1.

The above discussion has already made clear that the present case is chiefly concerned with the problem of the so-called ‘exhaustion’ of national industrial property rights related to copyright as laid down in Article 17 of the German Copyright Law. The Oberlandesgericht, making the reference, has declared that the wording of that provision leaves open the question whether placing goods on the market abroad with the consent of the holder of the right also exhausts the latter's distribution rights in Germany. Apparently, in view of the principle of territoriality as it is widely understood in this field, the court is inclined to hold that the right is not thereby exhausted. On the other hand, however, because of the unclear wording of the Law in question, the lack of unanimity in the legislative provisions and the fact that the Law was enacted after the entry into force of the EEC Treaty, the court considered it necessary to pose the question in the light of the principles of the Treaty relating to this field. In my opinion, this can only mean that the court intends to seek an interpretation of the national law that will conform to Community law, if necessary at the expense of the principle of territoriality. If this is made clear there is at the same time no doubt that, contrary to the views of some of those concerned, there is no need to examine the question whether the provisions of the Treaty invoked by the court constitute directly applicable Community law, that is to say, rules of law which an individual can invoke against national legislation. On the contrary, it is merely necessary to examine the principles of the Treaty in the field with which we are now concerned precisely because it must be assumed, particularly in view of the principle contained in the second paragraph of Article 5, that the national legislature did not intend to disregard them and that the meaning of the provisions enacted by it must be interpreted accordingly. Seen in this light, it must first be recognized that free, unhindered movement of goods must be regarded as a fundamental principle of the common market. Furthermore, one must bear in mind—as was done in the Sirena case, decided recently—the concept of the unity of the common market and its system of competition, which is intended to achieve the comprehensive prevention of distortions of competition and in particular to maintain competition between Member States. The relevant provisions in this respect are Articles 3 (a) and (f), 30 et seq. and 85 et seq. Speaking quite generally, their aim is to prevent the obstruction of trade by national or private means, and the partitioning of the market. Obviously, national industrial property rights, that is to say, including copyright and related protection rights, appropriately formulated or interpreted, may operate against this objective since, as the argument of DG shows, they permit, under certain circumstances, a market to be partitioned at all levels of the economy, that is, the absolute control and blocking of trade between Member States. Now in order to justify this, reference is constantly made to Articles 36 and 222 of the EEC Treaty, that is, first, the provision whereby trade between Member States must be subject to restrictions in the interest of the protection of industrial and commercial property (Article 36), and, secondly, the provision whereby the EEC Treaty leaves untouched the system of property ownership in Member States (Article 222). Such references certainly did have some value as arguments when this problem was first raised. However, since then it has been established by the case-law of the Court that there is room for considerable qualification in this respect, particularly in view of the reservation in Article 36 whereby the prohibitions or restrictions mentioned in that article ‘shall not, however, constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States’. This line of decisions began with the Grundig-Consten judgment, with its findings regarding trade-mark law, and then was developed in the Parke, Davis case with pronouncements relating to patent law; it received confirmation recently with regard to trade-mark law in the abovementioned Sirena case. According to these decisions, the principle is that although the Treaty leaves the existence and substance of industrial property untouched (the national legislature decides these questions—cf. [1968] ECR 71) their exercise is completely subject to Community law (cf. [1966] ECR 345, [1968] ECR 71 and [1971] ECR 69). Consequently, the main problem in the present case also is to differentiate between the existence of rights and the exercise of rights. As the Commission rightly stresses, the capacity to manufacture and to effect the initial distribution of the protected product certainly comes within the sphere of the existence of the right, since it ensures for the holder the benefit to which he is entitled. On the other hand, it seems doubtful whether the principle of territoriality, to which reference is constantly made in connexion with industrial property rights, also forms part of the substance and is of the essence of such rights. In my view, it is significant that here we are faced with an ambiguous concept the contours of which cannot be discerned with absolute clarity, and on which there is clearly no unanimity. It is occasionally said that the principle of territoriality states (in accordance with the Paris Convention) that the protection granted in one State is independent of protection rights conferred in other States. Moreover, it is also formulated to mean that the effects of protection rights are restricted to the territory of the State in which the rights are granted, although the national legislature may make the legal effects dependent on facts which occur abroad. ( 2 ) In any event this permits it to be said that in spite of the principle of territoriality the holder of trade-mark rights who uses the same trade-mark internally and abroad cannot prohibit the import of a product by virtue of his domestic trade-mark if he has supplied the product with the trade-mark and placed it on the market abroad. ( 3 ) With regard to copyright, reference may be made in this context to a recent decision of the Austrian Oberster Gerichtshof according to which the right of a manufacturer of sound recordings is exhausted (that is, it is not possible to prohibit imports) if the holder of the right has placed the product on the market or if it has been placed on the market abroad by an authorized exporter or by a licensee. With regard to the well-known (and much criticized) Varan judgment of the Bundesgerichtshof of 29 February 1968, the only recent decision of a supreme court embodying the converse view, according to which, in the case of the species protection right (“Sortenschutzrecht”) which is related to patent rights, if the product is placed on the market abroad by the holder of the right that is not relevant to the exhaustion of the right, but it should not be forgotten that the relevant Seeds Law expressly makes the export of protected species dependent on the specific consent of the holder of the species protection right and that therefore the exhaustion of the right cannot occur if the product is merely placed on the market. In view of this situation there is in fact much to be said for the view that the principle of territoriality, which is so uncertain in outline, does not form part of the existence of the right. In any event this applies to the particular problem of the main action, namely, a situation in which, as the Oberlandesgericht has held, a legal person connected with the holder of the right has placed the goods in question on the market abroad. Here it should be decisive that the objective of the industrial property right was attained when the goods were first placed on the market, since it was possible to use the monopolistic opportunity for gain. On the other hand, it would undoubtedly go beyond the objective of that right if the holder was permitted to control further marketing, in particular to prohibit re-importation, and the free movement of goods was impeded. Thus in view of the reservation contained in Article 36, the fundamental aims of the Treaty and the principles of the common market, and in spite of the guarantee of the subsistence of industrial property rights, in a situation such as that in the present case it may be held that the right has been exhausted, and the exercise of the distribution right is thus precluded. Nevertheless, there is one final objection to be considered, put forward in particular by the Federal Government. It is derived from Article 99 (3) of the First Preliminary Draft Convention for the European Patent for the common market, which provides: “After the transitional period laid down in this Article (at least five years from the entry into force of the convention) regardless of the provisions of national law laid down in the Contracting States, the rights attaching to patents granted for the same invention in two or more Contracting States to the same legal or physical person or to legal or physical persons who have economic connexions shall not extend to acts concerning a product covered by the said patents which are done on the territory of one of the said Contracting States after the proprietor of the patents, or his licensee, has lawfully placed that product on the market in one of these States”. Thus the national limitations on such rights are to subsist during a transitional period and will not be eliminated until its expiry, with the result that those rights are exhausted when the patent holder places the protected product on the market in a Member State. Hence the Federal Government maintains that this transitional provision would have been devoid of purpose if the exhaustion of the rights already ensued from the Treaty provisions examined above. In fact, it cannot be denied that this deduction is impressive. At the same time, however, it should not be decisive. When I say this I am not thinking of the fact that this preliminary draft deals with patent law questions whereas the present case concerns copyright and related protection rights, for this distinction is irrelevant since copyright is certainly more closely related to a patent right than to a trade-mark right, for example. However, we should not forget that the provision cited is merely a preliminary draft which has been prepared by experts, that is, that it does not represent the last word of the governments and is therefore not an authentic interpretation of the EEC Treaty. Moreover, it seems significant that the draft states that it should be indicated in the preamble to the Convention that “the Contracting States do not intend by this Convention to prejudice the provisions of the treaties establishing the European Communities”. Accordingly, regardless of this preliminary draft, it must finally be held with regard to the partial aspect of the first question that has been discussed so far that a proper interpretation of the EEC Treaty leads to the conclusion that on the basis of the facts set out in the order making the reference national industrial property rights must be held to be exhausted.