C-53/87

CICRA AND ANOTHER v RENAULT

OPINION OF MR ADVOCATE GENERAL MISCHO delivered on 21 June 1988 *

Mr President, pendent traders, provided that the latter pay Members of the Court, a fair royalty to the manufacturer.

1. By virtue of the questions submitted by the tribunal civile e penale (Civil and 4. In the present opinion, ' which relates to Criminal Court), Milan, in Case 53/87 the questions submitted by the Milan Court, (Consorzio italiano della componentistica di I shall consider the problem more ricambio per autoveicoli, hereinafter referred particularly, but not exclusively, with to as 'the Consorzio', and Maxicar v reference to the provisions of the Treaty Renault) and by the High Court of Justice, concerning the free movement of goods. In London, in Case 238/87 (Volvo v Veng) for my Opinion in Case 238/87 I shall a preliminary ruling, the Court is essentially concentrate above all on the question of confronted by the problem whether a motor compulsory licences. vehicle manufacturer who is the proprietor of protected rights in respect of designs and models of bodywork components for a vehicle manufactured by him may, without I — The first question infringing Community law, prevent the marketing by independent producers or traders of copies of those bodywork components. 5. The first question submitted by the tribunale civile e penale, Milan is as follows :

6. Let me start by pointing out that the 'which have as their specific object or effect dispute in the main proceedings has certain the restriction of patterns of exports and features which are rather different from thereby the establishment of a difference of those of the other cases on industrial treatment between the domestic trade of a property with which the Court has had Member State and its export trade in such a occasion to deal. way as to provide a particular advantage for national production or for the domestic market of the State in question at the expense of the production or of the trade of other Member States'. 3 7. It is not a case here of a proprietor of protective rights defending his 'territory' against imports, but of independent producers attacking that proprietor by chal­ lenging his entitlement to exercise his 11. We can therefore conclude at this early exclusive rights against them; 2 the stage that the prohibition laid down by Consorzio and Maxicar demand the right to Article 34 of the Treaty is not an issue in manufacture the parts in question them­ the present case. There is no restriction on selves and subsequently to export them. exports within the meaning of Article 34 that ought to be examined in order to determine whether it might be 'justified on grounds of . . . the protection of industrial and commercial property' within the 8. I shall return later to this challenge meaning of Article 36. which, to some extent at least, calls in question the very existence of industrial and commercial property rights. First, I should like to consider the problem of the exportation of spare parts manufactured or 12. Seen in that light, the dispute in the capable of being manufactured by the main proceedings thus concerns a situation plaintiffs in the main proceedings since it is wholly internal to Italy: two Italian that aspect of the question submitted which companies claim the right to manufacture in relates to the provisions of the Treaty Italy components covered by protective concerning the free movement of goods. rights in ornamental designs in Italy.

'that in principle the protection of industrial and commercial property established by Article 36 would be rendered meaningless if a 19. The question submitted thus clearly person other than the owner of the right to goes beyond the simple question whether the design in a Member State could be the exercise of the intellectual property right allowed to market in that State a product is compatible with the specific purpose which is identical in appearance to the thereof, as defined by the Court. The protected design'. national court considers that 'there appears to be some foundation for the question raised by the plaintiffs with regard to the lack of justification for protective rights 16. However, as the Court points out in the which, since they do not satisfy the relevant next paragraph of that judgment, functions of the protection of industrial and prohibitions and restrictions must, by virtue commercial property laid down in Article 36 of Articie 36, be justified inter alia on of the EEC Treaty, may constitute a means grounds of the protection of industrial and of arbitrary discrimination or a disguised commercial property and must not restriction on trade between Member States' constitute a means of arbitrary discrimi­ (end of p. 9 of the English translation of nation or a disguised restriction on trade the order for reference). between Member States.

17. As is apparent from the first paragraph of the grounds of the Milan Court's 20. Can the Court undertake an exam­ judgment, the latter is well acquainted with ination of that kind, having regard to its previous decisions in that field? In my those cases and the question which is opinion, the following distinction must be submitted refers to the possible existence of drawn : a disguised restriction on trade between Member States.

(Keurkoop v Nancy Kean Gifts, cited patent or design, where it is alleged that above, paragraph 18); the patent or design was granted improperly under the national legislation? I have in mind, for example, cases where the law of a Member State allows (b) consideration of the validity or a patent to be granted even for an otherwise of a design is also a matter 'invention' which is known and was for the national courts; patented a long time earlier in another Member State, or cases where a Member State allows only its own nationals to register protective rights in (c) where the proprietor of a design 'abuses' respect of spare parts. his right to prevent imports (a right which stems inherently from the specific purpose of registration of the design), he cannot benefit from the exception to 21 . 1 consider that it is clear, or at least has the principle of free movement of goods 5 been since the Warner Brothers judgment, laid down in Article 36. That is the case that in such a case the Court is entitled to if the prohibition of imports is of such a consider whether the legislation in question kind as to maintain or bring about arti­ may be regarded as justified on the ground ficial partitioning of the market within of protection of industrial and commercial the EEC. Thus the proprietor cannot property within the meaning of Article 36. rely upon his rights in order to prevent In that judgment, the Court stated, inter the importation or marketing of a alia, that product which has lawfully been placed on the market in another Member State by him, with his consent or by a person economically or legally dependent on him (the theory of exhaustion of the 'it is not possible, by permitting copyright exclusive right). Similarly, the proprietor fees to be charged only on sales allowed to of an exclusive right may not rely on his private individuals and to hirers of video- right if the prohibition on importation cassettes, to ensure that film makers receive or marketing of which he wishes to avail remuneration which is commensurate with himself could be connected with an the number of hirings actually made and agreement or practice in restraint of which reserves for them a satisfactory share competition within the Community in the hiring market'. (paragraphs 24 to 27 of the judgment in Keurkoop v Nancy Kean Gifts, cited above). In this case, there has been no allegation either by the plaintiffs in the main proceedings or by the national The Court concluded from this that legis­ court that either of those situations lation which makes the hiring of video- exists or that there has been any other cassettes conditional upon authorization abuse of the rights in question; from the copyright holder, thus enabling the latter to make hiring conditional upon payment of a royalty, appears to be justified on grounds of protection of industrial and commercial property. (d) but what happens where the proprietor makes absolutely normal use of his right 5 — Judgment of 17 May 1988 in Case 158/86 Warner Brothers to prevent the importation of products Inc. and Metronome Video ApS v Erik Viuff Christiansen manufactured in infringement of his [1988] ECR 2605, in particular paragraphs 11, 15 and 16.

28. According to them, a spare part is not 25. In fact, according to the Milan Court, the subject of an effort of aesthetic crea­ the monopolistic position resulting from the tivity specific to it and distinct from the registration of ornamental designs for each effort made in designing the bodywork as a part making up the bodywork does not whole, and it cannot therefore per se be the constitute a 'return' for research and subject of the design right, still less so progress achieved from the aesthetic point because the effort of aesthetic creativity of view, since that was exhausted by the made when the bodywork as a whole was overall design of the car, which is at the designed is already sufficiently rewarded by same time protected by other registered the grant of an exclusive right covering the rights. The exclusion of competition from totality of the bodywork. Accordingly, the other undertakings and the higher price grant, in addition thereto, of a right of that payable to the proprietor of the rights as a kind covering the component would give result of his monopoly would appear to be rise to a kind of a 'double return' to the advantages which are unconnected with proprietor of the right. That view calls for the requirements of economic progress the observations which follow.

7 — Judgments of 31 October 1974 in Case 15/74 Centrafarm v 6 — In this respect, I would refer also to my Opinion of 28 Sterling Drug [1974] ECR 1147, of 14 July 1981 in Case April 1988 in Case 35/87 (judgment of 30 June 1988) 187/80 Merck v Stephar and Exler [1981] ECR 2063, and Thetford v Fiamma [1988] ECR 3585, at p. 3594, para­ of 9 July 1985 in Case 29/84 Pharmon v Hoechst [1985] graphs 20 and 23. ECR 2281. '

30. Moreover, even if the act of intellectual creation capable of giving the product an aesthetic value related only to the complete 33. Against that background, I should also design of the car and even if the form of a like however to draw the attention of the bodywork component was never the subject Court to the very detailed inquiry carried of separate study from the aesthetic out by an independent public authority, the standpoint (a view which is challenged, in United Kingdom Monopolies and Mergers particular by the German Government) it Commission, concerning the policy pursued would nevertheless be fair, in my opinion, by a large car manufacturer with respect to to say that not only the bodywork as a bodywork spare parts. (The report in whole but also each of its components is the question is attached as Annex 2 to the result of the creative or innovative effort observations of the Consorzio.) Having brought to bear by the manufacturer. established that in the specific case with which it was concerned the criteria of the United Kingdom legislation on anti­ competitive conduct and the public interest were fulfilled, the Monopolies and Mergers 31. As regards the question of the possi­ Commission proposed a limitation of five bility of a 'double return' for that creative years for the validity of exclusive rights effort or amortization in excess of the sums granted in respect of bodywork invested in research and development and components, but it in no way challenged the the perfecting of new models, I do not see principle whereby a manufacturer can obtain in what way a national legislature would be industrial property rights and receive the exceeding the limits of the protection of benefit, when selling those parts, of a industrial and commercial property if it 'return' for his innovative efforts and his allowed a car manufacturer to apportion research and development costs. that return or amortization between the price of the vehicle as a whole, on the one hand, and the price of the spare parts, on the other. Admittedly, it may be that the prices of spare parts are excessive and that it is the manufacturer's intention to obtain a 34. Finally, turning to the problem of 'double return'. However, this question is protection of spare parts for cars, we must tied up with the problem of abuse of a not forget that the same problem may arise dominant position which I shall consider in tomorrow regarding all other products due course when dealing with the second which are made up of a set of separately question submitted by the Italian Court. manufactured components or even components which coexist as parts of a whole without coming into physical contact with each other. Indeed, who could 32. It follows, in my opinion, from the deny — as was pointed out by Professor foregoing considerations that the grant of Breier in the study submitted by

35. But the Court does not need to express a view as to whether it is appropriate or necessary to protect car bodywork components. It is merely called upon to decide whether legislation of the type in question here appears to be justified on 39. Régie Renault is free to export from grounds of protection of industrial and Italy any spare parts which it may manu­ commercial property within the meaning of facture in that country, and to import into Article 36. In view of the foregoing Italy parts manufactured by its parent considerations, I consider that such a company or its subsidiaries in the other finding would be well founded. Member States. Likewise, every other car maker may export or import its own spare parts. Any private individual may also freely import original parts of any make what­ soever purchased by him in another Member State or export those purchased in Italy. 36. Secondly, the question remains to be examined whether a prohibition of imports based on legislation of that kind constitutes a means of arbitrary discrimination or a disguised restriction on trade.

II — The second question 'Does a car manufacturer abuse a dominant position within the meaning of Article 86 of the Treaty by registering protective rights in respect of spare parts for vehicles of its 42. The tribunale civile e penale, Milan, has manufacture, in the light of the fact that the submitted a second question to the Court in exercise of the exclusive rights deriving from the following terms: such registration has the effect of preventing independent undertakings from lawfully manufacturing those same parts and thus competing with the manufacturer?' 'Is or is not Article 86 of the EEC Treaty applicable so as to prohibit the abuse of the dominant position held by each car manu­ facturer in the market for spare parts for cars of its manufacture which consists in pursuing, by means of registering protective rights, the aim of eliminating competition 45. Before that question can be answered, it from independent manufacturers of spare is necessary to determine, in the first place, parts?' whether a motor vehicle manufacturer holds a dominant position in the market in spare parts for vehicles of its manufacture and, for that purpose, to establish whether that 43. By formulating its question in those market is in fact the 'relevant market'. terms the national court takes for granted that car manufacturers always hold a dominant position in the market for spare parts for the cars which they produce — an assertion which in my opinion remains to be tested — and that they abuse that position merely by registering protective rights in 46. It has been claimed in that respect that respect of the various bodywork com­ spare parts form part of a wider market ponents for their vehicles. which includes both motor vehicles and spare parts for them. In view of the fierce competition between motor vehicle companies, the price of spare parts is one of 44. I should therefore prefer to take the the factors taken into consideration by question to have the following meaning: purchasers.

47. There is no doubt that certain manufacturer may hold a dominant position purchasers of cars, before making their in the relevant market, even if such choice, also obtain information as to the industrial property rights as he may have price of spare parts, and that factor may acquired are disregarded. influence their decision. It is also certain that the owner of a vehicle of a particular make may, when deciding to change car, buy one of another make because the spare parts for the first car proved, in his opinion, excessively expensive. If the time factor is 51. The manufacturers' distribution net­ also taken into account, the competition work is in fact the first source of supply prevailing in the new-car market thus also which comes to the mind of someone includes an element of competition seeking a component because he feels sure regarding spare parts. that he will obtain that component there immediately or within a short period. Car manufacturers in a given country maintain, at least in that country, a fairly close-knit distribution network. Moreover, the manu­ 48. The fact nevertheless remains that the facturer's guarantee depends upon the use owner of a vehicle who, at a given moment, of so-called original parts the marketing of decides to repair the bodywork of his which is controlled by the manufacturer. At vehicle rather than purchase another, is a time when manufacturers offer anti-rust obliged to purchase (either directly if he guarantees of up to six years, that fact is not repairs the car himself, or indirectly through without significance. For their part, inde­ a garage in the manufacturer's network or pendent producers only enter the market through an independent repairer) a some time after a new model is brought out bodywork component which is identical in because they need to time to to undertake shape to the original part. Consequently, for the 'reverse engineering' necessary to enable the owners of a vehicle of a particular make them to produce copies of the original part. the 'relevant market' is the market made up The parts produced by them do not enjoy of the bodywork components sold by the the prestige associated with the 'original manufacturer of the vehicle or of the part' label and the places where they can be components which, being copies, are obtained are less well known. capable of being substituted for them.

53. It is apparent from previous decisions of tering protective rights in respect of the the Court that the mere possession of an parts in question of itself constituted an industrial property right does not auto­ abuse of that dominant position. matically imply that the holder thereof occupies a dominant position within the meaning of Article 86. In the Sirena and 56. If proprietorship of protective rights is Deutsche Grammophon 8cases the Court held not of itself sufficient automatically to that, for the proprietor of an industrial create a dominant position, a fortiori it property right to hold a dominant position, cannot per se amount to abuse of such a he must be in a position to prevent the position. maintenance of effective competition over a considerable part of the relevant market, having regard in particular to the existence and position of any producers or 57. The previous decisions of the Court distributors who may be marketing similar leave no room for doubt on this point. As goods or goods which may be subsituted for early as 29 February 1968 in its judgment in them. Case 24/67 (Parke, Davis & Co. v Probei, Centrafarm and Others [1967] ECR 55, at p. 72), the Court stated 54. But in the present case, the industrial property rights relate to bodywork components for a motor vehicle and the 'for this prohibition [under Article 86], to only products which can be substituted for apply it is .. . necessary that three elements them are products having exactly the same shall be present together: shape as the parts produced by the manu­ facturer. As the Commission rightly pointed out in its observations in Case 238/87 (reference for a preliminary ruling by the (i) the existence of a dominant position, High Court of Justice, London, in the case of Volvo v Veng), in those circumstances no substitutable goods exist which do not (ii) the abuse of this position, and encroach upon the registered rights of the manufacturer. Accordingly, as soon as the proprietor enforces his protective right in the ornamental design and the substitutable (iii) the possibility that trade between parts can no longer be produced, it is Member States may be affected beyond doubt that the manufacturer holds a thereby; dominant position in the market in bodywork components in respect of which he has registered protective rights, and which is, in the last analysis, the 'relevant although a patent confers on its holder a market' in this case. special protection at national level, it does not follow that the exercise of the rights thus conferred implies the presence together of all three elements in question; 55. The Milan court quite properly considered that that was the position and asked this Court whether the fact of regis­ it could only do so if the use of the patent 8 — Case 40/70 Sirena v Eda [1971] ECR 69, paragraph 16; were to degenerate into an abuse of the Case 78/80 Deutsche Grammophon v Melro [1971] ECR 487, paragraph 16. abovementioned protection'.

61. The additional element or circumstance 64. It should be pointed out, finally, that if might, on the other hand, consist in it were to be found that the monopoly discriminatory conditions of sale (refusal to enjoyed by motor vehicle manufacturers supply spare parts to independent suppliers, regarding spare parts produced by them and for instance), or refusal to continue to covered by protective rights frequently manufacture spare parts for a vehicle no prompts them to abuse their dominant longer in production even though many position or if the temptation to engage in vehicles of that type were still in use. But such abuse were considered too strong, it the case which comes most readily to mind would of course be open to the national is that of applying 'unfair prices' within the egislatures or possibly to the Community meaning of subparagraph (a) of the second legislature (by way of harmonization of paragraph of Article 86. The applicant national legislation) to regulate the exclusive companies in fact maintain that the rights in question by the means considered bodywork components produced by Renault most appropriate.

OPINION OF MR MISCHO — CASE 53/87

65. In conclusion, I propose that the Court should give the following answer to the second question submitted by the Milan Court:

'Article 86 of the Treaty must be interpreted as meaning that a car manufacturer does not abuse a dominant position merely by registering protective rights in respect of the parts making up the bodywork of cars manufactured by it and exer­ cising the rights deriving therefrom.'