UK: Can a Refusal to License IP Rights be an Abuse of a Dominant Position?

IMS Health GmbH & Co v NDC Health GmbH & Co KG
Last Updated: 20 November 2003

By Nick Cunningham and Mark Daniels

Advocate General Tizzano’s opinion in the IMS case delivered on 2 October 2003 could mean that an intellectual property rights holder in a dominant position may have to grant licences to its competitors.

The facts

This case concerns two large US companies which operate in Germany. IMS Health GmbH compiles, interprets and sells medical prescription and sales information for pharmaceutical products in Germany. Its presentation and analysis is based on a brick structure, which combines geographical parameters with structural factors such as the proximity of pharmacies to hospitals and medical practices, the areas covered by medical visitors, and so on. The principal structure has 1,860 bricks, each containing a minimum of five pharmacies (any fewer would pose data protection problems). The IMS data structure has become the industry norm for businesses supplying services and goods to the sector. In particular it is relied upon by the pharmaceutical manufacturers to record sales, reward salesmen, and plan marketing efforts. Although the data structure was devised over many years, with the co-operation and input of the manufacturers, IMS asserts copyright in it.

In October 2000 NDC Health GmbH began to offer services using a data structure based on the IMS structure, although arguing that it offers a better product because its data is more accurate and can be made available online. NDC says that it was obliged to use a structure that is very similar to the IMS structure, because the industry will not accept any other on economic grounds. Some manufacturers have supported NDC in its efforts to launch its competing service.

When sued by IMS in Germany NDC offered to take a licence of the IMS structure, which was refused. NDC then filed a complaint of abuse of dominant position under Article 82 EC with the European Commission (Case Comp D3/38.044) in December 2000.

The Article 82 complaint

The Commission gave its preliminary view and, as an interim measure, ordered a compulsory licence on terms to be determined if not agreed. IMS appealed to the Court of First Instance (CFI), which found that IMS’ prima facie case was stronger than NDC’s, and so suspended the Commission’s interim measure.

The CFI found that the Commission’s decision had turned "upon a non-cumulative interpretation of the conditions regarded as constituting exceptional circumstances in Magill" (RTE and ITP v Commission [1995] All ER (EC) 416). The Commission tended to agree with IMS that the existing jurisprudence required at least the establishment of a secondary market before Article 82 could be held to override fundamental intellectual property rights. NDC appealed unsuccessfully to the ECJ against the CFI’s ruling.

The position under the Article 82 complaint remains unresolved; the Commission’s final decision is awaited.

The German proceedings

In the case before it, the Landgericht has proceeded on the basis that copyright subsists in the structure, although this remains to be determined. It has referred three questions to the ECJ:

  • Should Article 82 EC be interpreted as meaning that the conduct of an undertaking with a dominant position in the market is abusive if it refuses to license the use of a data structure protected by copyright to an undertaking seeking access to the same market, if the potential purchasers reject any product not using that data structure because they already rely on products which are based upon it?
  • Is it relevant that the potential customers have been involved in the development of the data structure?
  • Is it relevant that the potential customers would have to incur material costs if they were to switch to a competing product which does not make use of the data structure?

Opinion of Advocate General Tizzano

The Advocate General has now concluded that if an intellectual property rights holder in a dominant position in a secondary market refuses to grant a licence to a third party this constitutes abuse where:

  • there is no objective justification for such a refusal;
  • the third party’s use of the intellectual property is indispensable for it to operate on the secondary market;
  • the refusal of licences eliminates all other competition in that market;
  • the product to be offered by the third party has different characteristics to the product of the right holder;
  • the third party product meets a need in the market which is unsatisfied.

He has also concluded that when assessing whether use of the protected data structure is necessary to compete in Germany, the participation of the pharmaceutical manufacturers in developing the data structure and the effort necessary to devise an alternative data structure to achieve the same analysis should be taken into account.


The Advocate General’s opinion follows existing ECJ law, but may identify a way in which the difference between the Commission and the CFI in the Article 82 Complaint may be reconciled.

The ECJ has already decided that the owner of an intellectual property right may have to license use of that right rather than use it to reserve a secondary market to itself (as, for example, in the Magill TV Guide case). This analysis depends on identifying separate primary and secondary markets. In Magill there were held to be two separate markets: one for the TV programming itself, and the second for the publication of TV guides.

The Advocate General says that it is sufficient that one can identify a theoretical primary market; there is no need for the rights holder to be active in the primary market for the analysis to apply. In this case the Advocate General has concluded that there is a market for the data structure itself and a market for provision of information using the data structure to the pharmaceutical industry. Arguably this is a truism for intellectual property rights, which generally only have commercial value when they are embodied in other goods or services. The Commission has made that point more forcefully and takes the line that there is no need to rely upon a primary/secondary market analysis at all.

On the Advocate General’s analysis, where an undertaking has an intellectual property right in a development tool (for example innovative software), two markets are created: the first for the tool itself, and the second for the goods and services created by using the tool. The rights holder will then be at risk of having to grant a licence to a competitor who wishes to use the tool to provide different, but competing, goods and services, unless the rights holder has objective reasons for refusing a licence.

On the Commission’s analysis to date (in its interim measure), exceptional circumstances surrounding the creation and use of an IP right in the market may in any event justify a finding of abuse where there is a refusal to license.

Both analyses are potentially damaging for IP rights holders.

Of course, the potential licensee must offer something different to the rights holder’s product - a licence will not be granted only on the basis that competition has been excluded. However the Advocate General does not give guidance on how different the licensee’s goods or services must be. Another area of uncertainty (and one which is particularly important in this case) is whether the reasons why use of a right appears to be indispensable to compete have any bearing on the question whether it is in fact indispensable. For instance, where the market is united in its insistence on an alternative product is that sufficient to overcome the IP rights of the dominant supplier?

A possible practical solution for businesses which are too successful for their own good may be to license a select few competitors (rather than none) using criteria which are arguably objective (for instance as to how different the competitor’s products are from the licensor’s).

The ECJ generally follows the Advocate General’s opinion in intellectual property and competition cases, but on the reference from the German court it will only answer questions, not determine the matter. The Advocate General has pointed out to the German court that under EC Treaty principles it may not contradict the Commission (even its preliminary view) and has suggested that it should therefore wait until the Commission’s final decision is known.

In May next year the Commission will gain new powers to intervene directly where it finds abuse (under the "Modernisation Regulation"). The Commission may therefore wait until then before giving its final decision in the Article 82 Complaint; the German proceedings are likely to be suspended in the meantime

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.