85/561/EEC: Commission Decision of 13 December 1985 relating to a proceeding under Article 85 of the EEC Treaty (IV/30.017 - Breeders' rights: roses) (Only the French text is authentic)
Date: 1985-12-13
Institutions: European Commission
Subjects: competition, exclusive distribution agreement, floriculture













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31985D0561

85/561/EEC: Commission Decision of 13 December 1985 relating to a proceeding under Article 85 of the EEC Treaty (IV/30.017 - Breeders' rights: roses) (Only the French text is authentic)  


Official Journal L 369 , 31/12/1985 P. 0009 - 0018 





COMMISSION DECISIONof 13 December 1985relating to a proceeding under Article 85 of the  EEC Treaty(IV/30.017   Breeders' rights: roses)(Only the French text is  authentic)(85/561/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 2, 3, and 4 thereof,Having  regard to the complaint lodged with the Commission pursuant to Article 3 (1) of Regulation N° 17 on  31 January 1980 by Mr René Royon,Having regard to the Commission Decision of 9 December 1983 to  initiate proceedings in this case,Having regard to the application for negative clearance and the  notification filed on 27 April 1985 by Mr Alain Meilland pursuant to Article 4 of Regulation N°  17,Having given the undertakings concerned the opportunity to make known their views on the  objections raised by the Commission, pursuant to Article 19 (1) of Regulation N° 17 and to  Commission Regulation N° 99/63/EEC of 25 July 1963 on the hearings provided for in Article 19 (1)  and (2) of Council Regulation N° 17 (2),After consulting the Advisory Committee on Restrictive  Practices and Dominant Positions,Whereas:I. FACTSA. The parties1.The parties to this case are  active mainly in the ornamental plant sector; they specialize in roses, which constitute a specific  market.2.The general partnership Meilland et Cie, Antibes, exploits throughout the world varieties  of rose bushes which are produced and distributed under the name Selection Meilland. The partners are:Mr Alain Meilland,Mrs Marie-Louise Paolino, widow of Francis Meilland,Mr Raymond  Richardier.The activities of this undertaking include the breeding of new varieties of rose bush,  the production of plants, the exploitation of such plants (so-called 'garden' exploitation) or of  the flowers ('cut flower' exploitation) and their distribution both wholesale and retail through an  international network of licensees and sub-licensees.The private company Universal Plants, Le  Cannet des Maures, specializes more particularly in the production of rose bushes. It is also the  breeder of a number of varieties or holder of the rights in their exploitation. The partners are:Mr  Alain Meilland,Mr Raymond Richardier, andMrs Marie-Louise Paolino, referred to above, is the  manager.These two undertakings trade under the name Universal Rose Selection-Meilland (URS-M,  hereinafter called 'Meilland').Owing to the economic importance, from both the qualitative and  quantitative points of view, of its varieties, which are sold in numerous countries, including the  two biggest markets for ornamental plants, North America and Europe, Meilland has for the past 30  years been one of the world's leading breeders and producers of roses. Its current turnover is  approximately 12 million ECU, two-thirds of which is from sales in the Community. This figure  includes both earnings from its own production and the royalties charged for the exploitation of  its varieties by third parties.3.In France, Meilland has granted a licence for the commercial  exploitation of its varieties to Mr and Mrs Francisque Richardier (hereinafter called  'Richardier'), who are related to Mr Raymond Richardier. The are exclusively authorized, under an  agreement they concluded with Meilland on 30 September 1968, to produce and sell, or cause to be  produced and sold, in that country rose bushes and cut flowers of the Selection Meilland varieties.  Theytrade on this basis under the name Universal Rose Selection-France (URS-F), at Tassin La  Demi-Lune, in the capacity of general licensee, and grant sub-licences to French nurserymen and  horticulturists wishing to exploit those varieties.4.While he was employed by Meilland as Director  entrusted with administrative and managerial functions and responsible for the international  distribution of the Selection Meilland varieties, MrR. Royon himself became in 1971, at the same  time and on an independent basis and with Meilland's consent, one of Richardier's sub-licensees. In  this capacity, he produced under glass, at his nursery 'Les Roses du Capitou' at Antibes, cut  flowers from rose bushes of the Selection Meilland varieties, including the variety Sonia. In 1983,  Mr Royon closed his business and sold his equipment.B. The products and their distribution5.The  products in question which are the subject of the contract covered by this proceeding, are rose  bushes and cut roses of the varieties Sweet Promise-Sonia Meilland and Pitica/Kyria, which are  Selection Meilland varieties, the second being a natural mutation of the first, discovered in Mr  Royon's glasshouses in 1971. Selection Meilland varietiesare as a rule intended either for  professional horticulturists specializing in the production of cut flowers sold as such to the  consumer, or for amateur gardeners seeking rose bushes. Almost all these varieties are protected,  usually by a plant breeder certificate, which is the case in all the Member States   except Greece  and Luxembourg   and in certain non-Community countries, but sometimes by a patent; moreover, each  one is distributed under a fancy name which has formed the subject matter of an international  filing. In January 1980, the date of the complaint, about 150 Selection Meilland varieties were  exploited with a production in excess of 1 000 or 2 000 plants. Of those varieties, 24, including  Sonia, were distributed throughout the Community and in 25 non-member countries for sale as cut  flowers. At the same time, a large number of other varieties are used to a limited extent by  Meilland as selection material.6.(a)The number of rose bushes sold to amateur gardeners each year  in Europe is put at 150 million; approximately 20 milion are derived from protected varieties,  representing retail sales worth about 30 million ECU; two-thirds of these are supplied by four  major breeders   the German breeders Kordes and Tantau, and the French breeders Meilland and  Delbard   or their licensees in the various countries of the Community.(b)As to the cut flower  trade, 90 % of which is in protected varieties, it is estimated that 200 million rose bushes are  exploited by rose growers world-wide, two-thirds of whom are in Europe where they own 3 000  hectares of glasshouses, andwhere 20 million such bushes worth about 25 million ECU are renewed on  average each year: including imports from non-Community countries, close on 5 thousand million cut  roses are sold each yearto private individuals in the Community, approximately half of which are  of varieties protected in the name of four major breeders   Meilland and Kordes, who remain on an  equal footing from one year to the next, followed by the American breeder Hill, and the Dutch  breeder de Ruiter.7.As a rule, the varieties exploited are 'creations' in that they are obtained by  trial and error from at least two existing varieties, being produced by more or less systematic  cross-breeding using creative selection methods. In the breeders' establishments, as in nature, the  'choices' of crossing may also be made empirically by natural factors such as the wind or insects.  However, certain varieties are the result of mutations. A distinction is drawn between natural  mutations, which appear spontaneously, and mutations brought about artificially by applying more or  less arbitrary scientific processes.The mutation takes the form of a growth, commonly known as a  'mutation' or 'sport', appearing on a plant of an existing variety known as the 'parent variety'.  Cuttings taken from this first growth enable it to be reproduced by grafting ad infinitum while  retaining its characteristics. A natural mutation with sales potential is a relatively rare  phenomenon which can, moreover, as a rule be observed knowingly only by the trained eye of a  connoisseur. To qualify for protection as a 'new variety of plant', in France and in those  countries which have introduced a system of protection derived from the International Convention  for the Protection of New Varieties of Plants (Paris, 2 December 1961), the mutation must, like any  new variety, first be examined to determine whether it has the features required by law. Both  mutations and varieties resulting from selection work must undergo a series of examinations  extending over several growth cycles, a lengthy process the outcome of which is uncertain; deciding  whether or not to incur the necessary expense therefore calls for good judgment, which presupposes  experience and knowledge, notably of the potential market.8.Where, as in the case of the variety  Pitica/Kyria, a natural mutation is discovered by a third party on a plant of a parent variety  already protected in the name of an original breeder, the problem arises of determining the extent  of the respective rights of each party   third party discoverer and original breeder   under the  law, in the new variety resulting from that mutation. In the field of plant species, this question  of principle is of considerable economic importance, particularly in the horticultural and floral  sphere where any new variety   whether it be a mutation or a creation   can become a best-seller  overnight and capture a market share as large as that held, for example, by Baccara in its day or  Sonia at the present time. Relations between the breeder of the parent variety which mutated naturally or of the variety which  was used as the initial source of variation and the third party who discovered or created the new  variety resulting from the original variety are governed by the following provisions of the French  Plant Protection Law (Loi relative à la protection des obtentions végétales) (N° 70 489) of 11 June  1970:(a)Article 1 (1):'For the purposes of this law, new variety of plant means a new variety of  plant that has been either created or discovered.'(b)Article 3 (1):'Any new variety of plant may  be covered by a ''plant breeders' certificate'', which confers on its holder an exclusive right to  produce, import into the territory where this law is applicable, sell and offer for sale the whole  or part of the plant or any reproduction or vegetative propagation material of the variety  concerned and of the varieties which are obtained from it by hybridization where their reproduction  requires the repeated use of the original variety.'(c)Article 23 (2)'Subject to the provisions of  Article 3, use of the protected variety as a source of initial variation with a view to obtaining a  new variety shall not constitute an infringement of the rights of the holder of a breeders'  certificate.'The French law is itself derived from the Paris Convention referred to above, of  which, among other provisions, Article 5 (3) stipulates that:'Authorization by the breeder shall  not be required either for the utilization of the new variety as an initial source of variation for  the purpose of creating other new varieties or for the marketing of such varieties'and that such  authorization is required only'when the repeated use of the new variety is necessary for the  commercial production of another variety'.For the purposes of this case, suffice it to say that  Article 1 (1) of the French law makes no distinction according to whether or not the parent variety  on which a mutation was discovered was itself already protected in the name of an original breeder.  The breeders' right in respect of the new variety Pitica/Kyria discovered by Mr Royon therefore  belonged to him if not exclusively, then at least to a large extent within the framework of an ex  lege sharing of the rights attached to that new variety. On the basis of these provisions, Meilland  claimed ex lege, in the course of the proceedings, not an exclusive right but a solution of the  'joint proprietorship' type concerning the variety Pitica/Kyria. 9.For the purposes of the exploitation of the Selection Meilland varieties in France, in respect of  which he has been granted a licence, Richardier supplies freely to all horticulturists and  nurserymen who so request three types of non-exclusive sub-licences, simultaneously if necessary,  for each variety they wish to exploit:(a)the so-called 'cut flower' agreement, granting a  sub-licence to produce only cut flowers and to sell them wholesale and retail;(b)the so-called  'nurseryman cut flower' agreement, granting a sub-licence to produce and sell only rose bushes,  themselves intended to be sold wholesale to cut flower producing horticulturists (holders of a 'cut  flower' agreement);(c)the so-called 'garden agreement', granting a sub-licence to produce only  rose bushes and to sell them retail and wholesale to amateur gardeners.As a result of the expansion  of the Meilland network, and at a rate of one agreement per licensed variety, thousands of such  similarly worded agreements have been concluded in France with about 900 of Richardier  sub-licensees.C. The agreements10.The agreement to which this proceeding relates is the 'cut  flower' sub-licensing agreement concluded between URS-F Richardier and Mr R. Royon on 28 October  1971 containing the following clause concerning mutations:Article X: 'The user undertakes to inform  the distributor or his authorized agent, within 15 days, of the appearance of any mutation in the  rose bushes of the variety referred to in this agreement, which he exploits for cutting. Such  mutation shall remain the property of Universal Rose Selection-Meilland and shall be surrendered to  it by the user in order that it might examine the mutation and judge whether it can be marketed. If  it can be marketed, Universal Rose Selection-Meilland will remunerate the user according to the  qualities exhibited by the new variety'.As from 1974, this clause was replaced by the following:New  Article XII: 'Mutations: the user undertakes to inform the distributor or his authorized agent  within 15 days of the appearance of any mutation in the rose bushes of the variety referred to in  Article 17, which he exploits for cutting. Such mutation shall be surrendered by the user to the  distributor alone in order that he might examine it and judge whether it can be covered by a plant  breeders' certificate and be marketed.The distributor shall inform the user of his decision within  three years from the date of such surrender. During that period, the user shall refrain from propagating the variety for commercial purposes.If  he decides to produce the mutation, the distributor shall so notify the user. Unless the parties  agree otherwise, the user shall be paid at 15 % of the gross royalties collected throughout the  period of exploitation of the new variety. All experimentation, protection and distribution costs  shall be borne by the distributor. If the distributor does not announce his decision within a  period of three years, he shall be deemed to have waived his rights over the mutation and shall  return it to the user'.An Article VIII entitled Guarantee was also added to the agreement as from  1974, worded as follows:Article VIII: Guarantee: 'The distributor guarantees only the material  existence of the patent, the application for a plant breeders' certificate or the plant breeders'  certificate. The user undertakes not to challenge the validity of those documents.If the  application for a breeders' certificate is refused, or if the patent or breeders' certificate  issued is invalidated at the request of a third party, the agreement shall be terminated as from  the day on which those decisions become final, without any compensation being due to either party.  The royalties paid to the distributor shall not be refundable and the royalties falling due up to  the date of the final decision must be paid. N° more royalties shall be payable by the user after  that date.'11.The provisions of the agreement in question concerning mutations were originally  agreed between Richardier and Mr Royon along the lines of a basic licensing agreement drawn up on  30 September 1968 between URS-M (Meilland) and URS-F (Richardier), which itself contained the  following clause:Article IV-(5): 'Mr and Mrs Richardier shall inform URS-Meilland of the appearance  of any new mutations of rose varieties which appear either on the rose bushes exploited by them or  on those exploited by their licensees. Such mutations shall remain the property of URS-Meilland,  which shall determine without appeal whether or not it is appropriate to market them'.However, this  agreement of 30 September 1968 was amended on 30 October 1972, the above wording being replaced by  the following new wording:New Article IV-(5): 'Mr and Mrs Richardier shall inform URS-Meilland of  the appearance of any new mutations of rose varieties which appear either on the rose bushes  exploited by them or on the rose bushes exploited by their licensees'.This amendment to the basic  licensing agreement did not give rise, in regard to mutations, to a corresponding amendment of the  agreement concluded between Richardier and Mr Royon on 28 October 1971. 12.In the other Member States, Selection Meilland varieties are exploited either by exclusive  licensees or by Meilland agents, who grant sub-licences to nearly 2 000 sub-licensees. Except in  Germany, the latter are obliged not to challenge the breeder's property rights and to transfer to  him the ownership in mutations. In the case of Germany, the following new provision concerning  mutations has been incorporated in all agreements concluded by Meilland and its German licensee  Strobel &  Co. with sub-licensees since 1972:'1)If, in the course of the vegetative propagation of  the varieties to which this agreement relates, the licensee discovers mutations (sports), he shall  inform the agent thereof. The latter or an authorized representative may come to take note of the  mutation on the licensee's premises and examine it, without, however, being able to have any  influence on the future use of the mutation.As inventor of the mutation, the licensee may reserve  the right to the new variety resulting from that sport save where the courts decide otherwise  pursuant to paragraph 12 (2) of the law on plant breeder certificates. Where the licensee intends  to sell the right in the sport accruing to him under paragraphs 1 and 2, or if he wishes to have  the mutation licensed, the agent shall retain an option right.'13.The thousands of similar  contracts to the agreements in question concluded either by Meilland or by the other plant breeders  in the EEC provide the economic context in which the present agreement may be considered.14.The  version as amended in 1974 of the 'cut flower' standard form agreement signed by Mr Royon (new  Article XII concerning mutations, referred to above, and Article VIII entitled 'Guarantee'  concerning the no-challenge clause, also referred to above) was notified by Meilland together with  an application for negative clearance on 27 April 1985, that is to say more than nine months after  the oral hearing of 4 July 1984.D. The application in the case of Pitica/Kyria of Article X of the  agreement between URS F (Richardier) and R. Royon15.Outstripping Baccara, which fell into the  public domain in 1974 after having provided 25 million plants, Sonia is the rose which has been the  biggest commercial success in the world (with about 40 million plants sold in 15 countries) since  it was created in 1960, in front of Visa   about 15 million plants   and far ahead of all the  others. In 1984, some 40 Selection Meilland varieties were exploited for cutting. In addition to  the abovementioned varieties, 10 provided a total of between 1 and 5 million plants throughout the  period of their exploitation, and the others less than 1 million, amongst which the  varietyPitica/Kyria was moderately successful with about 500 000 plants. These varieties had at  that time, including Pitica, six natural mutations discovered by third parties at their own places  of business, representing altogether nearly four million plants used for cutting in about 10  countries.16.In 1971, Mr Royon reported the discovery of several natural mutations of the variety  Sonia at his 'Les Roses du Capitou' nursery at Antibes. As stipulated in the abovementioned Article  10 of the agreement he concluded on 28 October 1971 with Richardier, he immediately sent grafts to  Meilland for examination of the mutations. Since he had still not received any reply by the end of  1973, on 10 December 1973 he filed, by way of precaution, an application for a breeders'  certificate in respect of one of them under the varietal name Pitica and informed Meilland of his  action; in a letter dated 7 March 1974, he again stressed the importance he attached to this new  variety. Meilland then announced its intention of exercising its rights over it, as can be seen  from the following extract from a letter to Mr Royon dated 10 April 1974:'This mutation, which you  refer to as 'RR7', having been discovered in your plantations of 'Sweet Promise/Sonia Meilland'  forming the subject matter of licensing agreement N° 1442-2 signed on 28 October 1971 between  Universal Rose Selection-France (Mr Francisque Richardier) and yourself, we are willing to agree as  follows:1. In the event of our reaching, before 31 March 1975, a favourable decision regarding production of  the variety:you will assign to us the claim to protection you have already considered necessary to  file as a precaution;we shall pay you, before 31 December of each year, 15 % of the gross royalties  collected throughout the period of exploitation of the said variety in all countries and  territories,all expenses in connection with experimentation, protection (including those you have  already incurred) and distribution will be borne by us.2. In the event of our reaching, before 31 March 1975, an unfavourable decision regarding production  of the variety, we shall waive our rights over the mutation.'17.A period of bargaining followed,  during which Mr Royon expressed his dissatisfaction with Meilland's offer and his wish to protect  and exploit Pitica himself in all countries in which Meilland decided to renounce its rights over  it. On 18 November 1974, i. e. less than a month before the expiry of the one-year period, which  started to run with the application for a certificate filed on 10 December 1973, for commencing the  protection formalities in other countries, Meilland formally announced its intention: to protect the variety in all countries in which that was possible,to seek protection in those  countries both for'cut flower' exploitation and for 'garden' exploitation,not to increase the rate  of remuneration payable to the discoverer under the sub-licensing agreement of 28 October 1971, as  amended in 1974.On this basis, a deed of assignment was drawn up on 23 November 1974, the main  provisions of which were as follows:(a)by a separate instrument, Mr Royon assigns to Meilland (in  the case in point, to Universal Plants Sarl) his application for a breeders' certificate in France,  N° 00730, concerning the variety Pitica, and his priority rights in other countries, and in general  all his rights in the invention;(b)Meilland reimburses all the expenses incurred by Mr Royon in  registering Pitica and takes steps to obtain protection in all countries where that is possible  (notably: the common market countries, Spain, the United States, Sweden, Morocco and Hungary)  (Article 2, 3 and 4); any property rights subsequently relinquished by Meilland would then be  reassigned free of charge to Mr Royon (Article 5); Meilland will give Pitica a commercial  designation protected in all countries as a trademark, which Mr Royon may use freely (Article 6);  in return for the assignment by Mr Royon of all his rights, he will receive a royalty of 15 % of  the gross amount, before deduction of any discounts, of the royalties paid by licensees in respect  of Pitica (Article 7); Mr Royon remains free to produce cut flowers of the variety Pitica at his  nursery 'Les Roses du Capitou', and the propagation licences already granted by him to  horticulturists will be confirmed; however, any other exploitation will be reserved exclusively for  Meilland (Articles 8, 9 and 10); Meilland undertakes to distribute Pitica as widely as possible,  but will alone be entitled to take decisions concerning its marketing; it undertakes also to offer  this variety for sale in the same way as the other varieties in respect of which Universal Plants  holds the exclusive production and distribution rights (Articles 11 and 12); Meilland undertakes to  carry out all the necessary tests to determine Pitica's suitability for 'garden' exploitation, to  inform Mr Royon of the results, and, if appropriate, to apply the provisions of this contract to  'garden' exploitation (Article 13).18.In July 1977, Pitica was declared by Meilland, on the basis  of tests carried out both by itself and by its agents or licensees in the Netherlands, Germany, the  United States and Israel, to be unsuitable for 'garden' rosebush exploitation. In August 1977, the  protective rights over the variety in Hungary and Morocco were reassigned free of charge to Mr  Royon, and protection was purely and simply abandoned for lack of interest in Sweden and Denmark.  It was first marketed for cutting in 1978, when it was given the name Kyria, which formed the  subject matter of an international filing in Meilland's name. At that time, there were 50 000  Pitica/Kyria plants in three countries. By the end of 1980, there was a total of 265 000 plants in  several countries (France, Japan, the United States, Latin America and a few in new plantations in  Italy and Switzerland). Having reached the 500 000 mark in 1984, it ranks 20th in importance  compared with the 60 other Meilland varieties that have been cultivated for cutting since that  company was formed.The other mutations discovered by third parties have been produced in a number  of countries ranging from five (Privé) to four (Carinella) and three (Carlita), and have each  produced a total of between 500 000 and 1 million plants depending on how well they have been  received, firstly by the licensees, and secondly by the public. Generally speaking, the number and  relative importance of the factors militating in favour of or against the success of a variety on a  market are highly unpredictable and are not always directly dependent on the decisions taken or the  resources employed by the breeder and his agents. Moreover, the exploitation of each variety within  a collection of varieties is necessarily subject to the requirements of the exploitation of the  collection as a whole. This is especially true in the case of Pitica, whose pale pink colour places  it in the same colour scale as its parent variety Sonia, which is also a pink shade.E. Mr Royon's  complaint and the arguments raised by Meilland19.Mr Royon lodged his complaint on 28 January 1980  against Article 10 of his agreement of 28 October 1971 with Richardier for infringement of the  competition rules set out in the Treaty. He considers that the above clause obliged him to assign  to Meilland his rights in the variety Pitica by the agreement of 23 November 1974, the underlying  principle and terms of which, notably as regards payment, were dictated to him without any scope  for discussion. He feels that, despite its worldwide production and distribution network, Meilland  did not do all in its power to make the variety a commercial success. He believes that Article X,  incorporated as it is in all the agreements with sub-licensees who use Selection Meilland roses,  prevents those sub-licensees from setting up as international distributors of the new roses  discovered by them, in such a way as to affect competition within the common market within the  meaning of Article 85 (1).The procedure which was opened on 9 December 1983 in response to this  complaint was extended bythe Commission to include the no-challenge clause contained in the same  standard form licensing agreement of URS-F Richardier (see above, point 10 at the end: Article VIII  entitled 'Guarantee') which prohibits the sub-licensee from challenging the validity of the  breeders' rights conferred on Meilland.20.Meilland has advanced the following main arguments in its  defence:(a)The Article X referred to in the complaint was not applied to Mr Royon since it was in  his capacity as Director with Meilland until February 1972 that he surrendered to his then employer  the Sonia mutations discovered in 1971. Moreover, for the same reason, he was not at that time free  to carry on business as a plant breeder. Lastly, he himself stepped outside the bounds of the  agreement he complains of, first of all by signing on 10 December 1973 an application for a plant  breeders' certificate in respect of a variety which Meilland had not considered worthwhile  adopting, then by not invoking expressly himself Article X of his agreement in the course of  subsequent bargaining. Meilland had, moreover, never invoked Article X against its licensees or  sub-licensees. Furthermore, since 1974, the new Article X of its agreements recognizes the  discoverer's rights over mutations and confers on Meilland only a right of pre-emption, which it  considers perfectly legitimate. In this respect, Meilland feels that the granting of a plant  breeders' certificate for a mutation discovered on a bush of a parent variety already protected in  the name of an original breeder differs fundamentally from the granting of a patent for the  improvement of a protected industrial invention: the improvement patent implies an 'exploitation'  of the main patent, itself involving an inventive 'effort' which is completely lacking in the case  of the unexpected discovery of a mutation. In the present case, there are no grounds for granting  Mr Royon, as it were, an improvement patent. Firstly, the 'power of mutation' is already  intrinsically present in the genetic make-up of the parent variety, the credit for which belongs  exclusively to the latter's creator. Secondly, the growth which represents the natural mutation of  a rose, a non-sexually reproducing species, is already in itself a new variety which fulfils the  conditions for protection owing to the fact that its characteristics are determined from the outset  by nature in such a way as to satisfy the requirements of distinctiveness, uniformity and stability  provided for by law without owing anything to the discoverer's intervention.Meilland considers that  the question of rights over the mutation is not expressly dealt with in the abovementioned French  Plant Protection law andthat it is only natural, since the law is silent on this matter, that the  parties to a licensing agreement relating to a new plant variety should settle it by common accord.  On the whole, Meilland believes it has made the same sales promotion effort for the variety Pitica  as for the others, bearing in mind all the requirements inherent in the management of the group,  even if in 1971 a preliminary examination had in fact overlooked the intrinsic qualities of the new  variety. At all events, the licensee-discoverer generally has neither the means nor the inclination  to launch out into the exploitation of a mutation, preferring by far to surrender it   sometimes  spontaneously   to Meilland, if only to take advantage of the latter's worldwide distribution  capability.(b)As regards the clause prohibiting the licensee from challenging the breeders' rights  held by Meilland, the latter points out first of all that no-one is obliged to contract; on the  other hand, once they are agreed to, all the clauses of a contract must be complied with in good  faith by both parties where they have freely given their consent; and a licensee must not be able  both to reap the benefits of a licence based on an intellectual property right and to reserve the  right to challenge that right as such. In the first place, under a licensing agreement, especially  in the case of a man   Mr Royon   who is a former employee and therefore has inside knowledge both  of the group and of its products and methods, the licensee possesses information which puts him in  a particularly favourable position to create or exploit situations in which a challenge is  possible. In the second place, and as a general rule, deletion of the clause would be a bonus to  the bad payer, who could then lawfully continue to use the licence while refraining from paying  royalties for the simple reason that he has initiated a challenge procedure, hence with, as it  were, the support of the courts. Lastly, from a pragmatic point of view, settlements in actions for  infringement would become impossible because they are based in most cases on the undertaking by the  infringer to withdraw any petition for nullity of the complainant's rights, which clearly implies  that he will no longer file such a petition.Everything which would deprive the licensor of the  benefits, thus detailed, of the clause would inevitably discourage in the long run an open  licensing policy such as that pursued by Meilland. This would ultimately undermine the  macro-economic advantages of such a policy, including the advantages from the point of view of  competition.(c)The notification made on 27 April 1985 by Meilland contains nothing new in relation  to the arguments and information already submitted in the course of the procedure, and at the oral  hearing held on 4 July 1984. II. LEGAL ASSESSMENTA. Article 85 (1)21.Article 85 (1) of the EEC Treaty prohibits as incompatible  with the common market all agreements between undertakings and decisions by associations of  undertakings which may affect trade between Member States and which have as their object or effect  the prevention, restriction or distortion of competition within the common market.22.The parties  concerned are undertakings within the meaning of Article 85, carrying on at the time of the facts  their main acitivity in the economic sector of ornamental flowers, and the agreements in question  are agreements between undertakings within the meaning of that Article.23.The following two  provisions of those agreements have as their object and effect the restriction of competition  within the common market:(a)Article X of the agreement concluded on 28 October 1971 between URS-F  (Richardier) and the sub-licensee Mr Royon obliging the latter to surrender to Meilland any  mutations he might discover on rose bushes of the licensed variety Sonia:The restrictive nature of  this first provision lies in the fact that it obliges the licensee to relinquish completely rights  he is justifiedin claiming in his discovery under the Frenchlaw referred to above. Consequently,  theagreement which deprives Mr Royon of all rights over mutations and reduces him to collecting a  royalty has the effect of completely eliminating the licensee as a potential supplier of varieties  resulting from mutations, both at the national level and on the markets of the other Member States.  By and large, the restrictive effect of this obligation was not substantially modified by the  changes made in this respect in 1974 to the standard form agreements in question (new Article XII),  limiting to three years the period within which Meilland may require compliance with the said  obligation by all its licensees or sub-licensees. In the present case, the letter sent on 10 April  1974 to Mr Royon by Meilland referred expressly to the latter's rights over the mutation Pitica,  which occurred in 1971, and it is therefore on the basis of this prior contractual obligation that  the agreement of 28 October 1971, the purpose of which was to lay downdetailed rules for the  assignment by Mr Royon of his own rights, was drawn up between Universal Plant Sarl and Mr Royon. The arguments put forward by Meilland in order to deny Mr Royon any property rights in the mutation  of the parent variety Sonia cannot be accepted. Firstly, in so far as several mutations were  discovered in Mr Royon's glasshouses in the context of the exploitation which he carried on under  the production and selling licence granted by Richardier, all those discoveries must be considered  to be independent of work done by Mr Royon directly connected with administrative responsibilities  exercised by him in the management of the Meilland group. It is not contested between the parties,  and it is borne out by the existence of the licensing agreement forming the subject matter of this  procedure, that, despite his functions as Director within the Meilland group, Mr Royon at the same  time and with Meilland's consent ran his business 'Les Roses du Capitou' on an independent basis.  The fact, raised, moreover, by Meilland, that the rose is a non-sexually reproducing species and  that its mutations are determined from the outset by nature with the qualities of varietal  uniformity and stability required for protection itself tends to rule out breeding activities or  work by Mr Royon incompatible with his obligations towards his then employer. Moreover, the very  fact that there came into being a 'new variety' (the variety Pitica) within the meaning of the law  in itself implies an inventive activity given tangible form in that new variety, which is  incontestable both in its existence and in the degree of invention it expresses. Irrespective of  the lack, if any, of an inventive 'effort', which Meilland also points to, an inventive 'activity'  is not in itself, where it is involuntary or unexpected, sufficient to exclude the granting of  property rights. Both the French law (in particular its Article 1 (1), referred to above) and the  laws of the other Member States, and the International Convention for the Protection of New  Varieties of Plants (referred to above), from which the former are derived, provide expressly that  the discovery of a mutation may give rise to the grant of a plant breeders' certificate in the same  way as the creation of a variety in the course of selection work. Moreover, Mr Royon's aptitude for  correct observation of the existence and qualities of a natural mutation itself proceeded from an  at least implicit prior inventive effort, and this is particularly attested to in the present case  by the fact that an unfavourable preliminary examination of the same mutation by Meilland was  subsequently to be proved wrong.(b)The obligation on the licensee, contained in the same agreement  in Article VIII entitled 'Guarantee', not to challenge the validity of the rights in the licensed  variety: The restrictive nature of this second provision lies in the fact that it denied the licensee the  opportunity, open to any third party, of removing an obstacle to his economic activity by means of  a petition for revocation. The importance of the restriction remains despite the prior examinations  and official tests which precede the grant of a plant breeders' certificate for a new variety of  plant, since those examinations do not entirely exclude the possibility of a wrongly conferred  right or imply that firms must forgo in advance any opposition or action for infringement in which  they might have an interest. Generally speaking, even where a licensee is able to challenge an  intellectual property right only on the strength of information received from the licensor himself,  the maintenance of free competition and, where appropriate, the revocation of an exclusive right  which was conferred wrongly are in the public interest, and this overrides any consideration  concerning the privileged relations between the parties to a licensing agreement.24.The  restrictions resulting from these two provisions are appreciable.(a)These restrictions have an  appreciable effect on the market in the products in question in the EEC in view of the importance,  both qualitative and quantitative, on that market of the rose varieties known as 'Selection  Meilland'. This is all the more true as a single variety, possibly a mutation discovered by a  licensee, may acquire a leading, or even dominant, position on the market. According to the case  law of the Court of Justice of the European Communities of 12 December 1967 in Case 23/67 Brasserie  de Haecht (1), the appreciable nature of the restrictions established in the present case stems  inter alia from the cumulative effect due to the existence in France and in the other Member States  of thousands of similar contracts obliging, in the case of each variety, licensees and  sub-licensees to surrender to the licensor any mutations that are discovered and not to challenge  the validity of the licensed rights, which confers on the restrictions taken as a whole even  greater economic importance. The restrictions have the effect of concentrating in the licensor's  hands alone all the varieties discovered by hundreds of licensees.(b)The restrictions also  appreciably affect trade between Member States in view notably of the cumulative effect described  above. Firstly, the obligation on Mr Royon not to challenge thevalidity of the licensed rights is  imposed on all licensees and sub-licensees throughout the Community, and applies also to Meilland's  rights in the other Member States. It thus enhances Meilland's position vis-à-vis its competitors  throughout the common market. Secondly, the obligation on Mr Royon to relinquish all his rights in  mutations is also imposed on all licensees and sub-licensees in the Community with the exception of  Germany, and affects Mr Royon's rights not only in his own country but also in the other Member  States. It thus eliminates him, and in general all other Meilland licensees, as an independent  international supplier of this type of new variety throughout the world and, in particular,  throughout the Community.25.The conditions for the application of Article 85 (1) of the Treaty are  therefore satisfied.B. Article 85 (3)26.Under Article 85 (3), the provisions of Article 85 (1) may  be declared inapplicable in the case of any agreement between undertakings which contributes 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 does not:(a)impose on  the undertakings concerned restrictions which are not indispensable to the attainment of these  objectives;(b)afford such undertakings the possibility of eliminating competition in respect of a  substantial part of the products in question.27.As regards the obligation on the licensee to waive  completely his rights in future mutations:In the present case, this obligation imposed on Mr Royon  did not concern his activities in respect of the production, propagation or distribution of the  licensed variety Sonia or of the cut flowers which are the end product thereof. It was, on the  contrary, extraneous to the conditions proper under which that product is produced or distributed,  and to any concern for the promotion of technical or economic progress or to any such effect, even  indirect,The only connection which can be established in the present context between the  aforementioned obligation on the licensee and production, distribution or the promotion of  technical oreconomic progress is a negative connection in that the clause in question has had the  effect of purely and simply depriving Mr Royon in advance of the new variety Pitica in respect of  which he could have endeavoured to bring about such improvements. The only practical result of the  clause is that, by thus completely eliminating this possibility, it also at the same time  diminishes the licensee's interest in the qualities of the mutations he might observe.Nor can it be  maintained that the improvement effects listed in Article 85 (3) will be automatically assured  because the said obligation transfers responsibility for any action in relation to the production  and distribution of the new variety Pitica to the Meilland group, which has greater resources at  its disposal than Mr Royon, the licensee. The exploitation both of the licensed parent variety and  of its mutation has in that case to take place within the overall framework of the management  requirements peculiar to Meilland and its collection of varieties and must therefore bend to those  requirements. As a result, the mutation does not receive the undivided attention it would have been  given by Mr Royon, who could have devoted his entire resources, his efforts and his detailed  knowledge of the international market to making it a success. This assessment is borne out by the  fact that, despite Mr Royon's exhortations, five years elapsed (1971 to 1976) between the discovery  of the new variety Pitica and the time when Meilland started to market it.It is therefore not an  obligation capable of fulfilling the first condition of Article 85 (3). This rules out any benefit  to consumers within the meaning of that Article. Lastly, this obligation on Mr Royon was not  indispensable to the satisfactory exploitation of the variety Sonia which had been licensed to  him.28.As regards the obligation on the licensee not to challenge the validity of the rights  licensed to him:The obligation not to challenge a breeder's right prevents both the licensee and  any third parties interested in exploiting the same variety under licence from acting freely in the  sphere of the descriptions and claims relating thereto, which constitutes an obstacle to technical  progress.In the event of a breeder's right being conferred wrongly on Meilland, its licensee would  nevertheless be obliged to pay royalties or purchase rose bushes in order to exploit the variety  concerned and would therefore likewise not be free to sell that variety wherever he wished, not  even in other countries where it would not be protected. Consequently, this obligation, too, is not capable of fulfilling the first condition of Article 85  (3). This in itself also rules out both any benefit to consumers and the need for an examination in  the light of the last two conditions laid down in that Article.29.For the reasons set out above,  the agreement in question does not satisfy all the conditions which must be met in order to qualify  for exemption under Article 85 (3). Thus, it is not necessary to examine if the late notification,  which arrived on 27 April 1983, could cover the contract in question, which expired in 1983, or if  this contract falls in the categories exempted from the obligation of notification by Article 4 (2)  of Regulation N° 17.III. ARTICLE 3 OF REGULATION N° 1730.Where the Commission finds that there is  infringement of Articles 85 or 86 of the EEC Treaty, it may, under Article 3 of Regulation N° 17,  require the undertakings concerned to bring such infringement to an end. However, in the present  case there is no longer any need to require the parties to bring the infringements established to  an end since the agreement in question, which Mr Royon concluded with Richardier on 28 October  1971, was terminated when the former closed his business and sold the equipment of 'Les Roses du  Capitou' in 1983.There are nevertheless reasons for finding that infringements were committed in  the past. The Commission's position, notably in the light of Article 85 (3), on all the agreements  concerned or on similar agreements should be clarified for the benefit of the public. Moreover, the  complainant has a manifest interest in the outcome,HAS ADOPTED THIS DECISION: Article 1The following provisions of the licensing agreement concluded on 28 October 1971 and  modified in 1974 between URS-F (Richardier) and Mr R. Royon for the exploitation of the rose bush  variety Sonia Meilland ('cut flower' agreement) constituted infringements of Article 85 (1) of the  EEC Treaty: 1The obligation imposed on the licensee, Mr R. Royon, by Article X of the agreement to surrender to  Meilland all mutations discovered on rose bushes of the licensed variety so that such mutations  might remain the exclusive property of Meilland and so that the latter might decide unilaterally  whether to exploit them commercially.2The obligation imposed in this respect on the licensee by the  new version of the agreement, after the amendment incorporated in 1974 (new Article XII), which  allows the plant breeder Meilland a period of three years from the date of surrender of a mutation  by the licensee within which to impose its unilateral decision concerning the commercial  exploitation of the mutation.3.The obligation imposed on the licensee in the new version of the  agreement drawn up in 1974 (new Article VIII entitled 'Guarantee') not to challenge the validity of  applications for plant breeders' certificates or of the plant breeders' certificates which are  assigned to him under licence.Article 2The application for exemption under Article 85 (3) of the  EEC Treaty for the provisions referred to in Article 1 is hereby refused.Article 3This Decision  is addressed to:1SNC Meilland &  Cie, 134 boulevard Francis Meilland, F-06600 Antibes;2Universal  Plant Sarl, 134 boulevard Francis Meilland, F-06600 Antibes;3Universal Rose Sélection-France (Mr  and Mrs Fran-cisque Richardier), F-69160 Tassin-la-Demi-Lune;4Mr René Royon, 128, Les Bois de Font  Merle, F-06250 Mougins.Done at Brussels, 13 December 1985.For the  CommissionPeter SUTHERL(1) OJ N° 13, 21. 2. 1962, p. 204/62. (2) OJ N° 127, 20. 8. 1963, p. 2268/63. (1) (1967) ECR 407.