C-65/86

BAYER v SÜLLHÖFER

OPINION OF MR ADVOCATE GENERAL DARMON delivered on 7 July 1987 *

Mr President, essential terms of that agreement are as Members of the Court, follows :

(a) Süllhöfer granted Bayer and Hennecke 1. Is the presence in a licensing agreement a non-exclusive free licence under the of a contractual stipulation by which the utility model and the German patent, licensee undertakes not to challenge and a licence subject to payment of industrial property rights having the same royalties under the corresponding content in respect of which he has been industrial property rights he held in granted licenses in several Member States other countries; compatible with Article 30 et seq. and Article 85 of the EEC Treaty? Those are the terms in which the Bundesgerichtshof has submitted to this Court the question of whether, in principle, a no-challenge clause (b) Hennecke and Bayer undertook to is valid in Community law. Let us briefly withdraw the revocation proceedings outline the essential points of the dispute in brought against the patent and agreed the main proceedings. to bring no further action directly or indirectly challenging the validity of the industrial property rights in question;

2. Mr Heinz Süllhöfer was the holder of a German patent and a utility model applied for in 1965 relating to a manufacturing (c) Bayer granted Süllhöfer a non-exclusive process and a device for the production of licence subject to payment of royalties polyurethane panels. Those rights have since under its own patent for the manu- expired. Maschinenfabrik Hennecke GmbH facture of foam panels; produces plant for the manufacture of polyurethane panels. Bayer AG, sole share- holder in Hennecke since 1968, supplies the raw material required for the production of (d) Finally, Bayer undertook not to bring those panels. proceedings against Süllhöfer based on past infringements of that patent.

4. It is not necessary to dwell at length on an examination of the validity of the clause in the light of Anicie 30 et seq. of the 'clearly does not fall within the specific Treaty. Industrial property rights fall under subject-matter of the patent, which cannot those provisions in so far as the exercise be interpreted as also affording protection thereof in accordance with national law may against actions brought in order to give rise to restrictions on imports or challenge the patent's validity . . . '. exports. The clause in question, however, does not relate to the exercise of the patent rights but prohibits the licensees from chal- lenging those rights. Nor is its nature such that it in itself constitutes an obstacle to Such a clause extends the patentee's trade within the Community. Finally, and monopoly without constituting one of the most importantly, it is a private agreement normal consequences attaching to the use of and cannot be compared to a State measure a patent. The licensee cannot improve his of the kind expressly referred to in Article competitive position because he undertakes 30 of the Treaty. The criteria for applying not to challenge the patent and thus possibly those provisions to the clause in question to free himself from his obligations under are therefore not met. the agreement. The clause may also perpetuate a patent granted in error. It is true that the relative effect of the agreement does not preclude the bringing of revocation proceedings by third parties, but the licensee 5. The nub of the Bundesgerichtshofs is undoubtedly the person best qualified to question is therefore whether a no-challenge act — by using the patent, he can gain very clause is compatible with Article 85 (1) of accurate knowledge of any legal and the EEC Treaty. technical defects which may affect its validity. 2The clause has the concrete effect,

10. Any attempt to ascertain what practical advantages there might be in a no-challenge '. . . in view of the fact that it is in the public clause from the patentee's point of view, interest to eliminate any obstacle to apart from that of protecting a 'doubtful' economic activity which may arise where a patent from challenge, must lead to the patent was granted in error'. 3 conclusion that there are very few indeed. Proceedings brought against a manifestly 'strong' patent will normally be dismissed, and the licensee's temerity may be further punished by a penalty for abuse of process. 8. It would be very hard not to deduce Admittedly, certain situations are from the general nature of those words that conceivable where a no-challenge clause, there is a presumption of incompatibility although covered by Article 85 (1), might with Article 85 (1). It was no doubt the fact qualify for an individual exemption under that no-challenge clauses are normally such paragraph 3. Such might be the case for as to restrict competition that led to their agreements by which undertakings in the being included in the 'blacklist' in Article 3 field of advanced technology, whose of Commission Regulation (EEC) N o financial and human resources are 2349/84 of 23 July 1984 (Official Journal sometimes limited, attempted to forestall 1984, L 219, p. 15), thus depriving them of any strategy of vexatious litigation the benefit of the exemption for certain employed by powerful licensees. Given the categories provided for in Article 1 of that field of activity of such undertakings, regulation. application might well be made to the Commission for an exemption.

13. In Remia v Commission 7 the Court stated, with regard to non-competition I shall limit my consideration to the first clauses included in an agreement for the and last criteria. First of all, giving a special transfer of an undertaking: status to settlements putting an end to liti- gation might give rise to fictitious disputes whose aim was to achieve an otherwise prohibited agreement. It would then be necessary to determine the real nature of 'In order to determine whether or not such the dispute in each case. The complexity of clauses come within the prohibition in such a result would make it difficult to Article 85 (1), it is necessary to examine reconcile with the requirements of legal what would be the state of competition if certainty. I do not, moreover, see what legal those clauses did not exist.' basis could justify a special status for an agreement of that type which, like any contract, is a private act. The criterion relating to the 'strength' of the right appears attractive in theory, inasmuch as it would It was held that such clauses 8 limit the validity of the clause to cases where there is no likelihood of perpetuating a 'doubtful' right. A serious disadvantage would, however, be presented by the fact that the assessment thereby required would '. . . in principle have the merit of ensuring involve subsequent judicial verification at that the transfer has theeffect intended. By odds with the conciliatory approach which virtue of that very fact they contribute to makes it possible to come to an amicable the promotion of competition because they settlement of a dispute. This condition is, lead to an increase in the number of under- moreover, noticeably in contradiction with takings in the market in question'. the first. If the patentee agrees to an amicable settlement, thereby accepting in part his adversary's claims, his right is generally unlikely to be of the unchallen- geable nature required by the hypothesis. In that case you did not consider that the anticompetitive character inherent in the very nature of such clauses precluded a search for the positive effects which they might in fact have on competition. 12. The exception proposed by the Commission therefore appears to involve 7 — Judgment of 11 July 1985 in Case 42/84 Remia v real uncertainty, both practical and theor- Commission[1985] ECR 2545, paragraph 18. etical. In my view, the need to provide an 8 — Cited above, paragraph 19.

16. Does the fact that the clause has 18. In the present case, the national court features which generally restrict competition might consider, after examining the and that it is included in the 'blacklist' in agreement as a whole, including the actual Article 3 of Commission Regulation N o significance of the granting of a licence 2349/84 render the presumption of its subject to payment of royalties for other incompatibility with the common market countries, that the clause in question does irrebuttable? I do not think so, and in that not come within the scope of Article 85 (1). respect I agree, thought not for the same In such cases, rather than mechanically reasons, with the position adopted by the applying the rules, which would mean Commission in this regard when it accepts ignoring the concrete issues of competition that, apparently by way of exception, Article at stake, it is preferable to take those issues 85 (1) is not applicable, as it previously into account, subject to the court's verifi- cation, in order to ensure that the objectives 9 — Judgment of 28 January 1986 in Case 161/84 Pronuptia of the treaty are respected. [1986] ECR 353, paragraph 14. 10 — Judgment of 30 June 1966 in Case 56/65 Société technique minière v Maschinenbau Ulm [1966] ECR 235, Opinion at 11 — Commission Decision 72/238/EEC of 9 June 1972 (Journal p. 259. Officiel L 143, 23.6.1972, p. 39).

OPINION OF MR DARMON — CASE 65/86

19. I therefore propose that the Court should rule as follows:

'The inclusion in a licensing agreement of a contractual stipulation by which the licensee undertakes not to challenge the validity of technical industrial property rights in respect of which he has been granted licences