85/410/EEC: Commission Decision of 12 July 1985 relating to a proceeding under Article 85 of the EEC Treaty (IV/4.204 Velcro/Aplix) (Only the French text is authentic)
Date: 1985-07-12
Institutions: European Commission
Subjects: industrial product, inter-company agreement, patent law, patents licence













EUR-Lex - 31985D0410 - EN






Avis juridique important




|



31985D0410

85/410/EEC: Commission Decision of 12 July 1985 relating to a proceeding under Article 85 of the EEC Treaty (IV/4.204 Velcro/Aplix) (Only the French text is authentic)  


Official Journal L 233 , 30/08/1985 P. 0022 - 0032 





COMMISSION DECISIONof 12 July 1985relating to a proceeding under Article 85 of the EEC  Treaty(IV/4.204 Velcro/Aplix)(only the French text is authentic)(85/410/EEC)THE  COMMISSION OF THE EUROPEAN COMMUNITIES,Having regard to the Treaty establishing the European  Economic Community,Having regard to Council Regulation N° 17 of 6 February 1962, first Regulation  implementing Articles 85 and 86 of the Treaty (1), as last amended by the Act of Accession of  Greece, and in particular Articles 3 and 5 thereof,Having regard to the notification filed on 30  January 1963 by Velcro France, Paris, later renamed Aplix SA (and hereinafter referred to as  'Aplix'), of the licensing agreement which Overseas Textile Machinery Sàrl (to whose rights Aplix  succeeded on 16 February 1959) had signed on 14 October 1958 with Velcro SA (hereinafter referred  to as 'Velcro'), of Nyon, Switzerland,Having regard to the complaint made to the Commission under  Article 3 of Regulation N° 17 on 10 November 1981 by Velcro acting jointly with Velcro Europe BV  (hereinafter referred to as 'Velcro Europe'), of Haaksbergen, the Netherlands, that the notified  agreement infringedArticle 85 (1),Having regard to the Commission Decision of 26 June 1984 to  initiate proceedings in this case,Having given the untertakings concerned the opportunity to make  known their views on the objections raised by the Commission, in accordance with Article 19 (1) of  Regulation N° 17 and Commission Regulation N° 99/63/EEC on the hearings provided for in Article 19  (1) and (2) of Council Regulation N° 17 (2) and having regard to the written submissions made by  Aplix and Velcro and their statements at an oral hearing held on 25 October 1984,After consulting  the Advisory Committee on Restrictive Practices and Dominant Positions,Whereas:A. FACTSI. The  notified agreementThe agreement of 14 Ocotber 1958 contains the following clauses: 1Under clauses 1 and 2, Velcro grants Aplix the exclusive manufacturing and exploitation rights  in France, Morocco, Tunisia and all the countries belonging to the French Economic Union for an  invention of a type of textile fastener formed of two hook-bearing tapes, which was protected by  French patent N° 1.064.360.Aplix undertakes to exploit the patents in accordance with Velcro's  directions or generally to manufacture a technically equivalent product (clause 5). It also agrees  to pay Velcro, in consideration of the patent rights and technical support granted to it, a lump  sum plus annual royalties on its sales at a fixed percentage of the net selling price ex-works.  Velcro is guaranteed a certain minimum amount of annual royalties and is to be allowed to check  Aplix's production and sales records for this purpose.2Under the first and second sentences of  clause 6 Aplix is obliged to sell all the products arising from its exploitation of the patents  under the trade mark 'Velcro'. The right to use the trade mark is granted to Aplix free of  charge.3Under clause 8, Aplix is free to sell the products covered by the agreement in countries in  which Velcro has not yet granted an exclusive licence.However, the products may under no  circumstances be exported directly or indirectly to countries covered by another Velcro licence  (clause 2).4Clause 19 provides that the agreement, which came into effect on 14 October 1958, is to  last for as long as the patents covered by it and any patents that might be obtained in the same  field remain valid.Clause 7 makes Aplix responsible for defraying the cost of maintaining the  patents for the licensed invention, and any patents that might be obtained later in the field of  the invention and which Aplix wishes to use, in force in the licensed territories during the  currency of the agreement. In the first sentence of clause 9 the parties also undertake to  communicate to one another without delay, and freeof charge to the other party, any improvements  that might be made to the invention. Supplementary agreements ('avenants') to the initial agreement were signed between Aplix and Velcro  on 17 November 1958, 29 May 1972 and 10 December 1973 under which the following further patents  were added to that originally licensed, which expired on 12 October 1972:(apatents Nos 1.182.436  and 1.188.714 covering a process for manufacturing a loop tape and a hook and loop fastener, which  expired on 9 August and 15 December 1977, and(bpatent N° 2.015.550 covering a metal tape fastener,  which does not expire until 11 August 1989.However, it is not contested between the parties that  the supplementary agreement of 10 December 1973 was intended to allow Aplix to intervene in an  action for illicit copying brought by Velcro against a third party in France.In these supplementary  agreements the parties expressly referred to the clause of the agreement of 14 October 1958 which  provides that the exclusive licence covers any patent subsequently obtained in the field of the  invention, and agreed that the abovementioned patents also fell within the scope of the exclusive  licence.Aplix maintains that Velcro breached its contractual obligations by failing to communicate  to Aplix all the patents that Velcro itself or companies belonging to its group obtained in  France.5Aplix undertakes to order all its requirements of manufacturing equipment, machinery and  accessories from the tape loom manufacturer Jakob Mueller, of Frick, Switzerland (third sentence of  clause 6).6Aplix also agrees not to use this equipment outside the licensed territories (fourth  sentence of clause 6).7Under clause 12, Aplix undertakes not to manufacture or sell any fastener  that might compete with the licensed invention during the currency of the agreement. Velcro  similarly agrees not to compete with Aplix directly or indirectly in this field and, in particular,  not to grant rights to its inventions to any competitor of Aplix.8If Aplix makes any potentially  patentable invention in the field covered by the agreement which is subsequently patented in  Germany, the United Kingdom, the Netherlands or the US, such patent is to be obtained by Velcro or  assigned to it. Fair compensation would be paid to the inventor or the person who has succeeded  tothe rights of the inventor. Velcro's other licensees would be authorized to use the invention  (clauses 9.2, 9.3 and 15), just as Aplix could use any inventions of other licensees or of  Velcro.9Clause 17 provides for arbitration to settle any disputes arising from the interpretation  or application of the agreement and lays down the procedure to be followed.II. The undertakings  concerned in the case1Velcro SA ('Velcro') is a Swiss company founded by the engineer M. G. de  Mestral, who assigned all his patents to the company. Until 1977 Velcro was not in the business of  manufacturing and selling the patented hook and loop fasteners itself, but exploited the patents by  licensing and by defending them in infringement actions, of which it has brought a number in recent  years in the Netherlands, France and other countries. Besides Aplix, Velcro also licensed the  following other companies in the EEC: Ausonia SpA for Italy, Gottlieb Binder for Germany, Van Damme  &  Cie NV for the Benelux countries and Selectus Ltd for the United Kingdom, Ireland and Denmark.  All these licensing agreements were entered into before 1963 and were notified to the Commission  and, except for that with Selectus Ltd, have expired. The basic Velcro patents were taken out in  all Community countries; they have all since expired long ago.Being itself unable to provide its  licensees with adequate technical support, which they initially obtained from the loom manufacturer  Jakob Mueller, Velcro set up with its licensees a research association, initially called Eavil and  later Dinco. This association was dissolved in 1971.Since 1969 Velcro's shares have been held by  the Netherlands Antilles corporation Velcro Industries NV, Curaçao, which acts as a holding company  for the Velcro group. The Velcro group also includes Velcro USA Inc. (Velcro's American licensee),  Canadian Velcro, Velcro Israël, Velcro New Zealand and Velcro Europe BV. The main business of the  group, which has production units for Velcro fasteners in the US, Canada, India and New Zealand, is  the manufacture and sale of hook-and-loop fasteners under the 'Velcro' trade mark in a large number  of countries including, in the last few years, European countries.2Velcro Europe BV, a member of  the Velcro group, was registered in 1977 at Haaksbergen, the Netherlands, as the manufacturing and  marketing centre for Velcro products in the European Community.The fasteners manufactured at  Haaksbergen and exported from the Netherlands under the 'Velcro' trade mark qualify as products of  Community origin underCommission Regulation (EEC) N° 749/78 (1) becausethe value of the fabric  imported from the US that Velcro Europe uses in making the fasteners is within the limits for the  percentage of imported materials in the finished product stated in the Regulation. Since 1984 the  fasteners produced by Velcro Europe are entirely manufactured in the common market.3The loom  manufacturer Jakob Mueller, to whom Velcro had already assigned under earlier agreements the  development of looms and other equipment necessary for manufacturing the patented product, was  designated in Velcro's agreement with Aplix of 14 October 1958 as the exclusive supplier of such  equipment, which was in part the subject of patents which had expired in the meantime. The  licensees' purchases of this equipment from Jakob Mueller have provided the latter's recompense for  the effort of developing it. Other manufacturers, especially in Europe and the Far East, have been  able to supply equipment comparable to that of Jakob Mueller at least since 1977.4Aplix manufactures  and sells wall coverings as well as self-gripping fasteners, but achieves the bulk of its turnover  in fasteners. It is thanks to the exclusive Velcro licence that Aplix has been able successfully to  enter the field of plastic fasteners in France, where, at present, it has two factories. It holds a  number of patents and registered trade marks in France and in various other countries. It set up a  factory in the US in 1982, another in Taiwan in 1984, and established subsidiaries in the Federal  Republic of Germany and in Italy in 1983. Between 1978 and 1983 Aplix's turnover tripled, and it  reached nearly FF . . . (2) in 1984.III. The products(aThe self-gripping hook-and-loop textile  fasteners marketed by Aplix under the 'Velcro' trade mark and, since 1977, partly under its own  'Aplix' mark are composed of a tape covered with loops, commercially called 'Astrakan', and a tape  covered with hooks, commercially called 'Hooks'. Both tapes are woven in polyamide yarn which can  stand temperatures of over 140 gC. When the two tapes are pressed together, the hooks engage the  loops. By pulling from one end, the hooks open and release the loops, and then return to their  original position because they are set in this position by a heat-setting process. The hook-and-loop fasteners combining two tapes that are manufactured and sold by Aplix conform to  the fastener described in French patents Nos 1.182.436 and 1.188.714, which are referred to as the  basic patents and which expired during the year 1977. This is the only type of fastener ever  marketed by Aplix or by any other Velcro licensee. The fastener covered by the original French  patent N° 1.064.360, made up of two tapes each covered with hooks, has never been exploited,  because it did not meet the technical requirements of the market.Aplix does not exploit any  improvement patents currently held by Velcro. In particular, it does not manufacture metal-hooked  tape, patent N° 2.015.550, which was the subject of the supplementary agreement of 10 December  1973.In accordance with clause 9 assigning to Velcro any patents in the Federal Republic of  Germany, the United Kingdom, The Netherlands or the United States for improvements made by Aplix,  Velcro holds several patents for inventions made by Aplix and its chairman. Only a few of these  patents have been exploited commercially for limited periods.(bThe hook-and-loop fastener had a  novel character when the patents were first exploited and required substantial technical and  commercial development by the licensee.Protracted technical development work was necessary even to  produce the materials and it was several months after the agreement was signed before trial  production could begin. In France, as in the other territories for which licences were issued,  commercial production of Velcro fasteners did not really begin until the end of 1960. Promotion  work was also necessary to stimulate demand for what was a completely new product marketed under a  trade mark not previously used.The technical data the parties supplied during the investigation of  the case give as the main advantages of the hook-and-loop fastener its ability to withstand a very  large number of opening and closing operations with very little wear and the fact that it can be  sewn, stuck, bonded or stapled on to the backing material, which enables it to be used to make a  quick-release closure in or between a wide variety of different materials, fabrics, cardboard,  paper, metal, glass, leather, etc., including those which have to be washed or dry-cleaned.The main  users of the fasteners are, in descending order of importance, household furnishing and clothing  manufacturers and distributors, the automotive and transport equipment industries and the leather  and footwear industries.(cThe hook-and-loop fasteners sold under the 'Velcro' or 'Aplix' trade  marks are in competition with other typesof textile fasteners, which are cheaper, partly because  of the greater age of the underlying invention and quality differences.The market for textile  fasteners can be divided into two groups of products of widely differing importance:slide (zip)  fasteners, whose market is about 20 times that for self-gripping fasteners and which to a limited  extent are substitutes for self-gripping fasteners;self-gripping fasteners, which besides Velcro  (hook and loop) fasteners also includes 'mushroom' type fasteners, which directly compete with  Velcro fasteners but have a more limited range of applications and inferior performance (they  cannot withstand boiling and are suited only to applications involving a very limited number of  opening and closing operations).The French market for self-gripping fasteners (both hook-and-loop  and mushroom type) is currently estimated at some 22 million metres of tape, of which about 8  million is mushroom type. Aplix holds about  . . . % of this market. At present, its sales are  mainly of hook-and-loop fasteners sold exclusively under the 'Aplix' trade mark, with the rest  accounted for by mushroom-type fasteners sold under the 'Fixa' mark and new self-gripping plastic  fasteners sold under the 'Plasti-Aplix' mark. The market for self-gripping fasteners is contracting  because of a fall in consumption by the footwear industry.The other firms besides Aplix that supply  self-gripping fasteners to the French market are Niedick (Federal Republic of Germany), Kanebo  (Japan), Kuny (Switzerland) and Louison (France), which sell mushroom-type fasteners under the  trade marks 'Brisa', 'Magicloth', 'Fix Velours' and 'Cric Crac' respectively. These manufacturers  also sell in other EEC countries. Hook-and-loop fasteners are sold in other EEC countries by Velcro  Europe and the Velcro licensee Selectus, which use the 'Velcro' trade mark, and by the ex-licensees  of Velcro and the American firm 3M.IV. The dispute between the parties(aAt a meeting held in  Geneva on 31 May and 1 June 1976 with all its European licensees, Velcro told them that as the  licensing agreements contained a large number of clauses prohibited by the EC Commission in its  Decision 76/29/EEC (AOIP/Beyrar) (1), they would have to be substantially amended. Velcro mentioned  the possibility of terminating the agreements and forbidding the licensees to use the trade mark  after expiry of the basic patents. In an exchange of correspondence with Aplix in November 1977, Velcro told Aplix that the  agreementof 14 October 1958 would end with the expiry of French patent N° 1.188.714 on 15 December  1977.Aplix, which had earlier unsuccesfully tried to obtain a licence from Velcro to continue to  use its trade mark for a long period after the basic patents expired, contested Velcro's position  and declared itself entitled to withhold certain sums Velcro claimed Aplix owed it. In particular,  it alleged that it had suffered serious harm because of Velcro's failure to pass on improvement  patents to it and to comply with the formalities for registering licences for such patents with the  INPI (Institut National de la Propriété Industrielle). Aplix also changed its company name from  Velcro France Sàrl, which it had used since 1959 with Velcro's consent, to its present one, Aplix  SA, and began to use the 'Aplix' trade mark. The parties decided to refer their dispute to arbitration as provided for in clause 17 of the  agreement, but the arbitrators declined to give a ruling, feeling that they must await a decision  by the Commission on whether or not the notified agreement was valid.(bVelcro later brought the  dispute before the Paris Regional Court (Tribunal de Grande Instance) claiming that Aplix was  engaging in unfair competition by taking various steps to deprive the 'Velcro' trade mark of its  distinctiveness, and in particular by using the words 'la plus forte production de Velcro en  Europe' in its letter headings, and asking the court to declare the agreement terminated through  the fault of Aplix.In its judgment given on 17 March 1981, the court held that the entire dispute  was subject to the arbitration clause stipulated in the agreement and declined jurisdiction. Its  decision was upheld by the Paris Court of Appeal on 19 October 1981, on the ground that the  agreement notified to the Commission enjoyed provisional validity until such time as the Commission  took a decision and must be enforced by national courts without reference to Article 85 of the  Treaty. The agreement was also held to enjoy provisional validity by a Dutch court when it refused  on 23 June 1983 an application for an injunction against one of Aplix's French dealers who was  exporting hook-and-loop fasteners to the Netherlands. It found that the exported fasteners must be  considered as having been legitimately put on the market in France (by Aplix) under the'Velcro'  trade mark with Velcro's consent.(cMeanwhile, following request for information by the Commission,  the parties had entered into negotiations early in 1979 with a view to reaching an amicable  settlement incorporating the changes the Commissionhad asked to be made in the notified agreement,  in particular to remove the territorial exclusivity granted to Aplix and the exclusive purchasing  obligation, the non-competition clause, the export ban imposed on Aplix and the compulsory  assignment of Aplix improvement patents in the Federal Republic of Germany, the United Kingdom, The  Netherlands or the United States. The need for these changes was confirmed by the Commission by  letters dated 7 June 1979 and 16 November 1981 to Velcro and Aplix respectively.The negotiations  between the parties continued, despite interruptions during which Velcro asked the Commission to  issue a statement of objections against the agreement, at least until the summer of 1982, as is  shown by letters which the parties' lawyers sent to the Commission on 27 July and 17 September  1982. In the end the negotiations broke down, with each side blaming the other for the failure.  Aplix had throughout expressed a willingness to delete the following clauses, which were mainly to  the benefit of the licensor:II(i) the ban on exports to countries covered by an exclusive Velcro  licence;I(ii) the obligation to purchase exclusively from Jakob Mueller;(iii) the licensee's  obligation to assign its rights in improvement patents in the Federal Republic of Germany, the  United Kingdom, The Netherlands and the United States; and(iv) the non-competition clause, except  for countries covered by the licence but outside the scope of Community law.It should be noted that  notwithstanding the non-competition clause, Aplix in fact exploited products competing directly  with Velcro fasteners, in particular 'mushroom' fasteners and fasteners made under a competing  patent invented and obtained by Aplix in 1967.(dSince 1979 Velcro Europe has been selling  self-gripping fasteners under the 'Velcro' trade mark to French distributors. On 4 November 1981  Aplix wrote to one of these French distributors claiming that its industrial property rights were  being infringed, though it did not specify how and, in particular, made no reference to the  'Velcro' trade mark or to the recent French court judgments. In April 1983 it also sent letters and  telexesto Velcro Europe alleging that it had infringed a patent Aplix had obtained in 1973 by  exporting bonded tapes to France. Subsequently, Aplix explained to the Commission that it was on  the basis of this patent that it had written to the distributor on 4 November 1981. According to  Velcro, the letter, though hedged with legal safeguards, was extremely threatening and calculated  to drive its customers over to Aplix through fear of court action.(eIn its reply to the Commission,  Aplix maintained that its agreement with Velcro was valid until at least 11 August 1989, the date  of the expiry of patent N° 2.015.550, which was the subject of the supplementary agreement of 10  December 1973. This supplementary agreement, Aplix argued, had been entered into in the same way as  the previous ones which had extended the agreement until December 1977, without any objection from  Velcro, which had received royalties until that time Aplix contended that it therefore had every  justification for claiming that the territorial exclusivity granted to it under the original  agreement had been extended until 11 August 1989.Aplix made it clear, however, that in view of the  principle established by the Court of Justice of the European Communities in Centrafarm v. Winthrop  (1), it would never have attempted to oppose the entry into its territory of products bearing the  'Velcro' trade mark that had been placed on the market in another Member State under the trade mark  by the trade mark owner or with his consent. On the other hand, it contended that the agreement of  1958 granted it an exlusive right to use the trade mark Velcro in France and that this exclusive  right entitled it to oppose the entry on to the French market of products bearing the 'Velcro' mark  that were directly sold by Velcro Europe to French buyers without having first been placed on the  market in the Netherlands. Although repeatedly voicing this position of principle, Aplix does not  appear, apart from its action in sending the above mentioned letter to a French distributor  supplied by Velcro, to have actually tried to prevent direct imports by Velcro from the  Netherlands. Furthermore, Aplix, considering itself bound by the export ban, never made any sales  in the EEC countries covered by an exclusive licence from Velcro. (fIn a letter to the Commission  dated 11 July 1983, Velcro again disputed that the notified agreement could be considered to be in  force after December 1977, arguing that the agreement could not have been extended by the  supplementary agreement of 10 December 1973 because the patent to which it referred had (a) been  licensed to Aplix at Aplix's request solely to enable it to intervene in a patent infringement  action Velcro had brought against the French company Décor and (b) had never been exploited. The following assessment of the clauses of the notified agreement in relation to the competition  rules of the EEC Treaty is without prejudice to the view a national court might take of the  question whether or not the agreement was extended by the supplementary agreement of 10 December  1973. (gAt the oral hearing held on 25 October 1984, the parties reiterated their basic positions.  In particular, Aplix asked the Commission to recognize its right to oppose direct imports of  products bearing the 'Velcro' trade mark should its status as the exclusive licensee of the mark be  upheld by a national court.It also complained of a lack of cooperation by Velcro in connection with  the removal from the agreement of the exclusive purchasing clause, the export ban, the  non-competition clause and the obligation to assign the rights to improvement patents, which would  at least have enabled the Commission to exempt the agreement for the past. Aplix also reaffirmed  its wish to reach an agreement with Velcro that was consistent with the competition rules. Velcro,  for its part, submitted that the supplementary agreement of 10 December 1973 could not be regarded  as a separate later agreement capable of validly extending the life of the 1958 agreement, since in  this as in the previous supplementary agreements the parties explicitly referred to clause 19 of  the 1958 agreement, which provided for automatic extension.Velcro also contested the right of Aplix  to use the 'Velcro' trade mark in a direct or indirect manner in France after expiry of the basic  patents in December 1977 and ruled out the possibility of an amicable settlement in the near  future.B. LEGAL ASSESSMENTI. The scope of this DecisionThis Decision concerns an agreement dated  14 October 1958 to which only two undertakings are party and which was notified to the Commission  pursuant to Article 5 of Regulation N° 17 before 1 February 1963. It is thus an agreement which    on the assumption that it is caught by Article 85 (1) and that the conditions for the application  of Article 85 (3) are fulfilled   the Commission could exempt retroactively under Article 6 (2) of  Regulation N° 17. The Commission in fact considers it possible that until 15 December 1977, certain  of the agreement's clauses could either have fallen outside the scope of Article 85 (1)   the  circumstances of the case justifying the protection of the investments made by the licensee in  France up to 15 December 1977, which date coincides in the present casewith the date of expiry of  the basic Velcro patents in France  or have benefited from exemption pursuant to Article 85 (3).  However, the Commission considers that at present, there is no need to make a finding as to the  validity of the 1958 agreement during the period prior to 15 December 1977, during which the  parties honoured the agreement in good faith. Furthermore, the Commission has no knowledge of any  claim by a third party, before the Commission or a national court, concerning that period.On the  contrary, the Commission considers it desirable to determine the validity of the agreement in the  period following 15 December 1977, on the subject of which the Commission has received a complaint  from Velcro SA and one of its licensees. The Commission also considers that there is no doubt that  since the expiry of Velcro's basic patents in France in December 1977, the notified agreement is  caught by the prohibition contained in Article 85 (1) and does not qualify for exemption pursuant  to Article 85 (3).II. Article 85 (1)The licensing agreement of 14 October 1958, supplemented by  the supplementary agreements of 17 November 1958 and 29 May 1972, and possibly also by the  supplementary agreement of 10 December 1973, is an agreement between undertakings within the  meaning of Article 85. The agreement has the object and effect of restricting competition within  the common market by means of the provisions discussed below. The resulting restrictions have an  appreciable effect on the relevant fastener market, given the share of the French market held by  Aplix.1The provisions of the agreement listed in paragraphs 1 8 of section A I above constitute,  since 15 December 1977, restrictions of competition in the meaning of Article 85 (1).Paragraphs 1  and 2  The exclusivity granted to Aplix under the agreement and operated by the parties prevents  Velcro from itself exploiting its patents for the fasteners and the 'Velcro' trade mark in France  and from offering licences to other firms that might be interested in the patents or trade mark,  and so prevents competition in these territories between different persons exploiting the same  inventions and the same trade mark. This restriction on the owner of the industrial property rights  has fallen under the prohibition contained in Article 85 (1) at least since the expiry of the basic  patents. Assuming that the agreement was validly extended until 1989 and that Aplix exploited until  that time Velcro patents that were still valid, an exclusivity for such patents could only be  considered compatible with Article 85 (1) of the Treaty if it concerned the introductionand  protection of a new technology in the contractterritory, within the meaning of the Court's  judgment in the 'Maize seed' case (1), which cannot be maintained in this case.The exclusivity, as  so far applied by the parties, has had the effect of restricting the freedom of Velcro to market  directly in France not only any new products resulting from still-valid improvement patents but  also products made under the expired basic patents, which are at present the only ones exploited by  either Aplix or Velcro.Article 85 (1) is not excluded from applying to this restriction on the free  movement of goods by the fact that the goods are marketed under the 'Velcro' trade mark while under  the agreement Aplix has undertaken to sell all products arising from the exploitation of the  patents, under the name Velcro. Apart from the fact that such use of the mark is not stipulated as  exclusive to Aplix, it must be pointed out that Aplix is wrong in saying that Community law only  requires free movement of trade-marked goods which have already been placed on the market in  another Member State.In its Hag judgment (2), the Court of Justice held that it would be contrary  to the EEC Treaty to prohibit the marketing in a Member State of goods on which a trade mark had  been lawfully placed in another Member State on the ground that an identical trade mark having the  same origin existed in the first Member State.It is clear from this judgment that the assignment of  a national mark does not alter the position regarding the applicability of trade-mark law: it does  not permit either the assignee or the assignor of a national mark to oppose direct imports by the  other on the basis of that law. If it is unlawful to invoke trade-mark law against direct imports  even where the mark has been assigned or otherwise transferred (by court order or expropriation),  this applies all the more where the mark has merely been licensed.Thus, in the absence of any  justification resulting from a need to protect the introduction of the Velcro mark in France even  after December 1977, it is not part of the essential function of a trade mark to enable Velcro or  Aplix to isolate national markets by prohibiting imports of products manufactured in another Member  State and lawfully bearing the 'Velcro' trade mark affixed by the trade mark owner himself or by  any of his licensees. In the present case, the criteria for judging such a restiction on free trade  between Member States can only be those laid down in Article 85 (3). Paragraph 3  The export ban prevents Aplix from selling its products outside the licensed  territory in countries where Velcro has granted exclusive licences. Since exclusive licences are  still in force in the United Kingdom, Ireland and Denmark, Aplix cannot export its hook-and-loop  fasteners made under Velcro patents from France to those countries. Indeed, Aplix gave a formal  undertaking not to make such exports to the United Kingdom in the settlement on 2 November 1983 of  an action brought against it by Velcro's United Kingdom licensee, Selectus Ltd, in the High Court  of Justice, Chancery Division, London.As is stated in the AOIP/Beyrard Decision, referred to above,  it is no part of the essential function of patent rights to enable the licensor to prohibit the  licensee from exporting to countries in which the licensor has granted a licence. The protection of  one licensee against the competition of another licensee through a contractual ban on exporting or  importing is at least after expiry of the basic patents a restriction of competition within the  meaning of Article 85 (1). Furthermore, as stated above, the invocation of the Velcro mark also  does not permit such isolation of markets.Paragraph 4  The automatic extension of the term of the  licensing agreement, on condition only that Aplix defrays the cost of maintaining in force the  improvement patents it desires to use, denies the licensor the possibility of escaping the  restrictive obligations upon him at the end of the statutory period of protection for the basic  patents. The restriction of competition resulting from the denial of this possibility to Velcro is  all the more serious in that the agreement does not provide a right of early termination, except  for serious breach of contract.As the Commission stated in the AOIP-Beyrard Decision, the parties  are free to agree subsequently to extend the term of the original agreement; but the Commission  would reiterate the principle that a unilateral extension of the term of an agreement, that is to  say, in the absence of a specific agreement to that effect, is not permissible. In the present  case, it should be noted that the contract was validly extended to December 1977 by the specific  agreements of 17 November 1958 and 29 May 1972 concerning the so-called basic patents, which alone  permitted the effective exploitation of the Velcro fasteners.Paragraph 5  As interpreted and  applied by the parties, the obligation to obtain looms and other equipment exclusively from the  tape loom manufacturer Jakob Mueller relates only to plant specifically for the production of  self-gripping fasteners, such as looms for weaving the tape and cutting machines for making the  hooks. At least with effect from 1977, when it may be considered that substitute products were on  the market (see point A.II.3 above), such an obligation prevents the licensee from obtaining the  equipment from other manufacturers in the common market, possibly on more favourable terms. Besides restricting the freedom of the licensee, this obligation also significantly affects the  position of third parties, especially loom builders, who are thereby deprived of an important  potential customer.Paragraph 6  The obligation not to use the looms outside the licensed territory  restricts the licensee's freedom to manufacture in Member States other than France the Velcro  fasteners for which it has receiveda patent licence and prevents it doing so in theMember States  where it could manufacture most advantageously.Paragraph 7  The obligation on the parties not to  compete with one another prevents the licensee and the licensor from carrying on research in fields  connected with the licensed patents or from manufacturing or selling competing products while the  agreement is in force.Paragraph 8  The obligation to allow Velcro to acquire the title to patents  in the Federal Republic of Germany, in the United Kingdom and in The Netherlands for improvements  discovered by Aplix is, in principle, an unwarranted extension of the licensed patents in that the  licensor is using his industrial property rights to appropriate certain foreign patents covering  improvement inventions that are wholly or partly the work of his licensee.2The restrictions of  competition discussed above have been, since the expiry of the basic patents in December 1977,  likely to affect trade between Member States. The exclusivity prevents Velcro from exploiting its  patents and trade mark directly in France and hence from exporting from or to that territory. The  indefinite term of the agreement influences trade between Member States at least when combined, as  in the present case, with other restrictive clauses likely to affect trade. The obligation on the  licensee to obtain looms and other production plant from a specific supplier in Switzerland  prevents it from obtaining these supplies from other Member Statesand so restricts trade in such  products between Franceand those States. The restriction of the licensee's manufacturing rights to  French territory prevents it from transferring its production base to or setting up a new  production unit in other Member States. The ban on either party taking an interest in competing  products prevents them from engaging in trade in such products across Member State frontiers or  obtaining licences for them from firms in other Member States. The export ban isolates certain  other Member States from the French market. The obligation to assign Velcro certainimprovement  inventions prevents the licensee from obtaining patents for such improvements in other Member  States and hence from exploiting them in such States, whether directly or by licensing.III. Article  85 (3)Under Article 85 (3), the provisions of Article 85 (1) of the EEC Treaty may be declared  inapplicable in the case of agreements between undertakings which contribute to improving the  production or distribution of goods or to promoting technical or economic progress, while allowing  consumers a fair share of the resulting benefit, and which do not:(aimpose on the undertakings  concerned restrictions which are not indispensable to the attainment of these objectives;(bafford  such undertakings the possibility of eliminating competition in respect of a substantial part of  the products in question.1(aTo the extent that the agreement gives Aplix the benefit of a  prohibition on the licensor from exploiting the products in France and from granting further  licences there during the life of the patents which expired in 1977, the Commission considers that  the agreement was outside the scope of Article 85 (1) to the extent that circumstances of the kind  described in the abovementioned 'Maize seed' judgment, especially new technology, the need for  investment and a beneficial effect on competition vis-à-vis other products, were present in this  case until December 1977, or that it could in any event have been exempted under Article 85 (3).The  exclusivity no doubt made it easier for Aplix to take upon itself the risk of investing in the  exploitation of the Velcro patents and thus facilited the development of a new product,  self-gripping fasteners, in competition with slide fasteners, so contributing to technical and  economic progress.The industrial exploitation of the Velcro patents through licensing provided the  user industries witha product which they came to appreciate forits qualities and its suitability  for particular applications. The user industries can thus be said to have received a fair share of  the benefit resulting from the agreement. The territorial protection resulting from the licensee's  exclusive sales rights and the related ban on the licensor exporting into the territory can be  considered to be indispensable for inducing the licensee to undertake a commitment to develop and  manufacture a new product, which when the agreement was signed was still at an experimental stage,  and to build up from scratch amarket for the product and considerable goodwill for the 'Velcro'  trade mark. The agreement did not eliminate competition for a substantial part of the products in  question, since there are many other producers in France manufacturing competing products.(bThe  Commission sees no justification under Article 85 (3), however, for restrictions on the marketing  in France of products manufactured by Velcro Europe after the patents for the processes used by  Velcro Europe, notably the so-called basic French patents Nos 1.182.436 and 1.188.714, had expired  on 9 August and 15 December 1977 respectively.The Commission would point out that any exclusivity  that may be granted for patents under an agreement is indissolubly linked to the existence and  continuing validity of the patents. Therefore, in the present case exclusivity can no longer apply  between the parties for the Velcro patents, which the licensee exploited throughout their life, and  no obstacle can on that basis be placed on the importation and marketing in France of products  manufactured using processes that are no longer protected.Nor can the import of Velcro products  into France be justifiably opposed on the basis of use of the trade mark. Although trade mark  rights, unlike patent rights, are not subject to a time limit provided the mark continues to be  used or its registration is renewed, a trade mark owner or his licensees cannot enforce the rights  held in a mark where one of them exports to the other's territory within the common market unless  special reasons such as the protection of the introduction of the mark into those territories  justifies such action.In a case like the present one, it can be accepted that exclusive user rights  for a trade mark help to promote the entry of a new product in a new respective territory in which  the licensor or a licensee operates. However, such exclusive rights must cease at the latest when  the basic patents expire, so that the products, which up till then have been protected from  competition within national territories, can spread beyond these territories and become established  throughout the enlarged market of the Community. In fact, nearly 20 years afterthe introduction of  the Velcro mark to France and other EEC countries, including the Netherlands, the Commission cannot  find that in the present casethere are special circumstances which might still justify exclusivity  of the mark in favour of Aplix orof Velcro after the expiry of the basic patents in December  1977.(cFinally, supposing that the contractual relations between the parties did continue after  December 1977 for the exploitation of patent N° 2.015.550 (and of any other patented processes that  Aplix might be entitled to exploit until August 1989), no exclusive manufacturing and sales rights  on Aplix's part with respect to this or any other more recent patent could be accepted under  Article 85 (3), or even considered as falling outside the scope of Article 85 (1) for a certain  period, unless it were established that such patents were actually exploited. The Commission  understands that no such more recent patent has been exploited by Aplix. Even if Aplix had done so  and exclusive rights in Aplix's favour could be justified, this would not entitle Aplix to oppose  imports of products bearing the 'Velcro' mark manufactured in other Member States not according to  these patents but to patents that have expired.2The export ban on Aplix, the automatic extension of  the term of the agreement, the obligation to obtain supplies exclusively from the loom builder  Jakob Mueller, the prohibition of Aplix from manufacturing the patented product outside the licensed  territory, the non-competition clause, and the obligation on the licensee to assign the licensor  its rights to certain improvement inventions are not justified since December 1977 by valid patents  or by trade-mark rights and do not fulfil the conditions for exemption laid down in Article 85  (3).(aThe export ban on Aplix is designed to underpin a system of territorial protection for other  licensees in other common market countries and for Velcro itself. Whilst export bans imposed by  Velcro on Aplix and the other licensees might in the past have been eligible for exemption for a  certain period during the validity of the basic patents in France and the other common market  countries on account of the novelty of the licensed technology and the investment undertaken by the  licensees, there is no longer any justification for such an exemption at least since 1977. This  export ban therefore represents a serious limitation of Aplix's freedom to compete within the  common market.(bThe provision in clause 19 of the notified agreement is, in the absence of specific  agreements validly extending the agreement beyond December 1977, a serious restriction of Velcro's  freedom to escape the restrictive obligations imposed on it in the agreement, and it is difficult  to see how this clausecould contribute to improving the production or distribution of the products  or promote technical or economic progress.(2(cThe obligation upon the licensee to obtain the  special equipment it requires for the production of hook-and-loop tape exclusively from Jakob  Mueller, although it is established that at least since 1977 the licensee could have obtained  similar equipment from other suppliers in the common market, is a serious restriction on the  licensee's freedom to choose his source of supply. This restriction is thus not necessary to ensure  a technically satisfactory exploitation of the invention. Furthermore, after 1977, there is no  justification by way of legitimate recompense to Jakob Mueller for the effort of developing the  equipment necessary to exploit the invention, as Jakob Mueller was able to obtain such recompense  from supplying Aplix and the other licensees up to that date.(dAfter the expiry of the basic  patents, the ban on manufacturing the patented products outside the licensed territory has no  beneficial effects for the purposes of Article 85 (3), but acts rather as a brake on better  allocation of resources within the common market.(eGiven that Aplix has not exploited any valid  patent since December 1977, the non-competition clause cannot be justified by reason of an improved  exploitation of patents. There is also no justification based on a more intensive use of the Velcro  mark by the licensee, as Velcro has been disputing the legality of such exploitation since 1977 and  Aplix has been using a mark of its own since then.(fThe restriction of competition involving the  compulsory assignment to Velcro of the title to certain foreign improvement inventions made by the  licensee also cannot be justified after December 1977. Velcro's basic patents having come into the  public domain since then, Velcro can no longer invoke rights to obtain title to any improvement  patents.3Since not all the conditions laid down in Article 85 (3) are fulfilled in respect of the  period following the expiryof Velcro's basic patents, namely 15 December 1977, the notified agreement cannot be exempted after that date.IV. Article 7 (1)Where agreements  notified before 1 February 1963 do not fulfil the conditions of applicability of Article 85 (3) of  theTreaty, and the parties terminate them or amend them so that they are no longer caught by  Article 85 (1) or fulfil the conditions of applicability of Article 85 (3), the Commission is  empowered, when adopting a decision pursuant to Article 85 (1), to determine the period to which  the prohibition laid down in Article 85 (1) applies.In the present case, Aplix wanted to amend  certain clausesof the agreement (see point A. IV (c) above), while Velcro wanted to terminate the  agreement in December 1977 (see point A. IV (f). Notwithstanding this disagreement over the  amendment or termination of the agreement within the meaning of Article 7 of Regulation N° 17, both  parties were bound by the agreement until the date of this Decision, as it is an old agreement  which benefits from provisional validity. This validity was confirmed by the French and Dutch  courts in 1981 and 1983 (see point A. IV (b) above). The Commission considers that in the present  case, despite the absence of the conditions laid down in Article 7 of Regulation N° 17, since the  parties were bound by the agreement until the date of this Decision, the principle of legal  security should prevail, at least as regards the effects of the agreement as between the parties,  over that of the retroactivity of the Commission Decision. However, the Commission does not  consider itself empowered to limit the period during which the prohibition laid down in Article 85  (1) applies if the conditions of Article 7 of Regulation N° 17 are not fulfilled.V. Article 3  (1)Article 3 (1) of Regulation N° 17 provides that where the Commission, upon application or upon  its own initiative, finds an infringement of Article 85 of the Treaty, it mayby decision require  the undertakings or associations of undertakings concerned to bring such infringement to an end. On  the basis of the findings set out in sections I, II, III and IV above, the Commission considers  that since 15 December 1977 the undertakings in question have committed an infringement of Article  85 (1) and that no exemption may be granted for the notified agreement,HAS ADOPTED THIS  DECISION:Article 1As regards the territory of the common market and, in  particular, of France, the clauses listed below of the licensing agreement signed by the  undertakings referred to in Article 4 on 14 October 1958, and supplemented by supplementary  agreements signed on 17 November 1958, 29 May 1972 and 10 December 1973, constitute infringements  of Article 85 (1) of the EEC Treaty since 15 December 1977:1clause 1 (exclusivity);2clauses 2 and 8  (export bans); 3clause 19 (extension of the term of the restrictive clauses of the agreement beyond the life of  the so-called basic patents, namely patents Nos 1.064.360, 1.182.436 and 1.188.714);4third sentence  of clause 6 (exclusive purchasing obligation);5fourth sentence of clause 6 (prohibition on  manufacturing outside the licensed territory);6clause 12 (non-competition clause); and7clause 9  (compulsory assignment of improvement patents in the Federal Republic of Germany, the United  Kingdom and The Netherlands).Article 2Application of Article 85 (3) of the EEC Treaty is hereby  refused.Article 3The undertakings referred to in Article 4 shall immediately bring the  infringements listed in Article 1 to an end. Article 4This Decision is addressed to:1Velcro SA, rue César-Soulié 3, CH-1260 Nyon2Aplix SA, avenue Marceau, 75bisF-75116 ParisDone at Brussels, 12 July 1985.For the  CommissionPeter SUTHERLANDMember of the Commission(1) OJ N° 13, 21. 2. 1962,  p. 204/62. (2) OJ N° 127, 20. 8. 1963, p. 2268/63. (1) OJ N° L 101, 1. 4. 1978, p. 7. (2) In the published version of the Decision, some figures have hereinafter been omitted, pursuant  to the provisions of Article 21 of Regulation N° 17 concerning non-disclosure of business secrets. (1) OJ N° L 6, 13. 1. 1976, p. 8. (1) Case 16/74, ECR (1974) 1183. (1) Case 258/78 ECR (1982) 2015. (2)  Case 192/73 ECR (1974) 731.