July 22, 2019



by Marie-Anne Frison-Roche

ComplianceTech©. Pour lire le document de travail en français, cliquer sur le drapeau français

This working document serves as a basis for a contribution to the Grands Arrêts de la Propriété intellectuelle (major cases in Intellectual Property), published under the direction of Michel Vivant, in the new section devoted to Regulatory perspective.

Conceived as a "regulatory tool", intellectual property is then used by the State as an "incentive for innovation". Public authorities adopt solutions that stem from sectoral concerns that permeate intellectual property. Because the economic sectors become prime, the systemic perspective then prevails in the solutions retained in the judgments passed by the courts. 

 One can see it through three French court decisions: 


 Civ., 1ière, 28 février 2006, named Mulholland Drive ;

 Paris, 11 décembre 2012, Sanofi-Aventis ;

 Civ., 1ière, 6 juillet 2017, SFR, Orange, Free, Bouygues télécom et autres.



Intellectual property, derived from the State and inserted in a public policy, can be conceived, not to reward a posteriori the creator but to incite others to innovate. It is then an Ex Ante tool of Regulation, alternative to subsidies. If private copying is an exception, it is not in relation to the principle of competition but in an insertion in a system of incentives, starting from the costs borne by the author of the first innovation: the owner of the rights is then protected , not only according to a balance of interests, but in order not to discourage innovative potentials and the sector itself. (1st decision).

The sectoral policy then pervades the intellectual property used to regulate a sector, for example that of the drug. While it is true that a laboratory wishing to market a generic medicine did not wait for the patent expiry of the original medicine to do so, it is not relevant to sanction this anticipation of a few days because investments made by the holder of the intellectual property right have been made profitable by it and because the public authorities favor generics for the sake of public health (2nd decision).

The systemic interest provides and that is why Internet service providers have to bear the costs of access blocking while they are irresponsible because of the texts. This obligation to pay is internalized by Compliance because they are in the digital system best able to put an end to the violation of intellectual property rights that the ecosystem requires to be effective. (3rd decision).



It is necessary to underline the paradox represented by the infatuation of the theoreticians of Regulation with intellectual property, whose legal nature it transforms by an exogenous reasoning(I). Influenced, the case law uses reasoning based on incentives, investments, returns and costs, so that the State obtains the operators expected behaviors (II). As a natural result, there is a sectoral segmentation, for example  in telecommunications or pharmacy, which ends up calling into question the uniqueness of intellectual property, according to the technologies and public policies that affect them  (III). There are still imputations of new obligations on operators just because they are in the technical position of implementing intellectual property rights: the transition from Regulation to Compliance is thus taking place (IV).

I. The paradox of the Regulatory craze for intellectual property, whose legal nature it transforms

"Regulation" is a term that refers to the economy more than to the Law. It is only in a second time that it integrated it through what today we call the "Law of Regulation"!footnote-1632. The economy of regulation is at the hinge macroeconomics and microeconomics. It is a question of obtaining long-term beneficial effects by setting up and deploying an economic system, which brings us back to a "macro" perspective, by relying on the dynamism and rationality of the economic operators themselves, which brings back to the “micro” dimension. In addition, the Regulation always supposes that the Public Authorities, and notably the State, are present in mechanisms which nevertheless belong to a market environment. This may be required because the market, as a space of massive meeting of supply and demand producing an adequate price thanks to competition between suppliers who compete to conquer a customer by the prices and ever more adequate service innovation and quality, is "failing." Regulation is then a technique which overcomes these shortcomings. These can be temporary, during a transition from a monopoly economy to a competitive market economy, or definitive, when structures force monopolies (financial market, transport networks, etc.). The Regulation then takes a compulsory legal form because it is the market itself in its failure which implies the intervention of constraints, the institution of authorities, etc., technical corpora similar to all the countries being adopted .


But the Regulation can also express the intervention of the State in the market because it wants to imprint on it a public policy!footnote-1633. The Law of Regulation then becomes very different from country to country, because each State develops its own vision of what is good for the social group and for the economy.

However, in these intersecting dimensions, because the sectors have both shortcomings and temporary and definitive while they are also the subject of public policies, the companies which operate there claim intellectual property rights. Competition law is a priori hostile to them since intellectual property confers a monopoly, the competitive principle can only admit it under the status of exceptions with the various justifications which allow these rights to hamper the fluidity of markets, even entry to the markets, the barrier to entry, for example by a patent, being the first and most serious annoyance made to the liberal principle.

On the contrary, the economics of regulation will welcome intellectual property rights!footnote-1634 This is an illustration of the opposition between regulatory law and competition law!footnote-1635). It is however a particular Regulation since the State will not intervene via a public authority but by injecting into operators private prerogatives, intellectual properties, to obtain a structural effect more effectively than by a public decision, structural effect than the mere competitive dynamism is not enough to establish. For example, domain names fall under this logic, with authors calling for an increase in their Regulation as they structure the Internet!footnote-1637). Thus, the intellectual property mechanism can be a means of remedying a structural market failure without resorting to the administrative burden of public authorities


But conceived thus, it is the whole of the matter which changes because its foundation is modified. Indeed, if we take up the conception that the Law has of why prerogatives are given to people (rights) over creations or inventions, it is to reward them for having inserted these in a world in which these objects were not there and of which they would remain absent without the inventiveness of human beings. The public authority thus grants after the realization to the inventor and to the creator the recognition which is due to him, which makes unbearable that another is taking what is still a part of themselves: the work, the 'invention. The monopoly is thus unjustified by its link with the person.

The economy of Regulation starts on different bases. Imbued with the general idea that the Law is a practical tool that is used to achieve goals, which strips the Law of its specificity by the simple economic analysis that is made of it, the premise applying as well to the state than the private operator, the "legal standard" is an available tool to get what you want. Thus, the State has a "toolbox" containing different tools, which it will use. Among those, a tool of choice: the "intellectual property" of which he is the master and which he attributes, retains, gives up or takes back according to the policy he pursues with regard to the results he wants to obtain. The perspective, which no longer requires legal knowledge or consideration for national legal systems, will become uniform and the Economics of Regulation will put “intellectual property rights” at the center as tools capable of achieving a goal. pursued by the State: to encourage companies to innovate, to include innovation in their calculations. "Innovation Law" is the legal translation of this economic concept, born first of all in the United Kingdom and the United States, translated into European Union law and transposed into national law.


The transfiguration has taken place. Translated in the texts, perceptible in the jurisprudence, producing solutions foreign to those which would have produced the classic law centered on the person of the creator, whereas the Regulation conceives the rights of this one only as a tool to achieve an objective of which it is only the vector: innovation. Reconciliation can then be done with competition law since it only knows business and calculation, innovation being only a means of producing profit.

II. Incentive, investment, return and cost, justifying the attribution of the right by the State to produce the behaviors wanted by the Politics: the reasoning of Regulation taken again by the jurisprudence

The very famous judgment known as Mulholland is also perfectly explained by Stéphanie Carre!footnote-1638) insofar as it marks the outlines of the exception of private copying in relation to copyright, according to the approach of " triple test ”, explained in this comment to which it is referred. We will rather focus here on emphasizing how this judgment is inspired by its very letter from an economic perspective of Regulation. This is because he examines the case in the light of Community law, which tends to think of intellectual property law through the primary principle of the market. The vote in March 2019 on the directive directly protecting copyright is a reaction to this lack of autonomy, but was obtained with difficulty.


The judgment states that "the normal exploitation of the work", that which justifies the insertion of the technical measure by the rights holder in the DVD hindering its use by a third party, "must be assessed taking into account the economic impact can have in the context of the digital environment ”. It is remarkable that this already old ruling (2006) refers to digital technology and takes as primary concern the sustainability of the digital system and not only a balance between "rights", since the ruling does not retain, as requested yet user associations, the existence of “private copying rights”. It is not just a battle of law against law; it is not a balance between particular interests: it is also a strategy devised by the Legislator for the good development of the digital sector, the implementation of which is handed over to the judge.

This is how reference is made to the costs of production, their amortization and the operation of the property. These three criteria applied in the judgment are found, for example, in the pricing techniques for access to transport infrastructure, the amount of which is fixed either by the Regulator and controlled by the Council of State, or by the network operator and may give rise to a dispute, the contestation of which will give rise to judicial case-law. The whole is unified by Community case law which affirms that what it costs third parties should not be a market price, that is to say what results from the meeting of wills by a contract, but a amount that includes costs and standard return on capital. This corresponds to what is targeted here through the mention of “income necessary for the amortization of production costs”, showing that the handling of intellectual property rights is only a partition of a more general work: Regulation.


The difficulty is more in the absence of a "tool" in this box that became the Law: the regulator ... And as this was underlined by the authors, how the judge, since lack of thrush that is the Regulator in the Law of the Regulator we turn to the still available robin that is the Judge, can he carry such an “appreciation” both political and strategic, with regard to innovation which is the common good of the digital ecosystem?

III. The sectoral segmentation of intellectual property rights, through case law anchored in specific economies and policies: what remains of the uniqueness of the branch of Intellectual Property Law?

The judge derives his power from the fact that he is a generalist and concretizes in a particular way through the cases before which he is seized the general prerogatives of people. This is its strength and its weakness, while the Regulator is often presented as a kind of specialized judge who can and must adapt the solutions to the specificities of the objects and services of the sector which he must help to build and whose balances he must maintain. on the long term. Thus, in Mulholland, to rule out the private copying exception, because the reasoning required falls within the scope of the Regulation, the judge is asked to proceed as a Regulator, that is to say, to refer to " risks inherent in the new digital environment ”, risk being the major concern of sectoral Regulation Rights.


This sectoral dimension is so important in Regulatory Law that it falls into the very definition of it: if there are sectoral regulatory authorities it is because these different sectors suffer from specific failures and / or c 'is the specificity of such or such objects or activities which justifies this visible hand of the State in this however liberal theory of Regulation. Principles, rules and reasoning certainly constitute what should be designated as a "common law of regulation" but are superimposed on sectoral rights. This is how this right was born, often crystallized by sectoral authorities, for example ARCEP for telecommunications, or the AMF for financial markets. By nature, the specificity of the objects themselves penetrate into legal rules and decisions. Impregnation will be done in the same way in intellectual property, pulverizing it as many as there are sectors, since the tool that is intellectual property is not handled at all in the same way if we are in financial matters, digital matters or health matters.

Thus, patents are at the heart of health policy. This guides court decisions that an orthodox jurist would readily qualify as contra legem. Indeed, as long as a holder is in his right, a third party cannot dispose of it. Until the last moment. If the beneficiary of a patent finds that a third party has the invention, even a few days before the end of the monopoly, he is entitled to seek protection from the judge because of this infringement.

But this does not take into account the Regulation of the pharmaceutical sector, from two angles, explained by the judgment of the Paris Court of Appeal of December 11, 2012, in a dispute between two major operators in the sector, Sanofi -Aventis and Novartis, the first wanting to produce a generic, the second holding the patent on the original drug.


The Court considered that the generic designer should not be punished for three reasons, the first two of an economic nature, the last of a political nature. First, economically the princeps laboratory had already paid for its investment: "the investments made to discover the princeps product have been offset by the protection granted by the patent and the SPC for several years". Therefore, there is no longer any need to protect it. This implicitly but necessarily means that it does not matter that a third party has violated their right (see IV on the question of "rights").

We find the same calculation of costs and returns. Here, the output having been sufficient, the State can cease its protection, as a ladder is removed, the operator having climbed enough. The notion of subjective right, which should be consubstantial with intellectual property right, is not present in this "cost / benefit" analysis. We find the common economic idea, present in the Mulholland judgment that the holder had the “necessary income” to cover the “production costs” and that is enough… We see here that the Economy has replaced the Law . One can conceive it, the economists finding the obvious reasoning to encourage investments, avoid rents, etc. The Law is a little lacking.

The second reason, still of an economic nature, is "the absence of harm". The judgment states that the injury comes from the placing on the market of the generic, but this is due to the health system itself, the judges targeting "the damage resulting from the placing on the market of such products which necessarily results in a loss of market ”. But when you are the holder of a right and a third party ignores it, you do not have to prove the existence of harm, it is the difference between a legal situation and a factual situation is the very advantage of having a subjective right.


One wonders then why to have given a kind of free pass to the generic designer? Reason for public policy. It is not hidden by the judgment: "the existence of generic products is favored by the public authorities for the sake of public health". That’s why when you can, you have to give reason to the generic. Is it up to the judge to do that? Is it even the Regulator to do this? This legis ratio which fully justifies the adoption of this or that text in favor of generics, while texts going in the opposite direction will be taken for the benefit of the princeps laboratory to encourage innovation (and therefore investment in research and therefore the extension of patents), can it be taken up as a ratio decidedi by a judge, and used as a basis in a court decision?

The more general question already present in Mulholland is whether the judge himself becomes a regulator in the regulated sectors. The judge naturally tends to answer in the affirmative. The State Council does this openly, as "regulator of regulators". Judges do this implicitly, by handling conventional law, here intellectual property.

But what becomes of classical law if intellectual property law is a loose tool in the economist's box which hands it over to the public body with a "bunch" of other standards? This generates tensions or transformation because the Law of Regulation, as it aims to take over the long term of systems cannot be reduced to individual reports of prerogatives and obligations. It can then only transform, as here, the concept of "right", "damage" and therefore "responsibility".


IV. The distribution by the judge of responsibilities on operators by the sole consideration of the systemic effectiveness of the protection of innovations: the transformation by intellectual property law of Regulation into Compliance

Intellectual property law conventionally belongs to private law. But the Regulation does not know this summa divisio between public law and private law. Thus for the efficiency of the health system and the political will to favor the generic (in particular to lighten public finances) the notion of subjective right will be put in the background (see above). In the same way and by nature, Regulation is systemic. Subjective rights are "mediates", that is to say, they are conferred by the State so that their holders are encouraged to engage in behaviors which serve a purpose which is targeted by the State and which becomes, through individual action, materialized. For example innovation.

But these goals can be very diverse and intellectual property lends itself particularly well to the technique of incentives, the heart of the economy of Regulation, since it is postulated that people will seek to create and invent only to become rich, or famous (utility function) and not love of the beautiful, the true and the good.

Operators will have their rights as well as their responsibilities placed on their heads not because they deserve it (reward for rights, punishment for responsibilities), but because it is useful for the optimal functioning of the system and qu 'They are in a position to have this charge.


From this reasoning, which is the basis of all the new Compliance Law!footnote-1639, the judgment rendered by the first civil chamber on July 6, 2017, SFR, Orange, Free, Bouygues telecom is exemplary.

In 2006, case law could still refer in Mulholland only to a "digital environment" (see above). In 2017, we live in a digital world. The state has organized a system for blocking sites with illegal content, the main assumption being that of illegal download sites. An injunction can be obtained from the judge and Internet service providers (ISPs) technically operate the blocking. The case law of the trial judges chooses to pass the cost of this other kind of technical measure onto them. They dispute this cost because how could they have to pay since, moreover, by European level texts expressly declare them not responsible for the content of these sites?

The Court of Cassation nevertheless maintains the solution. The reason is simple: no one other than ISPs have enough money to bear the costs of this technical measure without which the statement of principle that there must be blocking access to this site does no longer has any effect. The judgment takes care to emphasize that the bodies representing the looted professions, already financially fragile, would be economically incapable of supporting it. The ruling clarified the procedure by placing the burden on ISPs to prove that such a charge "would impose unbearable sacrifices" or "would jeopardize their economic viability". Unless you die, it's up to them to put into effect the political will to make intellectual property rights effective!


However the ISPs are not responsible for what is happening on the sites…. But the justification is in the judgment itself and is in the double sense of the word "responsibility". Certainly they are not the authors and it is not for this reason that they must pay. It is not a punishment. As the judgment states: "the assumption by these intermediaries of the cost of the blocking and dereference measures ordered was strictly necessary for the preservation of the rights in question". This means that if they don't do it, no one can do it. However, it must be done. Otherwise the whole system is ineffective. However, it must be effective. So they have to do it: it's an Ex Ante Responsibility.

As the Court of Cassation expressly says, they are the ones who are in position, as an "intermediary" and because their economic power allows it and until they demonstrate that their viability would be threatened, to to ensure that the intellectual property rights which some have been able to say that in fact they no longer exist on the Internet can by the technique of blocking be effective. Thus, as Alain Supiot asks, responsibility is "taken seriously"!footnote-1640: the judge poses that the operator most able to make the system effective must carry it, technically and financially. Therefore, this is the entire system, here the effectiveness of copyright, creation and innovation in a digital world, which is internalized, in ISPs. This reasoning, clear and clear in the judgment, is deployed more generally in a Law which also embraces intellectual property: the Law of Compliance!footnote-1641.


This internalizes in crucial operators in a position to make effective rules and achieve goals that others have set; they become responsible for it. Critical digital operators, not only ISPs but also platforms, are destined to become debtors of intellectual property rights, if we still want it to exist in a world renewed by digitalization. In this movement, it is not the texts but the jurisprudence which, as in this judgment, shows a way to follow, where Compliance takes over from Regulation, both systemic, objective and in which the concept of responsibility is central.




 (M.-A. Frison-Roche, Le Droit de la Régulation, D.2001, chron., p.610-616)


Chevallier, J.,  Introduction, in S. Dormont et Th. Perroud, Droit et Marché, LGDJ, 2015.


 Vivant, M. Propos introductif, in M. Vivant (dir.), Droit et économie de la propriété intellectuelle, LGDJ, 2014, XI-XIII)


M.-A. Frison-Roche, Droit de la concurrence versus Droit de la régulationin Mélanges en l’honneur de Marie-Stéphane Payet, Au-delà des codes, 2011, pp.171-185


(Ph. Gilliéron, Le nom de domaine : une régulation trop « marquée » ?, in M. Vivant (dir.), Droit et économie de la propriété intellectuelle, LGDJ, 2014, pp.135-151


In Vivant, M. (dir.), Grands Arrêts de la propriété intellectuelle, Dalloz. 


(M.-A. Frison-Roche, Le Droit de la compliance, D.2016, chr, pp.1871-1874.)


Delmas-Marty, M. et Supiot, A. (dir.), Prendre la responsabilité au sérieux, Fayard, 2015)


Frison-Roche, M.-A.  L’apport du Droit de la Gouvernance dans la Gouvernance d’Internet, rapport au Gouvernement, 2019.

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