Promedia Revisited: What Teva’s Appeal Means for Abuse of Process Standards

Earlier this year, the European Commission (EC) published its decision against Teva where it found the company had abused its dominance through inter alia misusing the divisional patent filing system to artificially create uncertainty for competitors in the market for glatiramer acetate (GA) (brand name Copaxone) in some Member States. Teva has appealed the decision before the General Court (GC).

Importantly, unlike previous vexatious litigation cases, Teva proposed an ‘exceptional standard test’ based on a combination of different precedents. In response, the EC proposed a more general test under Article 102 TFEU differentiating earlier precedents including the ITT Promedia case (Promedia).

This blog examines three issues: first, the treatment of the criteria laid down in Promedia by competition authorities; second, some potential shortcomings in Teva’s test and the EC’s response; and finally, the benefits of a uniform test. Ultimately, I argue that the Teva appeal offers the GC an opportunity to clarify the standard for abuse of process under Article 102 TFEU. Whether it reaffirms the Promedia criteria or endorses a new uniform test will have implications for patent strategy and litigation risk in the EU.

The Promedia criteria

In Promedia the EC took the view that bringing legal proceedings could not be characterised as an abuse unless an undertaking in a dominant position brought an action (i) which could not reasonably be considered as an attempt to establish its rights and could therefore only serve to harass the opposite party; and cumulatively, (ii) which was conceived in the framework of a plan whose goal is to eliminate competition (para 55) (Promedia criteria). Interestingly, on appeal, the CJEU never considered the correctness of the test as the challenge was limited to its applicability. (para 58) Moreover, the CJEU held that the criteria would apply in wholly exceptional circumstances. (para 60)

Since the criteria were laid down, there have been inconsistencies in its interpretation and/or application in subsequent cases.

AstraZeneca: a broad interpretation

In AstraZeneca, one of the key cases following Promedia, the EC took a broad view of the Promedia criteria, as it clarified that the use of public procedure and regulation including administrative and judicial process may also in specific circumstances constitute abuse. Significantly, it also emphasised that merely because the effects on the market may be dependent on the further decision of a public authority would not be decisive in excluding the existence of abuse (see para 328, decision). On appeal, the GC did not overturn the EC’s view on the Promedia criteria.

A narrower interpretation: Protégé and Agria Polska

In contrast in Protégé, a case which concerned dismissal of an application by the EC, the EC and the GC strictly applied the Promedia criteria, holding that the applicant had to prove that the proceedings instituted were only to harass the applicant and could not reasonably be considered as an action to enforce the entity’s intellectual property rights. (paras 52 – 62)

A few years thereafter, in Agria Polska which was an appeal again by a complainant whose complaint was dismissed, the EC took a similar narrow approach. The case concerned a complaint to the EC against the coordinated approach taken by some undertakings in making complaints to national authorities in Austria and Poland which allegedly led to unwarranted administrative inspections and resultant loss of market share. While the complainants relied on the Promedia criteria with respect to the unwarranted complaints, the GC confirming the EC’s reasoning, held that the criteria did not apply to the circumstances where the national authorities seized of the complaint had discretion on whether to act on the complaint (para 56).

Had the EC taken a similar approach as in AstraZeneca, the discretion of the public authority may not have been determinative of whether the Promedia criteria applied. If at all, discretion may have become relevant when determining if the Promedia criteria had been met. For example, that the national criminal authorities had exercised discretion to carry out administrative inspections may have become relevant when considering if the conduct of the undertakings was a reasonable exercise of their right.

National Cases: diverging standards1

In 2022, the Spanish CNMC imposed a fine on MSD for abuse of the patent process (previously covered here) where the commission applied the Promedia criteria although in its application, it did not emphasise the ‘only’ portion of the first limb as in Protégé. (para 471)

More recently however, the Italian Court in Roxtec took a different approach to the Promedia criteria. The Italian AGCM found that Roxtec had abused its dominance in the market of modular sealing systems by implementing a strategy aimed at limiting the entry of Wallmax, a competitor, through the filing of various instruments for registrations of European trademarks and initiating legal proceedings across the world. There was also an element of disparagement involved. Roxtec contended that the institution of proceedings was a simple right of defence and did not meet the Promedia criteria.

On appeal, the Italian Court while not contesting the Promedia criteria found that the AGCM’s case was different as it had relied on multiple proceedings across the globe in the context of wider exclusionary conduct to prove abuse as against a singular action (para 120). Whether the court was right to treat multiplicity alone as a sufficient differentiating factor is unclear given the previous cases also involved multiple actions. Moreover, the Court in response to Roxtec’s concerns about decreasing burden of proof said that it was the subject matter of proof and not the burden that had changed, i.e., that the multiple proceedings taken in totality still needed to meet the criteria. It subsequently went on to hold that by proving multiplicity of proceedings as part of a wider exclusionary conduct, the ACGM had also met the requirements of the Promedia criteria. However, in doing so it did not specify how the two limbs were met. (paras 120 and 133) Therefore, while Roxtec lays emphasis on multiplicity, it is unclear how this impacts the application of the Promedia criteria.

The exceptional standard test

Teva proposed an exceptional standard test: a) assessed objectively, the conduct must have the object of eliminating competition; and b) there must be no plausible explanation justifying the conduct, other than the anticompetitive object. (para 1058)

The test appears to frame the ‘only serves to harass’ in the first limb of the Promedia criteria in the negative, i.e. with the use of ‘no plausibility’. Given that the conduct in such cases is otherwise legal, the usage of the term ‘plausibility’ could make it more difficult for authorities to prove abuse as the authorities will have to disprove any plausible alternative explanation. For instance, the plausible explanation put forward by the parties in most previous cases would have been the protection of intellectual property rights. Additionally, the proposed test does away entirely with the second limb of the Promedia criteria, particularly ‘in the framework of a plan’ which may make it more difficult for an authority to rely on multiplicity of proceedings or other conduct such as disparagement to demonstrate abuse. More so, where there are no internal documents regarding the conduct, and objective interpretation of abuse is solely relied upon.

EC’s response

The EC disagreed with Teva’s test on various grounds including that the Promedia criteria, one of the precedents cited in support, only applied to court proceedings and not to the division patent system in question. Instead, the EC proposed a more general test under Article 102 TFEU. (para 1060) The first limb required the EC to prove that the conduct was not competition on the merits, for which, it relied on Teva’s comprehensive patent plan to exclude competitors. In its application, the EC’s first limb bears semblance to the Promedia criteria. (section 8.3)

For the second exclusionary effects analysis, one key issue was whether the effect of the overall conduct or the singular conduct should be considered. Teva contended that the EC should demonstrate the impact of each patent withdrawal on the relevant market since its case was that absent the withdrawal, the divisional patent application would not have succeeded. The EC disagreed and stated it was not just the withdrawal but the overall impact of the artificially prolonged patents on the entry of generics which was relevant to the effects analysis. (para 1416) Previously, the EC has not conducted an effects analysis in vexatious litigation cases, and imposing such a requirement would add to the burden on competition authorities where multiple proceedings and markets are involved.

Concluding remarks: need for clarity

While the substance of the Promedia criteria have mostly gone unchallenged, the differences of approach in the cases since Promedia have created uncertainty for businesses and enforcers alike. A clear and uniform test — coupled with guidance on the evidentiary weight of national decisions and the circumstances in which competition authorities may assess matters pending elsewhere — would provide greater certainty. Such clarity would benefit not only companies seeking to design compliant intellectual property strategies but also competitors aiming to identify and challenge exclusionary conduct before it becomes irreparable. The Teva appeal offers the General Court a pivotal opportunity to define the boundaries of legitimate legal action under Article 102 TFEU.

Disclaimer: Views and opinions expressed are the author’s own.

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  Author has used google translation.