C-24/67

3. Policy of the EEC — Rules on competition — Patents — Use — Sale price of the patented product — Higher price as compared with the unpatented product — Such difference not necessarily improper (EEC Treaty, Article 85)

1. The restrictive nature of Article 85(1) is 85(1), in the absence of any agreement, incompatible with any extension of the decision or concerted practice pro­ prohibition for which it provides beyond hibited by this provision, or under the three categories of agreement ex­ Article 86, in the absence of any abuse of clusively enumerated therein. a dominant position. 2. The existence of the rights granted by a 3. A higher sale price for the patented prod­ Member State to the holder of a patent is uct as compared with that of the un­ not affected by the prohibitions con­ patented product coming from another tained in Articles 85(1) and 86 of the Member State does not necessarily con­ Treaty. The exercise of such rights can­ stitute an abuse of a dominant position. not of itself fall either under Article

In Case 24/67

Reference to the Court under Article 177 of the Treaty establishing the European Economic Community by the Gerechtshof (Court of Appeal), The Hague, for a preliminary ruling in the action pending before that court between

Parke, Davis and Co.

1 — Language of the Case: Dutch. 2 — CMLR.

Advocate-General: K. Roemer

Registrar: A. Van Houtte

gives the following

JUDGMENT

Issues of fact and of law

I — Facts and procedure only entitled to intervene in the matter but was even under an obligation to do so Parke, Davis & Co., whose registered office because of the licence which it had granted is in Detroit (United States), is the holder of to Konihklijke Nederlandse Gist- en Spiri­ Netherlands patents Nos 69,156 (issued on tusfabriek N. V. at Delft for the exploitation 17 November 1961) and 70 832 (issued on 16 of these patents. August 1952) which relate to a micro­ The three defendants opposed this claim biological preparation and a chemical anti­ first for reasons concerning both the facts biotic preparation process called chlor­ and the interpretation of Netherlands amphenicol. patent law. It was only during the proceed­ The Probel, Interpharm and Centrafarm ings before the Gerechtshof, The Hague, companies marketed or resold and delivered that Centrafarm alleged that Parke, Davis chloramphenicol in the Netherlands with­ & Co. was acting in disregard of Articles 85 out the permission of Parke, Davis & Co. and 86 of the EEC Treaty in using its On 15 January 1958 Parke, Davis & Co. Netherlands patent to prevent the importa­ brought an action against Probel, Inter­ tion into the Netherlands of chloramphe­ pharm and Centrafarm before the Arron­ nicol produced and freely sold in Italy. It is dissementsrechtbank, Rotterdam, for a fact that under Italian patent law no breach of patent and sought damages and patent can be granted for medicaments and an order requiring them to refrain from any processes for their preparation. Centrafarm further infringement. In particular Parke, stated that it had bought chloramphenicol Davis & Co. alleged that the chlorampheni­ from Carlo Erba at Milan. col in question had been made by one of the In its judgment of 30 June 1967 the Gerechts­ processes for which it held a patent in the hof, The Hague, reached decisions on most Netherlands and furthermore that it was not of the points at issue. In particular it

declared that the practices of which com sion, the Governments of the French plaint was made against these three com Republic and the Federal Republic of panies were illegal, and ordered them to Germany presented oral argument. cease forthwith from infringing the two The Advocate-General delivered his patents concerned in any way, and threat reasoned, oral opinion at the hearing on 7 ened them with periodic penalty payments February 1968. for non-compliance with the order. But this order was made 'except as regards products II — Observations submitted pur from Italy'.

products. It confines its activities to learn 2. Is the answer to Question 1 different if the ing about inventions patented in other price at which the patent-holders offers countries and published in patents registers, the product on the market in the territory so that it can use them in its manufacturing of the first Member State is higher than activities, without any indemnity or sanc the price asked of the consumer in that tion, and freely market the products thus same territory for the same product when produced in its own country. it comes from the second Member State?' The countries of western Europe are being The judgment of the Gerechtshof, The flooded, so it is said, with these Italian Hague, was received at the Registry of the products 'in breach of the patents issued in Court of Justice on 6 July 1967 having been these countries, which forces the holders of sent from the Registry of the former court those patents to bring large numbers of to the Registry of the latter. actions for infringement of patents in order In accordance with Article 20 of the Statute to protect their rights against this illegal of the Court, Parke, Davis & Co. (Advo

This would completely distort the abovementioned companies, the Commis- normal conditions of competition in the

market concerned, and the consequences of it' and by 'abuse' of such dominant postion. this would be to strip patents granted for It is argued that for the purposes of Article pharmaceutical products of all their value 86 a dominant position connotes an econo­ in the countries of the EEC and to create mic concept. In order to discover whether utter havoc in the common market in an undertaking is in a dominant position, it medicaments. This would be contrary to the is necessary to examine whether the under­ 'harmonious development of economic taking is protected or substantially protect­ activities' throughout the Community, ed against any competition within the which is one of the objectives laid down by Common Market or in a substantial part of Article 2 of the Treaty. it so that it can impose its own conditions. Parke, Davis & Co. demonstrates by a series Parke, Davis & Co. says that the exclusive of examples that the importance of the rights enjoyed under patents do not of them­ decision to be taken by the Court of Justice selves create a dominant economic position in this case is not limited to pharmaceutical within the meaning of Article 86. It is only products. It says that this decision has con­ when a given sector of economic life is sequences for all branches of commerce and limited exclusively or mainly through the industry. An affirmative answer to the patented products that the exclusive rights questions referred by the Gerechtshof, The of the holder of the patent may also bring Hague, would bring about an upheaval in about a dominant economic position. every branch of business life with unfore­ It is also argued that there cannot be any seeable consequences. question of a dominant economic position Parke, Davis & Co. recalls the theoretical in any of the following examples: first, when discussions which have occurred on the apart from the patented product there are more limited subject of 'parallel patents'. other products on the market which have the The question could be asked whether same effect or are intended for the same use 'patented products, made and duly mar­ and which, therefore, are in competition keted in one country by the holder of a with the patented product; secondly, when patent or under licence from him' could licences are granted to different licensees 'then be imported and sold without the which compete inter se as regards the patent holder's authority in another country patented product; thirdly, when a product in which a patent has also been issued to manufactured according to a patented pro­ him'. National patent law in various cess can also be manufactured by one or countries, for example in the Netherlands more other processes. It is asserted that the and in Germany, would not permit this. first and the last of these examples applies as However the problem of parallel patents regards the patents in question in the present remains outside the scope of the questions case.

rights. This article states that the provisions the 'practical guide' prepared by the Com of Articles 30 to 34 shall not preclude pro mission on Regulation No 17, from the hibitions or restrictions on imports, exports Commission's notice of 24 December 1962 or goods in transit justified on grounds of (Official Journal of the same date) and from the protection of industrial and commercial a reply given on 18 January 1963 to Mr property. Thus, according to this wording, Blaisse, a Member of the European Parlia Article 36 is not directly applicable to the ment (Official Journal of 26 January 1963). situations referred to in Article 86(1).

rights. If this were not so, the reference to patent law do not fulfil either the same needs Article 222 in the grounds of judgment in the or the same objectives. Grundig case would be superfluous and As for the second question referred to the irrelevant. It appears from other passages of Court of Justice, Parke, Davis & Co. that judgment that not every exercise of emphasizes that in its opinion the Gerechts industrial property rights is necessarily hof, The Hague, was probably thinking of compatible with Community law.

Parke, Davis & Co. devotes 35 % of its turn cluded between two undertakings, having as over to such research and to the costs of their effect the imposition of restrictions on advertising its products. As regards the the exercise of industrial property rights on patents in question, it is alleged that this the assignee or user of such rights, need to be research has been carried out in the areas of notified because subparagraph (2)(b) of biology, chemistry and therapeutics, which Article 4(2) so provides. This appears from in this case took place at Parke, Davis &

Co.'s research centre with the help of more expensive. Thus there is a loophole in laboratories and scientific collaborators at Netherlands legislation of which under various American universities. 'The Italian takings such as Centrafarm and others industry, which copies a new product by would like to take advantage. It is asserted applying the specifications published in the that case-law evolved in the Netherlands patent registers of other countries concern makes it possible to protect holders of ing the means of preparation, does not have pharmaceutical patents against imitations to bear all these costs.' Thus it is evident, from abroad which use the opportunities continues Parke, Davis & Co., that the provided by the said legislation.

The that in these circumstances differences in principle that patents have territorial effect quality would also be practically non- has not been set at nought by the rules of the existent.' Treaty. Articles 100 and 101 of the Treaty indicate Centrafarm sets out Netherlands and Italian the procedure to be followed for reaching a patent law in detail, and also states the closer approximation of national laws on previous case-law of the Court (the judg the subject of patents. Since this approx ments in Bosch, Case 13/61 of 6 April 1962, imation has not yet been brought about Van Gend en Loos, Case 26/62 of 5 February along the lines laid down in the Treaty, the 1963, Costa, Case 6/64 of 15 July 1964, court must base its decision on the legal Technique Minière, Case 56/65 of 30 June situation as it exists at present. 1966, and Grundig, Joined Cases 56 and During the oral procedure Parke, Davis & 58/64 of 13 July 1966).

National mono supplied to wholesalers and carrying a polies of a commercial character are to be generic name, are not subjected to the adjusted before the end of the transitional quality control required by law for products period so as to ensure that no discrimination bearing a trademark, which are necessarily regarding the conditions under which goods

are procured and marketed exists between unfair purchase prices there must be under nationals of Member States. The creation of stood a price which is not exactly referable new commercial monopolies is prohibited to the goods delivered. The comparison by virtue of Article 37(2). The application between the prices of the patented medica of competition law does not of itself affect ments with those for which wholesalers the existence or acquisition of industrial could sell the same medicaments if their sale property rights, but only limits the exercise were authorized proves that using patents

369). The provisions relating to compulsory within the definition of the prohibition in licences are not applied in the Netherlands. Article 86, secondly because the obtaining The legislative provisions relating to of an injunction from the courts would set proprietary products have not been adapted up a barrier to the marketing of the product to the directives of the Council. In the even though the unpatentable product was Netherlands the dominant position of the freely put into circulation on a part of the holder of the patent has, up till now, re markets concerned, and thirdly because the mained unlimited from the national point obtaining of an injunction from the courts of view. on the basis of the patent would thus be an According to Centrafarm both Article 86 of act setting up a barrier to marketing.

facto. Amongst the examples given in the parallel patent existing in one of the other second paragraph of Article 86 one, con Member States. A non-patentable product cerning prices, is applicable here, because by has always been 'free' and its sale cannot be

impeded for the same reasons as those stated to pay costs. above. The Commission analyses the scope of the According to Centratarm the second ques questions referred and observes that the tion must also be answered in the affirma Gerechtshof, The Hague, limits itself to tive, because the protection inherent in the asking whether, in the present case, the fact patent uselessly maintains high prices and of asking the courts for an injunction is con makes it possible to depart to a large extent trary to Article 85(1) or Article 86.

ineffective. The supranational rules on com patents, on the one hand, and the rules on petition, applied within the Common competition set out in Articles 85 to 90, on Market, should be applied in such a way the other, must be determined in accordance that the free movement of pharmaceutical with the Treaty. Since the Treaty does not products on this market cannot be impeded expressly lay down these relationships and in any way whatsoever by patents. since Articles 85 and 86 are directly appli During the oral proceedings Centrafarm cable in their entirety in every Member stated that the Italian company Carlo Erba State, the national court must itself decide was manufacturing chloramphenicol under upon the field of application of these provi a licence granted by Parke, Davis & Co. sions with regard to national 'patent' law Centrafarm pointed out that in various and, where applicable, do so on the basis of areas the exceptions have been made to an interpretation given by the Court. competition rules on the basis of the Com Since the Gerechtshof, The Hague, has also munity regulations themselves. It is asserted mentioned Articles 222 and 36 in its ques that in the absence, at present, of rules on tions, regard should be had to the judgment patents, the rules on competition in Articles of the Court of Justice of 13 July 1966 in 85 and 86 apply without restriction. Thus Joined Cases 56 and 58/64 in which trade for a finding against Centrafarm, it would be marks were more particularly at issue.

This provision also and the non-observance of the directive of shows that the Treaty recognizes that the the Council of 29 January 1965 by the establishment of the Common Market Member States, activities such as those cannot fail to affect national patent law to a carried on by Centrafarm are perfectly legal. certain extent. This article does indeed make Probel states that the chloramphenicol an exception to Articles 30 to 34 as regards which it imported from Belgium to the prohibitions or restrictions on imports, Netherlands originated in Italy and that it exports or goods in transit so as to protect stopped these imports in 1958, under threat industrial and commercial property, but of a court action. Probel relies on the wis only in so far as they do not 'constitute a dom of the Court and asks not to be ordered means of arbitrary discrimination or a

disguised restriction on trade between sequences from this principle, it must not be Member States'. forgotten that patent law does not fulfil the Article 222, which appears in that part of the same function and does not have the same Treaty devoted to general provisions, effect on the freedom of competition as does merely states that the Treaty shall in no way trademark law. This is why it is necessary to prejudice the rules in Member States examine the objectives of Community law governing the system of property owner on competition and those of national patent

It certainly does final objective of the Treaty, namely the not prevent Community law from limiting establishment of a free and common market the exercise of rights referable to property in between Member States'. certain cases. For example this can happen A conflict between national patent law and when Articles 85, 86 and 92 and provisions Community law on competition can arise laid down on the basis of Articles 43 and 75 particularly when the holder of a patent uses are applied. However, if it were to be his right to prevent any importation of the admitted that Article 222 also applies to the patented product from another Member system of industrial and commercial proper

All the Member 13 July 1966. More particularly, as regards States recognize, whatever the theoretical patent law, the Treaty does not say that in basis on which they do so, that the protec case of conflict between the rules on com tion granted by a patent is exhausted when petition of the Treaty and patent law the the patented product is put on the market. latter prevails. Moreover, the fact that The justification for this legal consequence Community law can impose limitations on is to be found in the fact that the holder of the exercise of a right conferred by a patent the patent has been able to benefit from his is not surprising in any way. Even under monopoly over the product so put on the national law, the exercise of rights and the market. When he grants a licence, he re use of opportunities arising under a patent ceives this benefit in the form of royalties. by the holder thereof can be limited by other Thus the reasons for limiting freedom of rules and, in particular, by provisions competition amongst persons acquiring the relating to cartels and to the protection of product and for continuing to protect this

JUDGMENT OF 29. 2. 1968 — CASE 24/67

markets. The possibility must be accepted to dividing up and partitioning off markets that the potential profits in the Common on which patent protection already exists. Market are not identical with those On the contrary, it is fulfilling its primary obtained previously when there were function which is to guarantee that the separate protected markets. For patent law holder of a patent shall be in a position to does not guarantee the making of a particu exploit his monopoly, by putting him in a lar profit with certainty, but only the position to oppose the entry of products for possibility of making a profit. As regards which he has not been able to receive any this, the situation on the market is in fact benefits from his monopoly, by reason of the influenced by national and. Community very fact that the Member State concerned measures, for example the lowering of does not grant any patent for the same customs duties on alternative products, in product. In a case such as this, therefore, such a way that the previous monopoly the holder of a patent may, without com position of the holders of patents or licences mitting an infringement of Article 85(1) or changes in any case. An undertaking which, of Article 86, use his rights under the patent on the basis of parallel patents, has granted to prevent imports from the Member State licences in different Member States, and in question.

On the basis of patent law. the above considerations, the Commission The Commission argues that there may be suggests that the following reply should be infringement of Article 86 where the under given to the two questions referred: taking in question itself uses these parallel patents and occupies a dominant position '1.(a) Article 85(1) and Article 86 of the within the Common Market or in a sub EEC Treaty do not prohibit the stantial part of it. The patent does not of holder of a patent granted in one of itself confer such a dominant position, but it the Member States or his licensee

PARKE, DAVIS v CENTRAFARM

2. The fact that in the Member State in ber States governing the system of property which the said holder possesses a patent ownership. Since industrial property con the holder of a patent, or his licensee, stitutes one of the elements of the system of offers the said product or substance at a property ownership in each of the Member higher price than the one at which this States, this provision of itself means that, in the absence of any stipulation to the con product or substance originating in an other Member State is offered is not trary on this point in the Treaty, national relevant from the legal point of view for law on this subject is to be recognized and the purposes of the question considered upheld.

It is argued may constitute an abuse within the that on this occasion the Court only con meaning of the said article.' demned the 'improper use' of rights under one or other national systems of trademark During the oral procedure the Commission law in order to render Community law on declared in its reply that it would be possible cartels ineffective (Rec. 1966, p. 500). It did to quote the case of parallel patents or a not throw doubt on the principle and the comparable situation in a case where, for means 'of exercising these rights' and did example, an undertaking such as Probel not order the suppression of 'state prohibi made cheaper purchases of chloramphenicol tions' which follow from this and which are 'from holders of licences granted by Parke, provided for in Article 36.

The absence of the territory covered by it. In other words, protection in this Member State in this way

makes it possible for manufacture to take As regards the second question, the French place more cheaply, but the introduction of Government is of the opinion that the mere a product thus made on the territory of fact the price demanded by the holder of the another Member State would ruin the pro patent in the protected territory is higher tection granted by that State. than the price demanded in the same terri The French Government is of the opinion tory for an article produced by a person in that Article 85 is only directed at restrictions fringing the patent does not matter.

How an end. This would not in any way result in ever, at all events, such application could giving any rights to the person infringing only relate to the effects of the said national the patent nor would it result in any limita legislation. Article 86 would only apply in tion on the right of the holder of the patent this way first if the conditions laid down by to take all proceedings against those directly the Treaty were fulfilled, even though the or indirectly responsible for infringements. natural effects of national legislation on During the oral procedure the French industrial property, which are accepted by Government emphasized that it was the Treaty, are precisely to affect trade necessary for the Court to limit itself to between Member States and to create a replying to the questions asked by the dominant position in a substantial part of Gerechtshof, The Hague, in the context of the Common Market. Secondly, it would the present case. only apply if it were possible on that occasion to carry out a comparison between The Government of the Kingdom of the situations of the same kind.

Thus certain effects of rights recognized as six national patents could be granted for the belonging to holders of patents, could not in same invention, each granting an exclusive any way adversely affect the rights of those right to the holder of the patent for its patent-holders to call upon the courts to territory exclusively. This exclusive right prohibit all acts of infringement in the terri means, in principle, that it is only the holder tory covered by their patents. of the patent who can profit from the

invention, which means in effect that he In the first category, which occurs most alone may manufacture or sell the patented frequently, the holder of the patent, to product or apply the process or sell the whom the said patent has been issued in product manufactured by means of that several countries, himself produces and sells process. the goods in one of those countries, and Thus the holder of the patent can prohibit these goods are later imported into other anyone else from manufacturing or selling countries of the EEC.

licence. These products are thus 'put into objectives of the holder of the patent com lawful circulation' and 'the patent rights are pared with the objectives of the EEC exhausted as regards them'. Once the Treaty. According to the Government of products are put into lawful circulation any the Netherlands, this does not mean that in person may freely sell them thereafter. This such a case the private interest is always principle that the rights of the holder of the opposed to the public interest. It is not

This may be the derived from national patent law, and the case when a patent for his invention cannot aims pursued by the EEC, in particular the be issued to him in the latter country or aim of creating a free market within which when the protection granted by the patent goods can be sold from one country to in that country is not sufficiently worth another without any obstacle. while to him. Competitors are free to Three factors are to be taken into considera manufacture the products in question and tion in this case: the intention behind patent to put them in circulation in the countries law, namely the encouragement of research for which the holder of the patent does not and industrial development, the interests of possess exclusive rights.

JUDGMENT OF 29. 2. 1968 — CASE 24/67

products. Thus, since Italian law inten especially in cases where the holder of the tionally makes no provision for protecting patent must face imports of the product in pharmaceutical products by a patent, a question into a country of the EEC from manufacturer of medicaments who has another country of the EEC where the patented his product or the process of its product is not protected by a patent. This manufacture in the Netherlands cannot answer would mean that in countries which protect his invention in Italy. The advantage do give patent protection to the product the which the Italian manufacturer of medica issue of a patent would no longer be of any ments possesses in Italy cannot be criticized, use, with the result that industry would be at least in so far as the sale of medicaments less interested in doing intensive research in manufactured in Italy is limited to Italy the technical fields concerned (in this case

patent. If the products were allowed to patent and to keep secret the inventions enter the country where the patent has been resulting from research. Obviously this taken out without the holder's being in a would not favour the development of position to enforce his rights, the producer industrial cooperation in the field of tech or seller of the products originating in the nology. country where the law does not make provisions for the issue of patents for The Government of the Federal Republic of pharmaceutical products would have an Germany is of the opinion as to the first advantage over the holder of the patent. question that in so far as the Gerechtshof This would mean that such a producer or in asking whether Article 85 can prevent seller would, at no expense to himself, have rights arising under a patent from being the benefit of research carried out by the exercised, the answer is given by the very holder of the patent, which would not only wording of that article. Article 85(1) pre be unjust, but would jeopardize the funda supposes agreements between undertakings, mental principle of patent law, and its decisions by associations of undertakings proper functioning, and also undermine the and concerted practices. Thus it can only be hopes which the inventor entertained on the applied if at least two undertakings volun basis of the law. Furthermore it would tarily combine their efforts.

The

point to be considered is whether Article 86 might freely use the patented process in is applicable when the holder of a patent another Member State where it is not asks the courts to prohibit the sale of patented. Thus this is not a case of dividing products originating in a territory which up and monopolizing regional markets does not grant exclusive selling rights in a within the Community with the help of territory where the patent has been granted. industrial property rights. What is asked for This question must also be answered in the here is that preference be given to a patent in negative for several reasons. a Member State over imports of products The position which the holder of a patent made without a patent in a country on the has by reason of his patent is not to be con basis of the patented process.

mercially unusable. Furthermore Article 86 vention outside that territory. For this does not prohibit all actions of an under reason the patent-holder can prohibit third taking which has a dominant position, but parties from selling the patented products only the 'abuse' of that position within the or the products made by means of the Common Market or in a substantial part of patented process within the territory of the it. This means that it is the dominant State which has issued the patent, even position itself which must be used as a when these products have been lawfully

has not been harmonized. Furthermore, in sary to ask whether actions taken on the Article 36 of the Treaty the Member States basis of a patent can be considered as an expressly accepted the repercussions of the 'abuse' of a dominant position. In any event, freedom of national patent legislation on the there is no 'abuse' of a dominant position free movement of goods within the Com when the holder of a patent granted by a munity. Member State enforces the rights arising This situation led the governments of the under his patent before an ordinary court of States to start work on a uniform European law in order to stop his patent being in law of patents as from 1959.

one and the same producer. According to Market or in a substantial part of it by the the jugdment whereby the court at The holder of a patent when he asserts his rights Hague referred the case, the actions taken by as against persons infringing them before the holder of the patent are only intended to the courts of the Member State which has protect his rights against third parties who issued the patent to him, in order to prevent

his patent from being infringed by the im­ the patented product are higher than those portation of products from another Mem­ of identical products originating in a ber State. The contrary view would result in country where a patent is not necessary does distorting competition and granting an not of itself lead to the conclusion that a unjustified advantage to undertakings which holder of a patent is abusing any dominant carry on business in the Member State position which he may hold. Patent rights where the number of products for which give the holder of a patent the possibility, by applications for patents may be made is means of fixing his prices, of recouping the smallest. Undertakings in that State could heavy costs which he normally has to bear freely imitate patented processes in other in research and development, particularly Member States and sell the products manu­ in the pharmaceutical field. Furthermore, factured by means of these processes in the Article 86 does not prohibit dominant posi­ whole of the Common Market, and do so at tions as such but only their abuse. Thus the lower prices because they would not have prohibition does not apply to dominant had to bear the costs of developing those positions which may result from a patent, or processes. Thus the protection of the patent to actions for infringements which are con­ would be almost entirely ineffective within comitant with the existence of the patent. the EEC. Even when a holder of a patent exploits a Another undesirable consequence of the dominant position by manifestly over­ hypothesis refuted here would be the neces­ charging for the patented products, it is the sity of obtaining patents in every Member overhigh prices which are prohibited under State for any invention even if it was only Article 86, not the patent and the right to intended to use it in just one Member State. bring actions for infringement, which goes This would mean, on the one hand, that with it. Accordingly, in the opinion of the inventors would be burdened with greater German Government, the answers which costs and, on the other, that national patent should be given to the questions asked by the offices would be overburdened with applica­ Gerechtshof, The Hague, are as follows: tions. "The holder of a patent issued by a Member As to the second question, the Federal State infringes neither Article 85 nor Article Government makes the following observa­ 86 of the EEC Treaty when in reliance on his tions. In so far as the applicability of Article patent he obtains a judgment from a court 85 of the Treaty is concerned, it makes no prohibiting the importation of products difference that the products manufactured from a Member State which does not grant under the patent are more expensive than exclusive rights with regard to those identical products manufactured in a Droducts:

The national rules relating to the protection of industrial property have not yet been unified within the Community. In the absence of such unification, the national character of the protection of industrial property and the variations between the different legislative systems on this subject are capable of creating obstacles both to the free movement of the patented products and to competition within the Common Market.

As regards the provisions relating to the free movement of products, prohibitions and restrictions on imports may be justified under Article 36 on grounds of the protection of industrial property, but subject to the expressly stated reservation that these 'shall not, however, constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States'. For similar reasons, the exercise of the rights arising under a patent granted in accordance with the legisla­ tion of a Member State does not, of itself, constitute an infringement of the rules on competition laid down by the Treaty.

Under Article 85(1) of the Treaty, '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 an interference with competition are prohibited as incompatible with the Common Market. Although the generality of the words used is evidence of an intention to include without distinction all the categories of agreement described in this provision, the restrictive nature of the said provision is incompatible with any extension of the prohibition for which it provides beyond the three categories of agreement exclusively enume­ rated therein.

Moreover, in a comparable field, Article 36 of the Treaty, after providing that Articles 30 to 34 shall not preclude restrictions on imports or exports justified on grounds, inter alia, of the protection of industrial and commercial property, expressly states, as has already been observed, that such restrictions 'shall not, however, constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States'.

Accordingly, since the existence of patent rights is at present a matter solely of national law, the use made of them can only come within the ambit of Community law where such use contributes to a dominant position, the abuse of which may affect trade between Member States.

Although the sale price of the protected product may be regarded as a factor to be taken into account in determining the possible existence of an abuse, a higher price for the patented product as compared with the unpatented product does not necessarily constitute an abuse.

It follows from all the above: first, that the existence of the rights granted by a Member State to the holder of a patent is not affected by the prohibitions contained in Articles 85(1) and 86 of the Treaty; secondly, that the exercise of such rights cannot of itself fall either under Article 85(1), in the absence of any agreement, decision or concerted practice prohibited by that provision, or under Article 86, in the absence of any abuse of a dominant position; finally, that a higher sale price

PARKE, DAVIS v CENTRAFARM

for the patented product as compared with that of the unpatented product coming from another Member State does not necessarily constitute an abuse.

in answer to the questions referred to it by the Gerechtshof, The Hague, by judg­ ment of that court of 30 June 1967, hereby rules:

1. The existence of the rights granted by a Member State to the holder of a patent is not affected by the prohibitions contained in Articles 85(1) and 86 of the Treaty;

2. The exercise of such rights cannot of itself fall either under Article 85(1), in the absence of any agreement, decision or concerted practice prohibited by this provision, or under Article 86, in the absence of any abuse of a dominant position;

3. A higher sale price for the patented product as compared with that of the

JUDGMENT OF 29. 2. 1968 — CASE 24/67

unpatented product coining from another Member State does not necessarily constitute an abuse;

Registrar President

OPINION OF MR ADVOCATE-GENERAL ROEMER DELIVERED ON 7 FEBRUARY 1968 1

Mr President, patented process. Furthermore, in an action Members of the Court, for infringement of patent, when the prod­ ucts in question are 'new' under the Law of In a reference made by the Gerechtshof, The 7 November 1910, those marketed without Hague, you are once again called upon to the permission of the holder of the patent consider the competition law of the EEC are presumed to have been manufactured by Treaty. We must start with the facts, which the protected process, unless the person have attracted wide attention because of the presumed to be infringing the patent rebuts nature of the questions asked on this this presumption. occasion. It seems that patent rights of Parke, Davis & The American company Parke, Davis & Co. have been infringed by the marketing Co., whose registered office is in Detroit, is by a Belgian company (Probel of Brussels) the holder of two Netherlands patents for and two Netherlands companies (Reese en the biological and chemical manufacture of Beintema-Interpharm, a limited company, the antibiotic 'chloramphenicol'. It has and Centrafarm, a partnership, both of granted licences to a Netherlands under­ Rotterdam) in the Netherlands of chlor­ taking established in Delft and it is a term of amphenicol from various countries of the license agreement that the licensor must Europe, without the permission of the com­ enforce the patent rights in the Netherlands pany holding the patent or of the under­ on behalf of the licensee. taking holding the licence. This led to the I would point out in this connexion that bringing of proceedings in 1958 in Rotter­ although, under Netherlands law, medicinal dam during which Parke, Davis & Co. preparations are not themselves patentable claimed damages for infringement of its the holder of a patent for a manufacturing patent rights from the three companies in process nevertheless has the exclusive right question and an injunction, under threat of to market a product manufactured by the periodical penalty payments, against any