Abuse of a dominant position through administrative and judicial procedures for trademark protection

The Investigation and Complaint

The Authority initiated its investigation on 13 April 2021 against Roxtec AB, a Swedish company active in the market for multi-diameter cable gland modules, and its Italian subsidiary, Roxtec Italia S.r.l (jointly, “Roxtec”), following a complaint submitted by a competitor, WallMax S.r.l. (WallMax). WallMax reported a violation of Article 102 of the Treaty on the Function of the European Union (“TFEU”) allegedly perpetrated by Roxtec and aimed at excluding competitors from producing and commercializing products for which Roxtec’s patent had already expired.

Complex exclusionary strategy

Following the investigation – which included the acquisition of evidence by the Swedish competition authority through the cooperation mechanism provided for by EU competition law rules – AGCM found that, after the patent’s expiry, Roxtec put in place a set of behaviors which, when considered together, could be traced to a single, complex exclusionary strategy to maintain the market position acquired under the patent’s validity. Specifically, Roxtec filed ten applications for the registration of EU trademarks relating to the image, in different colors, of its patented product. Moreover, it initiated several lawsuits against WallMax and acquired a large number of safety certifications for its product, which the Authority deemed an unnecessary and malicious use of administrative and judiciary procedures. Roxtec also offered certain commitments to the Authorities to remedy the alleged distortions of competition with a view to obtaining the closure of the investigation without a finding of infringement, but the Authority rejected the offer, considering the proposed measures insufficient to remove the concerns for competition.

Invalid trademarks and safety certifications

The Authority found that, after the expiry of the patent and as from 2015, Roxtec filed ten applications for the registration as EU trademarks of the symbols and shapes that were mostly used to identify its off-patent technology, nine of which were ultimately considered invalid by the EUIPO’s board of appeal as being in contrast with Article 7(1)(e)(ii) EU Regulation 2017/1001. This was apparently decisive for the finding of an abuse, since the above provision prohibits the registration of EU trademarks consisting exclusively of the shape of a good when the latter is necessary to obtain a technical result, as this would grant a de facto monopoly over the technical solutions or functional characteristics of a product. Furthermore, AGCM considered Roxtec’s acquisition of numerous safety certifications as unrelated to competing on the merits and purely aimed at excluding competitors by raising their costs. The Authority found that this conduct made it extremely onerous for other companies to compete with Roxtec’s products as obtaining the same certifications – which attract customers – would require competitors to invest considerable resources in terms of budget and time spent.

Arbitrary Lawsuits

AGCM deemed that the numerous lawsuits that Roxtec initiated against WallMax, claiming slavish imitation and counterfeiting of registered trademarks and models, had the primary objective of hindering WallMax’s expansion into new markets outside Italy. Although many proceedings are still pending, the Authority attributed great importance to two decisions issued in favor of WallMax in the Netherlands as evidence that such lawsuits were arbitrary and part of the overall exclusionary strategy, thus constituting an abusive exercise of rights.

Comments and takeaways

To issue its decision, AGCM referred to a consistent but disputed CJEU case law on Article 102 TFEU, which prohibits a company’s abuse of a dominant position within the internal market when this may affect trade between Member States.

In principle, a company that holds a dominant position bears a responsibility to ensure that its conduct does not impair effective and fair competition within the internal market. Based on this general principle, EU courts have repeatedly maintained that the instrumental misuse of judicial or administrative procedures or of the regulatory framework for the protection of intellectual property rights – including trademarks – exclusively or mainly to attain an anti-competitive effect (such as the exclusion of an actual or potential competitive force) goes beyond fair competition on the merits of the product and, thus, may constitute an “abuse of right” in breach of Article 102 TFEU.

However, whether the manner in which a company exercises its right to protect and enforce the exclusivity which characterizes Intellectual Property may constitute an abuse of a dominant position depends on the specific circumstances of the case, in particular on the analysis of the market conditions and competitive dynamics that form the economic and legal context of which a contested conduct is part. Moreover, in several instances, the complexity of the overall conduct to be contested in abuse cases makes it possible to construe different plausible readings of the overall situation or of single aspects of the overall conduct. These elements make the finding of “abuse of rights” particularly challenging to substantiate for competition authorities and courts, but also for dominant firms to defend themselves from.