From: news@paragraf.nbg.sub.org
Newsgroups: de.soc.recht
Subject: JUS 9240.3.1 Free trade                 
Date: Wed, 16 Dec 92 21:25:48 +0100
Organization: VDJ Nuernberg

ENR   : 2493
HD    : 3. Free Movement of Goods, Services and Capital
TI    : Judgment of the Court of Justice - Articles 30 and 36 of the EEC Treaty
        - Patents
RF    : JUS 9240.3.1
AB    : The Smith Kline and French Laboratories company holds two British
        patents for the production of a pharmaceutical product
        "Cimetidine". These two patents carried mention of a "licence of
        right". In compliance with British legislation (Patents Act of
        1977), when the patent carries this expression, any person is
        authorized to take out a licence on the patent under the conditions
        which can be set either by an agreement with the patent holder or,
        if no agreement is reached, by the "Comptroller General of Patents".
        In this context, two companies Generics and Harris Pharmaceuticals,
        applied for licences of right to manufacture, import and sell
        Cimetidine. Since the parties were unable to reach an agreement on
        the terms of the licence, they were set by the Comptroller, and
        subsequently by the Patents Court. Among other things, this court
        included a clause in the conditions of the licences of right,
        prohibiting Generis and Harris Pharmaceuticals from importing
        Cimetidine in the form of a finished product from non-member
        countries and from Spain and Portugal. This ruling was appealed.
        The Court of Appeal referred to the Court of Justice for a number
        of preliminary rulings on the interpretation of Articles 20 and 36
        of the EEC Treaty and on Articles 47 and 209 of the Act of Accession
        of Spain and Portugal. The Court of Justice recalled first, that,
        although the national authorities competent for setting the terms of
        licences of right can grant or refuse an authorization to the
        licensee to import the product covered by the patent from a third
        country  outside of the Community without infringing Articles 30 and
        36 of the EEC Treaty, these authorities must not use discriminatory
        criteria which could affect trade between Member States in
        infringement of Articles 30 and 36 of the EEC Treaty.
        In this case, the Court noted that as a result of the practice by
        the British authorities, the licensee can be authorized to import
        the product covered by the patent from a third country when the
        patent holder does not manufacture the product on the territory of
        the Member State where the patent was issued, but imports it from
        other Member States. In this case, the patent holder may be exposed
        to competition resulting from imports from third countries to which
        it is not exposed when it exploits the patent in the form of
        manufacture on the national territory. The Court noted that this
        practice is discriminatory in that it encourages patent holders to
        manufacture products on the national territory rather than to import
        them from the territory of other Member States. The Court added that
        this practice could be an obstacle to intra-Community trade and
        therefore constitutes a measure having an effect equivalent to a
        quantitative restriction of imports, prohibited by Article 30 of the
        Treaty. In the Court's opinion, this practice cannot be justified
        under Article 36 of the EEC Treaty (protection of industrial and
        commercial property) since, given the specific object of the
        patent, there is no reason on which the difference in treatment
        decided by the national authorities can be based. This difference,
        the Court continued, is in fact motivated not by the specific
        requirements of the industrial and commercial property but by a
        concern for promoting production on the Territory of the Member State
        in question. The Court concluded that :
         Articles 30 and 36 of the EEC Treaty preclude the authorities of
        Member States competent to settle, in the absence of agreement, the
        terms of licences of right from relying upon provisions of national
        legislation in order to refuse the licensee of right authorization
        to import the patented product from non-member countries where the
        proprietor of the patent manufactures the product within the
        national territory and in order to grant such authorization where
        the proprietor of the patent works his patent by importing the
        product from other Member States of the Community. The Court also had
        to examine the scope of Articles 47 and 209 of the Act of accession
        of Spain and Portugal. These provisions, which derogate, within the
        limits they define, from the principles stated in Articles 30 and 36
        of the EEC Treaty. The Court noted that Articles 47 and 209 of the
        Act concerning the conditions of the accession of the Kingdom of
        Spain and the Portuguese Republic and the adjustments to the Treaties
        must be interpreted  to the effect that the authorities of the Member
        States competent to settle, in the absence of agreement, the
        conditions of licences of right may, on the basis of those
        provisions and in derogation from the principles laid down by
        Articles 30 and 36 of the Treaty, prohibit the licensee from
        importing from Spain and Portugal a patended pharmaceutical product
        if national law confers upon the proprietor of the patent the right
        to prevent imports and if the proprietor exercises the right
        conferred upon him by Articles 47 and 209. Judgment of the Court of
        Justice of 27 October 1992, Case C-191/90  Generics (UK) Limited,
        Harris Pharmaceuticals v. Smith Kline and French Laboratories
        Limited, not yet published.
CT    : Free movement of goods; Patent
DT    : 921127