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EUROPEAN NATIONAL IP LAWS UNDER THE EU UMBRELLA: FROM NATIONAL TO EUROPEAN
COMMUNITY IP LAW
Jean-Luc Piotraut*
2 LOY.
U. CHI. INT'L. L. REV. 61 (2004)
In Europe, intellectual property ("IP")
law combines copyright and other copyright-related rights laws and industrial
property law (i.e. patent,
trademark, and geographical indications laws).
Considering the sovereignty of states,
intellectual property rights first had to comply with territoriality
principles, which used to hinder economic and cultural exchanges. Some
form of international protection, therefore, was quickly considered.
In the field of IP, an international organization was established in
the late 19th century to provide countries with an administrative framework
and a permanent forum for discussion (1).
With its headquarters in Geneva, Switzerland, this intergovernmental
organization is now known as the World Intellectual Property Organization
("WIPO"), initially named the Bureaux for the Protection of
Intellectual Property (best known by its French acronym, BIRPI). Its
main job is to administer the multinational intellectual property agreements
signed under its aegis, with the purpose of establishing unions of all
states that have adhered to the treaty in question (whether dealing
with copyrights or related rights, patents, plant patents, etc.) (2).
Moreover, IP has become a focal point
of the modem global trading system: it was addressed in 1994 at the
creation of the World Trade Organization ("WTO") through the
side agreement on Trade-Related Intellectual Property Rights ("TRIPs").
In Europe, the ongoing construction
of an economic and political community has required the European Community
("EC") to address IP law as well. As a result, IP law in Europe
seems to have evolved from resting solely on national laws into a partial
European Community law, the importance of which continues to grow daily.
This article examines the ways in which
such "Europeanification" of IP law has been brought
about. Currently, there are five main approaches, which will be presented
successively in Parts II to VI. Part II focuses on regional IP law treaties
in the field of patent law. Part III describes the EC case law de limitation
of national IP laws, in particular, as regards the free movement of
goods and free competition policy. Part IV examines Community statutory
delimitations of national IP laws under provisions not exclusively limited
to IP law. Part V discusses the different methods of ongoing harmonization
of national IP laws in the European Union ("EU"). Part VI
describes the current establishment of a Community IP law through the adoption of industrial
property rights largely unbound and independent of national legal systems.
--------------------------------------------------------------------------------------------------------------- * Jean-Luc Piotraut is currently a Maître de Conferences in Private Law
at the University of Metz (France) and he was, during the Spring semester
2004, a Visiting Professor of Law at Chicago-Kent College of Law (I.I.T.). (1) See G. B. DINWOODIE, INTERNATIONAL INTELLECTUAL PROPERTY LAW AND POLICY
(W. 0. Hennessey & S. Perlmutter, 2001). (2) Id. --------------------------------------------------------------------------------------------------------------- My assertion is that the methods of
harmonizing IP law in Europe may contribute to a reappraisal of the
fundamental international legal principle of territoriality based on
the IP rights which should be governed only by national laws.
Two regional treaties have been implemented
to harmonize or unify the European national patent laws: the Strasbourg
Convention (3) and the Munich Convention
(4). Both constitute an important source
of European patent law.
As a matter of fact, an additional
European treaty, the Luxembourg Convention of December 15, 1975 for
the European patent for the common market ("Community Patent Convention")
(5) created a unitary Community patent
having equal effect throughout the whole EC territory. Such a Community
patent would have been "granted, transferred, revoked or allowed
to lapse" (6) only within this entire territory.
However, such a system would have been
very costly because all patent documents would have to be translated
into the languages of each Member State. For this reason, notwithstanding
a Council agreement in 1989 (7), a sufficient
number of countries did not ratify this treaty and it therefore never
came into effect.
By now, despite the lasting success of the Strasbourg and Munich Conventions, the ongoing "Europeanification" of IP law does not seem to be brought about through regional treaties any longer. .
The Strasbourg Convention was signed
on November 27, 1963, under the Council of Europe, an international
organization founded in 1949 which is independent of the European Union,
and designed to encourage political cooperation between the countries
of Europe. Its purpose is to harmonize the patentability requirements
in European national laws. Article 1 of the convention provides:
In the Contracting States, patents shall be granted for any inventions
which are susceptible of industrial application, which are new and which
involve an inventive step. An invention which does not comply with these
conditions shall not be the subject of a valid patent . . . --------------------------------------------------------------------------------------------------------------- (3) Convention
on the Unification of Certain Points of Substantive Law on Patents for
Invention, Nov.27, 1963, 1249 U.N.T.S. 369 [hereinafter Strasbourg Convention]. (4) Convention
on the Grant of European Patents, Oct. 5, 1973, 1065 U.N.T.S. 199 [hereinafter
Munich Convention]. (5) Convention
for the European Patent for the Common Market, Dec. 15, 1975, 1976 O.J.
(L 17) 1 [hereinafter Luxembourg Convention]. (6) Luxembourg
Convention, supra note 5, art. 2(2). (7) Council
agreement (89/695/EEC) relating to Community patents, done at Luxembourg
on December 15, 1989. ---------------------------------------------------------------------------------------------------------------- This provision lays down four substantive
conditions for the validity of a patent: an invention, an industrial
application, novelty, and an inventive step.
Only 12 countries have formally joined
the Strasbourg Convention; however, nearly every European country (8) has passed similar provisions through its own legislation.
These provisions are also contained in the Munich Convention on the
granting of European patents (9).
In addition, each WTO member must comply
with the requirements set forth in TRIPs agreement Article 27(1):
Patents shall be available for any inventions, whether products or processes,
in ail fields of technology, provided that they are new, involve an
inventive step and are capable of industrial application . . .
B. The Munich Convention on the Grant of European
Patents
The Munich Convention on the Grant
of European patents, also known as the European Patent Convention ("EPC"),
was signed on October 5, 1973. Twenty-nine countries have already joined
it, including countries that are not currently members of the European
Community (e.g. Bulgaria,
Switzerland and Turkey) (10). The impending
adherence of several more countries is planned (11).
The EPC sets up a centralized registration
System in the European Patent Office ("EPO"), located in Munich,
Germany (12).
By this time, the grant of a European
patent only allows the patentee to be protected under national patents
in countries appointed in his/her application. This means that despite
the administrative examination of the filings in the EPO, national courts
are free to decide on both validity and infringement issues.
At the beginning of the European construction,
the Community only had very restricted power. Therefore, it seemed necessary
to combine the purely national IP laws and the EC law, especially those
related to the free movement of goods and free competition policy. The
first step in the creation of European IP law has been a Community delimitation
of national laws made by the European Court of Justice ("ECJ")
and the Court of First Instance of the EC.
--------------------------------------------------------------------------------------------------------------- (8) Including
those which are not Member States of the EC. (9) Munich
Convention art. 52, Patentable inventions: "(l) European patents
shall be granted for any inventions which are susceptible of industrial
application, which are new and which involve an inventive step." (10) See
2004, O.J. EUROPEAN PATENT OFFICE, 479 (2004). (11) Id. (12) See
M. SINGER & D. STAUDER, THE EUROPEAN PATENT CONVENTION: A COMMENTARY
(Cologne, Germany, 2003) ---------------------------------------------------------------------------------------------------------------
A. Respective Scopes of National IP Laws and Community
Law
In the 1960's, European law included
no IP provision except for former Article 36 EEC, currently Article
30 EC. This provision excuses Member States for respecting the policy
favoring the free movement of goods, which prohibits quantitative restrictions
on imports or exports and all measures having equivalent effect on different
grounds such as:
the protection of health and life of humans, animals or plants; the protection
of national treasures possessing artistic, historic or archaeological
value; or the protection of industrial and commercial property.
(Emphasis added)
This means that for more than 20 years
after the beginning of the construction of the European Community, you
could only find IP provisions in European national laws, and these provisions
were sometimes very different from one country to another. Therefore,
the first question the ECJ, seated in Luxembourg, had to solve consisted
of specifying the respective scope of national IP laws and European
Community law.
With this goal in mind, the ECJ delivered two main judgments: one in the
field of patents, Parke Davis (13) and one in the field of trademarks, Sirena
(14). They both draw a very important distinction
between the existence and exercise of national IP rights and the limits
these may take in the EC: while the existence of IP rights granted
by a Member State shall not be affected by the prohibitions contained
in the EC Treaty, the exercise of such rights may fall under one
of those prohibitions.
Although it was delivered before the
beginning of the approximation of literary and artistic property laws
in Europe, the Phil Collins case (15)
gave the ECJ its first opportunity to apply the Community general principle
of non-discrimination to copyright and related rights:
Within the scope of application of this Treaty, and without prejudice to
any special provisions contained therein, any discrimination on grounds
of nationality shall be prohibited (16).
This case involved an infringement
suit brought in Germany by musician Phil Collins against a distributor
who had marketed an unauthorized CD in Germany containing a recording
of a U.S. concert (17). However, at the
time, the current German law only allowed German artists to prohibit
the distribution of their foreign performances (18).
--------------------------------------------------------------------------------------------------------------- (13) Case
24/67, Park, Davis 1 C°. v. Prabel, Reese, Beintema-Interpharm and Centrafarm,
1968, E.C.R. 55, [1968] C.M.L.R. 47 (1968). (14) Case
40/70, Sirena S.r.l. v. Eda S.r.l, 1971 E.C.R. 69, [1971] C.M.L.R. 260
(1971). (15) Joined
cases C-92/92 and C-326/92, Phil Collins v. Imtrat Handels GmbH, Patricia
Im- und Export Verwaltungs GmbH and Leif Emanuel Kraul v. EMI Electrola
GmbH, 1993 E.C.R. I-5145, [1993] 3 C.M.I.R. 773 (1993). (16) Treaty
Establishing the European Community (Amsterdam Consolidated Version),
October 2, 1997. [hereinafter EC TREATY] (Provision initially located
in Article 7 of the EEC TREATY - which has become Article 6 after the
Maastricht Agreement was signed in 1992 - and now written in Article
12). (17) Cases C-92/92 and C-326/92, 1993 E.C.R. 1-5145, [1993] 3 C.M.L.R. 773 (1993) (18) Id. ---------------------------------------------------------------------------------------------------------------
Such a provision was condemned by the
ECJ because it did not comply with the Community general principle of
non-discrimination (19). The Court stated
that the requirements of this general principle:
be interpreted as precluding the legislation of a Member State from denying
to authors and performers from other Member States, and those claiming
under them, the right, accorded by that legislation to the nationals
of that State, to prohibit the marketing in its national territory of
a phonogram manufactured without their consent, where the performance
was given outside its national territory (20).
C. Delimitation of National IP Laws Related to
the Free Movement of Goods
Articles 24 to 30 of the EC treaty
(formerly Articles 30 to 36, EEC) relate to the elimination of quantitative
restrictions between Member States, especially on imports (Article 28
EC) and exports (Article 29 EC). However, according to Article 30 EC,
those provisions "shall not preclude prohibitions or restrictions
on imports, exports or goods in transit justified on . . . the protection
of industrial and commercial property" (21).
This means that the "protection
of industrial and commercial property" constitutes an exception
to the free movement of goods policy implemented in the European Community.
The ECJ has been asked to construe
such a provision and decide whether the use of legal national monopolies
given by IP rights would violate the European policy on the free movement
of goods. In other words, is the owner of an IP right entitled to bring
an infringement suit to prevent goods from getting over internal borders
inside the EC territory?
1. The Principle of Community Exhaustion of IP
Rights
The ECJ has laid down a principle of
IP rights exhaustion within the Community (22).
This principle essentially means that a product lawfully manufactured
and marketed in a Member State, where it is protected under an IP right,
is entitled to circulate freely in the entire EC territory. In other
words, national IP rights shall not extend to acts done in the territory
of a Member State after a product has already been placed in the market
in the territory of any EC Member State by the owner of the IP right
without his or her express consent.
a)
Community Exhaustion in the Field of Copyright and Related Rights
The ECJ first formulated its exhaustion
doctrine in the Deutsche Grammophon
case, a case regarding a producer's sound recording right (23). The court held that a German producer may not rely
on its exclusive right of distribution to prohibit the marketing of
records in Germany that it had previously supplied to its French subsidiary
(24). ---------------------------------------------------------------------------------------------------------------
(21) EC
TREATY art. 30. (22) This
principle is similar to the U.S. first-sale doctrine in copyright law.
See 17 U.S.C. § 109. (23) Case 78/70, Deutsche Grammophon GmbH v. Metro-SB- Grossmärkte GmbH & Co KG 1971 E.C.R. 487, [1971] 1 C.M.L.R. 631 (1971) (24) Id --------------------------------------------------------------------------------------------------------------- The Community exhaustion doctrine was
next applied to copyright in the Musik-Vertrieb
Membran decision (25). The dispute
involved a German copyright management society and undertakings that,
under the consent of the copyright owner, imported U.K. manufactured
and U.K. marketed records into Germany but calculated royalties based
only on U.K. distribution (26). The ECJ first held that the statutory expression
found in Article 30 EC, "protection
of industrial and commercial property" was to be interpreted
to include the protection of copyright (27).
Secondly, the ECJ found the policy concerning the free movement of goods
prevailed over the protection of copyright, in spite of the requisite
license, because putting the recordings in the British market led to
an exhaustion of copyrights so that, subject to the payment of the due
fees, anybody was entitled to exploit the works already put into circulation
in the British market with the consent of their owners (28).
b) Community Exhaustion in the Field of Industrial
Property
In the field of industrial property,
the ECJ has held that neither parallel patents nor parallel trademarks
could prevent the importation of protected drugs by a third party from
a Member State to another.
The leading cases here are the Sterling
Drug (29) case, involving patents
and the Winthrop (30)
case, involving trademarks. In both cases, the Dutch firm, Centrafarm, bought lesser-priced pharmaceutical products in other
European countries and then distributed them in the Netherlands. Since
the owners of those industrial property rights were protected either
with parallel patents or parallel trademarks, they brought infringement
suits against Centrafarm, based on their Dutch IP rights
(31). Nevertheless, the ECJ rejected
the actions as "incompatible with the rules of the EEC treaty concerning
the free movement of goods within the common market" (32).
In Sterling Drug, the ECJ held:
Whereas an obstacle to the free movement of goods of this kind may be justified
on the ground of protection of industrial property where such protection
is invoked against a product coming from a Member State where it is
not patentable and has been manufactured by third parties without the
consent of the patentee and in cases where there exist patents, the
original proprietors of which are legally and economically independent,
a derogation from the principle of the free movement of goods is not,
however, justified where the product has been put onto the market in
a legal manner, by the patentee himself or with his consent, in the
Member State from which it has been imported, in particular in the case
of a proprietor of parallel patents (33).
--------------------------------------------------------------------------------------------------------------- .(25) Joined
cases 55/80 and 57/80, Musik-Vertrieb Membran GmbH and K-tel International
v GEMA und Mechanische Vervielfältigungsrechte, 1981 E.C.R. 147. (27) Id. (28) Id. (29) Case
15/74, Centrafarm BV and Adriaan de Peijper v. Sterling Drug Inc., 1974
E.C.R. 1147. (30) Case
16/74, Centrafarm BV and Adriaan de Peijper v. Wintrhop BV, 1974 E.C.R.
1183. (31) Cases
15/74 & 16/74. (32) Id. (33) Case 15/74, ¶ 11. --------------------------------------------------------------------------------------------------------------- The Winthrop
decision states:
In fact, if a trademark owner could prevent the import of protected products
marketed by him or with his consent in another Member State, he would
be able to partition off national markets and thereby restrict trade
between Member States, in a situation where no such restriction was
necessary to guarantee the essence of the exclusive right flowing from
the trademark (34).
2.
Exceptions to the Community Exhaustion of IP Rights
The principle of Community exhaustion
is not uncompromising; the ECJ has admitted that IP right protection
can prevail over the policy favoring the free movement of goods, at
least in certain situations.
a)
As Regards to Remaining Differences between National Laws Inside the
European Community
In its "EMI 2" decision
(35), made before European harmonization
concerning the duration of copyright protection, the ECJ held that such
a duration was "inseparably linked to the very existence of the
exclusive rights."
As a result, the lawful distribution
of Cliff Richard sound recordings into the Danish market, where they
were already in the public domain, did not lead to any Community exhaustion
of reproduction and distribution rights. The German distribution company,
EMI Electrola, was consequently entitled to oppose, on the ground
of its protected copyright, exports of those sound recordings in Germany
by bringing an infringement suit.
b)
As Regards to a Patent Compulsory License
The Pharmon case (36) was brought before the ECJ after the German company
Hoechst, the proprietor of a pharmaceutical product patent in
Germany and of parallel patents in the Netherlands and in the U.K.,
sought to prevent the Dutch company Pharmon from marketing in
the Netherlands a consignment of those medicines bought by a British
undertaking, which had obtained a compulsory license in the U.K.
The ECJ emphasized that, in the case
of a compulsory license, "the patentee cannot be deemed to have
consented to the operation of that third party. Such a measure deprives
the patent proprietor of his right to determine freely the conditions
under which he markets his products" (37).
Therefore, "the theory of the
exhaustion of patent rights which pre supposes that the product in question
has been marketed freely and voluntarily by the patent proprietor, or
by a third party with the proprietor's consent, does not apply in the
case of a compulsory license" (38). --------------------------------------------------------------------------------------------------------------- (34) Case
16/74, ¶ 11.
---------------------------------------------------------------------------------------------------------------
c)
As Regards to Repackaging and Re-Branding of a Pharmaceutical Product
The ECJ has admitted that trademark
protection on a pharmaceutical product can prevail over the free movement
of goods policy.
In the Hoffmann La-Roche case
(39), the Court considered the question
of repackaging parallel imported products (Valium tablets) within
the E.U. This issue arose from the difference between the prescribed
pack size in the country of import, the U.K., and the country of export,
Germany (40). The court held that there was no exhaustion of
IP rights if the repackaging could adversely affect the original condition
of the pharmaceutical product (41).
The Bristol-Myers Squibb case
(42) concerned not only repackaging,
but also re-branding. Re-branding takes place where the owner of the
right uses different marks in the country of export and country of import,
and where the parallel importer applies to the trademark used for that
product in the country of import. However, since the reputation of the
trademark and its owner may suffer from the inappropriate presentation
of a repackaged product, the ECJ decided that there would be no exhaustion
of IP rights if the repackaging could damage the reputation of the trademark
and its owner (43). Paragraph 75 emphasizes
that, in such a case:
[T]he trademark owner has a legitimate interest, related to the specific
subject matter of the trademark right, in being able to oppose the marketing
of the product. In assessing whether the presentation of the repackaged
product is liable to damage the reputation of the trademark, account
must be taken of the nature of the product and the market for which
it is intended (44).
Consequently, "the packaging must
not be defective, of poor quality, or untidy," and the importer
must give "notice to the trademark owner before the repackaged
product is put on sale," and, on demand, to supply "him with
a specimen of the repackaged product" (45).
D. Delimitation of National IP Laws Related to Free
Competition Policy
It arises from Articles 2 and 3 of
the EC treaty that one of the tasks of the Community is to establish
a common market by implementing common activities, such as "a System
ensuring that competition in the internal market is not distorted"
(46). ---------------------------------------------------------------------------------------------------------------- (40) Id. (41) Id. (42) Joined
Cases C-427/93, C-429/93, and C-436/93, Bristol-Myers Squibb v. Paranova
A/S; C. H. Boehringer Sohn, Boehringer Ingelheim KG and Boehringer Ingelheim
A/S v. Paranova A/S; Bayer Aktiengesellschaft and Bayer Danmark A/S
v. Paranova A/S, 1996 E.C.R. 1-3457. (44)
Id. (45) Id. (46) EC
TREATY art. 3(g). --------------------------------------------------------------------------------------------------------------- But since IP rights allow territorial
monopolies, they are able to harm the EC free competition policy. That
is why the European construction of IP rights has articulated concerns
regarding both national IP rights exploitation and EC free competition
policy, i.e. anti-competitive agreements regulations on the one
hand and abuses of dominant position regulations on the other.
1.
Compliance of IP Rights Exploitation with the Anti-Competitive Agreements
(or Cartels) Regulations
To be effective, competition assumes
that the market is made up of suppliers, working independently of each
other. However, if certain companies agree among themselves to collude
rather than compete, such agreements impair competition. This is why
Article 81 (formerly Article 85) of the EC treaty prohibits, as incompatible
with the common market:
all agreements between undertakings, decisions by associations of undertakings
and concerted practices which may affect trade between Member States
and which have as their object or effect the prevention, restriction
or distortion of competition within the common market, and in particular
those which: (a) directly or indirectly fix purchase or selling prices or any other
trading conditions; (b) limit or control production, markets, technical development, or investment; (c) share markets or sources of supply; (d) apply dissimilar conditions to equivalent transactions with other trading
parties, thereby placing them at a competitive disadvantage; (e) make the conclusion of contracts subject to acceptance by the other
parties of supplementary obligations which, by their nature or according
to commercial usage, have no connection with the subject of such contracts
(47).
Alternatively, an agreement which restricts
competition may still be accepted according to European competition
law under the conditions provided in Article 81(3), as such an agreement
"contributes to improving the production or distribution of goods
or to promoting technical or economic progress, while allowing consumers
a fair share of the resulting benefit" (48),
and does not:
(a) impose on the undertakings concerned restrictions which are not indispensable
to the attainment of these objectives; (b) afford such undertakings the possibility of eliminating competition
in respect of a substantial part of the products in question.
Now, the ECJ must decide on the case
of agreements on IP rights, which are likely to be used for anti-competitive
practices.
--------------------------------------------------------------------------------------------------------------- (48) While free competition seems to be the only goal of US antitrust law (especially the Sherman Act of 1890, under which Congress prohibited agreements "in restraint of trade"). See 15 U.S.C. §§ 1-7. EC competition law has two stated goals, which are, first, to protect the competitive process from restraint and, second, to promote the European integration. This means, as a result, that although they restrict comp |
