RESTRICTEDWORLD TRADE
ORGANIZATIONIP/Q3/HUN/1
28 October 1997
(97-4710)
Council for Trade-Related Aspects
of Intellectual Property RightsOriginal:  English
REVIEW OF LEGISLATION IN THE FIELDS OF PATENTS, LAYOUT-DESIGNS
(TOPOGRAPHIES) OF INTEGRATED CIRCUITS, PROTECTION OF
UNDISCLOSED INFORMATION AND CONTROL OF
ANTI-COMPETITIVE PRACTICES IN
CONTRACTUAL LICENCES
Hungary1
The present document reproduces the introductory statement made by the delegation of
Hungary, the questions put to it and the responses given in the review of legislation on patents, layout-
designs (topographies) of integrated circuits, protection of undisclosed information and control of
anti-competitive practices in contractual licences at the Council's meeting of 26-30 May 1997.2
_______________
I. INTRODUCTORY STATEMENT
The Hungarian Law No. XXXIII of 1995 on the protection of inventions by  patents entered
into force on 1 January 1996.  The Hungarian Law sa tisfies the requirements laid down by Section 5
of the TRIPS Agreement and is in full compliance with the European Patent Convention.
Patent protection shall be granted for inventions which are new, involve an inventive activity
and are susceptible of industrial application, in all fields of technology.
The exclusive rights conferred by a patent extend to the making, using, putting on the market
or offering for sale a patented product, or importing such product.
In case of patented processes the exclusive right of exploitation extends to using a process
which is the subject matter of the invention, further to making, using, putting on the market, offering
for sale or importing for such purposes a product obtained directly by the said process.
Patent rights shall be enjoyable without discrimination as to the place of invention, the field
of technology and whether products are imported or locally produced.
The patent owner has the right to assign or transfer by succession the patent and to grant
licences of exploitation to third parties.
                                                     
1As regards legislation relevant to the areas under review and notified by Hungary under Article 63.2 of
the Agreement, reference is made to documents IP/N/HUN/Rev.1, IP/N/1/HUN/P/1-2, IP/N/1/HUN/I/1 andIP/N/1/HUN/L/1.
2The minutes of the meeting have been circulated in document IP/C/M/13.IP/Q3/HUN/1
Page 2
The control of anti-competitive practices in contractual licences appears in the Hungarian
Patent Law.  According to Article 27(2) any clause of a contract of exploitation  conflicting with the
prohibition on restricting economic competition by agreement shall be null and void.  This provision
is in full compliance with Article 40.2 of the TRIPS Agreement by which a Member may adopt,
consistently with the other provisions of this Agreement, appropriate measures to prevent or control
such practices.
The Hungarian Patent Law contains provisions al most literally identical with Article 34 of the
TRIPS Agreement on the reversal of burden of proof in respect of patented processes.
The protection of topographies of integrated circuits is provided for by Hungarian Law
No. XXXIX of 1991 which was drafted with regard to  the Treaty on Intellectual Property in Respect
of Integrated Circuits (IPIC Treaty).
Furthermore, the Law is consistent with Section 6 of the TRIPS Agreement and the
Directive 87/54/EC.
On the basis of the protection the owner has exclusive right to exploit the topography
commercially or to grant a licence of exploitation to thirds parties.  The exploitation means
reproduction, whether by incorporation in a micro-electronic semiconductor product or otherwise,
importation for commercial purposes or marketing of the topography or of the semiconductor product
incorporating the same.
The protection has a duration of ten years counted from the date of filing an application or
from the first commercial exploitation if this occurred within two years prior to the filing date.
As regards the acts not requiring the authorization of the owner of the protection, the Law
contains provisions on the limitation of the exclusive right deriving from the protection.  Accordingly,
it is not considered as unlawful if a person imports micro-electronic semiconductor productsincorporating the topography for commercial purposes without knowing or having reason to believe
that these products contain an unlawfully reproduced topography.
From the date of knowing or having reason to know that the reproduction of the topography
was unlawful only the stock on hand or the ordered products could be marketed, provided this person
pays the usual royalty to the owner of the protection.
Law No. LVII of 1996 on the Prohibition of Unfair and Restrictive Market Practices protects
business secrets from disclosure to unauthorized parties and prohibits the accession to or use of such
secrets in an unfair manner.
For the purposes of the Act business secrets are:  all facts, information, solutions or data
related to the economic activity, in connection with which the entitled person has a justifiable interestin keeping them secret.
The Law is applicable when approval for the marketing of pharmaceutical or agricultural
chemical products is required and for that purpose the applicant submits data (undisclosed test)
concerning the said products.
The provisions of the Law on the protection of business secrets in the framework of
prohibition of unfair competition are consistent with Section 7 of the TRIPS Agreement on the
protection of undisclosed information.IP/Q3/HUN/1
Page 3
We would like to thank the European Communities, Japan and the United States of America
for their detailed questions concerning the Hungarian laws and regulations under review.  We
answered the questions immediately and the answer s were submitted to the Secretariat in the time-
limit prescribed.
Should there be any further questions concerning the Hungarian laws and regulations under
review, we are ready to give the requested information.
II. REPLY TO THE GENERAL QUESTION ON PRIORITY RIGHTS3
Does your country recognize a right of priority on the basis of an earlier patent
application filed in any other WTO Member by a national of a WTO Member?
In compliance with the obligations under the TRIPS Agreement, Hungary is ready to
recognize priority rights based on a first filing of a trademark, industrial design and patent application
in another WTO Member, irrespective of whether that other WTO Member is a member of the Paris
Convention.
III. REPLIES TO QUESTIONS POSED BY THE EUROPEAN COMMUNITIES AND
THEIR MEMBER STATES
1. Section 19 of Act XXXIII of 1995 on the Protection of Inventions by Patents (the
"Patents Act") provides, inter alia , the following exceptions to a patent holder's exclusive rights:
(1) acts performed for private use or outside the sphere of economic activities and (2) acts of anexperimental purpose, connected with the subjec t matter of the patent, including experiments
and research matter necessary for licensing the distribution of pharmaceuticals.  Please explain
how these provisions are consistent with the requirements of Article 30 of the TRIPS
Agreement.
Under Article 19 (1) of Hungarian Patent Law (hereinafter: HPL) patent protection shall
afford the owner of the patent (patentee) the exclus ive right to exploit the invention.  Article 30 of the
TRIPS Agreement allows Members to provide limited exceptions to the exclusive rights conferred by
a patent, provided that such exceptions do not unreasonably conflict with a normal exploitation of the
patent and do not unreasonably prejudice the legitimate interests of the patent owner, taking account
of the legitimate interests of third parties.
The exceptions provided for in Section 19 of HPL are limited to certain acts, namely to acts
done privately or not involved in an economic activity, to acts done for experimental purposes,
including experiments and tests necessary for the registration of medicines and to use of the patent in
individual cases, for preparing a medicine.  Such acts being not involved in an economic activity or
done for experimental purposes are according to generally accepted international norms notconsidered to unreasonably conflict with the normal exploitation of the patent.  The creation of these
exceptions takes account of the legitimate interests of third parties.
Therefore the said provisions of HPL do not unreasonably prejudice the legitimate interests of
the patentee and are consistent with Article 30 of the TRIPS Agreement.
Furthermore, in this respect the Hungarian legislation is fully harmonized also with the
Luxembourg Agreement on Community Patents (CPC) which has been taken into consideration when
creating the substantive provisions of HPL with a view to the European norms.
                                                     
3At the meeting of the TRIPS Council of 27 February 1997, Members agreed to respond to this
question in the context of the present review (document IP/C/M/12, paragraph 18).IP/Q3/HUN/1
Page 4
2. Section 21 of the Patent Act provides that a patent holder is not entitled to preclude
"pre-utilization" or "continued utilization" of a patented invention.  Please explain how these
exceptions to a patent holder's exclusive rights are consistent with Article 30 of the TRIPS
Agreement.
A right of prior use will belong to any person who, in good faith, before the date of priority,
in the territory of the country and within the framework of his economic activities, had begun to makeor use the subject matter of the invention or had made serious preparations for that purpose
(HPL Article 21(1)).
A prior user shall be considered as a bona fide user until it is proved that the prior use was
based on the inventive activity that led to the patented product (HPL Article 21(2)).
Patent protection shall have no effect against a prior user in relation to the extent of making,
using or preparation existing at the priority date (HPL Article 21(3)).
The right of prior use may only be transferred together with an entitled economic organization
or with that part of the economic organization in which such making, using or preparation has taken
place (HPL Article 21(3)).
A right of continued use shall belong to any pe rson who, in the period between a declaration
of lapse of patent protection and restoration thereof, in the territory of the country and within the
framework of his economic activities, has started to make or use the subject matter of the invention orhas made serious preparations for that purpose.  The provisions (concerning the rules of prior use) of
paragraph (3) shall apply mutatis mutandis  to the right of continued use (HPL Article 21(4)).
The above rules of HPL do not unreasonably conflict with a normal exploitation of the patent
and do not unreasonably prejudice the legitimate interests of the patent owner, because the patent
protection shall have no effect against a prior user or a continued user only in relation to the extent of
making, using or preparation existing at a certain date.  The right of prior or continued use is therefore
limited, and is supposed never to achieve a commercial scale.  It is also limited as far as it is not freelytransferable.
Nevertheless, the provisions of the Patent Law in question take account of the legitimate
interests of prior and continued users and create a fair balance between the interests protected by thefirst to invent system on the one hand and by the first to file system, on the other hand.  Consequently
these provisions are in full consistency with Article 30 of the TRIPS Agreement.
Furthermore, these provisions are also in compliance with Article 38 of CPC as well as with a
decision on the prior use contained in Part V of the Rules of Implementation concerning Part VIII of
that Agreement (Annex I, Resolution).
[Follow-up question from the EC]
Could the Government of Hungary explain who has the burden of proof in establishing
that a prior use was based on the inventive activity that led to the patented product ?
According to Article 21(2) of the Hungarian Patent Law a prior user shall be considered a
bona fide  user until it is proved that the prior use was based on the inventive activity that led to the
patented product.  Therefore the patentee has the burden of proof in establishing that the prior user
had begun to make or use the subject matter of the invention or had made serious preparations for thatIP/Q3/HUN/1
Page 5
purpose in bad faith i.e. based on the inventive activity, because the prior user is deemed to be a bona
fide user until the contrary is proved.
3. Under Sections 31 to 33 of the Patent Act, an applicant for a compulsory licence must
demonstrate that the patent owner was unwilling to authorize use of the patent despite the
existence of "appropriate conditions".  The law does not specify that the potential licensee must
offer reasonable commercial terms and conditions for the right to use the patent.  It also doesnot specify that a compulsory licence must be ex clusive and does not limit the scope of such a
licence to supplying the Hungarian market.  Given  the absence of express provisions on these
points, please explain how Sections 31 to 33 of the Patent Act are consistent with the
requirements of Article 31 of the TRIPS Agreement.
The provision of the HPL according to which an applicant for a compulsory licence has to
prove before the court that the requirements for a compulsory licence have been complied with and
that the patentee was unwilling to grant a licence under appropriate conditions, has in our view thesame meaning as the wording or Article 31 of the TRIPS Agreement, where "reasonable commercial
terms" are required as one of the conditions laid down for granting a compulsory licence.
The non-exclusive nature of the compulsory licence follows from the other relevant
provisions of the HPL.  More precisely, since the compulsory licence is a licence granted by the court
without the authorization of the patentee, the cogent rule of Article 28(4) of the HPL is applicable insuch a case.
According to the said Article a right of exploitation shall be exclusive only if expressly
stipulated by contract.
The right of exploitation is not based on a "contract" in case of a compulsory licence granted
by the court.  Furthermore, the court has to establish the scope and duration of a compulsory licencetaking into account the purpose of exploitation authorized by it (Article 33(2)).
The compulsory licence granted by the Hungarian court shall extend to the use of the patent
to supply the domestic market, because under Article 31 of the HPL it is a precondition for a
compulsory licence that the domestic demand is not satisfied by the patentee.
The provision of the Patent Law is in full compliance with the relevant provision of the
TRIPS Agreement requiring that such use shall be authorized predominantly for the supply of the
domestic market.
[Follow-up questions from the EC]
Could the Government of Hungary explain how the terms "reasonable economic terms"
as provided for in Article 31 of the TRIPS  Ag reement are taken into account in the law and/or
in the case-law?
Does the Government of Hungary have the intention to amend its law to make it
absolutely clear that all conditions of Arti cle 31 of the TRIPS Agreement are fulfilled?
Under Article 33 of the Hungarian Paten Law an applicant for a compulsory licence is
required to prove that the requirements for a com pulsory licence have been complied with and further
that the patentee was unwilling to grant a voluntary licence to exploit the patent under appropriate
conditions within a reasonable period of time and the applicant is able to exploit the invention to theIP/Q3/HUN/1
Page 6
required extent.  The applicant for a compulsory licence has the burden of proof in that question if he
made an offer under appropriate conditions to the patentee.
In the civil procedure the court has to decide whether an offer was "appropriate" or
"reasonable" on the basis of the general licensing conditions in the technical field of the patented
invention, taking into account all relevant circumstances of the case.  In this respect the spirit and
therefore the application of the Hungarian Patent law are in line with Article 31(b) of the TRIPSAgreement.
The Government of Hungary restates that the wording of Article 33 of the Hungarian Patent
law has the same meaning as the expression "reasonable commercial terms" used by the TRIPS
Agreement.
The Hungarian Patent Law is fully consistent with the TRIPS Agreement and therefore the
Government of Hungary does not intend to amend the law.
4. For applications for protection which were pending on the date of application of the
Agreement, how do your authorities comply with Article 70.7 of the TRIPS Agreement which
allows the amendment of the applications to claim enhanced protection?
In Hungary the Law No. II of 1969 was am ended by Law No. VII of 1994.  By this
amendment the protection of inventions previously excluded from protection by the Law - namely the
protection of chemical products per se  - has become possible.  The said amendment also contained
provisions on claiming product protection in pending patent applications and detailed rules of the
applicable procedure.  Accordingly, enhanced protection was available before the entry into force of
the TRIPS Agreement.
5. Section 7(5) of Act XXXIX of 1991 on the Protection of the Topographies of Micro-
electronic Semiconductor Products (the "PTMSP Act") allows for the disposition of stock onhand of an unlawfully reproduced integrated circui t, provided that the right holder receives the
"Customary fee of utilization" for such disposit ion after adequate notice from the right holder.
Please explain how this provision complies with Article 37 of the TRIPS Agreement, which
requires that in such circumstances the right ho lder should receive "a reasonable royalty such
as would be payable under a freely negotiated licence".
The relevant provision of Hungarian Law reads as follows:
"Exploitation shall not be considered as unlawful if a person imports for commercial
purposes or markets semiconductor products incorporating a topography, of products
incorporating the same, without knowing or  having reason to believe that these
products contain an unlawfully reproduced topography.  From the date this personknows or has reason to know that the reproduction of the topography was unlawful,
he may put on the market only the stock on hand or ordered, against the usual royalty
payable to the owner of the protection."
The above provision of the law is in full compliance with the relevant Article 37 of the TRIPS
Agreement, where the payment of a "reasonable roya lty" is obligatory in case of such use.  We
assume that the term usual royalty, referring to a royalty usual under the current market situation, and
the term "reasonable royalty" have the same meaning.IP/Q3/HUN/1
Page 7
6. Chapter II of the Act LVII of 1996 on the Prohibition of Unfair and Restrictive Market
Practices (the "Unfair Practices Act") protects undisclosed information related to the economic
activity, provided that the person seeking protec tion has a "justifiable interest" in keeping the
information secret.  Please explain how this provision is consistent with Article 39 of the TRIPS
Agreement, which does not condition the protection of undisclosed information on the existence
of a "justifiable interest".
Under Article 4(3)(a) of Act No. LVII of 1996 on the Prohibition of Unfair and Restrictive
Market Practices, for the purpose of that Act "business secrets are all facts, information, solutions or
data related to the economic activity, in connection with which the entitled person has a justifiable
interest in keeping them secret, and in the interest of keeping the above secret, the entitled person has
taken the required measures".
By this definition all data qualifying as "business secrets" are related to the economic activity
of the person who possesses them.
Therefore they have a "commercial value" according to Article 39.2 of the TRIPS Agreement.
By our interpretation, where an information has "commercial value" the entitled person has a
justifiable interest in keeping it secret.
Therefore the provision of the Hungarian Law is consistent with Article 39.2 of the TRIPS
Agreement.
7. Please explain how Hungary ensures protecti on of undisclosed information submitted to
the government as a condition of marketing approval for pharmaceutical or agricultural
chemical products as required by Article 39.3 of the TRIPS Agreement.
The Hungarian authorities competent for the market approval for pharmaceutical or
agricultural chemical products are obliged to protect the information submitted to them as businesssecrets to which the provisions of the Law referred to under question 6 above apply.
[Follow-up questions from the EC]
Could the Government of Hungary indicate the duration of protection of undisclosed
information submitted as a condition of marketing approval for pharmaceutical or agricultural
chemicals provided for by the Hungarian law?
Article 39.3 of the TRIPS Agreement does not contain any obligation as to the duration of
protection of submitted test or other data.  According to the practice of the competent authority, the
National Institute of Pharmacy, such data and test cannot be disclosed without express consent of the
applicant for marketing approval.
IV. REPLIES TO QUESTIONS POSED BY JAPAN
1. In your country, are the following subject matters protectable by patent:  (1) plants and
animals, and (2) plant and animal varieties?
Under Law on the Protection of Inventions by Patents No. XXXIII of 1995 (HPL) plants and
animals are protectable provided that they meet the general requirements of patentability (see
Articles 1-5 of HPL).IP/Q3/HUN/1
Page 8
Under Articles 105 to 114 of HPL plant varieties and animal breeds are protectable, provided
that they meet the special requirements laid down by the law.
2. In your country, is the act of offering for sale included in the exclusive rights of patent?
According to the Article 19(2)(a) of HPL on the basis of the exclusive right of exploitation,
the patentee shall be entitled to prevent any person not having his consent, from making, using,
putting on the market, offering for sale a product which is the subject matter of the invention.
The offering for sale of a product obtained directly by a patented process is also prohibited by
Article 19(2)(c) of HPL.
3. In your country, what kinds of acts are rec ognized as exceptions to the exclusive rights
conferred by a patent right?
Article 19(6) of HPL declares that the exclusive right of exploitation shall not extend to:
(a) acts done privately or not involved in an economic activity;
(b) acts done for experimental purposes rela ting to the subject matter of the invention,
including experiments and tests necessary for the registration of medicines;
(c) preparation for individual cases, in a pharmacy, of a medicine in accordance with a
medical prescription, or acts concerning the medicine so prepared.
Furthermore, the law provides for certain limitations of patent protection, such as the right of
prior use and the right of continued use under Article 21 of HPL.  According to another provision,subject to reciprocity the patent protection shall have no effect with respect to means of
communication and transport which are in transit in the country or to foreign goods which are not
intended to be put on the market in the country (Article 21(5) of HPL).
4. In your country, in which case is use wi thout the authorization of the right holder
permitted, including use by the government or by third parties authorized by the government?
The use of a patented invention without the authorization of the patentee is permitted:
(a) by virtue of a right of prior use or right of continued use, subject to the conditions laid
down in Article 21(1-4) of HPL;  or
(b) in case of a compulsory licence granted according to Articles 31, 32, 33 of HPL.
5. In your country, how is the obligation under Articles 34.1 and 34.2 of the TRIPS
Agreement regarding the shift of the burden of proof in civil proceedings for patent
infringement related to a process patent implemented?
In the absence of a proof to the contrary, a product shall be deemed to have been obtained by
a patented process if the product is new and a substantial likelihood exists that the product was made
by the patented process and the patentee has been unable, despite reasonable efforts, to determine theprocess actually used.  A substantial likelihood that the product was made by the patented process
shall exist, in particular, when the patented proce ss is the only known process (Article 19(7) of HPL).
This provision is in compliance with Articles 34.1 and 34.2 of the TRIPS Agreement.IP/Q3/HUN/1
Page 9
V. REPLIES TO QUESTIONS POSED BY THE UNITED STATES
1. Article 27 of Hungary's Law No. XXXIII on the Protection of Inventions by Patents
makes null and void any patent licensing agreement that restricts economic competition or has apurpose incompatible with the social functions of patent rights.  Please explain how this Section
is interpreted in Hungary, giving examples if possible, and explain how such provisions complywith the requirement of Article 30 of the TR IPS Agreement, which specifies that limited
exceptions to the exclusive rights conferred by a patent do not unreasonably conflict with a
normal exploitation of the patent and do not unreasonably prejudice the legitimate interests of
the patent owner.
The provisions of Article 27(2) of the Law prohibit the restriction of economic competition
by agreement of exploitation.  Therefore, it is in full compliance with the relevant provisions of the
TRIPS Agreement, according to which nothing in that Agreement shall prevent Members from
specifying in their national legislation licensing practices or conditions that may in particular cases
constitute an abuse of intellectual property rights having an adverse effect on competition in therelevant market (Article 40(2)).
The prohibition of concluding exploitation contracts that restrict economic competition shall
have no effect to the exclusive rights of the patentee;  in this regard this is not an exception to the
patentee's exclusive rights and it does not unreasonably prejudice the legitimate interests of the patentowner.  The exclusive rights can namely be exercised only in compliance with the provisions of other
relevant laws, especially with the Law on the Prohibition of Unfair and Restrictive Market Practices.
Under Article 27(2) it is also prohibited to conclude an agreement of exploitation having a
purpose incompatible with the social functions of the rights conferred by a patent.
This is a special provision in the law based on the general and basic principles laid down by
the Civil Code, already notified to the TRIPS Council.
Section 5 of the Civil Code prohibits abuse of rights.  According to Section 5(2):
"Exercise of a right shall qualify as abuse of rights if it is directed to an aim
incompatible with the social purpose of the right, especially if it leads to damage to
the national economy, to harassment of persons, injury of their rights and lawful
interest, or to the acquisition of unjust advantages".
In this context the prohibition of abuse of rights on the basis of contracts of exploitation will
never mean limitation of the rights of the patentee, because the same basic principle is applicable to
all contracts in Hungary.
[Follow-up questions from the US]
Please provide examples of the range of circumstances under which a patentee has been
or could be found to exercise its rights in a manner that improperly restricts economiccompetition in light of the Law on Unfair an d Restrictive Market Practices.  Under what
circumstances will an exclusive licence to expl oit in Hungary be inconsistent with these
competition rules?
The provisions of the Hungarian Law on Unfair and Restrictive Market Practices as well as
their implementation in patent licence practice can be explained by reference to the Association
Agreement between the Republic of Hungary and th e European Community ("European Agreement").
According to Article 62 of the European Agreemen t "the following are incompatible with the proper
functioning of the Agreement, in so far as th ey may affect trade between the Community and
Hungary:IP/Q3/HUN/1
Page 10
(i) all agreement between undertakings, decisions by associations of undertakings and
concerted practices between undertakings which have as their object or effect the
prevention, restriction or distortion of competition;
(ii) abuse by one or more undertakings of a dominant position in the territories of the
Community or of Hungary as a whole or in a substantial part thereof;..."
Under Article 11 of the Hungarian Law on Unfair and Restrictive Market Practices
agreements between undertakings and coordinated practices, as well as the decisions of the social
organizations, public bodies of undertakings, unions and other similar organizations of undertakings,
unions which  may display or do display such an effect, are prohibited.
Both the above provision and the non-exhaustive list of the prohibited market practices
included in the said Article are in compliance with Article 85(1) of the Rome Treaty.  Until a
Government decree establishes the exemptions in compliance with the Commission Regulation (EC)
No. 240/94 of 31 January 1996 on the application of Article 85(3) of the Treaty to certain categoriesof technology transfer agreements, the said Regulation shall be applied in Hungarian practice.  The
legal basis to this is to be found in the Decree of the Government 230/1996 (XII. 26) on the
implementation of Article 62(1)(i)(ii) of the European Agreement.  Article 6 of this decree on the
"Block exemptions" stipulates that "when implementing Article 62 of the European Agreement
according to Articles 2 and 3 of the present Decree,  the competent authorities shall completely apply
the principle included in the valid Community Regulations on block exemptions.  The Office of
Economic Competition shall be informed of any procedure of the Community relating to the
acceptance, repeal or amendment of block exemptions".
Taking into account the above, the sanction in Article 27(2) of the Patent law concerning the
nullity of clauses conflicting with the prohibition of restrictive economic competition has to beimplemented with a view to the cited Article of the Hungarian Law on Unfair and Restrictive Market
Practices and by applying the principles laid down in the cited Commission Regulation.
Please provide examples of the range of circumstances under which a patentee has been
or could be found to exercise its rights in a manner inconsistent with social functions under
Article 27(2) of Hungary's Patent Law.
The provision of Article 27(2) of the patent Law is reflecting a general principle of the Civil
Code.  Article 2(2) of the Civil Code reads as follows:
"The law ensures the free exercise of rights due to persons in accordance with the
social purpose of these rights."
It follows clearly from this provision that rights cannot be exercised arbitrarily.  The said
principle appears also among the provisions relating to contracts.  According to Article 200(2) "a
contract violating a legal rule or conclude d by evading a legal rule shall be null and void, unless the
legal rule stipulates another legal consequence.  A contract shall also be null and void if it is evidently
contra  bonos mores ".
Article 27(2) of the Hungary Patent Law includes these principles to make clear that these
shall be relevant with regard to licence agreem ents.  Furthermore, the leading principle of the
European court of Justice, according to which the industrial property rights shall be exercised in
compliance with their social functions, with a view to the free movement of goods, have been taken
into account when drafting the Hungarian law.  There is no legal practice in this regard.  Should,
however, a concrete case arise, it would be decided in compliance with the above principles.IP/Q3/HUN/1
Page 11
2. Please explain whether a patentee can satisfy the obligation to "exploit" the invention in
Hungary as used in Article 31 of Hungary's Law on the Protection of Inventions by Patents
through importation of the patented product.  If not, please explain how this provision complies
with the requirement of Article 27.1 of the TRIPS Agreement, which precludes discrimination
in the enjoyment of patent rights with regard to local manufacture or importation of the
patented invention.
The obligation of exploitation as laid down by Article 31 can be satisfied by importing the
patented product, since the exclusive rights conferred by a patent, as defined in Article 19(2)(a) and
(c) expressly include the importing of products.
Article 31 does not leave any doubt that the patentee can freely decide how he will exploit the
invention, since the import is apt to satisfy the domestic demand.
Therefore the said provisions of Hungarian Law are consistent with Article 27.1 of the TRIPS
Agreement.
[Follow-up question from the US]
Are there any circumstances under which importation would not satisfy market demand
pursuant to Article 31 of Hungary's Patent Law?
The patentee can satisfy the obligation laid down by Article 31 of the HPL by importing the
patented product.  The patentee should undertake at least serious preparations for importation of thesaid product in order to satisfy the domestic demand.
3. Article 33(4) of Hungary's Law on the Protecti on of Inventions by Patents states that the
holder of a compulsory licence has the same righ ts as the patentee in regard to the maintenance
of the patent and the exercise of the rights deriving from protection.  Please explain how this
provision is applied in practice, providing examples where possible.
There is no legal practice on the application of this provision.
4. Please indicate how many compulsory licen ces on a yearly basis have been granted in
Hungary since 1 January 1993?
No compulsory licence has been granted since 1 January 1993.
5. Article 37 of Hungary's Law on the Protection of Inventions by Patents provides for a
ruling on lack of infringement if a person believes that patent infringement proceedings may be
instituted against him.  It is not clear from th e law whether the ruling made by the Patent Office
under Article 44(d), 46, 47, 82 and 83 would be made after a proceeding in which the patentee
would have an opportunity to participate.  Please describe in detail how this article is
implemented.
Under Article 83 of the Patent Law the Hungarian Patent Office shall invite the patentee to
submit comments on the request for a decision on lack of infringement.  Following the written
preparatory work, it shall decide at a hearing whether the request shall be admitted or refused.
The general rule under Article 47 of the Patent Law on the establishment of facts even
strengthens the position of the patentee by prescrib ing that the decisions of the Patent Office may only
be based on facts and evidence on which the parties concerned have had an opportunity to present
their comments.IP/Q3/HUN/1
Page 12
The general rules of administrative procedures also require the notification of the client of the
hearing.
6. Please describe how the relevant Hungarian authorities protect the test data submitted
with applications for marketing approval of pha rmaceutical and agricultural chemical products
against unfair commercial use in accordance wi th Article 39.3 of the TRIPS Agreement,
including protection against the direct or indirect reliance on such data to support later-filedapplications.
The relevant Hungarian authorities are obliged under the general rules of administrative
procedure not to reveal any information on the test data submitted to them in any form to any person
who is not a party of the procedure of applicants for marketing approval of pharmaceutical and
agricultural chemical products.  In compliance with this obligation the Agreement on Intellectual
Property between the Government of the Republic of Hungary and the Government of the
United Sates of America (signed on 24 September 1993) contains in Article VI relating to ActsContrary to Honest Commercial Practices and Prot ection of Trade Secrets the following obligation:
"Government use
4. Parties, when requiring, as a condition of approving the marketing of pharmaceutical
or of agricultural chemical products which utilize chemical entities, the submission of
undisclosed test or other data, the origination of which involves a considerable effort, shallprotect such data against unfair commercial use.  In addition, Parties shall protect such data
against disclosure, except where necessary to protect the public or unless steps are taken to
ensure that the data are protected against unfair commercial use."
As to the direct or indirect reliance on such data to support later-filed applications, reference
is made to the Protocol of the above Agreement;
4. Regulatory Approval of Products
"The Parties agree that the following procedure is in conformity with the provisions of
paragraph 4 of Article VI of this Agreement:
When applying for an application for marketing approval of a generic product, the applicant 
(the "second" submitter) can prove the equivalence of its own product with the original one,
on the basis of a sample of the commercially available original product, while referring to the
original documentation if needed.  When deciding on the approval of the "second"
application, the competent authority bases its decision on the examination of the
documentation attached to this application.
During the procedure the authority in question does not reveal any information in any form 
on the documentation of the original product."