Merck & Co. Inc., Merck Sharp & Dohme Ltd and Merck Sharp & Dohme International Services BV v Primecrown Ltd, Ketan Himatlal Mehta, Bharat Himatlal Mehta and Necessity Supplies Ltd and Beecham Group plc v Europharm of Worthing Ltd.
Date: 1996-12-05
23 In so doing, it is important to bear in mind that Articles 47 and 209 of the Act of Accession introduced a derogation from the principle of free movement of goods and that it is settled case-law that such derogations are to be interpreted strictly (see, to this effect, Case C-191/90 Generics and Harris Pharmaceuticals [1992] ECR I-5335, paragraph 41).
30 In that judgment, the Court referred to its judgment in Case 15/74 Centrafarm v Sterling Drug [1974] ECR 1147 in which it held, in paragraphs 8 and 9, that as an exception, on grounds of the protection of industrial and commercial property, to one of the fundamental principles of the common market, Article 36 of the Treaty admitted such derogation only in so far as it was justified for the purpose of safeguarding rights constituting the specific subject-matter of that property, which, as regards patents, is, in particular, in order to reward the creative effort of the inventor, to guarantee that the patentee has the exclusive right to use an invention with a view to manufacturing industrial products and putting them into circulation for the first time, either directly or by the grant of licences to third parties, as well as the right to oppose infringements.
31 In paragraphs 9 and 10 of Merck, the Court then stated that it followed from the definition of the specific purpose of a patent that the substance of a patent right lies essentially in according the inventor an exclusive right to put the product on the market for the first time, thereby allowing him a monopoly in exploiting his product and enabling him to obtain the reward for his creative effort without, however, guaranteeing such reward in all circumstances.
32 The Court held, finally, in paragraphs 11 and 13 of Merck that it was for the holder of the patent to decide, in the light of all the circumstances, under what conditions he would market his product, including the possibility of marketing it in a Member State where the law did not provide patent protection for the product in question.  If he decides to do so, he must then accept the consequences of his choice as regards free movement of the product within the common market, this being a fundamental principle forming part of the legal and economic circumstances which the holder of the patent must take into account in determining how to exercise his exclusive right. Under those conditions, to permit an inventor to invoke a patent held by him in one Member State in order to prevent the importation of the product freely marketed by him in another Member State where that product was not patentable would cause a partitioning of national markets contrary to the aims of the Treaty.
41 Contrary to their contention, the judgment in Pharmon shows that the Court confirmed the principles laid down in Merck.  In Pharmon, the Court emphasized the importance of the patentee's consent to the product in question being put into circulation.  At paragraph 25 it held that, where the authorities of a Member State grant a third party a compulsory licence allowing him to carry out manufacturing and marketing operations which the patentee would normally have the right to prevent, the patentee cannot be deemed to have consented to those operations and he may therefore oppose importation of products made by the holder of the compulsory licence.
47 As to that, although the imposition of price controls is indeed a factor which may, in certain conditions, distort competition between Member States, that circumstance cannot justify a derogation from the principle of free movement of goods.  It is well settled that distortions caused by different price legislation in a Member State must be remedied by measures taken by the Community authorities and not by the adoption by another Member State of measures incompatible with the rules on free movement of goods (see Case 16/74 Winthrop [1974] ECR 1183, paragraph 17;  Joined Cases 55/80 and 57/80 Musik-Vertrieb Membran and K-tel International v GEMA [1981] ECR 147, paragraph 24; and Joined Cases C-427/93, C-429/93 and C-436/93 Bristol-Myers Squibb and Others [1996] ECR I-3457, paragraph 46).