The Gazette 1976

GAZETTE

January-February 1976

EUROPEAN SECTION

Territorial protection Territorial protection is therefore justified against goods imported from a member state where the inven- tion in question is not patentable if the goods were manufactured there without the patentee's consent, express or implied (the Parke Davis case). It is justified against goods infringing the patent or trademark im- ported from outside the EEC or from another Member State, which have been produced and sold without the patentee's consent and in violation of his patent rights. And it seems fairly likely from statements made by the Court in the Centrafarm and Cafe Hag cases (although the point has not yet been directly decided), that terri- torial protection is permitted against goods produced under a similar patent or trade mark in another Mem- ber State where th£ original owners of the patents or marks were legally and economically independent: the case of similar patents and trade marks not having a common origin. In other words, unilateral exercise of rights not having a common origin with those rights, if any, under which the goods were produced elsewhere in the EEC, is permitted. On the other hand, national patent or trade mark rights cannot be used to prevent imports from another Member State of goods which have been legally marketed there by the patentee or trade mark owner or its licensee, or otherwise with its consent (e.g. by an associate company). In such a case the owner's exclusive right to the first sale has been satisfied, and the owner therefore has no right to divide up the Common Market. If this was not the law, the owners of patents or trade marks could partition off national markets and so prevent the unifying of the Common Market, though this would not be justified to protect the essence of the owner's rights. It follows that there are now considerable oppor- tunities for companies to buy patented or trade marked goods from the patentee or trade mark owner or his licensee (or after they have been sold for the first time) and to export them to other EEC Member States where the prices being charged by the local licensee are higher. This was what the Centrafarm company was doing. As a result of the Cafe Hag Case, the same rule applies (i e. territorial protection is not obtainable) where the consent was given by the previous owner of a trade mark, as well as by the present owner. Also, the person entitled to use the trade mark in one Member State may sell directly into any other Member State where a trade mark with the same origin exists. It is not yet clear that these two consequences of the Café Hag case apply also to patents. Owners in different Member States of "parallel" trade marks having the same origin may therefore need to differentiate their goods from those of the other owners by adding to the trade mark which is common to both. It is probable but not yet certain that these rules do not apply to the relatively unusual cases where two similar patents or trade marks were originally obtained by coincidence in different Member States by owners unconnected with one another (no common origin). Nor is it settled that the owner of a patent in say Ireland can use his Irish rights to prevent the import of goods manufactured in say Italy by a company un- connected with him if he never sought an Italian patent, or has allowed the relevant Italian patent to lapse. Clearly he could not do so if he had agreed to the manufacture in Italy, but he probably could obtain

Patent and Trade Mark Rights and Licences in Community Law

by John Temple Lang Introduction

This article is a short summary of a lecture given by John Temple Lang in Stockholm at a conference organised by the Federation of Swedish Industries and the University of Uppsala. The law of the EEC has greatly altered the position under patent, trade mark and knowhow law of many Irish companies, giving them new opportunities for ex- porting their patented and trade marked goods, and exposing them to new competition. It has also made illegal certain types of clauses restricting competition, which occur frequently in patent and similar licences, and therefore exposed companies to the risk of fines. This is a risk which should now be covered in a thorough audit. EEC law also offers companies a way of escaping from certain contractual restrictions on their growth which they may have agreed to in the past. The full text of the lecture is being published by the conference organisers. Defined rights to exercise patents and trade marks Many of the problems of reconciling the need for a unified Common Market with the national character of patent and trade mark laws have now been resolved. First, in a series of cases the Court of Justice of the European Communities has ruled on how far owners of patents and trade marks may exercise their rights to prevent goods made and marketed in the Community from being imported into a given Member State. Sec- ondly, the application of EEC law on restrictive prac- tices to patent licences is now becoming clearer. Apart from the classical arguments for competition and for antitrust laws to ensure that competition con- tinues, free competition was essential to create a single market out of first six, then nine, national markets. The benefits of competition in a larger market would not be obtained if companies could keep national frontiers in existence through market-sharing agree- ments or by using national patent or trade mark rights. Community rules on freedom to use patent and similar rights were not only an essential element in EEC anti- trust law, but an essential element in the uniting of Europe. Free competition to unify the Common Market is a means, not an ideology. Any method of maintaining national frontiers as barriers to trade is therefore looked at very critically by the EEC Commission and the Court. Article 36 EEC Treaty allows import restrictions in- sofar as necessary to protect industrial and commercial property, provided they do not form a disguised restric- tion on trade between Member States. Under the decision of the Court in the Centrafarm case, this means that national patent rights may be used to prevent importation of goods only in order to protect the patentee's exclusive right to use the invention and to put the resulting goods on the market for the first time either himself or by a licensee, and the correspond- ing right to prevent infringements. Similarly national trade mark rights may be used to exclude goods from a national market if this is necessary to protect the trade mark owners' exclusive right to sell the trademarked goods for the first time. 10