Judgment of the Court of 17 February 1977. - Farbwerke Hoechst AG v Hauptzollamt Frankfurt am Main. - Reference for a preliminary ruling: Hessisches Finanzgericht - Germany. - Value for customs purposes of trade-marks. - Case 82-76.



European Court reports 1977 Page 00335

Greek special edition Page 00121

Portuguese special edition Page 00135



Summary

Parties

Subject of the case

Grounds

Decision on costs

Operative part



Keywords

1 . VALUE FOR CUSTOMS PURPOSES - DETERMINATION - ASSOCIATION - DEFINITION FOR THE PURPOSES OF ARTICLE 2 ( 2 ) OF REGULATION NO 803/68 - APPLICATION TO THE CASE OF ARTICLE 3 ( 7 ) ( B ) OF THAT REGULATION

2 . VALUE FOR CUSTOMS PURPOSES - DETERMINATION - ASSOCIATION - CONCEPT

( REGULATION NO 803/68 , ARTICLE 2 ( 2 ))

3 . VALUE FOR CUSTOMS PURPOSES - DETERMINATION - TERRITORIAL DISTRIBUTION RIGHTS - TRANSFER IN EXCHANGE FOR ROYALTIES - RIGHT TO MANUFACTURE THE IMPORTED PRODUCT - ASSIGNMENT FREE OF CHARGE - REGULATION NO 1788/69 , ARTICLE 2 ( 1 ) ( A ) - APPLICATION

Summary

1 . THE DEFINITION OF THE CONCEPT OF ' PERSONS ASSOCIATED IN BUSINESS ' SET OUT IN ARTICLE 2 ( 2 ) OF REGULATION NO 803/68 OF THE COUNCIL IS ALSO VALID FOR THE PURPOSES OF THE APPLICATION OF ARTICLE 3 ( 7 ) ( B ) OF THAT REGULATION .

2 . AN ASSOCIATION SUCH AS THAT REFERRED TO IN ARTICLE 2 ( 2 ) OF REGULATION NO 803/68 IS CREATED BY A CONTRACT WHEREBY THE FOREIGN SUPPLIER OF A PRODUCT GRANTS TO THE COMMUNITY BUYER DISTRIBUTION RIGHTS WHICH ARE TERRITORIALLY DEFINED AGAINST PAYMENT OF ROYALTIES IN THE FORM OF A PERCENTAGE SHARE OF THE PROCEEDS OF SALES .

3 . A CONTRACT BY WHICH , PRIMARILY , TERRITORIAL DISTRIBUTION RIGHTS ARE TRANSFERRED IN RETURN FOR ROYALTIES AND , IN ADDITION , THE RIGHT , ASSIGNED FREE OF CHARGE , TO MANUFACTURE THE IMPORTED PRODUCT , FALLS WITHIN THE PROVISIONS OF ARTICLE 2 ( 1 ) ( A ) OF REGULATION NO 1788/69 OF THE COMMISSION .

Parties

IN CASE 82/76

REFERENCE TO THE COURT PURSUANT TO ARTICLE 177 OF THE EEC TREATY BY THE HESSISCHES FINANZGERICHT FOR A PRELIMINARY RULING IN THE PROCEEDINGS PENDING BEFORE THAT COURT BETWEEN :

FARBWERKE HOECHST AG , FRANKFURT-AM-MAIN ,

V HAUPTZOLLAMT FRANKFURT ,

Subject of the case

ON THE INTERPRETATION OF REGULATION ( EEC ) NO 803/68 OF THE COUNCIL OF 27 JUNE 1968 ON THE VALUATION OF GOODS FOR CUSTOMS PURPOSES ( OJ ENGLISH SPECIAL EDITION , 1968 ( I ), P . 170 ) AND OF REGULATION ( EEC ) NO 1788/69 OF THE COMMISSION OF 10 SEPTEMBER 1969 DETERMINING CERTAIN EXCEPTIONS WITHIN THE MEANING OF ARTICLE 3 ( 2 ) OF COUNCIL REGULATION ( EEC ) NO 803/68 ( OJ ENGLISH SPECIAL EDITION , 1969 ( II ), P . 387 ).

Grounds

1 BY ORDER OF 18 JUNE 1976 , WHICH WAS ENTERED AT THE COURT REGISTRY ON 13 AUGUST 1976 , THE HESSISCHES FINANZGERICHT REFERRED TO THE COURT , PURSUANT TO ARTICLE 177 OF THE EEC TREATY , NINE QUESTIONS CONCERNING THE INTERPRETATION OF REGULATION NO 803/68 OF THE COUNCIL OF 27 JUNE 1968 ON THE VALUATION OF GOODS FOR CUSTOMS PURPOSES ( OJ ENGLISH SPECIAL EDITION , 1968 ( I ), P . 170 ) AND OF REGULATION NO 1788/69 OF THE COMMISSION OF 10 SEPTEMBER 1969 DETERMINING CERTAIN EXCEPTIONS WITHIN THE MEANING OF ARTICLE 3 ( 2 ) OF THE ABOVEMENTIONED REGULATION NO 803/68 ( OJ ENGLISH SPECIAL EDITION , 1969 ( II ), P . 387 ).

2 THESE QUESTIONS WERE RAISED IN THE CONTEXT OF A CASE CONCERNING THE VALUE FOR CUSTOMS PURPOSES OF PHARMACEUTICAL PRODUCTS IMPORTED BY FARBWERKE HOECHST , THE PLAINTIFF IN THE MAIN ACTION ( HEREINAFTER REFERRED TO AS ' HOECHST ' ).

HOECHST CONCLUDED A CONTRACT WITH HOFFMAN-LA ROCHE , WHOSE REGISTERED OFFICE IS IN BASEL , SWITZERLAND , UNDER WHICH IT OBTAINED THE RIGHT TO PURCHASE FROM LA ROCHE A PREPARATION PRODUCED BY THE LATTER FIRM FROM TWO SUBSTANCES , SULFADOXIN AND TRIMETHOPRIM , OR TO MANUFACTURE THIS PREPARATION ITSELF FROM THESE SUBSTANCES SUPPLIED BY LA ROCHE AND TO SELL THE PREPARATION THROUGHOUT THE WORLD WITH THE EXCEPTION OF THE UNITED STATES OF AMERICA . IT MAY SELL THE SPECIAL MEDICINAL PREPARATION UNDER ITS OWN TRADE-MARK AND IN ITS OWN NAME BUT IS NOT PERMITTED TO MENTION LA ROCHE IN ITS PUBLICITY WITHOUT THE EXPRESS CONSENT OF THAT FIRM . AS CONSIDERATION ' FOR THE RELEASE OF THE DISTRIBUTION RIGHTS ' HOECHST UNDERTOOK TO PAY TO LA ROCHE A ROYALTY OF 3 % OF THE NET TURNOVER .

3 IN THE COURSE OF 1971 AND 1972 , HAVING IMPORTED TEN CONSIGNMENTS OF THE SPECIAL MEDICINAL PREPARATION MADE UP FROM THE TWO ABOVEMENTIONED SUBSTANCES AND SUPPLIED BY LA ROCHE , HOECHST RE-PACKED THE PRODUCT IN SMALLER PACKAGES ON WHICH IT SUBSEQUENTLY AFFIXED FOR THE FIRST TIME THE TRADE-MARK ' BORGAL ' , REGISTERED IN ITS NAME IN THE FEDERAL REPUBLIC OF GERMANY .

THE CUSTOMS OFFICE , THE DEFENDANT IN THE MAIN ACTION , DISCOVERED THE EXISTENCE OF A LICENSING AGREEMENT BETWEEN HOECHST AND LA ROCHE AND THE AFFIXING OF THE TRADE-MARK ' BORGAL ' AND CONSEQUENTLY , BY AMENDED NOTICE OF ASSESSMENT , DETERMINED THE CUSTOMS VALUE OF THE SPECIAL MEDICINAL PREPARATIONS IN QUESTION BY INCREASING THEIR PRICE BOTH IN RESPECT OF THE ROYALTIES PAID TO LA ROCHE , WHICH INCREASE IS NO LONGER AT ISSUE , AND ALSO IN RESPECT OF THE PRESUMED VALUE OF THE TRADE-MARK ' BORGAL ' .

IT IS THE LATTER INCREASE WHICH IS AT ISSUE AS THE CUSTOMS OFFICE HOLDS THAT IN APPLICATION OF ARTICLE 3 ( 7 ) OF REGULATION NO 803/68 THE TRADE-MARK ' BORGAL ' MUST BE REGARDED AS A FOREIGN MARK IN VIEW OF THE FACT THAT HOECHST WAS ' ASSOCIATED IN BUSINESS ' WITHIN THE MEANING OF ARTICLE 2 ( 2 ) OF THAT REGULATION WITH LA ROCHE , THE VENDOR OF PRODUCTS ESTABLISHED OUTSIDE THE CUSTOMS TERRITORY OF THE COMMUNITY AND THAT THE INCLUSION OF THE VALUE OF THE TRADE-MARK IN THE VALUE FOR CUSTOMS PURPOSES IS NOT EXCLUDED BY ARTICLE 2 OF REGULATION NO 1788/69 .

THE FIRST FOUR QUESTIONS

4 IN RESPECT OF THE VALUE FOR CUSTOMS PURPOSES OF IMPORTED GOODS ARTICLES 1 AND 2 OF REGULATION NO 803/68 PROVIDE THAT THE VALUE SHALL BE TAKEN TO BE THE NORMAL PRICE AND IF A SALE IS ACTUALLY CARRIED OUT IN THE OPEN MARKET THE SALE PRICE IS IN GENERAL DEEMED TO CORRESPOND TO THE ' NORMAL PRICE ' .

NEVERTHELESS THESE PROVISIONS MAKE AN EXCEPTION OF THE CASE WHERE THE AGREED PRICE WAS INFLUENCED BY ANY COMMERCIAL , FINANCIAL OR OTHER RELATIONSHIP WHICH MIGHT EXIST OUTSIDE THAT CREATED BY THE SALE ITSELF BETWEEN THE SELLER AND THE BUYER ( ARTICLE 2 ( 1 ) ( B )).

ARTICLE 2 ( 2 ) OF THE REGULATION PROVIDES THAT TWO PERSONS ARE TO BE DEEMED TO BE ASSOCIATED IN BUSINESS IF EITHER OF THEM HAS ANY INTEREST IN THE BUSINESS OR PROPERTY OF THE OTHER OR IF THEY HAVE A COMMON INTEREST IN ANY BUSINESS OR PROPERTY .

5 ARTICLE 3 OF REGULATION NO 803/68 RELATING TO THE INCIDENCE ON THE VALUE FOR CUSTOMS PURPOSES OF THE EXISTENCE OF PATENTS , TRADE-MARKS AND OTHER MARKS PROVIDES IN PARAGRAPH 7 THAT A TRADE-MARK SHALL BE TREATED AS A FOREIGN TRADE-MARK WHICH MUST BE TAKEN INTO ACCOUNT IN DETERMINING THE VALUE FOR CUSTOMS PURPOSES INTER ALIA ' IF IT IS THE MARK OF . . . ( B ) ANY PERSON ASSOCIATED IN BUSINESS WITH . . . ANY PERSON BY WHOM THE GOODS TO BE VALUED HAVE BEEN GROWN , PRODUCED , MANUFACTURED , OFFERED FOR SALE OR OTHERWISE DEALT WITH OUTSIDE THE CUSTOMS TERRITORY OF THE COMMUNITY ' .

6 THE FIRST QUESTION ASKS WHETHER THE DEFINITION OF BUSINESS ASSOCIATION CONTAINED IN ARTICLE 2 ( 2 ) OF THE REGULATION IS ALSO APPLICABLE TO THE CONCEPT OF ASSOCIATION REFERRED TO IN ARTICLE 3 ( 7 ) ( B ) OF THE SAME REGULATION .

IF THE FIRST QUESTION IS ANSWERED IN THE AFFIRMATIVE THE THIRD QUESTION SUBSEQUENTLY ASKS WHETHER AN ASSOCIATION SUCH AS THAT ENVISAGED BY ARTICLE 2 ( 2 ) MAY RESULT FROM ' AN AGREEMENT , THE PRIMARY OBJECT OF WHICH IS THE GRANT TO THE DOMESTIC BUYER BY THE FOREIGN SUPPLIER OF GOODS OF SELLING RIGHTS IN A SPECIFIC TERRITORY AGAINST PAYMENT OF ROYALTIES AND UNDER WHICH IN ADDITION THE SAID PURCHASER IS GRANTED , FREE OF FURTHER CHARGES , THE RIGHT TO MANUFACTURE THE IMPORTED PRODUCT UNDER THE PATENTED PROCESS FROM THE TWO ACTIVE SUBSTANCES PATENTED PROCESS FROM THE TWO ACTIVE SUBSTANCES PATENTED BY AND TO BE PROCURED FROM THE UNDERTAKING SUPPLYING THE GOODS ' .

7 AS ARTICLE 3 ( 7 ) DOES NOT ITSELF DEFINE THE CONCEPT OF ' A PERSON IN ANY WAY ASSOCIATED IN BUSINESS WITH ' A PRODUCER OR SELLER OUTSIDE THE CUSTOMS TERRITORY REFERENCE SHOULD BE MADE FOR SUCH A DEFINITION TO THE PROVISIONS OF ARTICLE 2 ( 2 ).

THIS SUBPARAGRAPH DOES NOT CONTAIN ANY INDICATION SUCH AS TO SUGGEST THAT IT SOLELY RELATES TO THE APPLICATION OF THE FIRST PARAGRAPH OF THAT ARTICLE . ON THE CONTRARY , AS THIS PROVISION IS TO BE FOUND AMONG THE FIRST ARTICLES WHICH STATE THE BASIC CONCEPTS FOR THE APPLICATION OF THE REGULATION EVERYTHING SUGGESTS THAT THE TERMS USED IN ARTICLE 3 ( 7 ) REFER TO ITS DEFINITION OF ' BUSINESS ASSOCIATION ' . FURTHERMORE , SUCH AN INTERPRETATION CORRESPONDS BOTH TO THE GENERAL OBJECTIVES OF THE REGULATION AND TO THOSE OF ARTICLE 3 , AS THE PROVISION IN ARTICLE 3 ( 7 ) ( B ) SEEKING TO INCLUDE THE CASE IN WHICH AN IMPORTER OF FOREIGN PRODUCTS SUBJECT TO A TRADE-MARK IMPORTS PRODUCTS INTO THE COMMUNITY WITHOUT A TRADE-MARK IN ORDER TO AFFIX OR HAVE AFFIXED TO THEM THE FOREIGN TRADE-MARK WHICH MAY BE REGISTERED IN A MEMBER STATE AFTER THE IMPORTATION AND SUBSEQUENTLY TO SELL THE GOODS AS PRODUCTS SUBJECT TO A TRADE-MARK .

THE INTENTION OF GIVING AS WIDE AN APPLICATION AS POSSIBLE TO THIS PROVISION OF CUSTOMS LAW IS SUPPORTED BY THE FACT THAT IN REGULATION NO 1788/69 THE COMMISSION LAID DOWN ADDITIONAL RULES IN ORDER TO PREVENT THE APPLICATION OF THIS PROVISION FROM GIVING RISE TO INJUSTICE .

8 THE REPLY TO BE GIVEN TO THE FIRST QUESTION IS THEREFORE THAT THE DEFINITION OF THE CONCEPT OF ' PERSONS ASSOCIATED IN BUSINESS ' SET OUT IN ARTICLE 2 ( 2 ) OF REGULATION NO 803/68 OF THE COUNCIL IS ALSO VALID FOR THE PURPOSES OF THE APPLICATION OF ARTICLE 3 ( 7 ) ( B ) OF THAT REGULATION .

9 SINCE THE SECOND QUESTION WHICH WAS ASKED IN CASE THE FIRST QUESTION SHOULD BE ANSWERED IN THE NEGATIVE HAS THEREFORE LOST ITS PURPOSE , THE ANSWER TO THE THIRD QUESTION SHOULD BE THAT AN ASSOCIATION SUCH AS THAT REFERRED TO IN ARTICLE 2 ( 2 ) OF REGULATION NO 803/68 IS CREATED BY A CONTRACT WHEREBY THE FOREIGN SUPPLIER OF A PRODUCT GRANTS TO THE COMMUNITY BUYER DISTRIBUTION RIGHTS WHICH ARE TERRITORIALLY DEFINED AGAINST PAYMENT OF ROYALTIES IN THE FORM OF A PERCENTAGE SHARE OF THE PROCEEDS OF SALES . IN FACT , AS IT ENTAILS PARTICIPATION BY THE SUPPLIER IN THE PROCEEDS OF THE MARKETING OF THE PRODUCTS IN QUESTION BY THE BUYER SUCH A CONTRACT CONSTITUTES PRECISELY THE KIND OF CONTRACT REFERRED TO IN ARTICLE 2 ( 2 ).

IT IS WELL TO ADD THAT THE FACT , WHICH WAS REFERRED TO BY THE NATIONAL COURT THAT SUCH A CONTRACT IN ADDITION GRANTS TO THE BUYER THE RIGHT TO MANUFACTURE THE PRODUCT IN QUESTION HIMSELF ACCORDING TO THE PATENTED PROCEDURE FROM TWO PATENTED SUBSTANCES WHICH HE UNDERTAKES TO BUY FROM THE ABOVEMENTIONED FOREIGN SUPPLIER CANNOT QUALIFY THIS CONCLUSION IN VIEW OF THE FACT THAT THIS RIGHT DOES NOT GIVE RISE TO THE PAYMENT OF ADDITIONAL ROYALTIES .

QUESTIONS 5 , 6 AND 7

10 PURSUANT TO ARTICLE 3 ( 2 ) OF REGULATION NO 803/68 THE COMMISSION , BY MEANS OF REGULATION NO 1788/69 OF 10 SEPTEMBER 1969 , LAID DOWN CERTAIN EXCEPTIONS TO THE RULE CONTAINED IN ARTICLE 3 ( 7 ) OF THE FORMER REGULATION STATING THAT ' WHERE THE RIGHT TO USE THE TRADE-MARK BELONGS TO A PERSON ESTABLISHED IN A MEMBER STATE , THE APPLICATION OF ARTICLE 3 ( 1 ) AND ( 7 ) . . . MAY LEAD TO A VALUATION WHICH IN CERTAIN CASES IS DIFFICULT TO JUSTIFY ' .

ARTICLE 2 OF THAT REGULATION PROVIDES THAT ' IN SO FAR AS THE RIGHT TO USE A TRADE-MARK TREATED AS A FOREIGN TRADE-MARK WITHIN THE MEANING OF ARTICLE 3 ( 7 ) OF REGULATION ( EEC ) NO 803/68 DOES NOT ENTAIL THE PAYMENT OF ANY ROYALTY , THE VALUE OF SUCH RIGHT SHALL NOT BE INCLUDED IN THE VALUE FOR CUSTOMS PURPOSES WHERE . . . THE TRADE-MARK IS THAT OF A SOLE AGENT OR SOLE CONCESSIONAIRE ESTABLISHED IN A MEMBER STATE , THERE IS NO BUSINESS ASSOCIATION BETWEEN THE AGENT OR CONCESSIONAIRE AND THE SUPPLIER OF THE GOODS TO BE VALUED OTHER THAN THE RELATIONSHIP CREATED BY THE AGENCY OR CONCESSION AND THE RIGHTS OF THE AGENT OR CONCESSIONAIRE IN THE TRADE-MARK ARE NOT RESTRICTED WITHIN THE MEANING OF ARTICLE 3 ( 7 ) ( C ) OF REGULATION ( EEC ) NO 803/68 ' .

11 BELIEVING THAT THIS PROVISION MIGHT BE APPLICABLE TO THE USE MADE BY HOECHST OF THE TRADE-MARK ' BORGAL ' THE NATIONAL COURT SEEKS BY MEANS OF QUESTIONS 5 , 6 AND 7 CLARIFICATION FOR THE TERMS ' SOLE AGENT ' AND ' SOLE CONCESSIONAIRE ' .

12 COMPARISON OF THE VERSIONS IN THE DIFFERENT LANGUAGES OF THE COMMUNITY OF THE TEXT OF ARTICLE 2 OF REGULATION NO 1788/69 SHOWS THAT THESE TERMS MUST NOT BE INTERPRETED IN THE STRICT TECHNICAL SENSE WHICH THE TERMS ' AGENT ' OR ' CONCESSIONAIRE ' MAY HAVE IN THE LAW OF ONE OR OTHER OF THE MEMBER STATES BUT MAY BE INTERPRETED WIDELY AND IN A NON-TECHNICAL MANNER . THE TERMS ' SOLE AGENT ' AND ' SOLE CONCESSIONAIRE ' MUST NOT BE UNDERSTOOD AS REFERRING TO TWO QUITE DISTINCT AND MUTUALLY EXCLUSIVE LEGAL CONSTRUCTIONS BUT AS INTENDED TO INCLUDE THE DIFFERENT CONSTRUCTIONS WHICH IN THE LEGAL SYSTEMS OF THE MEMBER STATES REFER UNDER THE ONE OR THE OTHER OF THESE DESIGNATIONS TO CONTRACTUAL RELATIONSHIPS BELONGING TO THE CATEGORY THUS INDICATED .

CONSEQUENTLY A CONTRACT BY WHICH PRIMARILY TERRITORIAL DISTRIBUTION RIGHTS ARE TRANSFERRED IN RETURN FOR ROYALTIES AND , IN ADDITION , THE RIGHT , ASSIGNED FREE OF CHARGE , TO MANUFACTURE THE IMPORTED PRODUCT , FALLS WITHIN THE PROVISIONS OF ARTICLE 2 ( 1 ) ( A ) OF REGULATION NO 1788/69 OF THE COMMISSION .

13 IN VIEW OF THIS CONCLUSION IT IS NOT NECESSARY TO REPLY TO QUESTIONS 8 AND 9 .

Decision on costs

COSTS

14 THE COSTS INCURRED BY THE COMMISSION OF THE EUROPEAN COMMUNITIES WHICH SUBMITTED OBSERVATIONS TO THE COURT ARE NOT RECOVERABLE .

AS THESE PROCEEDINGS ARE , SO FAR AS THE PARTIES TO THE MAIN ACTION ARE CONCERNED , IN THE NATURE OF A STEP IN THE ACTION PENDING BEFORE THE NATIONAL COURT , COSTS ARE A MATTER FOR THAT COURT .

Operative part

ON THOSE GROUNDS ,

THE COURT

IN ANSWER TO THE QUESTIONS REFERRED TO IT BY THE HESSISCHES FINANZGERICHT , BY ORDER OF 18 JUNE 1976 , HEREBY RULES :

1 . THE DEFINITION OF THE CONCEPT OF ' PERSONS ASSOCIATED IN BUSINESS ' SET OUT IN ARTICLE 2 ( 2 ) OF REGULATION NO 803/68 OF THE COUNCIL IS ALSO VALID FOR THE PURPOSES OF THE APPLICATION OF ARTICLE 3 ( 7 ) ( B ) OF THAT REGULATION .

2 . AN ASSOCIATION SUCH AS THAT REFERRED TO IN ARTICLE 2 ( 2 ) OF REGULATION NO 803/68 IS CREATED BY A CONTRACT WHEREBY THE FOREIGN SUPPLIER OF A PRODUCT GRANTS TO THE COMMUNITY BUYER DISTRIBUTION RIGHTS WHICH ARE TERRITORIALLY DEFINED AGAINST PAYMENT OF ROYALTIES IN THE FORM OF A PERCENTAGE SHARE OF THE PROCEEDS OF SALES .

3 . A CONTRACT BY WHICH , PRIMARILY , TERRITORIAL DISTRIBUTION RIGHTS ARE TRANSFERRED IN RETURN FOR ROYALTIES AND , IN ADDITION , THE RIGHT , ASSIGNED FREE OF CHARGE , TO MANUFACTURE THE IMPORTED PRODUCT , FALLS WITHIN THE PROVISIONS OF ARTICLE 2 ( 1 ) ( A ) OF REGULATION NO 1788/69 OF THE COMMISSION .