## Facts

- IMS sold German regional pharmaceutical sales data organized in a copyrighted geographic “brick structure” of 1,860 units.
- The brick structure became a de facto industry standard after widespread use and customer integration into internal systems.
- A competitor (PII), later acquired by NDC, attempted to market similar data using brick structures very similar to IMS’s.
- IMS obtained German interlocutory injunctions barring the competitor’s use of the IMS-style structures; an appellate court treated the structure as a copyright-protected database under German law.
- The German trial court stayed IMS’s request for a final injunction and referred questions on whether refusal to license the structure could be an abuse of dominance under Article 82 EC (now Article 102 TFEU).

## Issues

1. Under what “exceptional circumstances” can a dominant firm’s refusal to license a copyright-protected input constitute an abuse under Article 82 EC?
2. How should indispensability be assessed where the protected input functions as an industry standard on a downstream market?
3. What role do the “new product,” elimination-of-competition, and objective-justification requirements play in determining abuse?

## Decision

- The Court held that refusal to license IP is not abusive by itself; abuse arises only in exceptional circumstances.
- It identified four cumulative conditions for abusive refusal to license: indispensability, prevention of a new product with consumer demand, lack of objective justification, and elimination of all competition on a secondary market.
- It elaborated an indispensability test requiring assessment of real or potential substitutes and barriers to creating alternatives.
- It declined to decide whether IMS’s conduct was abusive on the facts, leaving application of the criteria to the national court.

## Legal Principles

- A dominant undertaking’s refusal to license an intellectual property right is generally lawful; only exceptional circumstances can make the exercise of exclusivity abusive under Article 82 EC.
- Compulsory licensing for abuse requires four cumulative elements:
  - the input is indispensable for operating on a neighboring/secondary market;
  - refusal prevents the emergence of a genuinely new product or service for which there is potential consumer demand;
  - refusal lacks objective justification; and
  - refusal is likely to eliminate all competition on the secondary market.
- Indispensability is not shown by customer preference or competitive disadvantage alone; it requires that no real or potential substitute exists and that technical, legal, or economic obstacles make independent duplication impossible or unreasonably difficult for a comparably sized competitor.
- The “new product” requirement is not satisfied by mere duplication or minor differentiation; the refusal must block a product or service not offered by the rights holder for which there is potential demand.
- In applying EU competition rules, national courts must avoid decisions that conflict with decisions taken or contemplated by the European Commission.

## Conclusion

The Court limited compulsory licensing of copyright-protected inputs under Article 82 EC to narrowly defined situations, requiring proof of indispensability, foreclosure of a genuinely new product, lack of objective justification, and elimination of downstream competition, while leaving factual application to the referring national court.


IMS Health GmbH & Co. OHG v. NDC Health GmbH & Co. KG, Case C-418/01, 2004 E.C.R. I-5039 (Ct. Just. 2004)