CELEX: 51994PC0579
Language: en
Date: 1994-12-09
Title: Proposal for a EUROPEAN PARLIAMENT AND COUNCIL REGULATION (EC) concerning the creation of a supplementary protection certificate for plant protection products

COMMISSION OF THE EUROPEAN COMMUNITIES
                                             COM(94) 579 final
                                             Brussels, 09.12.1994
                                              94/0285 (COD)
                           Proposal for a
        EUROPEAN PARLIAMENT AND COUNCIL REGULATION (EC)
                         concerning the creation
                of a supplementary protection certificate
                      for plant protection products
                  (presented by the Commission)
 ---pagebreak---  ---pagebreak---                            EXPLANATORY MEMORANDUM
INTRODUCTION
PART ONE: COMPLETING THE INTERNAL MARKET FOR PLANT PROTECTION PRODUCTS
    A.       Harmonizing the duration of protection for inventions in the plant protection
             sector
    B.       Preventing distortions of competition
    C.       Remedying the erosion of patent protection
             (a) Erosion of effective patent protection
             (b) Operational differences between authorization systems
    D.       Need for Community action
PART TWO:         T H E NEEDS OF THE PLANT PROTECTION SECTOR WITH REGARD TO
                  COMMUNITY OBJECTIVES
    A.       Characteristics of the sector
             1. Scale of research and development
             2. Impact of environment policy
             3. Intensity of competition
             4. Industry profitability.
    B.       Improving competitiveness and promoting research
PART THREE:        T H E DIFFERENT INTERESTS INVOLVED
    A.       Access to the market for generic products
    B.       Effect on prices of the supplementary protection certificate
     C.      Multilateral application of the supplementary protection certificate
PART FOUR:         DETAILS AJ^D CHARACTERISTICS OF THE PROPOSED SYSTEM
     A.      Operation of the supplementary protection certificate
    B.       Legal basis
 PART FIVE :       EXAMINATION OF THE PROVISIONS
                                               - A -
 ---pagebreak---                 EXPLANATORY MEMORANDUM
INTRODUCTION
   1.       On 18 June 1992 the Council meeting on the internal market adopted
            Regulation 1768/92 concerning the creation of a supplementary protection
            certificate for medicinal products,^) which entered into force
            on 2 January 1993. When the Council adopted the common position pursuant
            to the procedure under Article 149(2) of the EEC Treaty, it also adopted,
            on 19 December 1991, a statement recorded in the minutes of the meeting:
            "The Council requests the Commission to submit to it as soon as possible
            after this Regulation enters into force a proposal concerning the creation of
            a supplementary protection certificate for plant health products. "
   2.       The Commission recalls that, during the discussions on Regulation 1768/92,
            it argued before the Council and Parliament that it would be possible, at a
            later stage, to apply the supplementary protection certificate to other
            products, such as plant protection products, provided the industry concerned
            demonstrated that it was faced with a situation justifying such a measure.
   3.       It should also be noted that, on the question of the scope of
            Regulation 1768/92, the large majority of the Member States took the view at
            the time that it would be more effective to restrict discussion to the
            pharmaceutical sector, without prejudice to their respective positions as to
            the need for subsequent action in respect of other products.
   4.       The plant protection industry wished the Community to intervene, on the
            grounds that Community action was necessary to remedy barriers to the free
            movement of its products, distortions of competition and the erosion of the
            duration of effective patent protection. Following the Council's request, and
            after examining the current global situation of the industry in question and
            noting, in particular, the obvious erosion of the duration of patent protection
            for plant protection products, the Commission takes the view that
            Community action is required.
            The proposed system prevents barriers to the free movement of plant
            protection products in the Union and the distortions of competition that
            would inevitably be caused by different national laws. This is the proposal's
            first objective. The second is to improve the legal framework for firms in the
            Union engaged in research and development work on new plant protection
            products by providing adequate protection for innovations, thereby improving
            their competitiveness on the world market.
W Regulation (EEC) No 1768/92, OJ No L 182, 2.7.1992.
                                             -2
 ---pagebreak--- PART-ONE:       COMPLETING THE INTERNAL MARKET FOR
                PLANT PROTECTION PRODUCTS
A. HARMONIZING THE DURATION OF PROTECTION FOR INVENTIONS
   IN THE PLANT PROTECTION SECTOR
   5.   The primary objective of this proposal is to harmonize, at Community level,
        the effective protection afforded to inventions in the plant protection field
        and, consequently, to ensure the proper functioning of the internal market. At
        the moment, the theoretical and, above all, the effective duration of
        protection for inventions in this field varies from Member State to Member
        State.
   6.   Where a plant protection product is protected by patent, the duration of this
        protection is generally twenty years from the date on which the patent
        application is filed in all the Member States, whether on the basis of national
        patent law or the European Patent Convention (Munich). However, this
        duration is theoretical in that marketing authorization procedures, prior to the
        product's being placed on the market, shorten it considerably and
        proportionally reduce the length of effective protection.
   7.   Action to restore adequate, effective duration of protection for these
        products can be envisaged only if the conditions for supplementary protection
        and its duration are harmonized between the Member States. Any disparities
        here, in particular concerning the duration of protection, would lead to
        restrictions on the free movement of plant protection products which could
        not be justified under Community law.
   8.    At the moment, having regard to the operating arrangements of national
         patent systems, the different patents protecting the same plant protection
         product in the Member States can commence and expire on different dates
         owing, in particular, to the existence of a priority period. This is the period of
         twelve months during which a person who has properly filed an application
         for a patent in one Member State may file another for the same invention in
         another Member State without losing the benefit of the novelty of the
         invention. It follows that the dates on which these different patents take effect
         and expire may vary between the Member States.
   9.    In addition, a number of Member States have only recently become members
         of the European Patent Convention (Munich) and the resulting harmonization
         is not yet fully effective. Thus, patents issued in Germany before 1978 had a
         term of eighteen years, former Irish patents one of only sixteen years and
         patents issued tn the United Kingdom before the entry into force of the
         Patents Act 1977 one of seventeen years from their date of issue. The result
         is that a product which has entered the public domain in some Member States
         may still be protected by an exclusive patent right in others, which disrupts
         the free movement of goods.
 ---pagebreak---    10.- Lastly, differences in the operation of national registration systems cause an
        imbalance in the duration of effective protection available to the same plant
        protection product in different Member States, which interferes with the free
        movement of these products and free access to the market for competing
        products. As the Court noted in Case C-341/87 fEMI v Patricia), the problem
        there stems from the differences between national legislation regarding the
        period of protection afforded by copyright and by related rights, those
        differences concerning either the duration of the protection itself or the
        details thereof, such as the time when the protection period begins to run. In
        this case, the imbalance — and the disruption to the internal market ~ arises
        from the different dates on which the different patents covering the same
        product expire throughout the Union.
        Corrective action is therefore needed.
B. PREVENTING DISTORTIONS OF COMPETITION
   11.  Because of the differences currently existing between the details of the
        operation of the patent system and of the registration system, a number of
        producers of plant protection products are subject to unjustified distortions of
        competition. This is particularly true of producers established in Member
        States where marketing authorization is obtained much more slowly than in
        the other Member States.
        The erosion of the duration of effective protection is exacerbated by
        differences in the efficiency of the different national registration systems.
        Depending on the Member State, the time taken by the national authorities
        responsible for marketing authorizations to approve an application may vary
        from one to four years. Faced with the general erosion of the duration of
        effective patent protection, which disrupts the proper functioning of the
        internal market, firms are also faced with substantial differences in the time
        taken to process their applications for marketing authorization, which
        constitutes a form of distortion of competition.
   12.  The effort already made at Community level to harmonize the rules on
        marketing authorizations for plant protection products through the adoption
        of Directive 91/414/EEC, which is essential to the completion and
        functioning of the internal market for this sector, must be supplemented by
        the creation of a corrective mechanism for the inadequacies in the system of
        protection for plant protection research, which are attributable to the very
        same requirements of the prior marketing authorization.
        This corrective mechanism must be harmonized at Community level, failing
        which it would only maintain -- possibly worsen ~ existing distortions of
        competition.
   13.  Putting plant protection products on a footing similar to that which would
        obtain in the absence of a marketing authorization system means placing them
        on the terms that obtain in other sectors of technology not subject to
        marketing authorization. The plant protection sector is experiencing
 ---pagebreak---        distortions of competition in relation to other technological sectors because
       of the very existence of the prior authorization mechanism.
   14. The duration of the supplementary protection afforded by the certificate must
       be sufficient to fulfil the objectives of promoting research pursued by the
       proposal while maintaining balanced competition. In this respect, plant
       protection research should not be discriminated against; it should be placed
       on terms similar to those existing in other sectors. That is why the
       Commission is proposing that the supplementary certificate should have a
       maximum term of five years and that the total duration of effective protection
       (residual period 'of the basic patent to which is added the supplementary
       protection certificate) should be a maximum of fifteen years, starting from the
       first authorization to place the product on the market in the Community. This
       period is equivalent to that existing in other industrial sectors which are not
       subject to prior marketing authorization.
C. REMEDYING THE EROSION OF PATENT PROTECTION
   (a) Erosion of the duration of effective protection
   15. The available statistics reveal that plant protection products are suffering
       from increasing erosion of the duration of effective patent protection because
       of the continuous increase in the time taken to obtain the necessary prior
       marketing authorizations. This is not just the time taken by the national
       authorities to examine applications for authorization, but rather the time
       required by firms to prepare and carry out all the tests and analyses necessary
       to file the application for authorization.
       The duration of effective patent protection of plant protection products
       (period of time between the date of obtaining the marketing authorization and
       the expiry of the patent protecting the product) has fallen from an average of
       twelve years in 1978 to some nine years today.
       These figures are taken from analyses carried out on a product-by-product
       basis for each of the Member States. They reflect a situation similar to that of
        medicinal products when Regulation (EEC) No 1768/92 was adopted
        in 1992, and justify the adoption of a similar measure for the plant protection
        sector.
                                          5-
 ---pagebreak---             Table 1: Duration of effective protection for plant protection products
            (years)
                      1978              12,0                 1986              11,5
                      1979              10,75                1987              11,0
                      1980               9,5                 1988              10,5
                      1981               9,25                1989              10,0
                      1982              10,0                 1990              10,0
                      1983              11                   1991               9,75
                       1984             11,75                1992               9,250)
                      1985              11,25
            Source: ECPA (European Crop Protection Association)
    16.     These overall figures are confirmed by the analysis carried out in each
            Member State. In the United Kingdom, the duration of effective patent
            protection for plant protection products fell from eleven years in 1980 to just
            over six years in 1991. In Germany, it has also fallen, from some twelve years
            in 1980 to nine years at the moment.
    17.     An imbalance thus arises between the interests of the patent-holder and those
            of persons wishing to exploit the patented product once the patent has
            expired. Because of the very nature of plant protection products, they are,
            like medicinal products, easily reproduced, without the "pirate" having to
            bear the costs of research and development which went into the original
            product. This explains the specific value and overwhelming role of the patent
            in the strategy of the plant protection industry, for which this instrument is of
            vital importance since there is no alternative.
    (b)     Operational differences between authorization systems
    18.     With regard to the duration of effective protection, the differences which can
            exist between Member States at the level of theoretical protection are
            exacerbated by the operational differences between the systems of marketing
            authorization for plant protection products. This is where the main obstacles
            to the proper functioning of the internal market for plant protection products
            are to be found.
     19.    Any plant protection product must not only be effective as an insecticide,
            herbicide, fungicide, etc., but at the same time it must not have any
            unacceptable effect on health or the environment.
            This twofold requirement explains why research and development on new
             plant protection products requires increasing amounts of time and investment
             and why these products cannot be placed on the market without having been
             officially scrutinized and authorized beforehand.
0) estimation
                                              -6-
 ---pagebreak---     20._       On 15 July 1991 the conditions and procedures for authorizing plant
               protection products were harmonized at Community level by Council
               Directive 91/414/EEC concerning the placing on the market of plant
               protection products/2)
               The system established by the Directive provides for:
               (a) a positive list of active substances approved at Community level;
               (b) a system of authorization, by the Member States, of products containing
                     one or more active substances included on the Community positive list;
               (c) mutual recognition by the Member States of national authorizations
                     provided that agricultural, plant health and environmental (including
                     climatic) conditions relevant to the use of the product are comparable in
                     the regions concerned;
               (d) a data protection mechanism — submitted with the applications for
                     marketing authorization ~ for the benefit of the first applicant for a period
                     often years from first inclusion of an active substance on the positive list.
    21.        Harmonization of authorizations at Community level and the requirement to
               register all existing and new active substances is necessary, but not sufficient,
               for the completion of the internal market, which will be of long-term benefit
               to the plant protection industry in the Union and to users. The diversity of
               national requirements concerning marketing authorization for plant protection
               products represents always a substantial cost to industry.
D.   NEED FOR COMMUNITY ACTION
     22.        The question of whether the proposed measures are proportionate to the
                objectives pursued should also be looked at. In so far as one of the objectives
                is to prevent obstacles to the proper functioning of the internal market which
                would be created by disparities in the application of national laws, this
                objective cannot be attained satisfactorily by action taken solely at Member
                State level. To ensure the proper functioning of the internal market, the laws
                of the Member States should be harmonized so that the duration of protection
                for the same plant protection product is identical throughout the Union.
                Harmonization must deal with not only the duration of protection generally
                but also with such matters as the date on which protection expires. That is
                precisely what the mechanism chosen in this proposal does.
     23.        The data-protection mechanism incorporated into applications for marketing
                authorization introduced by Directive 91/414/EEC would not, for its part,
                have the same scope and the same effects as those conferred by a patent or
                similar instrument. Protection of the registration data is not absolute in that
                manufacturers of generic products can, if they so wish, themselves carry out
(2> O J L N o 2 3 0 , 19.8.1991, p. 1.
                                                  -7
 ---pagebreak---     the tests needed to obtain marketing authorization without waiting for data
    from the innovating firm. Only a patent or similar instrument can guarantee
    fully effective protection on the market, enabling the investment made in
    research and development to be recovered and adequate financial reserves to
    be set aside for R&D activities.
24. As was the case in 1992 for medicinal products, this proposal seeks to create
    a specific and sectoral industrial property instrument which is not such as to
    have any influence on the general patent laws applicable to other
    technological sectors. Since what is being created is a new industrial property
    instrument distinct from patents, the optimal harmonization at Community
    level of its conditions of issue and its method of calculation can be achieved
    only by using the legal instrument of a Parliament and Council Regulation.
25. The method of calculating the duration of the supplementary certificate —
    based on the first authorization to place the product on the market in the
    Community, and for all the Member States — means that the different
    certificates covering the same product will expire on the same date
    throughout the Union. The date of issue of the marketing authorization in the
    different Member States has no impact here since the duration of the different
    certificates is calculated, for all the Member States, on the basis of the first
    authorization to place the product on the market in the Union. Once the
    different certificates issued by the different Member States for the same
    product have expired, the product will enter the public domain at the same
    time in all the Member States.
26. A heterogeneous and potentially or actually diverging situation with regard to
    national laws governing the conditions for granting the supplementary
    protection, its effect or duration would be such as to create distortions of
    competition in the Union. Not taking the initiative at Community level and
    leaving to the Member States the task of determining the rules for and
    duration of an extension of patents for plant protection products would have
    adverse consequences on the free movement of these products and on the
    competitive conditions prevailing in this sector.
    A Community solution entailing harmonization of the conditions for the
    application of the system introduced and the rules governing it and
    standardization of the duration of protection of plant protection products
    therefore has to be found to secure the establishment and proper functioning
    of the internal market and the introduction of normal competition.
27. However, with regard to patents, national laws cannot be approximated
    without also preserving the harmonization between the national systems and
    the European patent system. That is why the certificate applies to all plant
    protection products authorized to be placed on the market and protected by
    patent in their national territory, whatever path — national or European ~ has
    been followed for that purpose. A uniform solution applying to all patented
    products, whether the patent was issued under national law or under the
    European Patent Convention (Munich), can be achieved effectively only by
    action at Community level.
 ---pagebreak--- 28.. The certificate is a national document issued by a national patent office but
     whose conditions of issue and duration are harmonized at Community level.
     In certain aspects it is essentially different from the basic patent. It contributes
     to facilitating the proper functioning of the European patent system. The
     result would be completely different if it were possible to obtain a certificate
     only for plant protection products protected by a national patent. A fortiori,
     when use is made of the European procedure to obtain a Community patent,
     it will be all the more necessary for the certificate to apply equally to plant
     protection products protected by a Community patent. The proposal has been
     developed with a view to providing now for this prospect.
                                          9-
 ---pagebreak--- PART TWO: THE NEEDS OF THE PLANT PROTECTION SECTOR
                 WITH REGARD TO COMMUNITY OBJECTIVES
   A detailed profile of the plant protection sector is given in the Annex.
A. CHARACTERISTICS OF THE SECTOR
   1.      Scale of research and development
   29.     The recent trend in the plant protection products industry is for a continuing
           increase in expenditure on research and development (R&D), both as a
           percentage of total sales and in absolute terms.
           In 1991 R&D expenditure by the fifteen leading firms in the world
           averaged 10.25 % of turnover. Biotechnology has become, in this respect, a
           key factor in research, principally in the field of transgenic plants and the
           development of pesticides. The new plant varieties will be resistant to
           pesticides, disease, herbicides, frost and drought, and of improved quality.
           Biotechnology research will not substantially reduce sales volume in the plant
           protection sector but will produce significant changes in the types of product
           available and in the competition between different products.
   30.     Significantly, expenditure by plant protection firms on research and
           development and the development of new products rose from ECU 25 million
           per product in 1975 to more than ECU 125 million in 1992, a five-fold
           increase.
           It should be noted that, among the different development stages of a plant
           protection product (synthesis and screening-formulation, analysis of the
           product and chemistry-biology-toxicology and environment), it is toxicology
           and environment which have expanded most: expenditure on studies of the
           toxicology and environmental impact of new products rose from
           ECU 4 million per product in 1975 to ECU 50 million in 1992, an eleven-fold
           increase (Source: Fonds der Chemischen Industrie, Informationsserie
           No 10"Pflanzenschutz").
   31.     However, plant protection research, like pharmaceutical research, is a high-
           risk activity, involving extremely costly and hazardous investment. It is
           estimated that some 15 000 chemical compounds must be synthesized and
           analysed for every new product placed on the market. In addition, it is
           increasingly difficult to find new plant protection products since solutions to
           the less complex research objectives have already been found and
           international competition imposes very high standards. While new plant
           protection products were introduced at the rate of one major innovation a
           year in the 1960s, this fell to one every three years in the 1980s. The number
           of new products placed on the market is therefore much lower in the plant
           protection sector than in pharmaceuticals, where fifty a year is a normal
           figure.
                                             10-
 ---pagebreak--- 32.. In addition, whereas European firms were pioneers in the discovery of new
     products in the 1970s (introduction of Bayer's fungicide triazole), two of the
     major discoveries in the past decade, imidazoline and sulphonyl, both
     herbicides, came from American companies (American Cyanamid and Du
     Pont). Their sales of these two products for 1989 are estimated at 9 % of the
     world herbicide market. A fourth major new product, however, the
     insecticide pyrethrin with 6 % of the world market, was a European
     innovation.
33.  This shift in the centres where new products are developed can be illustrated
     by looking at where the products currently registered as herbicides in France,
     the most representative part of the European plant protection market in terms
     of     crops     and     climate,     were   researched.      France    currently
     authorizes 115 herbicide substances. The table below shows where these
     substances were discovered during previous decades.
     Table 2: Origin of herbicides launched in France
         Time of launch           Europe          United States           Japan
              1960s               67%                33%                   0%
              1970s               52%                45%                   3%
              1980s               37%                51 %                 12%
     Source:ECPA
     These data are significant in that they clearly show the downward trend in
     new herbicides launched by European firms. If there are no significant
     changes in the protection given to research by European firms, it is likely that
     American groups will continue to be the main source of scientific and
     technical progress in this sector.
34.  In many respects, the constraints on research in plant protection are similar to
     those affecting pharmaceutical and chemical research. None the less, a
     number of the sector's specific features make it even more vulnerable:
      (a) Plant protection products are used by farmers to increase the profitability
          of their farms, which reduces the producers' room for manoeuvre with
          regard to the price levels of their products. The market for plant
          protection products is highly price-sensitive: prices are not controlled and
          are the result of market forces; farmers choose between the different
          products on offer largely on cost.
      (b) Plant protection research has a narrower range of objectives than
          pharmaceutical research. The aim is essentially to place on the market
          products which are more environment-friendly and more efficient from an
          agricultural point of view.
      (c) Development costs are very high because of the fact that formulations and
          instructions for use of plant protection products must take account of
          regional differences in agronomic conditions.
                                       -11
 ---pagebreak---     - (d) Plant protection companies are particularly exposed to market
           competition (no massive state purchases, as is the case for medicinal
           products with a number of public health services).
2.    Impact of environment policy
35.   The scale of research is directly linked to requirements concerning the
      environment. The industry must balance its role of crop protection with that
      of not endangering the environment. In this respect, plant protection research
      is intended not only to limit the risk of major agricultural disasters and the
      massive losses (some 30 % of world harvests) caused by parasites, disease
      and weeds. Today, new plant protection products must not only help in
      avoiding a fall in yields and securing food supplies; they must also involve no
      unacceptable risk for man and the environment.
      The major challenge facing the industry is therefore to find a proper balance
      between compliance with environmental policies and the production
      requirements of modern agriculture. Moreover, the high level of
      environmental requirements further reduces the industry's chances of
      discovering commercially viable new products.
3.    ' ntensity of competition
36.    The industry will have to face an increasingly competitive environment as a
      result of the completion of the single market, the reform of the common
      agricultural policy and the GATT agreements on international trade.
      The frontier-free single market will, among other things, involve a gradual
      alignment of prices in the Member States. Until recently, prices in Germany
      were the highest, almost double those in the United Kingdom, those in France
      lying between the two. For some three years now, however, firms have been
      allowing for the single market when introducing products and price
      differences have fallen to no more than 25 %. This trend will accentuate even
      further the importance of research as a predominant factor in the
      c ompetitiveness of firms within the Union.
37.   In addition, reform of agricultural policy and implementation of the GATT
      agreements on international trade will reduce the amount of land farmed and
      agricultural subsidies and will lead to a markedly slower rate of growth in the
      market for plant protection products in developed countries, offset however
      by rising demand from developing countries. Whereas the average rate of
      growth of the market in the Union was some 6 % in 1988, the situation has
      seriously deteriorated since, with a spectacular fall in sales on the West
      European market of 18 % in 1992.
      The current reform, and the completion of the single market, will increase the
      intensity of competition in the sector. In particular, the number of plant
      protection firms in the Union will probably fall, through acquisitions and
      mergers, involving particularly firms in biotechnology research.
38.   We must not ignore the fact that more than half the world market for plant
      protection products concerns ones which are no longer covered by patents
                                       -12-
 ---pagebreak---     and which, therefore, will not be able to benefit from the Regulation
    concerning the supplementary protection certificate. According to available
    estimates, 55 % of the world herbicide market is for products no longer
    covered by patents; the figures for insecticides and fungicides are 58 %
    and 59 % respectively. Accordingly, the plan for a supplementary protection
    certificate will affect only some of the firms in the sector, to a degree yet to
    be determined (see below). This incentive for research should also encourage
    competition between plant protection firms to develop new products.
4.  Industry profitability
39. The aim of the supplementary protection certificate is to protect current
    profitability levels in the plant protection product industry so as to ensure
    future research. Profitability in the industry, in particular in the Community, is
    lower than in industry in general and the pharmaceutical industry in particular,
    and is falling.
    Whereas in 1990, at world level, the industry had average profits of 8.2 % of
    turnover, companies based in the Union had to be satisfied with only
    some 6 %, while their American competitors achieved 11.4%. Since then,
    margins have shrunk even further, 1992 being a very bad year for sales in
    Europe. The competitive position of the European industry is therefore
    considerably weaker than that of its main competitors, American and Asian in
    the main. In a sector where investment in research is so substantial and risky,
    an adequate profit margin is essential to ensure the continuity of the R&D
    process.
40. There are two fundamental reasons for the global reduction in the profitability
    of plant protection product companies during the 1980s, namely the impact of
    an increasingly competitive market and the significant increase in costs and
    time spent on developing new products and getting them authorized.
    The figures reveal that the plant protection industry does not generate profits
    proportionate to the inherently high level of risk associated with its activities,
    which alone would be able to generate adequate financial reserves to maintain
    and carry on research activities. They also show the need to extend
    supplementary protection to certain patented products which are already
    marketed in the European Union.
41. None the less, the costs of developing plant protection products (up to
    ECU 125 million for each new product placed on the market) will remain
    particularly high because of the considerable volume of experimental data
    required to show that the products are effective and safe. Unlike the case of
    medicinal products, formulations and instructions for the use of plant
    protection products must take account of regional variations in agronomic
    conditions and of effects on the metabolism ~ not only of plants but also of
     animals — and on the environment in general. It follows that the recovery of
    the corresponding investments is absolutely vital for the research industry and
     depends, to a large extent, on it being guaranteed an adequate duration of
     effective protection for innovations introduced.
                                       13
 ---pagebreak--- B.  IMPROVING COMPETITIVENESS AND PROMOTING RESEARCH
    42.       In its communication to the Council and Parliament of 16 November 1990 on
              industrial policy,^) the Commission had occasion to stress the vital
              importance for the position of the Union in the world economy of having a
              competitive industry, one factor in which is the capacity for innovation.
              Strengthening the competitiveness of Community industry and promoting
              research and technological development are now expressly included in
              Article 3 of the Union Treaty.
    43.       Support for the research effort in a high-risk industry such as plant protection
              products depends to a large extent on recovering the cost of investments in
              R&D on new products, through the sale nnd exploitation of patented
              products.
              The erosion of the duration of effective protection under patents for plant
              protection products, as described above (point 15), leads to manifestly
              inadequate protection which penalizes research precisely in the field which,
              because of the very nature of the process of innovation, requires the
              protection of industrial property more than other industries.
    44.       The Commission White Paper on Growth, Competitiveness and Employment,
              presented to the European Council in Brussels in December 1993, stresses
              the need for action to restore the competitiveness of European firms and to
              encourage growth. These measures are part of an approach to boost the
              technology/growth/employment cycle. The supplementary protection
              certificate for plant protection products is a sectoral initiative which is fully
              consistent with this overall approach.
O  Industrial Policy in an Open and Competitive Environment, COM(90) 556 final.
                                                 14-
 ---pagebreak--- PART THREE: THE DIFFERENT INTERESTS INVOLVED
A. ACCESS TO THE MARKET FOR GENERIC PRODUCTS
   45. The very nature of the supplementary protection certificate will ensure that
       plant protection products benefiting from the provisions of the Regulation
       will continue to be protected for a longer period of time. Thus, producers of
       generic plant protection products have access to certain patented products
       only after several months or perhaps several years.
       A number of important points should be made here.
   46. First, more than half the plant protection products sold are no longer
       protected by patent.
        Table 3: Plant protection product market: shares of patented               and
       patented-expired products
                                       Current patent             Patent expired
           Herbicides                        45%                      55 %
           Insecticides                      42 %                     58 %
           Fungicides                        41 %                     59 %
           Total                             43%                      57%
        Source: Wood Mackenzie Consultants Ltd.
        These figures, which were confirmed by a study carried out in 1990 by the
        UK Ministry of Agriculture, Fisheries and Food (MAFF), show that, in the
        three most important sectors of the market for plant protection products,
        products not covered by patents and thus freely accessible to manufacturers
        of generic products account for more than 50 % of the market.
        Of course, none of the products in this category will benefit from the
        provisions of the proposed Regulation, leaving manufacturers of generic
        products complete freedom of action. In addition, the patented products
        which account for the rest of the market will qualify for only one
        supplementary protection certificate per active substance. Thus, if the same
        active substance is used in different forms (powder, liquid, etc.), only one
        certificate can be issued and not as many certificates as there are forms
        marketed. The certificate protects the active substance which is contained in
        the different forms or presentations of the product.
   47.  Second, it should be noted that the supplementary protection certificate is not
        an automatic mechanism giving five years' additional protection for all
        patented products. Certificates are granted and their duration calculated on a
        case-by-case basis, taking account of the duration of patent protection
        actually lost by the product in question during development and the
        authorization procedure for placing on the market. Thus, although the
         supplementary protection certificate can be valid for a maximum of five years,
                                        -15-
 ---pagebreak---         it will be valid for less than this if marketing authorization was granted less
       than ten years after the application for a patent was filed.
        The non-automatic nature of the certificate also means that it is granted by
        national patent offices not to all products which might benefit from it, but on
        application by the holder of the basic patent protecting the product
        concerned. In certain cases (development of a revolutionary plant protection
        product within the same group of products), the patent-holder could
        deliberately choose not to exercise his right to apply for a supplementary
        protection certificate, thus leaving the product to enter the public domain
        once the basic patent expires.
        The mechanism selected is such that the maximum effective protection of
        fifteen years (residual duration of the basic patent plus duration of the
        supplementary protection certificate) is calculated from the date of the first
        authorization to be placed on the market in the Community, which means that
        the full fifteen years will be achieved only in the Member State in which the
        first marketing authorization is obtained. In each Member State in which a
        marketing authorization is obtained subsequently, the total duration of
        effective protection will be reduced by the period of time between the first
        marketing authorization in the first Member State and the subsequent
        authorization.
   48.  A third feature of the proposal is to provide a wide range of information to
        interested third parties — including manufacturers of generic products —
        through publication of details of the application, the decision to grant or
        reject the application, and the expiry of the certificate. Manufacturers of
        generic products will thus be able to monitor the development of the market
        for patented plant protection products and will not suddenly be faced with a
        fait accompli.
   49.  Lastly, it should be acknowledged that the generics industry depends to a
        large extent on the success of research-based industry in that there will be no
        generics industry to benefit if the research industry does not develop new
        plant protection products. Today's research findings are the guarantee of the
        prosperity of tomorrow's generics industry. r lhe supplementary protection
        certificate should contribute to the appearance of new plant protection
        products which one day will be accessible to manufacturers of generic
        products.
B. EFFECT ON PRICES OF THE SUPPLEMENTARY CERTIFICATE
   50.  A tricky problem posed by the proposal for a Regulation concerns the impact
        of the supplementary protection certificate on the prices of plant protection
        products and, consequently, on farmers' expenditure. Taking account of the
        overall situation of the agricultural world, there are grounds for asking this
        question and giving a precise answer. Various estimates suggest that the
        certificate will have a minimal impact on the prices of plant protection
        products.
                                          16-
 ---pagebreak--- 51.- As mentioned above (point 46), the proposed mechanism will not apply to all
     plant protection products; the 57 % of the market which has already entered
     the public domain will not be affected at all. Nor will the granting of a
     supplementary certificate be automatic, since it is to depend on the merits of
     each individual case.
52.  Plant protection products placed on the market after the entry into force of
     the Regulation will benefit from a supplementary protection certificate only
     after ten years, i.e. on the expiry of the basic patent protecting them. During
     these ten years, the supplementary protection certificate will have no impact
     on their prices.
     The aim of the transitional arrangements — which concern products already
     on the market when the Regulation comes into force — is to strike a fair
     balance between what is needed to achieve the proposal's objectives and what
     can reasonably be accepted by society. This balance should not allow all plant
     protection products already on the market to have a supplementary
     protection certificate, but should also not exclude all these products from the
     transitional arrangements.
53.  Taking 1 January 1985 as the reference date for the transitional arrangements
      — this date defines the size of the group of products already placed on the
      market when the Regulation comes into force and qualifying for a
      supplementary protection certificate ~ means that only 37 plant protection
      products       could    benefit    from     the   transitional    arrangements,
      representing 5.28 % of the total market for such products in the European
      Union.
      Today, these 37 substances represent a market of the order of
      ECU 285 million. As a rule, it is estimated that the introduction of generic
      versions of plant protection products (legal copies of products no longer
      protected by patent) leads to a price reduction of some 25 %. In addition,
      the 37 substances concerned by the transitional arrangements would benefit
      from a supplementary protection certificate of 2.5 years on average. That
      means that the entry into force of the certificate system will put back
      by 2.5 years a price reduction of the order of 25 % on a market estimated at
      ECU 285 million, i.e. some ECU 180 million.
      This postponement of a price reduction — it must be regarded as such rather
      than as a genuine price "rise" ~ caused by the supplementary protection
      certificate must be spread out over a period of ten years. This is because
      products that obtain marketing authorization after the entry into force of the
      Regulation will not benefit from a supplementary protection certificate until
      the expiry of the basic patent protecting them, i.e. on average ten years later.
      During this period, only plant protection products already on the market
      when the Regulation enters into force will be affected.
       If the additional expenditure generated by the supplementary protection
       certificate is spread out over a period often years, that gives ECU 18 million
       a year. This amount represents an increase in expenditure by farmers on plant
                                       -17
 ---pagebreak---        protection products of the order of 0.33 % a year. According to data supplied
       by Eurostat, expenditure by farmers on buying plant protection products
       accounts for 6.2 % of their total outgoings. The introduction of the
       supplementary protection certificate will increase this figure to 6.2204 %,
       which is not a significant rise.
       On the industry side, this increase in turnover — of the order of 6.25 % of the
       market for products affected by the transitional arrangement ~ should
       generate additional resources to encourage research. These are estimated at
       ECU 4.86 million a year for each substance concerned during the period of
       additional protection.
   54. It is clear that, by its very nature, the supplementary protection certificate will
       have an impact — albeit limited, as shown above ~ on prices: however, it
       should safeguard the future of plant protection research in Europe, and hence
       the development of products which will be more environment-friendly and
       adapted to the needs of agricultural efficiency. There is strong demand from
       farmers for such products.
C. MULTILATERAL APPLICATION OF THE SUPPLEMENTARY CERTIFICATE
   55. This      proposal       for    a     Regulation,   like   Regulation       (EEC)
       No 1768/92 concerning medicinal products, may benefit not only firms from
       within the Union but also firms from outside. In fact, having regard to the
       geographical distribution of the plant protection research industry, only
       Swiss, American and Japanese firms are concerned.
   56. The obligations which the European Union accepted under the GATT
       Uruguay Round prevent any other outcome. Article 3 of the TRIPs text
       (trade-related aspects of intellectual property rights) lays down the "national
       treatment" principle, which requires the GATT Contracting Parties to grant
       to natural or legal persons from the other Contracting Parties the same
       treatment as they give to their nationals.
   57. A further consideration is that plant protection firms from the Union benefit
       from restoration of patents in Japan and Korea, and the advantages inherent
       in the American system, where the duration of the patent is, in fact, longer
       than the theoretical 17 years because of the method of calculation. In the
       United States the duration of patents is 17 years from the date on which the
       patent is granted and not from the date on which the application is filed,
       which means that any delay in the procedure for awarding the patent — very
       frequent because of the judicial proceedings in that country — delays the start
       of protection and means that effective protection ends later.
   58. Lastly, according to estimates, if the reference date for the transitional
       arrangements is 1 January 1985, of the thirty-odd products concerned, less
       than ten are of American origin, while the rest are European. It is thus clear
       that the proposed measure will not be of greater benefit to firms from outside
       Europe. In the context of an open market, in normal circumstances it will
       apply both to European firms and those from outside the Union.
                                         -ii
 ---pagebreak--- PART FOUR:       DETAILS AND CHARACTERISTICS OF THE
                 PROPOSED SYSTEM
A. OPERATION OF THE SUPPLEMENTARY CERTIFICATE
   59. The supplementary protection certificate is a sui generis industrial property
       instrument which takes effect on the expiry of the basic patent protecting an
       invention in the plant protection field. The rules governing its granting and its
       duration are harmonized at Community level, although the certificates are
       issued by the national patent offices. The same plant protection substance
       patented and authorized to be placed on the market in a number of Member
       States is the subject of the same number of applications for certificates, filed
       with corresponding national patent offices. At national level, the competent
       patent office is that of the State which granted the basic patent or on whose
       behalf it was granted and in which a marketing authorization was obtained.
   60. The supplementary protection certificate applies to all patents existing at
       national level, whether granted under national law, the European Patent
       Convention (Munich) or, subsequently, the Community Patent Convention
       (Luxembourg). Only legislative action at Community level, in the form of a
       Regulation, can achieve the degree of harmonization needed at this triple
       level.
   61. As was decided for medicinal products in 1992, this proposal for a
       Regulation harmonizes the conditions for granting supplementary protection
        certificates and their duration; it does not create a single application or a body
        specifically responsible for issuing supplementary protection certificates at
        Community level.
   62.  With a view to maintaining as broad as possible a degree of harmony in the
        field of industrial property, the Commission takes the view that a proposal
        concerning the creation of a supplementary protection certificate for plant
        protection products should not, in principle, differ from Council
        Regulation 1768/92 concerning medicinal products.
        This means that the basic rules, the procedure and the overall mechanism for
        the supplementary protection certificate, in particular its duration, should be
        identical. Moreover, this approach was preferred by the national experts
        attending the meeting of the Group of experts on industrial property held, at
        the Commission's initiative, on 1 October 1992. The few changes in relation
        to Regulation 1768/92 are highlighted in the section on examination of the
        provisions (see Part Five).
   63.  Because of the very high research costs in the plant protection sector, it is
        usual practice to protect any invention in all the Member States (in fact,
        protection is generally wider since patent applications cover the entire
        industrialized world). With regard to the European Union, that means that the
         same plant protection substance protected in all the Member States will have
         its protection extended by a maximum of five years and that this protection
                                          -19
 ---pagebreak---          will expire on exactly the same day throughout the Union. The detailed
         procedures provided for in this proposal are a powerful force for
         harmonization of the conditions of protection granted to inventions in the
        plant protection sector and, through competition, a means of ensuring the
        establishment and proper functioning of the internal market.
   64.  Putting plant protection products on a footing similar to that which would
        obtain in the absence of authorization means placing them on the terms that
        obtain in other sectors of technology not subject to authorization. The
        Commission puts the average period from when the patent application for a
        given product is filed to when it is placed on the market at five years. The
        duration of protection under the certificate thus calculated (the period "lost"
        less five years) takes effect on the day after the basic patent lapses.
        If the duration of protection under the certificate (the period "lost" less five
        years) is added to the period of effective protection under the basic patent,
        i.e. from the date marketing authorization is obtained to the end of the
        patent's term, a total period of effective protection for the product concerned
        is obtained of a maximum of fifteen years, starting from the first authorization
        to be placed on the market in the Community.
B. LEGA , BASIS
   65.  The introduction of a different period of protection for plant protection
       products in each of the Member States of the Union would create obstacles
       to their free movement within the internal market and distort conditions of
       competition.
       The introduction of a standard, adequate period of protection for the results
       of plant protection research will help avoid problems in the internal market,
       encourage innovation and technical progress at Union level, and promote
       intra-Community trade in plant protection products. In addition, because of
       the method of calculation, the certificate is a powerful force for
       harmonization and will facilitate the free movement of plant protection
       products in so far as one and the same patented product protected by
       certificates in a number of, or all, the Member States will enter the public
       domain on the same day throughout the Union.
       However, this proposal does not create, at Community level, any new body
       responsible for issuing certificates; they will be issued by national patent
       offices.
       The Commission proposes that Article 100a of the EC Treaty be taken as the
       legal basis for this proposal.
       In drafting the proposal, the Commission has taken due account of the
       provisions of Article 7c of the Treaty and has found that there is no need to
       provide for special or exceptional provisions for the time being.
       Similarly, the Commission has considered the question of the high level of
       protection required in the field of health, safety, environmental protection and
                                        -20-
 ---pagebreak--- consumer protection under Article 100a(3) of the Treaty. In order to
introduce a high level of protection, meeting both the requirements of the
internal market and the need to create a legal environment conducive to the
unhampered development of research activities in the plant protection sector,
the duration of effective protection for plant protection products should be
harmonized at fifteen years from the date of the first authorization to be
placed on the market in the Union.
                                 21 -
 ---pagebreak--- PART FIVE: EXAMINATION OF THE PROVISIONS
                                     Article 1
   66. "Plant protection products" are defined in Article 2 of Directive 91/414/EEC
       concerning the placing of plant protection products on the market. The terms
       "substances", "active substances" and "preparations", also taken from
       Directive 91/414/EEC, help to identify better what is covered by the
       definition of plant protection product.
       However, since the objectives of the patent system are different from those of
       the system of marketing authorization, it is important to stress that, for the
       purposes of the certificate, the term "product" is not understood to mean an
       agro-chemical product or a plant protection product in the wider sense, as
       presented for purchase by the final consumer, but in the narrower sense of
       active substance or combination of active substances contained in a plant
       protection product.
       The purpose of the expression "basic patent" is to specify what types of
       invention may serve as a basis for a certificate: the proposal does not provide
       for any exclusions. All plant protection research, provided that it leads to a
       new invention that can be patented, whether it concerns a new product, a new
       preparation, a new process for obtaining a new or known product, a new
       application of a new or known product, or a new combination of substances
       containing a new or known product, must be encouraged, without any
       discrimination, and must be eligible for a supplementary protection certificate
       provided that all of the conditions governing implementation of the
       Regulation are fulfilled.
       It is for the holder of the patents for the product, the process for obtaining
       the product, the application of the product or the combination containing the
       product, to choose which of these patents is to be regarded as the "basic
       patent" for the purpose of obtaining a supplementary protection certificate.
                                     Article 2
   67. This Article determines the scope of the proposal. It refers to any product
       that is the subject of both a system of protection by patent and a system of
       administrative authorization prior to its being placed on the market.
       It is specified that the authorization concerned is that provided for in
       Directive 91/414/EEC or in equivalent national law, thereby making it clear
       that the proposal applies only to plant protection products which have been
       authorized to be placed on the market pursuant to current Community or
       national law.
       With rega^ to the twelve Member States, Directive 91/414/EEC came into
        force in J     993. However, applications for ma..;eting authorization filed
       before that date in these Member States, on the basis of the relevant
                                         22
 ---pagebreak--- provisions of the different national laws, will be governed, even once
authorization has been granted, by those same national laws and not by
Directive 91/414/EEC. The reason for this is that the period between the
application for marketing authorization and the date of issue can run to
several years. This explains why the proposal lays down that products
covered by national law — those in respect of which the application for
authorization to be placed on the market was filed before the entry into force
of Directive 91/414/EEC — will also be able to benefit from a supplementary
protection certificate under the conditions laid down by the Regulation.
With regard to the countries which are soon to become members of the
European Union, the proposal allows for enlargement by laying down that
any product which has been the subject of an application for marketing
authorization filed before the entry into force of Directive 91/414/EEC for
the Member State in question will be able to benefit, under the conditions
laid down by the Regulation, from the supplementary protection certificate.
If, in the future, a new Member States joins the European Union,
Directive 91/414/EEC will enter into force in that Member State at a later
date than that laid down for the current Member States. It is possible that the
authorization to be placed on the market obtained in this new Member State
will be the first marketing authorization to be obtained in the enlarged
Community; this authorization must also enable a supplementary protection
certificate to be obtained. The proposal allows for this type of situation.
Since the proposal does not state under what kind of law patent protection is
given, it follows that the proposal applies to all plant protection products with
a patent in any Member State, whether this be a national patent, a European
patent or, in due course, a Community patent.
Only patented products are covered, whatever the legal source of the patent.
The aim here, with a view to the single market, and in accordance with the
solution adopted in Regulation (EEC) No 1768/92 concerning medicinal
products, is to prevent the illogical situation whereby, in one and the same
Member State, a new plant protection product may or may not benefit from a
supplementary protection certificate depending on whether the corresponding
patent was obtained nationally or at European level.
The requirement for harmonization on two levels, in addition to the urgency
in this specific instance in view of the constantly increasing periods required
to obtain authorizations to place plant protection products on the market,
calls for the adoption of a legal solution that maintains such harmonization
and enables it to be implemented simply and swiftly. That is why the proposal
for a Regulation provides for a system identical to that in force
since 2 January 1993 for medicinal products, i.e. a supplementary protection
certificate, the conditions and the rules for obtaining which are laid down in a
uniform manner for all of the Member States of the European Union.
                                  23-
 ---pagebreak---                                    Article 3
68. This Article lays down the substantive conditions to be met by a product in
    order to obtain a certificate.
    As the certificate is a national document, compliance with these conditions
    must be examined with respect to the Member State in which the application
    for a certificate is submitted and to the date of application.
    First, it must be ascertained that the product is protected by a current patent.
    It is this patent that serves as the basis for the certificate for the purposes of
    the Regulation.
    It may be that the same product is protected by more than one patent, e.g.
    one for the product and another for the process for obtaining the product. In
    this case, it is for the holder of the patents concerned to choose one of them
    as the basic patent. This choice is particularly important in that the subject
    and the content of the protection granted by the certificate are limited,
    respectively, by the subject and content of the basic patent.
    The product must have obtained a valid marketing authorization in
    accordance with Article 4 of Directive 91/414/EEC. That Directive adopts a
    two-stage system of authorization: first, the authorization is restricted to
    plant protection products containing certain active substances on a
    Community list of authorized active substances; next, the final product is
    subject, as a final product, and before it is actually marketed, to a separate
    authorization to be placed on the market. Only plant protection products
    which have successfully completed these two stages qualify for a
    supplementary protection certificate.
    In addition, because of the special features of the registration system for plant
    protection products (long delay between the filing of the application and the
    issue of the certificate by the competent authorities in the Member States),
    there is a need to ensure that a product authorized on the basis of an
    equivalent provision of national law can also benefit from the proposal.
    It is frequently the case that one and the same product is successively granted
    several authorizations to be placed on the market, in particular every time a
    modification is made affecting dose, composition or use, and every time a
    new use for the product is developed. In such a case, only the first
    authorization to place the product on the market in the Member State in
    which the application is lodged is taken into account for the purposes of the
    Regulation, in particular for calculating the period of six months available to
    the holder of the basic patent to submit an application for a certificate.
    Furthermore, if the first authorization given is also the first authorization to
    place the product on the market in the Union, it serves as the sole reference
    for all of the Member States for calculating the duration of each of the
    certificates they grant for the same product (see Article 13).
    Lastly, the product must not have already been the subject of a certificate in
    the Member State concerned. The certificate is designed to encourage
                                     -24
 ---pagebreak---     research into new plant protection products so that the duration of protection
    it affords, together with the duration of effective protection by patent, is
    sufficient to enable the investments made in the research to be recovered.
    However, it would not be acceptable, in view of the balance required between
    the interests concerned, for this total duration of protection for one and the
    same plant protection product to be exceeded. This might be the case if one
    and the same product were able to be the subject of several successive
    certificates.
    This calls for a strict definition of the product as laid down in Article 2. If a
    certificate has already been granted for the active substance itself, a new
    certificate may not be granted for that active substance, whatever changes
    may have been made regarding other features of the plant protection product
    (use of a different salt, different excipients, different presentation, etc.).
    In conclusion, it should be noted that, although one and the same substance
    may be the subject of several patents and several authorizations to be placed
    on the market in one and the same Member State, the supplementary
    protection certificate will be granted for that substance only on the basis of a
    single patent and a single authorization to be placed on the market, namely
    the first granted in the State concerned (the first authorization in the Union
    being taken only to calculate a uniform duration of different certificates for
    one and the same product).
                                    Article 4
69. The supplementary protection certificate is a sui generis protection instrument
     inasmuch as it is linked to both an authorization to place the product on the
     market (the first granted in the State concerned) and to a previous patent (the
    basic patent). This is already evident from the conditions for obtaining the
     certificate, which require both that the basic patent is a current one and that
     the authorization is valid, failing which the certificate is void.
     The delimitation of the subject protected by the certificate also illustrates this
     duality since the protection afforded by the certificate is limited in two ways.
     It is often the case in the plant protection field that a patent protects a series
     of products based on the same formula. However, only some of these
     products will subsequently be developed and only one might be placed on the
     market. In such a case, the certificate will protect only the product covered
     by the authorization and not all of the products protected by the patent.
     At the same time, the product authorized will itself be limited by the patent's
     subject-matter. Lf the basic patent protects a compound x, where the
     authorized product consists of a combination of compound x and another
     active principle, only compound x will be protected by the certificate.
     Furthermore, the certificate will protect only the product covered by the
     authorization, namely the product within the strict meaning of Article 2.
                                       -25-
 ---pagebreak---     Lastly, the fact that the certificate is based on both the basic patent and the
    authorization can also be seen in the link between the protection afforded and
    the use of the product. A new product patent normally gives the product
    absolute protection so that any use of the patented product, even for non-
    patented applications, constitutes an infringement, i.e. the patent protects all
    possible uses that the product may have.
    The certificate does not given such protection. On the one hand, the link with
    the authorization system implies protection of the product covered by the first
    authorization, while limiting it to the uses of the product successively
    authorized prior to the expiry of the protection certificate.
    Plant health firms frequently develop new uses of the same product, which
    are the subject of new marketing authorizations. The marketing authorization
    is actually granted several years after the patent is filed, during which time the
    plant protection product undergoes multiple tests for one or more very
    specific uses. In view of this, it would seem to be logical to protect it, by
    means of the certificate, for the successive uses which have been the subject
    of authorizations.
    Furthermore, only uses in the plant protection field as defined in
    Directive 91/414/EEC come under the protection of the certificate
    (authorized use of the product as an additive in animal feedingstuffs, for
    example, would not be protected under the certificate).
    On the other hand, the protection granted by the certificate is limited by that
    of the basic patent. In the case of a product patent, the limitation under the
    patent will not apply since this type of patent protects all possible uses of the
    product. However, in the case of an application patent, the certificate will
    protect only the use or uses claimed in the patent, provided that they were
    authorized prior to the expiry of the certificate.
                                   Article 5
70. The effects of the certificate on the subject to which it refers as described in
    Article 4 are the same as those of the basic patent. The patent system has
    hitherto been the best way yet found of encouraging research. It is therefore
    not surprising, in view of the objective of this Regulation, that the certificate
    grants the same rights, subject to the same limitations.
    In the case of a basic patent covering a product, the rights conferred by the
    certificate will be the same as those conferred by the basic patent, but limited
    to any use of the product authorized prior to the expiry of the certificate.
    In the case of a basic patent covering a use of the product, the rights
    conferred by the certificate will be the same as those conferred by the basic
    patent, but limited to the use covered by the patent and authorized prior to
    the expiry of the certificate.
    T
     n the case :_, a basic patent covering a process for obtaining the product, the
    rights conferred by the certificate will be the same as those conferred by the
                                      26
 ---pagebreak---     basic patent, but limited to the process for obtaining the authorized product.
    The rights conferred by the certificate will be extended to the product if the
    law applicable to the basic patent lays down that the protection of a process
    for obtaining a new product extends to the product directly obtained by that
    process.
    Lastly, the certificate is subject to the same restrictions as the basic patent.
    Restrictions on private acts for non-commercial purposes, restrictions on acts
    for experimental purposes relating to the subject of the certificate and
    restrictions on obligatory licences relating to the subject of the certificate are
    some of the possible restrictions on the rights conferred by the certificate if
    these are also included in the basic patent.
                                   Article 6
71. The right to apply for a supplementary protection certificate belongs to the
    holder of the basic patent; it is for him, or his successor in title, to choose
    whether or not to exercise this right.
                                   Article 7
72. This Article concerns the time during which the application for the certificate
    must be submitted.
    A period of six months is provided from the date on which the first
    authorization to place the product on the market in the State concerned was
    obtained. This solution takes account of the various interests involved; those
    of the patent holder who, after having applied for the certificate, may, if he so
    wishes, forgo the certificate if his product proves to be unsuccessful on the
     market, and those of third parties who have every interest in knowing as early
     as possible whether or not the product concerned will be protected by a
     certificate once the patent has expired.
    Furthermore, there is no danger of applications for a certificate being
     routinely and systematically filed each time authorization to place a product
     on the market is given, since the conditions laid down in Article 3 for
     obtaining the certificate are strict and allow only one certificate per substance.
     It may be that authorization is obtained before the basic patent is granted, in
     particular in the field of biotechnology products, where patent applications
     may be left pending for quite a long time. In such cases, the period of six
     months begins on the date on which the patent is granted and not on the date
     on which the first marketing authorization is obtained.
                                    Article 8
73.  This Article concerns the content of the application for a certificate.
                                        27
 ---pagebreak---     Few documents are, required. Apart from the request itself, a copy of the first
    authorization to place the product on the market in the State concerned is
    required as this enables the product to be identified. If this authorization is
    not also the first authorization to place the product on the market in the
    Union, a copy of the latter also has to be attached since the duration of the
    certificate will be calculated, yi all Member States in which an application for
    a certificate is lodged, by reference to this criterion alone. Information
    enabling the basic patent to be identified must also be provided.
    The authority responsible for granting the certificate will have to verify that
    the authorization(s) and the patent refer to one and the same product.
    Lastly, the application must contain a summary of the product's features as
    defined at points A(l) or B(l) of Annex II to Directive 91/414/EEC or by
    equivalent national legislation. These are the features which enable it to be
    characterized as a plant protection product and, consequently, which help to
    provide a better description of the product. It is also a requirement that is
    easy to meet once all the tests on the product have been completed.
                                   Article 9
74. The application for a certificate must be submitted to the patents offices of
    the Member States. The office responsible for each application for a
    certificate is that in the State which granted the basic patent or on whose
    behalf it was granted and in which the first authorization to place the product
    on the market for that State was obtained. For one and the same plant
    protection product patented and authorized to be placed on the market in
    several Member States, as many applications for certificates must be
    submitted to the corresponding patents offices.
    The application for a certificate must be published by the patents office. This
    important formality ensures that third parties are informed as soon as
    possible.
                                  Article 10
75. This Article refers to the conditions governing the grant of the certificate or
    the rejection of the application.
    The procedure is simple; its application should not give rise to any particular
    difficulties. All patent offices must, in particular, be able to verify the
    conditions referred to in Article 3 under which the certificate was obtained.
    Contacts may, if necessary, be provided for between the patents office and
    the authority responsible for authorizing the product to be placed on the
    market.
                                       28
 ---pagebreak---                                   Article 11
76. With a view to providing the best possible information to interested third
    parties, the proposal for a Regulation provides for publication of the decision
    to accept or reject applications for supplementary protection certificates. This
    publication must be accompanied by a series of details intended to provide
    information which is as complete as possible to third parties.
                                  Article 12
77. This Article states that the Member States may provide that renewal of the
    certificate is subject to the payment of a fee. It is for the Member States to
    establish the amount if they decide to introduce such fees, failure to pay
    causing the certificate to lapse.
                                  Article 13
78. The duration of protection granted by the certificate is established on the
    basis of several factors.
    First, the duration of protection must be sufficient to meet the proposal's
    objectives of promoting research. In this respect, there is a need to avoid
    discriminating against plant protection research and to subject it to conditions
    similar to those which would obtain if plant protection products were not
    subject to authorization to be placed on the market.
    The duration of the certificates covering the same product in a number of
    Member States must be calculated on the basis of specific reference dates, the
    effect of which, in particular, is that all the supplementary protection
    certificates protecting one and the same product in the different Member
    States expire on the same date throughout the Union. The proposal for a
    Regulation will therefore exercise a powerful harmonizing effect on the total
    duration of protection for plant protection products throughout the Union.
    This harmonization also means that one and the same plant protection
    product, covered by supplementary certificates, will enter the public domain
    on the same day in all the Member States, whereas this is not the case under
    the current patent system.
    However, it is also essential to take account of the objectives of Community
    policy as a whole and, in particular, to prevent the duration of protection of
    plant protection products from becoming a barrier to them.
    Lastly, the system must be kept simple, while allowing for a certain degree of
    balance between all the interests involved.
    The Commission therefore proposes that the duration of the certificate be
    calculated on the basis of the protection period "lost" under the patent, i.e.
    the period between the date on which the patent application is filed and the
    date on which the first authorization to place the product on the market in the
    Community is obtained.
                                      29-
 ---pagebreak--- As the authorization dates for one and the same plant protection product
differ from one Member State to another, the later authorization is given, the
shorter the period of effective protection will be. The Community's policy on
authorizations should nevertheless gradually reduce the gaps between
Member States and therefore improve the levelling of the durations of
effective protection afforded to plant protection products.
Putting plant protection products on a footing similar to that which would
obtain in the absence of an authorization system means placing them on the
terms that obtain in other sectors of technology not subject to authorization.
The Commission puts the average period in Europe from the date on which
the patent application for a given product is filed to the date on which it is
marketed at five years. The duration of protection under the certificate thus
calculated (the period "lost" less five years) takes effect on the day after the
basic patent lapses.
It should be stressed that, if the effective period remaining under the basic
patent, i.e. from obtaining the marketing authorization to the expiry of the
patent, is added to the duration of protection under the certificate — the
period lost less five years ~ a total period of effective protection for the plant
protection product concerned of fifteen years is obtained, below which, in the
Commission's view, the objectives of this proposal for a Regulation will not
be attained.
Lastly, it should be pointed out that the proposal also provides for a deadline
after which the plant protection product enters the public domain. The
duration of the certificate may not exceed five years from the date on which it
takes effect.
The simplicity of the system means that it is not possible to take account of
certain factors, such as the diligence that the innovating firm has shown
throughout the tests required to obtain authorization. The proposal
compensates for this shortcoming by restricting the certificate in cases in
which authorization was obtained very late. For example, if the authorization
was obtained eighteen years after the application for the corresponding patent
was filed, the duration of the certificate is not thirteen years (eighteen minus
five) but five years, after which there is no further protection.
It should be noted that fixing the maximum duration of the certificate at five
years begins to have a restrictive effect if the marketing authorization for the
plant protection product concerned is obtained more than ten years after the
date on which the application for the patent was filed, which is, however, the
norm in this sector. Thus, an authorization obtained twelve years after the
corresponding patent application was filed does not produce a certificate of
seven (twelve minus five) years' duration, but a certificate of maximum five
years' duration.
                                  30
 ---pagebreak---                                     Article 14
79. This Article provides for four cases of extinction of the certificate: expiry of
    the certificate itself; surrender of the certificate by its holder; non-payment of
    the annual fees, and the fact that the product no longer has authorization to
    be placed on the market obtained in accordance with Community law.
                                    Article 15
80. The proposal lays down three grounds for invalidity of the certificate.
    (1) The certificate is void if the conditions for obtaining the certificate as laid
         down in Article 3 have not been complied with. This will in particular
         concern cases where the authorization to place the product on the market
         was not valid or was not the first in the Member State concerned, where
         the basic patent was no longer in force when the certificate was applied
         for and, lastly, where one and the same product was the subject of several
         certificates in the same Member State, in which case only the certificate
         granted in respect of the first authorization to place the product on the
         market in the State concerned will be valid.
     (2) The certificate is void if the basic patent is not valid when its lawful term
         expires. Where renewal of a patent until its term expires is indicative of
         the value of the product it protects, this ground for invalidity will play an
         important selective role. Furthermore, the exclusive protection granted by
         the certificate over a given period is not lawful unless the product
         concerned meets not only the specific conditions for obtaining the
         certificate laid down by Article 3, but also the criteria of patentability for
         the basic patent. It is therefore necessary to specify that the certificate is
         void if the basic patent or at least that part of the basic patent that
          corresponds to the product covered by the certificate has been revoked. It
         is therefore necessary to specify expressly that an application for
         revocation of the basic patent, with a view to the revocation of the
          certificate, may be submitted even after the lawful term of the basic patent
          has expired.
     (3). The certificate is void if the subject that it protects is not covered by the
          basic patent. The aim is to prevent a given product not protected by a
          patent from enjoying the exclusive protection of a certificate without
          having to fulfil the conditions and obligations specific to the patent
          system. This ground for invalidity is therefore based on the same principle
          as the previous ground. It should also be stressed that, if the subject of
          the certificate is only partially covered by the basic patent, the declaration
          of invalidity of the certificate may take the form of a corresponding
          limitation of the certificate, this being in accordance with the principle of
          proportionality. Lastly, the Article specifies that any person may request a
          declaration of invalidity of the certificate from the authority which
          granted it, i.e. the corresponding patents office. The decision of the office
          will be subject to appeal, as provided for in Article 17.
                                          31
 ---pagebreak---                                    Article 16
81. Pursuing its objective of making information widely available to interested
    third parties, the proposal lays down that notice be given of the lapse or
    invalidity of the certificate.
                                   Article 17
82. This Article provides that any decisions of the patents office to which the
    application for a certificate was made are open to the same appeals as
    provided for in national law against similar decisions in respect of patents.
    This is an essential legal guarantee, claims under which.are subject to the
    national patents law of the State in which the certificate was granted.
                                   Article 18
83. Where the proposal for a Regulation lays down procedural provisions, these
    will apply. If it does not, the applicable provisions are those laid down by the
    national law applicable to the corresponding basic patent, unless that law has
    laid down special procedural provisions.
    In addition, the proposal states that it is not possible to oppose a certificate
    which has been issued.
                                   Article 19
84. In accordance with the general principles of law, the proposal for a
    Regulation will apply to any product protected by a valid patent and which
    has not yet obtained the authorization to be placed on the market when the
    Regulation comes into force.
    The aim of this Article is to lay down transitional arrangements concerning
    products already authorized when the Regulation comes into force, a
    particularly important and sensitive part of the proposal. The Commission
    takes the view that certain criteria have to be satisfied in order to arrive at a
    balanced solution.
    It is essential to strike a balance between all of the interests concerned if the
    desire is to find a solution acceptable to everyone: the aim is neither to cover
    all products already being marketed nor to exclude them totally.
    The proposed solution must avoid any distortion to the system for granting
    authorization to place a product on the market that might make certain firms
    delay submitting an application for such authorization.
    Lastly, the solution must be free of uncertainty in order to enable all firms to
    plan ahead.
                                      -32-
 ---pagebreak--- That is why the Commission proposes that the Regulation apply to all
products authorized since 1 January 1985 and protected by a valid patent on
the date on which it enters into force.
The choice of 1 January 1985 as a single reference date for obtaining the first
marketing authorization should enable European industry to close the gap
between itself and its foreign competitors. Furthermore, if the date of entry
into force of the Regulation can be envisaged as the beginning of 1996, a
product for which a patent application was filed in 1976 will not be able to
benefit from a certificate unless the corresponding authorization was given
more than nine years after the application was filed (after 1985).
However, Directive 91/414/EEC concerning the placing of plant protection
products on the market entered into force only in mid-1993; this means that
few products which could qualify for the transitional arrangements of this
proposal for a Regulation have an authorization to be placed on the market
granted on the basis of Directive 91/414/EEC. Before this Directive entered
into force, the procedures for authorization to be placed on the market for
plant protection products were a matter for national laws. It is therefore
necessary to specify in the transitional arrangements that plant protection
products authorized after 1 January 1985 on the basis of either
Directive 91/414/EEC (a limited number of products) or an equivalent
provision of national law (the majority of products) are eligible for a
supplementary protection certificate, provided that the other conditions for
obtaining a certificate are met. Of course, in order to qualify for the
transitional arrangements, these products must still be validly protected by a
current patent on the date on which the Regulation comes into force.
As regards the transitional arrangements, the proposal for a Regulation lays
down that the application for a certificate must be filed during the six months
following the entry into force of the Regulation.
                                  33-
 ---pagebreak---                                                                                 ANNEX
PROFILE OF THE PLANT PROTECTION SECTOR
   The agro-chemicals industry comprises two principal sectors, fertilizers and chemical
   products protecting crops, also known as plant protection products, which include
   herbicides, insecticides, fungicides and plant growth regulators.
   Firms in the plant protection sector can be split into two broad groups: those which
   base their activities on substantial research, with a view to placing new plant
   protection products on the market, and those which do not carry out research but
   depend on the first group for making lawful copies of products no longer protected
   by patent: these latter firms are commonly called manufacturers of generics.
   A.      The market for plant protection products
           The world market for plant protection products is estimated at
           ECU 22 000 million (1992 figure). The United States accounts for
           some 27 % of this market, the twelve Member States of the European Union
           for 26 %, the Far East for 25 %, and the rest of the world for 22 %.
           Table 1: Plant protection products: market size by region (1992)
              (ECU million)    Herbicides  Insecticides Fongicides    Other      Total
              USA                  3649        1311         456         286       5702
              Western Europe       2275         878        1510        1022       5685
              Far East             1606        2160        1475         197       5438
              Latin America         976         606         406          52       2040
              Eastern Europe        293         297          142        122        854
              Rest of World         765         931          133         39       1868
             Total                 9564        6183        4122        1718      21587
           Source: County NatWest WoodMac.
           In terms of the value of plant protection products, it is estimated that the
           European Union, with some 36 % of world production, remains the largest
           producer, the United States lying second with almost 28 %. They are
           followed by Japan (14 %) and the rest of Western Europe (10 %).
           The current position of the European industry is based on experience over the
           last forty years in developing products initially aimed at the markets of
           Europe, Africa, Australasia and Latin America.
           France, Germany, Italy and the United Kingdom are the largest producers of
           plant protection products in the Union; with Spain, these countries are the
           largest consumers since between them they use more than 80 % of the
           herbicides and fungicides, and more than 75 % of the insecticides consumed
           in Europe.
           In 1992 France, along with the United States and Japan, accounted for 55 %
           of the world market for herbicides and, on its own, for 8 % of world sales.
           Today, herbicides form the largest production and market in the Union, with
                                            34-
 ---pagebreak---       the exception of Italy, where sales of fungicides have been greater than those
      of herbicides since 1990, and Spain, where sales of insecticide exceed those
      of herbicides.
B.    Trade balance
      The trade balance is very favourable to the Union since its exports run at
      twice the level of its imports although, since 1985, imports have been
      increasing more strongly than exports (see Table 2). The market for plant
      protection products in the European Union generates a positive trade balance
      of some ECU 850 million (1991).
      Whereas in 1986 the Soviet Union was the Union's largest export market
      (19%), in 1991 its successor States accounted for only 11 % of sales. The
      countries of central Europe and EFTA have taken over, even if it is the rest
      of the world which accounts for the highest percentage of Community
      exports (46 %). With regard to imports, the major competitors of Community
      firms are in the EFTA countries, with more than 50 % of total Community
      imports, followed by the United States (33 %).
      Table 2: Plant protection products: external trade
   (ECU million)    1982     1983    1984      1985    1986    1987    198B    1989    1990  1991
   Exports extra-EC 1074.7  1242.6  1527.1    1732.9  1599.9  1380.0  1342.9  1404.2  1423.0 1478.7
   Imports extra-EC  257.1   301.3   374.2     426.3   378.5   392.0   461.2   571.0   593.6  633.2
   Trade balance     817.6   941.3  1152.9    1306.6  1221.5   988.1   881.7   833.2  '829.5  845.5
   Ratio of exp/imp    4.1     4.12    4.08      4.07    4.23    3.52    2.91    2.46    2.4    2.34
   Intra-EC trade    97 9.6 1091.9  1413.0   1518.3   1521.9  1476.9  1628.4  1932.5  2162.0 2111.0
      Source: Panorama of European Industry and Eurostat 1991
      However, these figures reveal a decline in the relative position of the
      European plant protection industry at international level. Whereas the ratio of
      exports/imports was 4.18 in 1982 — which indicates that exports of plant
      protection products from the Union were more than four times higher than
      imports ~ this fell to 2.34 in 1991. During this period, the amount of plant
      protection products bought outside the Union rose from ECU 257 million to
      ECU 633 million, an increase of 146%, while exports rose from
      ECU 1 074 million to ECU 1 478 million, an increase of 37 %.
      Leading firms
      Most of the main producers of plant protection products — estimated to be
      forty worldwide ~ are located in the United States (9), Japan (11), or in
      Western Europe (14). Almost all are part of multinational chemical firms and
      the plant protection sector represents only a small fraction of the total group
      sales.
      Monsanto (USA) is regarded as the leading producer of herbicides (14 % of
      the world market), followed by Ciba (Switzerland) with 12 %, Rhône-
      Poulenc (France) and BASF (Germany) with 6 % each. In the field of
      insecticides, Bayer (Germany) and Rhône-Poulenc (France) are the leaders,
      followed by FMC (USA) and Hoechst (Germany). The main producers of
      fungicides are Bayer (18 % of the world market), Ciba, Rhône-Poulenc, Du
      Pont (USA) and BASF (see Table 3).
                                            35-
 ---pagebreak--- Table 3: Plant protection industry: leading firms
               Firm            Sales, of plant protection Plant protection products
                                        products                      as
                                    (ECU million)              % of total sales
  Ciba (CH)                            2416                         18J>
  Du Pont (USA)             j          1669                           52
  Bayer (D)                            1595                           7,3
  Rhône-Poulenc (F)                    1572                         12.5
  Zeneca (ex-ICI) (GB)                 1465                         28Ji
  Monsanto (USA)                       1405                         21^2
  Dow Elanco (USA)                     1349                        100.0
  Hoechst (D)                          1138                           4J
  BASF (D)                               975                          42
  American Cyanamid (USA)                854                        Ij^O
Source: County NatWest WoodMac — 1992 figures
In terms of the breakdown of turnover of plant protection products by
product group, it is estimated that herbicides account for 45 % of the total,
insecticides 29 %, fungicides 19 %, plant growth regulators and other
products 7 %.
                                36-
 ---pagebreak---                                        Proposal for a
            EUROPEAN PARLIAMENT AND COUNCIL REGULATION (EQ
                                    concerning the creation
             of a supplementary protection certificate for plant protection products
 THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN
 UNION,
 Having regard to the Treaty establishing the European Community, and in particular
 Article 100a thereof,
 Having regard to the proposal from the Commission/1)
 Having regard to the opinion of the Economic and Social Committee/2)
 (1) Whereas plant protection research contributes to the continuing improvement in crop
      production;
 (2) Whereas plant protection products, especially those that are the result of long, costly
       research, will not continue to be developed in the Community and in Europe unless
      they are covered by favourable rules that provide for sufficient protection to
      encourage such research;
 (3) Whereas at the moment the period that elapses between the filing of an application
      for a patent for a new plant protection product and authorization to place the
      product on the market makes the period of effective protection under the patent
      insufficient to cover the investment put into the research and to generate the
      resources needed to maintain a high level of research;
(4) Whereas this situation leads to a lack of protection which penalizes plant protection
      research and the competitiveness of the sector;
(5) Whereas, in its Resolution of 1 February 1993<3) on a Community programme of
      policy and action in relation to the environment and sustainable development, the
      Council adopted the general approach and strategy of the programme presented by
      the Commission, which stressed the interdependence of economic growth and
      environmental quality; whereas improving protection of the environment means
      maintaining the competitiveness of industry; whereas, accordingly, the issue of a
      supplementary protection certificate can be regarded as a positive measure in favour
      of environmental protection;
W OJNoC
(2) O J N o C
<3) O J N o C 138, 17.5.1993, p. 1.
                                             -37
 ---pagebreak--- (6) Whereas a uniform solution at Community level should be provided for, thereby
      preventing the heterogeneous development of national laws leading to further
      disparities which would be likely to create obstacles to the free movement of plant
     protection products within ihe Community and thus directly affect the establishment
      and the functioning of the internal market; whereas this is in accordance with the
     principle of subsidiarity as defined by Article 3b of the Treaty on European Union;
(7) WTiereas, therefore, the creation of a supplementary protection certificate granted,
     under the same conditions, by each of the Member States at the request of the holder
     of a national or European patent relating to a plant protection product for which
     marketing authorization has been granted is necessary; whereas a Regulation is
     therefore the most appropriate legal instrument;
(8) WTiereas the duration of the protection granted by the certificate should be such as to
     provide adequate, effective protection; whereas, for this purpose, the holder of both
     a patent and a certificate should be able to enjoy an overall maximum of fifteen years
     of exclusivity from the time the plant protection product in question first obtains
     authorization to be placed on the market in the Community;
(9) Whereas all the interests at stake in a sector as complex and sensitive as plant
     protection must nevertheless be taken into account; whereas, for this purpose, the
     certificate cannot be granted for a period exceeding five years; whereas the
     protection granted should furthermore be strictly confined to the product which
     obtained authorization to be placed on the market as a plant protection product;
(10) Wliereas a fair balance should also be struck with regard to the determination of the
     transitional arrangements; whereas such arrangements should enable the Community
     plant protection industry to catch up to some extent with its main competitors, while
     making sure that the arrangements do not compromise the achievement of other
     legitimate objectives concerning the agricultural and environment policies pursued
     both at national and Community level;
(11) Whereas only action at Community level can be effective in attaining the objective,
     which consists in ensuring adequate protection for innovation in the field of plant
     protection, while guaranteeing the proper functioning of the internal market for plant
     protection products;
HAVE ADOPTED THIS REGULATION:
                                              38
 ---pagebreak---                                                Article 1
                                             Definitions
For the purposes of this Regulation, the following definitions shall apply:
1.   'plant protection products': active substances and preparations containing one or
     more active substances, put up in the form in which they are supplied to the user,
     intended to:
      1.1.      protect plants or plant products against all harmful organisms or prevent the
                action of such organisms, in so far as such substances or preparations are not
                otherwise defined below;
      1.2.      influence the life processes of plants, other than as a nutrient (e.g. plant
                growth regulators);
      1.3.      preserve plant products, in so far as such substances or products are not
                subject to special Council or Commission provisions on preservatives;
      1.4.      destroy undesired plants; or
      1.5.      destroy parts of plants, check or prevent undesired growth of plants;
2.    'substances': chemical elements and their compounds, as they occur naturally or by
      manufacture, including any impurity inevitably resulting from the manufacturing
      process;
3.    'active substances': substances or micro-organisms including viruses, having general
      or specific action:
      3.1.      against harmful organisms; or
      3.2.      on plants, parts of plants or plant products;
4.    'preparations': mixtures or solutions composed of two or more substances, of which
      at least one is an active substance, intended for use as plant protection products;
 5.    'plants': live plants and live parts of plants, including fresh fruit and seeds;
 6.    'plant products': products in the unprocessed state or having undergone only simple
       preparation such as milling, drying or pressing, derived from plants, but excluding
       plants themselves as defined at point 5;
 7.    'harmful organisms': pests of plants or plant products belonging to the animal or plant
       kingdom, and also viruses, bacteria and mycoplasmas and other pathogens;
                                                   39-
 ---pagebreak--- 8.   'product': the active substance is defined at point 3 or combination of active
     substances of a plant protection product;
9.   'basic patent': a patent which protects a product as defined at point 8 as such, a
     preparation as defined at point 4, a process to obtain a product or an application of a
     product, and which is designated by its holder for the purpose of the procedure for
     grant of a certificate;
10. 'certificate': the supplementary protection certificate.
                                            Article 2
                                             Scope
Any product protected by a patent in the territory of a Member State and subject, prior to
being placed on the market as a plant protection product, to an administrative
authorization procedure as laid down in Article 4 of Council Directive 91/414/EEC^4), or
pursuant to an equivalent provision of national law if it is a plant protection product in
respect of which the application for authorization was lodged before the entry into force
of Directive 91/414/EEC for the Member State concerned, may, under the terms and
conditions provided for in this Regulation, be the subject of a certificate.
                                            Article 3
                             Conditions for obtaining a certificate
A certificate shall be granted if, in the Member State in which the application referred to in
Article 7 is submitted, at the date of that application:
(a) the product is protected by a basic patent in force;
(b) a valid authorization to place the product on the market as a plant protection product
     has been granted in accordance with Article 4 of Directive 91/414/EEC or an
     equivalent provision of national law;
(c) the product has not already been the subject of a certificate;
(d) the authorization referred to in (b) is the first authorization to place the product on
     the market as a plant protection product.
                                            Article 4
                                  Subject-matter of protection
Within the limits of the protection conferred by the basic patent, the protection conferred
by a certificate shall extend only to the product covered by the authorizations to place the
W OJNoL230, 19.8.1991, p. 1.
                                               40
 ---pagebreak--- corresponding plant protection product on the market and for any use of the product as a
plant protection product that has been authorized before the expiry of the certificate.
                                             Article 5
                                     Effects of the certificate
Subject to the provisions of Article 4, the certificate shall confer the same rights as
conferred by the basic patent and shall be subject to the same limitations and the same
obligations.
                                             Article 6
                                  Entitlement to the certificate
The certificate shall be granted to the holder of the basic patent or his successor in title.
                                             Article 7
                                   Application for a certificate
 I.   The application for a certificate shall be lodged within six months of the date on
      which the authorization referred to in Article 3(b) to place the product on the market
      as a plant protection product was granted.
 I.   Notwithstanding paragraph 1, where the authorization to place the product on the
      market is granted before the basic patent is granted, the application for a certificate
      shall be lodged within six months of the date on which the patent is granted.
                                             Article 8
                            Content of the application for a certificate
  1.  The application for a certificate shall contain:
      (a) a request for the grant of a certificate, stating in particular:
              (i) the name and address of the applicant;
              (ii) if he has appointed a representative, the name and address of the
                   representative;
              (iii) the number of the basic patent and the title of the invention;
              (iv) the number and date of the first authorization to place the product on the
                    market, as referred to in Article 3(b) and, if this authorization is not the
                   first authorization to place the product on the market in the Community,
                   the number and date of that authorization;
                                                 41
 ---pagebreak---    (b) a copy of the authorization to place the product on the market, as referred to in
       Article 3(b), in which the product is identified, containing in particular the
       number and date of the authorization and the summary of the product
       characteristics listed in Part A.I or B.I of Annex II to Directive 91/414/EEC or in
       equivalent national laws of the Member State in which the application was
       lodged;
   (c) if the authorization referred to in (b) is not the first authorization to place the
       product on the market as a plant protection product in the Community,
       information regarding the identity of the product thus authorized and the legal
       provision under which the authorization procedure took place, together with a
       copy of the notice publishing the authorization in the Official Journal or any other
       document including the information required.
2. Member States may provide that a fee is payable upon application for a certificate.
                                           Article 9
                         Lodging of an application for a certificate
1. The application for a certificate shall be lodged with the competent industrial
   property office of the Member State which granted the basic patent or on whose
   behalf it was granted and in which the authorization referred to in Article 3(b) to
   place the product on the market was obtained, unless the Member State designates
   another authority for the purpose.
2. Notification of the application for a certificate shall be published by the authority
   referred to in paragraph 1. The notification shall contain at least the following
   information:
   (a) the name and address of the applicant;
   (b) the number of the basic patent;
   (c) the title of the invention;
   (d) the number and date of the authorization to place the product on the market,
       referred to in Article 3(b), and the product identified in that authorization;
   (e) where relevant, the number and date of the first authorization to place the
       product on the market in the Community.
                                          Article 10
                   Grant of the certificate or rejection of the application
1. Where the application for a certificate and the product to which it relates meet the
   conditions laid down in this Regulation, the authority referred to in Article 9(1) shall
   grant the certificate.
                                             -42
 ---pagebreak--- 2. The authority referred to in Article 9(1) shall, subject to paragraph 3, reject the
   application for a certificate if the application or the product to which it relates does
   not meet the conditions laid down in this Regulation.
3. Where the application for a certificate does not meet the conditions laid down in
   Article 8, the authority referred to in Article 9(1) shall ask the applicant to rectify the
   irregularity, or to settle the fee, within a stated time.
4. If the irregularity is not rectified or the fee is not settled under paragraph 3 within the
   stated time, the authority shall reject the application.
5. Member States may provide that the authority referred to in Article 9(1) is to grant
   certificates without verifying that the conditions laid down in Article 3(c) and (d) are
   met.
                                           Article 11
                                          Publication
1. Notification of the fact that a certificate has been granted shall be published by the
   authority referred to in Article 9(1). The notification shall contain at least the
   following information:
   (a) the name and address of the holder of the certificate;
   (b) the number of the basic patent;
   (c) the title of the invention;
   (d) the number and date of the authorization to place the product on the market
        referred to in Article 3(b) and the product identified in that authorization;
   (e) where relevant, the number and date of the first authorization to place the
        product on the market in the Community;
   (f) the duration of the certificate.
2. Notification of the fact that the application for a certificate has been rejected shall be
   published by the authority referred to in Article 9(1). The notification shall contain at
   least the information listed in Article 9(2).
                                          Article 12
                                         Annual fees
Member States may require that the certificate be subject to the payment of annual fees.
                                              -43
 ---pagebreak---                                             Article 13
                                   Duration of the certificate
 1. The certificate shall take effect at the end of the lawful term of the basic patent for a
    period equal to the period which elapsed between the date on which the application
    for a basic patent was lodged and the date of the first authorization to place the
    product on the market in the Community, reduced by a period of five years.
2.  Notwithstanding paragraph 1, the duration of the certificate may not exceed five
    years from the date on which it takes effect.
                                            Article 14
                                    Expiry of the certificate
The certificate shall lapse:
(a) at the end of the period provided for in Article 13;
(b) if the certificate-holder surrenders it;
(c) if the annual fee laid down in accordance with Article 12 is not paid in time;
(d) if and as long as the product covered by the certificate may no longer be placed on
    the market following the withdrawal of the appropriate authorization or
     authorizations to place it on the market in accordance with Article 4 of
     Directive 91/414/EEC or equivalent provisions of national law. The authority
     referred to in Article 9(1) may decide on the lapse of the certificate either on its own
     initiative or at the request of a third party.
                                            Article 15
                                   Invalidity of the certificate
1.   The certificate shall be invalid if:
     (a) it was granted contrary to the provisions of Article 3;
     (b) the basic patent has lapsed before its lawful term expires;
     (c) the basic patent is revoked or limited so that the product for which the certificate
          was granted would no longer be protected by the claims of the basic patent or,
          after the basic patent has expired, grounds for revocation exist which would have
          justified such revocation or limitation.
2.   Any person may submit an application or bring an action for a declaration of
     invalidity of the certificate before the body responsible under national law for the
     revocation of the corresponding basic patent.
                                               -44-
 ---pagebreak---                                             Article 16
                                Notification of lapse or invalidity
If the certificate lapses in accordance with Article 14(b), (c) or (d), or is invalid in
accordance with Article 15, notification thereof shall be published by the authority
referred to in Article 9(1).
                                            Article 17
                                             Appeals
The decisions of the authority referred to in Article 9(1) or of the body referred to in
Article 15(2) taken under this Regulation shall be open to the same appeals as those
provided for in national law against similar decisions taken in respect of national patents.
                                            Article 18
                                            Procedure
      In the absence of procedural provisions in this Regulation, the procedural provisions
      applicable under national law to the corresponding basic patent shall apply to the
      certificate, unless that law lays down special procedural provisions for certificates.
      Notwithstanding paragraph 1, the procedure for opposition to the granting of a
      certificate shall be excluded.
                               TRANSITIONAL PROVISIONS
                                            Article 19
      Any product which, on the date on which this Regulation enters into force, is
      protected by a valid basic patent and for which the first authorization to place it on
      the market as a plant protection product in the Community was obtained
      after 1 January 1985 under Article 4 of Directive 91/414/EEC or an equivalent
      national provision may be granted a certificate.
      An application for a certificate as referred to in paragraph 1 shall be submitted within
      six months of the date on which this Regulation enters into force.
                                                 45
 ---pagebreak---                                  FINAL PROVISION
                                       Article 20
                                     Entry into force
This Regulation shall enter into force three months after its publication in the Official
Journal of the European Communities.
This Regulation shall be binding in its entirety and directly applicable in all Member
States.
Done at,
For the Parliament                                    For the Council
The President                                         The President
                                            46
 ---pagebreak---                       FINANCIAL STATEMENT
TITLE
    Proposal for a Parliament and Council Regulation concerning the creation of a
    supplementary protection certificate for plant protection products.
DESCRIPTION OF THE MEASURE
    The objective is to promote research in a high-risk sector by creating a new industrial
    property instrument, the supplementary protection certificate. The measure also
    harmonizes the conditions for granting the supplementary protection certificate and
    calculating its duration at Community level.
    The measure has no financial impact on the Community budget.
                                            47-
 ---pagebreak---         IMPACT OF THE PROPOSAL ON FIRMS
                            (in particular SMEs)
1. WHY IS COMMUNITY LEGISLATION NECESSARY?
   In order to harmonize at Community level the arrangements for granting and
   calculating the duration of the supplementary protection certificate, in pursuit of the
   following objectives:
   (a) improving the functioning of the internal market for plant protection products by
       ensuring their freedom of movement;
   (b) preventing the distortions of competition currently facing plant protection firms;
   (c) ensuring that plant protection research can benefit from better protection through
       a single measure with direct and uniform effect throughout the Community;
   (d) improving the competitiveness of the plant protection industry by supporting
       European research.
2. WHICH SECTORS WILL BE AFFECTED?
   (a) Firms manufacturing plant protection products, essentially those which base their
       activities on research, will benefit from the measure, provided that the products
       concerned are protected by a valid basic patent when the Regulation comes into
       force.
   (b) Most of these firms belong to international groups operating in several sectors of
       the chemical industry (basic chemistry, plant protection products, colorants,
       plastics, etc.) and human or animal health. Plant protection generally accounts for
       a relatively small percentage of their total activities, but it is characterized by a
       very high level of risk. However, the proposed measure is such as to apply to all
       plant protection firms irrespective of size.
       The rights to supplementary protection must be respected by third parties, such
       as manufacturers of generic plant protection products. However, the proposal
       contains limitations, in particular concerning the maximum duration of the
       supplementary protection certificate, intended to prevent any undue effect on the
       activities of manufacturers of generics in the sector.
                                             48
 ---pagebreak---    (c) There are no grounds for supposing that certain geographical areas will profit
       more than others from the measure.
3. WHAT MUST FIRMS DO TO COMPLY WITH THE MEASURE?
   The supplementary protection certificate will be granted to plant protection firms
   which apply for it, provided that all the necessary conditions are met.
   All applications for a supplementary certificate must be submitted to national patent
   offices: the application may be subject to the payment of a fee to be set by the
   competent authorities of the Member States.
4. WHAT ARE THE LIKELY ECONOMIC EFFECTS OF THE MEASURE?
   (a)     On employment.
           The creation of the supplementary protection certificate will provide
           innovating firms in the plant protection sector with an incentive to maintain,
           even increase, their investment in research. It will help to establish an
           appropriate legal framework for protecting innovation in the sector; it will
           thus have a positive effect on employment, in particular in research.
   (b)     On investment and the creation of new firms.
           Harmonization at Community level of the conditions for granting the
           certificate and the method of calculating its duration should provide the firms
           concerned with more certainty about recovering their costs, thus encouraging
           them to invest. Since patents are the best instrument for encouraging
           research, it is certain that the supplementary protection certificate — a sui
           generis instrument providing similar protection to a patent ~ will be regarded
           as an incentive to research in the plant protection industry.
   (c)     On the competitiveness of firms.
           By placing the plant protection industry in a competitive situation comparable
           to that prevailing in the other important regions of the world, the
           supplementary protection certificate should be an incentive for maintaining
           investments in Union territory. The European plant protection industry,
           which makes a substantial contribution to the European Union's positive
           balance of payments, will thus have the opportunity of better establishing its
           competitive position on domestic and international markets.
                                             49
 ---pagebreak--- 5.   DOES THE PROPOSAL CONTAIN MEASURES TAKING ACCOUNT OF
     THE SPECIAL CIRCUMSTANCES OF SMES?
     The measures contained in the proposal are not specifically aimed at small and
     medium-sized businesses, although they can also take advantage of it in so far as they
     meet the conditions required for a supplementary protection certificate to be granted.
6.   CONSULTATION
     A meeting of national experts was held on 1 and 2 October 1992 at the Commission's
     initiative. The experts examined the need for supplementary protection for patents
     for plant protection products in the light of a Commission working document. The
     main subjects discussed were determination of the scope of a Community measure
     and the transitional arrangements. This proposal takes account of the initial approach
     emerging from that meeting.
     In addition, Commission departments have contacted the various organizations
     representing the interests concerned by the proposal.
     The organization representing the research-based plant protection industry, the
     ECPA/1) supplied the Commission with data which established with certainty that
     the industry was suffering from substantial erosion of the duration of effective patent
     protection, which has a negative impact on the sector's research activities. The ECPA
     estimates that the supplementary protection certificate will help to ensure that
     innovating industries will be able to recover over a long enough period the
     increasingly large investments needed to develop new products.
     Commission departments also received a contribution from GAME/ 2 ) an informal
     grouping of several (currently four) producers of generic products, which takes the
     view that the proposed measure will delay free access to protected products and,
     consequently, is opposed to any extension of patent protection or of supplementary
     protection. GAME is eager to see generic products appearing on the market as
     quickly as possible after the expiry of a patent in order to promote competition, in
     particular price competition.
0) European Crop Protection Association.
(2) Generic Agrochemical Manufacturers of Europe.
                                               50
 ---pagebreak---      Lastly, COPA-COGECA(3) submitted its position, voicing its concerns about the
     effects of the supplementary protection certificate on the prices of plant protection
     products and, as a result, on expenditure by farmers on buying these products.
     Commission departments have made estimates to assess, where possible, the effects
     of the proposed measure on farmers' outgoings.
(3) Committee of Agricultural Organizations in the European Community; General Committee for
    Agricultural Cooperation in the EC.
                                                  51 -
 ---pagebreak---  ---pagebreak---  ---pagebreak---                                                                      ISSN 0254-1475
                                                              COM (94) 579 final
                                                      DOCUMENTS
EN                                                                         03 08
                                Catalogue number : CB-CO-94-601-EN-C
                                                             ISBN 92-77-83316-5
Office for Official Publications of the European Communities
L-2985 Luxembourg
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