an Opinion delivered on 20 November 2014 to the European Union Court of Justice, the Advocate General stated that the fact that a company owns a SEP does not necessarily mean that it holds a dominant position. He also proposed that the Court of Justice rule that, where the proprietor of an SEP has made a commitment to a standards body to grant third parties a licence on FRAND terms, it constitutes an abuse of a dominant position for that proprietor to request corrective measures or to seek an injunction against a company that has infringed the SEP, where it is shown that the SEP-holder has not honoured its commitment even though the offending company has shown itself to be objectively ready, willing and able to enter into such a licensing agreement (Source: WT/TPR/S/317).
In relation to antitrust actions against pharmaceutical firms, the WTO secretariat report provided national examples from Italy and France:
3.179. For example, on 27 February 2014, the Italian competition authority fined Roche and Novartis over €180 million for cartelizing the sales of two major ophthalmic drugs. The companies were found to have colluded to exclude the cheaper medicine (Avastin), used in the treatment of the most common eyesight condition in the elderly as well as other serious sight problems, and channelling demand towards the more expensive drug (Lucentis), through an artificial distinction between the two products. The anti-competitive agreement was found to cause the Italian National Health Service to sustain additional expenses estimated at over €45 million in 2012.
3.180. The French competition agency has also investigated practices aimed at delaying the development of cheaper medicines. For example, on 14 May 2013, it fined Sanofi-Aventis a total of €40.6 million for implementing a denigration strategy. This strategy was aimed at limiting entry into the market of generic versions of Plavix in favour of Sanofi Aventis’ products, i.e. the originator Plavix medicine and its generic version marketed by Sanofi-Aventis, Clopidogrel Winthrop. The company was found to have implemented a global and structured communication strategy, aimed at stopping the generic substitution process at two key stages: at the prescription stage, by convincing doctors to insert the indication “non-substitutable” to the prescriptions, so as to limit the substitution of Plavix by a generic medicine; and at the substitution stage itself, by encouraging pharmacists to substitute Plavix by Clopidogrel Winthrop, to the detriment of other generic competitors.
On copyright, the secretariat provided a detailed primer:
3.259. Based on its 2011 blueprint for IPRs, the EU is continuing the review and modernization of its legislative framework under which copyright and related rights can be protected and enforced. As part of this process, Directive 2014/26/EU on Collective Management of Copyright and Related Rights and Multi-Territorial Licensing of Rights in Musical Works for Online Use in the Internal Market was adopted on 26 February 2014. EU member States are required to implement the Directive into national law by April 2016. Its main objective is to establish a coordinated framework that provides for sound and transparent management of copyright and related rights by collective management organizations; it also aims at facilitating cross-border licensing of authors’ rights in musical works for online use so that these can be distributed across the EU while ensuring that the revenues due to the authors are collected.
3.260. Also as part of the legislative reform process of the EU copyright rules in order to adapt them to the digital age, the Commission initiated a public consultation that was held from December 2013 to March 2014. A broad range of themes was covered by these consultations, including: issues raised by territoriality in the Union market; the need for further harmonization; the application of limitations and exceptions to copyright in the digital age; the fragmentation of the EU copyright market; and how to improve the effectiveness and efficiency of enforcement while underpinning its legitimacy in the wider context of copyright reform. The results of the consultation were published in July 2014.
3.261. As foreshadowed in its Communication on Content in the Digital Single Market, the Commission also commissioned a series of external technical studies that examined legal and economic issues related to the creation of a comprehensive framework for copyright in the Digital Single Market. The studies covered the following topics:
(i) the application of Directive 2001/29/EC on copyright and related rights in the information society (December 2013). It assessed the extent to which the implementation of the Directive responds to the realities of digital markets and evaluated whether further harmonization of national copyright provisions is needed in order to support the cross-border exchange of services and information in the EU;
(ii) an “Economic Analysis of the Territoriality of the Making Available Right in the EU” (March 2014). Among the key issues discussed were whether the current legal framework for copyright and related rights needed to be updated in order to deal with the provision of online on-demand service, if territorial licensing hampers EU-wide dissemination of content, and how territorial licensing relates to social welfare;
(iii) the Making Available Right and its Relationship with the Reproduction Right in Cross-Border Digital Transmissions (December 2014).217 It focused on the link between the making available right and the reproduction right and looked into accompanying measures, including legislative changes, that might be needed in cases where the recommendations of the above-mentioned study were implemented;
(iv) “Assessing the Economic Impacts of Adapting Certain Limitations and Exceptions to Copyright and Related Rights in the EU”. Published in October 2013, the first part proposed a methodology to assess exceptions and limitations to copyright.218 The second part,published in June 2014, looked into specific policy options; and
(v) the Legal Framework of Text and Data Mining (March 2014) which examined how such data analysis activities were covered by the EU’s present legal framework, be it under copyright legislation or that related to database protection.
On the WIPO Marrakesh Treaty for the Blind, the WTO secretariat reported:
3.268. On 30 April 2014, the European Union signed the 2013 Marrakesh Treaty to Facilitate Access to Published Works for Persons Who Are Blind, Visually Impaired, or Otherwise Print Disabled that was concluded under the auspices of WIPO. On 21 October 2014, the Commission proposed the ratification, on behalf of the EU, of the Marrakesh Treaty which is due to enter into force upon acceptance by 20 WIPO member States.230 The Treaty provides for a mandatory exception to copyright under which copies can be produced, distributed or made available in accessible format to visually impaired persons without the authorization of the rightholder. Books in formats such as Braille, large print, e-books and audio books with special navigation tools can thus be exchanged across borders within the EU and with third countries.
On the jurisprudence developed by the Court of Justice of the European Union (CJEU) in the field of copyright and related rights -specifically on the scope of exceptions to copyright, the WTO report noted:
3.265. Defining the scope of exceptions to copyright has also been the subject of several CJEU judgments. On 5 June 2014, the Court ruled, for example, that the exemption in Article 5 of Directive 2001/29/EC extended to copies on a user’s computer screen and copies on the internet cache of a computer’s hard disk that were made by an end–user in the course of viewing a website. As such copies were temporary, transient or incidental in nature, and constituted an integral part of a technological process, they could be made without the rightholder’s authorization. This ruling was seen as a major clarification both for internet users in Europe, but also for companies that aim for an expansion of their activities in the internet economy.
In terms of developments in national law in relation to amendments to copyright law-specifically the “Google Tax” measures undertaken in Span and Germany – the Secretariat reported:
3.266. Among the relevant developments in EU member States are amendments to the copyright law in Spain that were adopted on 4 November 2014. One of the changes introduced by the amended law requires website owners to remove links to copyright-infringing material in case of large-scale infringing websites offering hyperlinks through an active and non-neutral activity, so long as they are not carrying out mere technical intermediation. Changes to the copyright law also include what has become known as the “Google Tax”: as of January 2015, online content aggregators benefit from an exception to copyright in order to post excerpts of news articles online; this exception is, however, subject to the payment of compensation to the organization representing newspapers. Google responded by announcing, on 11 December 2014, that it will close its news service in Spain. In Germany, for example, the introduction of an “ancillary copyright law for press publishers” in a 2013 amendment of the Copyright Law led to the removal of newspapers concerned from Google News. Subsequently, publishers requested to be relisted as they had witnessed a decrease in traffic. On the other hand, instead of adopting legislative measures, an agreement was reached in France on 1 February 2013 that allows the display of news content in Google’s search result in exchange for a payment of €60 million to French publishers.
During the 12th Trade Policy Review of the European Union, around 1,400 questions were submitted to the European Union by 31 WTO members. It is expected that the WTO secretariat will release the minutes and the questions and answers submitted during this Trade Policy Review in mid-August 2015.