5.

Given, therefore, that the ban on parallel imports, involving the use, on the basis of the law of the country concerned, of the protection afforded to the patent owner, is contrary to Article 30 and to the second paragraph of Article 32, we must now see whether, in the circumstances described by the Supreme Court of the Netherlands, it is allowable under Article 36. A trading arrangement made by an undertaking which is wholly the property of the parent company cannot be regarded as an arrangement made independently of the parent company. The Sterling Winthrop Company, a subsidiary of Sterling Drug Inc., sold in Great Britain a certain product which it manufactured under licence from the parent company, which owns the patent rights in both Great Britain and the Netherlands. It is reasonable to suppose that the placing of the product on sale in a Member State, which is the normal commercial practice of this manufacturer, took place with the agreement of Sterling Drug, since the parent company usually determines the trading policy of subsidiaries coming wholly under tits control. In fact, during the oral proceedings, one of Sterling Drug's counsel testified in so many words that his company, along with its British and Dutch subsidiaries, constituted a single undertaking. However that may be, in terms of economic reality, this action on the part of a subsidiary connot be without consequence for the parent company. A product lawfully put on sale in the Community must be able to circulate freely within it unless there is a requirement to the contrary arising from the need to protect a private right or public interest recognized by Community law as being of overriding importance. Under the precedents established by this Court, the special exceptions provided for under Article 36 for the protection of industrial property may be justified only in order to safeguard the rights which form the specific subject-matter of such property. Although this principle has not yet been expressed in clearly defined terms in respect of patents, there can be no doubt about its implication that Community rules can by their own action curtail the privileges which the national legislations confer on the owner of the patent. Every time a conflict arises between a specific form of protection granted to the patentee under national law and the operational requirements of the Community system, it will be necessary, after carefully balancing the conflicting interests and taking into account the need to respect the substance of legislation whose application is governed exclusively by the law of the country concerned, to ascertain whether the national rules and regulations can be given the benefit of exceptional treatment under Article 36. Against this background, let us now see, in relation to the particular circumstances of this case, what concrete meaning should be attached to the restrictive condition, already referred to, covered by the expression ‘specific subject-matter’. An essential constituent of a patent right is the exclusive right both to manufacture the products and to place them on the market for the first time. A legal monopoly of this nature, established in favour of an individual, necessarily means the right to block sale of the product which has been patented when manufactured by third parties or put on sale without the consent of the patent-owner. Accordingly, the national legislations may legitimately make it possible for the owner of the right to prevent importation of products which have been manufactured or put on the market without his consent. But there could be no justification for a ban on imports into a State in order to protect the sole owner of patents in force in different Member States on the basis of the territorial limitation, within the common market, of the consent he has given for their sale. The imposition of such a limitation, which in the circumstances under consideration would be designed solely to enable the owner of the patent to exercise control over the outlets for the product in the Community, cannot be regarded as coming under the specific subject-matter of the patent right. It is certainly not compatible with the basic principle of the Community system governing the circulation of goods for a company, which is the owner of a patent in force in more than one State of the Community and, through a company wholly under its control, joins in putting the said product on sale in a Member State, to block its importation bv third-party purchasers into another Member State for the purpose of ensuring a commercial monopoly there for another of its subsidiary companies. The circumstances in this case are not substantially different from those which were the subject of the judgment in Deutsche Grammophon Gesellschaft; which, it will be recalled, was concerned with a property right analogous to copyright in relation to sound recordings. In fact, though in the present case the product was manufactured in a Member State other than that in which its importation is opposed and it has, moreover, been put on sale by a party which in law is distinct from the party raising the objection, it must be borne in mind that, in the Deutsche Grammophon Gesellschaft case, too, the product was put on the market in a State other than that wherein the owner of the right, who objected to importation of the product, had his registered office. It must also be noted that, though, in the present case, the product was put on sale by a party which in law is distinct from the patentee, this cannot be regarded as an action wholly independent of the latter. The principle laid down in the case of a right analogous to copyright, such as the Deutsche Grammophon Gesellschaft was claiming, is equally applicable to a patent because, as the Commission, pointed out, in each of these two cases, the specific subject-matter of the two property rights consists of the exclusive right to manufacture, to reproduce and to market for the first time a specific intellectual or industrial product. In a case such as the one before us, just as in the situation which was the subject of the Court's judgment in Deutsche Grammophon, the purpose of the objection raised by the proprietor of the right to introduction into a State of a given product lies outside the specific subject-matter of the protection provided bv the right concerned. In the case of Deutsche Grammophon, the objection of the owner of the property right to reimportation of one of his products, which had been sold by him or with his consent for the first time in another Member State, went beyond the legitimate scope of protection. In the present case, too, given on one hand the relationship between the party putting the article on the market in another Member State and the owner of the patent, and, on the other, between the owner and the trading company to which he has granted a permit to sell the product in the importing State, the same interpretation must be placed on the patentee's objection to the free circulation of the product.