Subsidiarity liability: Biogaran

I wrote a blog a few months ago on the circumstances in which a subsidiary can be held liable for the infringing conduct of its parent.  That is a somewhat special interest subject which might be said to have received more than its fair share of attention among English judges and lawyers. However, I cannot resist a short update to point out that the issue has recently received attention from the EU General Court.

The context was a clutch of appeals relating to the Commission’s decision on ‘pay-for-delay’ settlements relating to patents owned by the French pharmaceutical company Servier. One of the addressees of the decision was Biogaran, a 100% Servier subsidiary.  One of Biogaran’s grounds of appeal – which was rejected – was that the Commission had wrongly held it liable for an infringement carried out by its parent.

The judgment is not as clear as one might have hoped, and it is also not yet available in English. However, two points are tolerably clear.

The first point is that the General Court considered that a subsidiary may be liable for an infringement even if does not itself have the knowledge that is ordinarily required to find an infringement: see [223]-[225].  That said, it appears that Biogaran did have at least some knowledge, so the precise limits of the court’s analysis are open to debate.

The second point relates to implementation.  Some parts of the Court’s judgment may be read as suggesting that a subsidiary may be liable even if it has played no role in the implementation of the infringement.  Other parts may be read as meaning that the subsidiary must play a role in implementation but that it can be relatively minor: at [225] the Court refers to implementation “even in a subordinate, accessory or passive manner.”

So Biogaran is unlikely to be the final word on this issue.  It does, however, tilt the balance more firmly in favour of subsidiary liability than some English judges might be comfortable with.