On 12 February 2014, the Italian Council of State ("CoS"), the highest administrative court in Italy, handed down its judgment upholding a fine of around € 10.6 million imposed by the Italian Competition Authority ("ICA") on the pharmaceutical company Pfizer for having abused its dominant position on the Italian market for drugs used to treat glaucoma by delaying the market entry of generic versions of its drug Xalatan.

In its January 2012 decision, the ICA found that Pfizer abused its dominant position by adopting a strategy aimed at blocking or delaying the ability of generic competitors of its drug Xalatan to enter the market. According to the ICA, Pfizer's strategy consisted of, among other things: (i) seeking to illegitimately extend the patent protection of its drug Xalatan by filing for and obtaining a divisional patent covering the same product as the original patent for Xalatan, and by filing for and obtaining a so-called "supplementary protection certificate" ("SPC") for this divisional patent, and (ii) conducting an aggressive enforcement campaign against competitors that wanted to enter the market with a generic version of Xalatan after the expiry of Pfizer's original patent for Xalatan in September 2009 (instead of after the expiry of the SPC for the divisional patent in July 2011). The ICA considered such conduct to be abusive after concluding that Pfizer's divisional patent was not based on novelty or any innovative step, but merely was sought to enable Pfizer to file for an SPC and thereby delaying the entry of generics onto the market

On appeal, the Lazio Administrative Court ("LAC") overturned, in a judgment of 3 September 2012, the ICA's decision on the grounds that Pfizer had lawfully exercised its intellectual property rights. The LAC stated that Pfizer's applications for the divisional patent and for the SPC were entirely legal and that Pfizer's enforcement strategy against generic producers was simply a way of Pfizer protecting its intellectual property from exploitation.

In its judgment, the CoS set aside the ruling of the LAC and upheld the ICA's finding that Pfizer had abused its dominant position within the meaning of Article 102 TFEU. The CoS first clarified that,in the context of an assessment under the competition rules, it is irrelevant that the divisional patent and the SPC were legitimately obtained. According to the CoS, Pfizer's strategy was exclusively aimed at preventing the entrance into the market of competing generic versions of its product Xalatan. Thus, Pfizer was found to have abused its dominant position on the relevant market by using its patent rights for purposes other than what the legislation granting those rights was intended to achieve. In reaching this conclusion, the CoS took into consideration the fact that Pfizer's divisional patent did not cover any additional innovation and did not lead to the launching of new products on the market. Thus, the LAC's judgment was overturned, and the ICA's finding was restored.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.