The Gazette 1973

EUROPEAN SECTION

LECTURE 2

PATENTS AND PATENT LICENSING UNDER EUROPEAN COMMUNITY LAW by DR. HORST HELM, Stuttgart (Lecture delivered in Burlington Hotel, Dublin, on 27 January 1973)

I (1) The first judgment of the European Court deal- ing with the influence of European cartel law on patents was the Parke-Davis decision of 29 February 1968. Here the Parke-Davis Co. instituted proceedings in the Netherlands based on a Dutch patent. The de- fendant was a company importing the medicament which was the object of the patent from Italy, where patent protection for medical products does not exist, and where consequently the article had been lawfully manufactured. The European Court held that only national legisla- tion decides on the existence of a patent right, whereas the exercise of this right is subject as much to Com- munity as to national law. In the specific case the Court held that no objection under European cartel law could be sustained in respect of the action of Parke- Davis, as Art. 36 of the Rome Treaty expressly allows restraints to protect industrial property, providing, however, that "such prohibitions or restrictions shall not constitute either a means of arbitrary discrimina- tion or disguised restriction of trade between Member States". The prohibition of cartels under Art. 85 was in- applicable, as the action of Parke-Davis was not based on a specific agreement restraining competition. From the Parke-Davis decision the conclusion can be drawn that, by means of a national patent, imports from EEC countries can be stopped, if the products were manufactured there by a third company which is entirely independent from that of the owner of the patent. The question of whether and why there is no patent protection abroad is of no material importance. (2) The judgment of the European Court of 8 June 1971 called German Gramophone Co. case is of much greater importance for the exercise of national protec- tion rights. German copyright law grants the manufac- turer of records a special protection right similar to copyright. The Deutsche Grammophon-Gesellschaft in- stituted proceedings endeavouring to prevent the im- portation of its own records from France to Germany. These records had been delivered by the company to its French subsidiary which apparently sold them to some firm who re-exported them to Germany. The European Court in its judgment declined to decide whether the action constituted a violation of Art. 85 of the Treaty; this would require that the action should be based on a cartel agreement. On the contrary, the European Court based its judgment on Art. 36, sentence 2, EEC Treaty. In its opinion a veiled restriction of trade between Member States

obtains, if by means of a protection right the import of such products shall be prevented, which the owner of a protection right himself or a third party sold with his approval in another EEC country. The National Courts could not allow such an action to succeed because this might endanger the objectives of the Community Treaty. (3) The judgment in the German Gramophone Co. case was welcomed by the European Commission. It applies as much to copyright as to patents and trade- marks. Prior to this judgment the European Court endeavoured in its Grundig-Consten and Sirena deci- sions to prevent restraints on imports caused by trade marks with the help of Art. 85 EEC Treaty. This would presuppo-e the proof that the action on account of the trademark, wa sbased on a licence or purchase agreement. In future, attempts to partition the Com- mon Market by means of protection rights will mainly be stopped with the help of Art. 36 EEC Treaty and less through the application of Articles 85 or 86. The German Gramophone Co. decision has a con- siderable impact on the exercise of protection rights. Befire this decision the assumption had been that patents could positively be used to prevent the importa- tion of products legitimately sold abroad, even by the patent owner himself or his licensees. The judgment corresponds to the European Court's tendency to react vigorously against all measures tending to erect trade barriers between Community countries. (4) The decision German Gramophone Co. does, however, create problems of interpretation. Under this judgment the owner of an Irish patent can certainly not raise objections against the importation of products from France, which his licensee sold there, and which were exported to Ireland by the licensee's customers. The situation is already different, however, if the Irish patent owner did not grant a licence in France, but sold his French patent to a third party. In such a case it can hardly be said that the products were sold in France with the Irish patent owner's approval. Most important for practical use is the case in which the foreign licensee does not sell products to a customer in his territory who exports them to Ireland, but instead imports them directly to Ireland himself. It would seem in such a case, that the principles of the decision German Gramophone Co. are not applicable, because the products were not marketed abroad and the sale to Ireland was not effected with the approval of the Irish patent owner. How the European Court will decide on such a case can, however, hardly be foreseen. 188