BOSCH vHAUPTZOLLAMT HILDESHEIM
proceedings are, sofarastheparties tothemain action areconcerned, astep
inthe action pending before the Finanzgericht Hamburg, thedecision on
costs isamatter forthat court.
On those grounds,
THE COURT (First Chamber)
inanswer tothe question referred toitbythe Finanzgericht Hamburg by
order of5November 1976 hereby rules.
Article 3(1)(a)ofRegulation No 803/68 oftheCouncil istobe
interpreted asmeaning that thenormal price ofgoods includes
the value ofapatented process where the protected process is
inseparably embodied inand constitutes the only economically
viable useofthe goods.
Donner Mertens deWilmars Bosco
Delivered inopen court inLuxembourg on14July 1977.
A.Van Houtte
RegistrarA.M.Donner
President ofthe First Chamber
OPINION OF MR ADVOCATE-GENERAL WARNER
DELIVERED ON 22JUNE 1977
MyLords,
Inthis case the Court isonce again
concerned with the interpretation of
Council Regulation (EEC) No803/68 on
the valuation ofgoods for customs
purposes. The actual question that calls
for decision ishowever novel. Itisastothe inclusion, inthe value ofgoods for
customs purposes, ofthe value ofthe
right touse apatent inrespect ofthem.
The case comes totheCourt byway ofa
reference forapreliminary ruling bythe
Finanzgericht ofHamburg. The plaintiff
before that Court is Robert Bosch
1483

OPINION OF MR WARNER —CASE 1/77
GmbH, which Ishall call 'Bosch'. The
defendant is the Hauptzollamt of
Hildesheim.
The facts are these.
An American company, Globe-Union
Inc., ofMilwaukee, which Ishall call
'Globe', isthepatentee ofaprocess for
the manufacture of electric storage
battery cell components. The process is
one whereby (to quote from the
description ofitgiven inparagraph
1.1.(a)ofanAgreement towhich Ishall
refer more particularly in amoment)
'assemblies ofcell plates and spacers are
clamped in assembled relationship,
portions thereof are fluxed orcleaned
while sosupported, and molten metal is
formed in amold and solidified
to rigidly support and electrically
interconnect selected ones ofsaid plates.
The process iscalled the'COS process',
the letters 'COS' standing for'cast-on
strap'. Globe isalso themanufacturer and
the patentee ofamachine which is
described (in paragraph 1.1.(b) ofthat
Agreement) ashaving been 'designed for
theexpress purpose ofthepractice ofthe
COS Process'. IntheFederal Republic of
Germany, there aretwo patents forthe
machine and one forthe process. We
have not been told what patents there
may beforthem inother countries.
The Agreement that Ihave mentioned
was made on 20May 1965 between
Bosch and G-U Overseas Ltd., aBritish
subsidiary ofGlobe, which Ishall call
'G-U O'.The Agreement recited, among
other things, that G-U Owas for the
purposes ofthe Agreement sufficiently
entitled tothe technical information and
patent rights ofGlobe with respect tothe
COS process and machine, and that
Bosch desired toacquire the machine
and the right commercially topractise
the COS process, and touse therefor
Globe's technical information andpatent
rights. (The machine was referred toin
theAgreement as'COS Equipment').
Paragraph 2.1oftheAgreement provided
that G-UO should, within 90 days,furnish toBosch certain technical and
other information toenable Bosch to
manufacture batteries using the COS
process and machine. Itcontinued:
'G-U Owill furthermore procure that
Globe will furnish toBosch, upon its
request, one ortwo COS Equipment with
such features and ataprice and on
conditions tobeagreed upon between
G-U O,Globe and Bosch inadvance'. I
donot pause toconsider whether the
obligation thus imposed onG-U Owas
legally enforceable, although itappears to
have been (byvirtue ofparagraph 9.3of
theAgreement) governed byEnglish law
and thegeneral principle ofEnglish law
isthat an agreement tomake an
agreement isunenforceable.
The other main relevant provisions of
the Agreement may besummarized as
follows.
Under paragraph 2.2 Bosch was tobe
provided byG-U Oand Globe with
engineering and consultancy services,
including inparticular visits byGlobe
experts tothe Bosch works 'with respect
toany detailed engineering forthefirst
COS Equipment and the installation
thereof. Those services were, byvirtue of
paragraph 5.7, tobecharged foronthe
basis ofthe actual expense incurred by
G-U OorGlobe intheir provision.
Under paragraph 2.3G-U Owas tomake
available toBosch throughout the term
oftheAgreement such ofG-U O's and
Globe's technical information, whether
patented orunpatented, aswould beof
assistance toBosch's operations under
theAgreement; and under paragraph 2.4
Bosch was given theright toinspect, at
any time during thetwo years following
thedate oftheAgreement, Globe's 'COS
Equipment' atany'suitable' Globe plant.
By paragraph 4.1 G-UO granted to
Bosch anon-transferable, non-exclusive
licence, expressed tobe'under Globe's
and G-U OsTechnical Information and
Patent Rights', (i)tomanufacture, useand
sell in all countries of Continental
Europe batteries embodying, utilizing or
resulting directly from the technical
1484

BOSCH vHAUPTZOLLAMT HILDESHEIM
information made available to Bosch
under theAgreement orany feature or
features covered bythe patent rights in
respect ofthe COS process ormachine
and (ii) touse and sell batteries so
manufactured in Great Britain and
Ireland, and inallcountries ofAfrica and
Asia, with certain exceptions. Byvarious
provisions of the Agreement (in
particular paragraphs 2.5, 3.2 and 4.3)
Bosch undertook countervailing obliga­
tions asto secrecy and asto the
disclosure toG-U Oofimprovements,
whether patented ornot, found byBosch
concerning the useofthe COS machine
orprocess. Byclause 5.1 Bosch was to
pay to G-U O an initial sum of
US $ 10 000 within one month ofthe
date oftheAgreement. Byclause 5.2, as
amended byasupplemental Agreement
made on 12December 1968, Bosch was,
forthefirst five years ofthelifeofthe
Agreement, topay toG-U Oaroyalty for
each battery sold under the licence, the
rates being US$1-15 for each 6-volt
battery and US$2-30 for each 12-volt
battery, with aminimum annual royalty
of US $ 7 000. Under paragraph 5-3,
Bosch was, from the beginning ofthe
sixth year, topay royalties athalf those
rates and then only forbatteries inthe
manufacture ofwhich anyofthelicensed
patent rights had been used.
The Finanzgericht has found asafact
that the technical information to be
given byG-U OtoBosch under the
Agreement included data astothe
preparation of the flux, as to the
temperature ofthe lead baths and asto
thecomposition ofthe lead alloys tobe
used intheCOS process.
On 4June 1974 Bosch applied tothe
defendant for customs clearance of a
COS machine supplied byGlobe. The
machine was entered under Heading
85.11 BoftheCommon Customs Tariff,
which comprises 'Electric welding,
brazing and soldering machines and
apparatus and similar electric machines
and apparatus for cutting, for any
material'. The (conventional) rate ofdutyon such goods under the CCT was
7-5%. The defendant provisionally
valued the machine atDM 271 107-25
and, onthat basis, assessed the customs
duty atDM 20333, which sum Bosch
paid. The defendant also assessed Bosch
to German 'import turnover tax'
(Einfuhrumsatzsteuer) ofDM 32058-40,
but with that this Court isnot concerned.
The valuation ofDM 271 107-25 was, asI
understand it,made upofasum ofDM
228 476-25 representing theprice paid by
Bosch for the machine (US$84 254-95)
and asum ofDM 42631 described asa
supplement in respect of royalties
payable byBosch under theAgreement
of20May 1965 (asamended).
The valuation was challenged byBosch. I
need not take upYour Lordships time
with a detailed account of the
administrative processes that followed.
Suffice ittosaythat they culminated ina
decision (Einspruchentscheidung) ofthe
defendant dated 4March 1975, under
which thesupplement ofDM 42631 was
reduced toDM 27099-43 and Bosch
was thereby rendered entitled to a
reimbursement ofDM 1123-40.
Against that decision Bosch now appeals
totheFinanzgericht, claiming that there
should benosupplement atalland, in
the alternative, that, ifthere should be
one, thedefendant's computation ofitis
still excessive.
Itappears that, inthe argument before
theFinanzgericht, animportant part has
been played by adecision ofthe
Bundesfinanzhof dated 7August 1962
(Aktenzeichen VII 89/60 U, Bundes-
steuerblatt III 1962, p. 549). The
Bundesfinanzhof there held that, if,in
connexion with thepurchase and import
of amachine manufactured under a
patent, the right toapatented process
was also assigned oralicence tousethat
right was granted, the consideration for
such assignment orgrant formed part of
the value ofthe machine for customs
purposes, atany rate ifthe machine,
owing tothespecial characteristics ofits
1485

OPINION OFMR WARNER —CASE 1/77
construction and tothe mode of its
operation, embodied the patented
process sothat aperson entitled touse
themachine could, byoperating it,also
operate the patented process without
taking anyfurther step inorder todoso.
That decision ofthe Bundesfinanzhof
was however given ininterpretation of
theGerman Zolltarifgesetz of16August
1951, astatute which antedated notonly
Regulation No803/68 buteven theentry
into force ofthe Brussels Convention on
the Valuation of Goods for Customs
Purposes. It is acommon feature
ofthe Zolltarifgesetz, ofthe Brussels
Convention and of Regulation No
803/68 that they allbased orbase the
value ofgoods forcustoms purposes on
theconcept oftheir 'normal price'. But
the particular provision of the
Zolltarifgesetz that was inpoint inthe
case before the Bundesfinanzhof was
paragraph 6(4), the wording ofwhich
was wider and less precise than that of
the corresponding provisions ofthe
Brussels Convention and ofRegulation
No 803/68. Paragraph 6(4)provided, so
far asmaterial: The normal price shall
include theright tousethepatent ...in
respect ofthe goods ifthe imported
goods aretheobject ofany such right'.
('Im Normalpreis isteinbegriffen das
Recht zur Benutzung des Patents ...an
den Waren, wenn die eingeführten
Waren Gegenstand eines solchen
Rechtes sind). Itisalso tobeobserved
that the reasoning of the
Bundesfinanzhof was in large part
founded onearlier authorities relating to
German customs legislation and tothe
German lawofpatents.
Sofar asGerman law isconcerned the
Zolltarifgesetz appears to have been
overridden byaStatute of17December
1951 providing for three Brussels
Conventions on customs matters,
including that on the Valuation of
Goods, to become applicable in
Germany: the'Gesetz über internationale
Vereinbarungen auf dem Gebiete des
Zollwesens'.AsYour Lordships know, the Brussels
Conventions bind allthe Member States
oftheCommunity, and alarge number
ofother States besides. The Convention
on the Valuation ofGoods contains in
Annex Ithe'Definition ofValue' which,
byArticle IIofthe Convention, each
Contracting Party undertook tointroduce
into itsdomestic law and, inAnnex II,
the 'Interpretative Notes' which, by
Article HI, each Contracting Party
undertook tointroduce into itsdomestic
law and, inAnnex II,the'Interpretative
Notes' which, by Article HI, each
Contracting Party undertook toconform
toinapplying theDefinition ofValue. I
need not read Annex I,because itsterms
arereflected inthose ofRegulation No
803/68, towhich Ishall come. Ineed
only recall that theDefinition ofValue
there setoutprescribes, asthemeasure of
thevalue ofimported goods forcustoms
purposes, theprice that they would fetch
onasale intheopen market between a
buyer and aseller independent ofeach
other, and that itthen refines onthat
concept, which itlabels 'the normal
price'. Imust, however, read part ofone
ofthe Interpretative Notes inAnnex II,
namely Note 5.This isasfollows:
The object oftheDefinition ofValue is
tomake itpossible inall cases to
calculate theduties payable onthe basis
oftheprice atwhich imported goods are
freely available toanybuyer onasale in
the open market atthe port orplace
ofintroduction into the country of
importation. Itisaconcept forgeneral
useand isapplicable whether ornotthe
goods are infact imported under a
contract ofsale, and whatever the terms
ofthat contract.
But the application ofthe Definition
implies anenquiry into current prices at
thetime ofvaluation. Inpractice, when
imported goods arethesubject ofabona
fide sale, the price paid orpayable on
that sale cangenerally beconsidered asa
valid indication ofthe normal price
mentioned intheDefinition. This being
so, the price paid or payable can
1486

BOSCH vHAUPTZOLLAMT HILDESHEIM
reasonably be used as abasis for
valuation, and Customs Administrations
are recommended, toaccept itasthe
value ofthegoods inquestion, subject:
(a)to proper safeguards aimed at
preventing evasion ofduty bymeans
offictitious orcolourable contracts or
prices; and
(b)tosuch adjustments ofthat price as
may be considered necessary on
account ofcircumstances ofthe sale
which differ from those envisaged in
the Definition ofValue.'
Article IVofthe Convention provides
that each Contracting Party may adapt
thetext oftheDefinition ofValue (a)by
inserting therein such provisions ofthe
Interpretative Notes asitmay consider
necessary and (b),notonly bygiving the
text such legal form asmay beessential
torender itoperative initsdomestic law,
but also 'by adding complementary
provisions clarifying the purport ofthe
Definition'.
As the preamble toRegulation No
803/68 (OJ L148/6 of28. 6.1968)
makes abundantly clear, the object of
that Regulation istoadapt theDefinition
ofValue and the Interpretative Notes to
the needs ofthe customs union created
bythe EEC Treaty, soastoensure the
uniform application ofthe Common
Customs Tariff throughout the Member
States.
Articles 1to8oftheRegulation inpart
reproduce and inpart complement the
Definition ofValue.
Article 1(1)provides:
'For the purposes ofapplying the
Common Customs Tariff, the value for
customs purposes ofthegoods imported
shall betaken tobethe normal price,
that istosay, theprice which they would
fetch, atthetime referred toinArticle 5
[that is,ingeneral, atthe time of
importation], on asale inthe open
market between abuyer and aseller
independent ofeach other.'Article 1(2)and Articles 2to8are
devoted torefining on the concept
defined byArticle 1(1),bylaying down
ingreat detail the terms and other
characteristics ofthe hypothetical sale
there postulated.
Thus, Article 1(2) prescribes the
assumptions tobemade astoplace of
delivery, astowhich party tothe sale is
tobear the costs, charges and expenses
incidental toitand todelivery, and asto
which istobear the burden ofinternal
duties and taxes.
Article 2(1)provides:
'Asale inthe open market between a
buyer and seller independent ofeach
other presupposes:
(a)that the price is the sole
consideration; by consideration is
meant not only thefulfilment ofa
legal orcontractual obligation, but
also any other form ofconsideration;
(b)that the price isnot influenced by
any commercial, financial orother
relationship, whether bycontract or
otherwise, between the seller orany
natural orlegal person associated in
business with him and the buyer or
any natural orlegal person associated
inbusiness with him (other than the
relationship created bythesale itself);
(c)that nopart ofthe proceeds ofany
subsequent resale, other disposal or
use ofthe goods will accrue, either
directly orindirectly, totheseller or
any natural orlegal person associated
inbusiness with him.'
Article 2(2), which was one ofthe
provisions inpoint inthe recent case
before this Court ofFirma Farbwerke
Hoechst AG vHauptzollamt Frankfurt
amMain/West (Case 82/76, not yet
reported), defines the circumstances in
which two persons aretobedeemed to
be associated in business with one
another.
Article 3,Your Lordships also remember
from that case, deals with industrial
1487

OPINION OF MR WARNER —CASE 1/77
property rights. Your Lordships will
particularly remember that itdeals
elaborately with trade marks. Incontrast
itdeals with patents succinctly, by
paragraph 1.Unfortunately there are
slight differences inthewording ofthat
provision inthe texts inthe different
official languages ofthe Community.
Those differences originate in a
discrepancy between the two authentic
texts ofthe Brussels Convention, namely
theEnglish and French texts.
The English text (ofArticle HIofAnnex
ItotheConvention) isreflected inthe
English and German texts ofArticle 3
(1).Itreads sofarasmaterial:
'When the goods tobevalued ... are
manufactured inaccordance with any
patented invention ...the normal price
shall bedetermined onthe assumption
that itincludes thevalue oftheright to
use the patent ... inrespect ofthe
goods.'
The French text, which isreflected inthe
French and Italian texts ofArticle 3(1),
reads:
'Lorsque lesmarchandises aevaluer...
sont fabriquees d'après un brevet
d'invention ...ladetermination duprix
normal se fera en considérant que
celui-ci comprend lavaleur dudroit
d'utiliser, pour lesdites marchandises, le
brevet...'
Thus, inthe English and German texts
the goods arereferred toashaving been
manufactured in accordance with the
invention, the mention ofthe patent
being adjectival, whereas inthe French
and Italian texts they are referred toas
having been manufactured inaccordance
with the patent, the mention ofthe
invention being there adjectival. The
Danish and Dutch texts ofArticle 3(1)
goeven further inthis direction: they
refer only to the patent. As Your
Lordships will see, inthecontext ofthe
present case, the English and German
texts make rather better sense than the
others.Tocomplete theoutline ofArticles 1to
8ofthe Regulation: Article 4provides
that, subject toexceptions inthe case of
goods imported insplit consignments,
The normal price shall bedetermined
ontheassumption that the sale isasale
ofthequantity tobevalued'; Article 5
defines the material time forvaluation;
Articles 6and 7contain definitions
relevant forthepurposes ofArticle 1(2);
and Article 8deals with transport costs.
Article 9etseq. ofthe Regulation give
effect totheintimation inInterpretative
Note 5ofthe Brussels Convention that,
inpractice, when imported goods arethe
subject ofabona fide sale, theprice paid
orpayable onthat sale can generally,
subject to proper safeguards and
adjustments, be taken as avalid
indication ofthe'normal price'.
Article 9provides:
1.The price paid orpayable may be
accepted asthe value for customs
purposes if:
(a)the contract ofsale isexecuted
within the period specified in
Article 10,
(b)theprice corresponds, atthetime
itisagreed upon, toprices ona
saleintheopen market between a
buyer and aseller independent of
each other, and
(c)that price isadjusted, ifnecessary,
totake account ofcircumstances
of the sale which differ from
those onwhich thenormal price
isbased.
2.Adjustments under paragraph 1(c)
may inparticular berequired with
reference to:
(a)the costs, charges and expenses
mentioned inArticle 1(2),
(b)reductions inprice granted in
favour ofsole agents or sole
concessionaires or any other
person operating incomparable
circumstances,
(c)abnormal rebates and any other
reduction from the ordinary
competitive price.'
1488

BOSCH vHAUPTZOLLAMT HILDESHEIM
(Article 10provides ineffect that, subject
toexceptions, Article 9istoapply only
where the date ofthe contract does not
precede the material time forvaluation
bymore than sixmonths).
Ineed not, Ithink, trouble Your
Lordships with any ofthe subsequent
Articles oftheRegulation. The problem
with which the Finanzgericht is
confronted inthis case iswhether, andif
sotowhat extent, the price paid by
Bosch under itscontract forthepurchase
ofthe machine (US $84 25495orDM
228 476-25) should beadjusted pursuant
toArticle 9(1)(c)oftheRegulation 'in
order totake account ofcircumstances of
the sale which differ from those on
which the normal price isbased'. The
question referred tothis Court bythe
Finanzgericht is'whether Article 3(1)of
Regulation (EEC) No 803/68 ofthe
Council ... isto be interpreted as
meaning that the normal price also
includes the value ofapatented process
embodied inanappliance within the
meaning ofthe judgment of7August
1962 ofthe Bundesfinanzhof No VII
89/60 U, Bundessteuerblatt III 1962,
p.549'.
The Finanzgericht explains initsOrder
forReference that, if,asitisinclined to
think, that question istobeanswered in
the negative, itwill accept Bosch's
contention that nosupplement istobe
added tothe price ofthe machine in
respect oftheroyalties payable byBosch
under the 1965 Agreement. This is
because, intheview oftheFinanzgericht,
nopart ofthose royalties was attributable
totheusebyBosch ofthepatents forthe
machine. Inthe light ofthe parties'
submissions, theFinanzgericht hascome
tothe conclusion that those royalties
were wholly attributable toother rights
acquired by Bosch under the 1965
Agreement, sothat the price itpaid for
the machine must be taken to have
included the consideration for the use of
the patents forthemachine. This Court
isnot of course concerned with the
question whether the Finanzgericht isright, in fact, as to that. The
Finanzgericht adds that, ifthequestion it
has referred to this Court isto be
answered intheaffirmative, itwill reduce
the supplement as assessed by the
Defendant. This is because the
Finanzgericht takes the view, on the
facts, that theCOS process isonly partly
'embodied' inthe COS machine inthe
sense of the rule laid down by
the Bundesfinanzhof. In order to
manufacture batteries according tothat
process, itisnecessary tohave, notonly
the machine and the directions for its
use, but also the further technical data
relating tothe preparation ofthe flux,
thetemperature ofthelead baths and the
composition ofthe lead alloys, none of
which are'embodied' inthe machine.
Inmyopinion, my Lords, the question
referred bythe Finanzgericht cannot be
answered by asimple 'Yes' or'No'. I
leave aside the obvious point that this
Court, whose rulings onCommunity law
have tobeapplied bythe Courts and
Tribunals ofallthe Member States, and
soapplied uniformly, would berendering
the task ofthose Courts and Tribunals
more difficult than itneed beifitwere
toformulate aruling byreference toa
Judgment ofaCourt, however eminent,
of one of the Member States. The
substantial difficulty is that the
Bundesfinanzhof' sJudgment of7August
1962 was given ininterpretation, notof
Regulation No 803/68, butofanearlier,
and differently worded, national statute,
and inthe context ofitsown national
system ofcustoms legislation and patent
law.Itwould besurprising tofind that a
rule thus established could betransposed,
without any modification, into Com­
munity law, butequally surprising tofind
that nothing akin toitexisted in
Community law.
SoIthink that this Court must approach
the interpretation of Regulation No
803/68, sofar asregards the problem
posed bythepresent case, with aproper
respect for the thinking of the
1489

OPINION OF MR WARNER —CASE 1/77
Bundesfinanzhof, but with anawareness
too that the problem isnot quite the
same as that with which the
Bundesfinanzhof was confronted. In
particular this Court cannot overlook that
the interpretation that itplaces on
Regulation No 803/68 must becapable
of practical application in all the
Member States, despite any divergences
between their respective patent laws. A
Community lawyer's natural instinct,
when faced with such arequirement, is
toresort toacomparative study ofthe
relevant laws ofthe Member States. I
have however come tothe conclusion
that, in the present instance, the
uncertainties are somany that such a
study would befruitless. Togive butone
example, itremains anopen question in
English law whether apatent for a
process isinfringed bythe sale ofa
machine that cannot beused except ina
manner infringing the patent (see per
Clauson J.inCincinnati Grinders Inc. v
B.SA. ToolsLtd. (1930) 48 R.P.C. at
p.58,Terrell ontheLaw ofPatents (12th
Ed.) §360 and Blanco White onPatents
forInventions (4th Ed.) §3-210).
Moreover, itmay bethat Regulation No
803/68 insofar asitreproduces the
Definition of Value in the Brussels
Convention (and, asIhave indicated, the
relevant words ofArticles 3(1) are
intended todoso)should beinterpreted
also inthe light ofthe laws ofthose
States which, whilst notbeing Members
of the Community, are Contracting
Parties tothe Convention. Their number
however issuch that Idonot think that
ameaningful comparative study oftheir
laws would beapractical possibility. I
suspect that theauthors, notonly ofthe
Brussels Convention, but also of
Regulation No803/68, came tothesame
conclusion and that that iswhy they
sought toframe the provisions both of
theConvention and oftheRegulation in
terms both non-technical and precise.
The task ofthis Court istointerpret
those terms and, inmyopinion, that task
will best be performed by adhering
strictly tothem. Iobserve that there isan
indication inthe Order for Referencethat the Finanzgericht takes the same
view.
Itwas conceded inargument onbehalf
ofBosch that there was one case where a
patent for aprocess could, for the
purposes ofArticle 3(1)ofRegulation
No803/68, beassimilated toapatent for
amachine. This was where the machine
was so constructed that its use
automatically entailed thecarrying outof
thepatented process and where there was
technically noway ofcarrying out that
process otherwise than byusing the
machine. Bosch distinguished that case
from other cases where, forinstance, the
process could becarried out otherwise
than by using the machine, orthe
machine could beused otherwise than
forcarrying outtheprocess, orwhere the
useofthemachine wasonly part ofthe
process, orwhere themachine could not
beused tocarry outthe process without
other knowledge covered byapatent for
theprocess. The present case, said Bosch,
was ofthe last kind, since the machine
here inquestion could noteffectively be
used forthe process without knowledge
ofthe data astothe preparation ofthe
flux, thecomposition ofthe lead alloys
and the temperature tolerances within
which thework must beperformed.
Inmy opinion that concession was
rightly made. As was pointed out by
Bosch, where the carrying out of a
process involves nothing more and
nothing less than the useofaparticular
machine, no genuine commercial
purpose isserved bytaking out apatent
forthe process inaddition tothepatent
for the machine. Insuch acase, the
invention of the machine and the
invention oftheprocess areone and the
same invention. Apatent for that
invention cannot beexcluded from the
scope ofArticle 3(1)simply because itis
inform apatent for aprocess. The
invention remains, despite the form of
the patent, one 'in accordance with'
which the machine has been
manufactured, within theterms ofArticle
3(1).
1490

BOSCH vHAUPTZOLLAMT HILDESHEIM
The Commission told us,initswritten
Observations, that, under the German
law ofpatents, itisnot possible totake
out apatent for aprocess having the
same content asapatent for amachine.
Inahelpful paper thatitsubmitted after
the hearing atthe request oftheCourt,
the Commission examined the position
astothat under the legal systems ofthe
other Member States. The conclusion to
bedrawn from that examination was that
therule was substantially thesame inall
the Member States, sothat, intheory at
least, cases ofsuch double-patenting
should be rare. There are however
variations inthe detailed application of
the rule asbetween the Member States,
and one knows, of course, that,
particularly inthis field, what happens in
practice does not always coincide with
what the law envisages. Indeed, were it
otherwise, there would never belitigation
inwhich the validity ofapatent was
challenged on the ground of'prior
claim'; or,atallevents, such achallenge
would never succeed. In truth, the
application of the rules against
double-patenting gives rise to such
complexities that itwould beunrealistic
tosuppose that there can never be
overlap between apatent for amachine
and apatent foraprocess. (As tothat I
need perhaps refer only tothe position
inEngland, which isdiscussed inTerrell,
op.cit., §§256 —264 and Blanco White,
op.cit.,§§4—301 —312. Inthelatter,
§§4—304&4—309 areparticularly
inpoint).
Although theconcession made byBosch
was thus, inmyopinion, rightly made, I
donot think that itwent farenough,
because itdid not cover acase where the
invention protected by apatent for a
process includes the use ofaparticular
machine and something else. Insuch a
case, itseems tome, insofar asthe
invention isofthe machine, itisnot
excluded from Article 3(1). The
Commission submitted that, insuch a
case, the value ofthe right touse the
patent inrespect ofthemachine must be
segregated from the value ofthe righttouse the patent inother respects. I
agree.
Where Idisagree with the Commission
isinthereasoning according towhich it
reaches that conclusion. The Com­
mission's view isonthe one hand that
Article 3(1)istobegiven anarrow
interpretation, excluding allpatents for
processes, unless they beprocesses by
which the imported goods themselves
have been manufactured, but, on the
other hand, that itisimplicit inArticle 1
(1) ofthe Regulation that where a
patented process covers the use of a
particular machine thevalue oftheright
sotouse the machine forms part ofits
'normal price'.
Inapproaching the interpretation of
Article 3(1)theCommission focusses its
attention onthe reference tothe goods
having been 'manufactured inaccordance
with' apatented invention. From this the
Commission deduces that Article 3(1)is
not concerned with any useofthegoods
after their manufacture and importation.
But this approach seems tome, with all
respect tothe Commission, toconfuse
the useofapatent inrespect ofgoods
(which iswhat Article 3(1)refers to)and
the use ofthe goods themselves. Take
the simple case ofapatented machine.
The unlicensed manufacture of the
machine would beaninfringement of
the patent. But sowould theunlicensed
sale orhire ofthe machine after its
manufacture, and itsunlicensed use then
inthe commercial production ofother
goods. Sothere isauseofthepatent in
respect ofthemachine, notonly when it
is manufactured, but when it is
subsequently sold, hired, orput into
production. The reference inArticle 3(1)
to'the right touse the patent ...in
respect ofthegoods' must beintended to
cover allthese. The situation inthetype
ofcase with which these proceedings are
concerned differs from that only
inasmuch as,thepatent being one for a
process, itisnecessary toenquire towhat
extent, ifany, the invention that it
protects isreally that ofthemachine.
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OPINION OF MR WARNER —CASE 1/77
To seek tosolve that problem by
reference toArticle 1(1) of the
Regulation isopen to two major
objections.
The first isthatitignores thestructure of
Articles 1to8oftheRegulation. Article
1(1), asIhave pointed out, only gives a
general definition oftheconcept ofthe
'normal price'. Articles 1(2)and 2to8
refine onthat definition, working outthe
details ofitsapplication inrelation to
specific matters. The matter ofindustrial
property rights, and inparticular of
patents, isdealt with byArticle 3.That
being sothere isnoroom forimplying
anything further about patents inArticle
1(1) itself. Of course each ofthe
provisions ofthe Regulation must be
interpreted inthelight oftheothers, but
that isnottosaythat anyofthem can be
interpreted asimplicitly dealing with a
matter which isthe express province of
another.
The second and graver objection isthat
Regulation No 803/68 isfiscal legis­
lation. Itspurpose and itseffect areto
define fiscal liabilities. Itwould be
contrary toallprinciple tohold thatsuch
liabilities could beimposed orincreased
byimplication.
The very argument ofthe Commission
evinces adifficulty inherent in its
approach. The Commission naturally
realized that itwas not enough tosay
that this case was implicitly covered by
Article 1(1). Itmust propound a
principle from which that could be
deduced. The principle itpropounded
was that theacquisition ofgoods attheir
'normal price' implied that thepurchaser
would acquire them free from restrictionsontheir user. Since weareavowedly in
the realm ofimplication itis,perhaps,
neither here nor there topoint outthat
nosuch principle isexpressed inArticle
1(1).Itishowever, Ithink, even onthat
footing, avalid criticism that the
principle sopropounded isinconsistent
with theCommission's own conclusions,
forthe Commission accepts that there
arecircumstances inwhich the existence
ofapatent foraprocess will restrict the
freedom ofapurchaser ofamachine to
useit,without thevalue oftheright to
use that patent forming part ofthe
'normal price' ofthemachine. The truth
isthat there isnothing intheconcept of
the'open market', and itisonthat, I
think, that the Commission mainly
relied, that connotes that apurchaser of
goods inthat market will acquire them
free from restrictions ontheir user. For
instance therule ofEnglish law isthat a
sale ofapatented article bythepatentee,
inany market, ispresumed tocarry with
ittheright forthepurchaser tousethe
article inany way hechooses, but that
that presumption isrebutted ifatthe
time ofthe sale thepurchaser hasnotice
ofrestrictions onitsuseimposed bythe
patentee, whether by contract or
otherwise (seeNational Phonograph Co.
ofAustralia, Ltd. vMenck [1911] A.C.
336,Goodyear TyreandRubber Co.
(G.B.)Ltd. vLancashire Batteries Ltd.
[1958] 1W.L.R. atp.861 andDunlop
Rubber Co.Ltd. vLonglife Battery
Depot, ibid., atp.1037). Ofcourse, where
andinsofarasArticle 3(1)applies, it
requires such restrictions tobeignored
incomputing the'normal price' ofthe
article. But nothing tothe same effect
canlegitimately beread into Article 1(1)
taken byitself or,forthat matter, into
anyother provision oftheRegulation.
Intheresult Iamoftheopinion that Your Lordships should answer the
question referred totheCourt bytheFinanzgericht bysaying that Article 3
(1)ofRegulation No803/68 istobeinterpreted asmeaning that thenormal
price ofanappliance includes thevalue oftheright touse apatent for a
process ifand totheextent towhich thescope ofthepatent issuch asto
protect theinvention oftheappliance itself.
1492