Opinion of Mrs Advocate General Rozès

Mr President,Members of the Court,

The Court of Justice has been requested by the Court of Appeal of England and Wales to give a preliminary ruling

on certain questions concerning the conditions for the exercise of artistic property rights under Community law and the provisions of the Agreement between the EEC and Portugal of 22 July 1972.

The facts are as follows:

The trio known as The Bee Gees transferred its rights in the songs collectively entitled Spirits Having Flown to RSO Records Inc. [hereinafter referred to as RSO]. That company in turn granted a licence in respect of those rights for the United Kingdom, a Member State of the Community, to Polydor Limited [hereinafter referred to as Polydor], which manufactures and distributes recordings of that work in that State.

Recordings of the same work are also manufactured and sold in Portugal, a non-member country, by Phonogram and Polygram Discos, companies incorporated under Portuguese law, which are licensees in that country of RSO's rights in the songs. Those companies belong to the same group of companies as Polydor.

Gramophone records from Portugal containing the sound recording in question were imported into the United Kingdom by Simons Records Limited [hereinafter referred to as Simons] and were marketed by Harlequin Record Shops Limited [hereinafter referred to as Harlequin] without the consent either of Polydor or of RSO.

Polydor and RSO therefore brought an action against Harlequin in the Chancery Division of the High Court of Justice for infringement of their United Kingdom copyrights under Section 16 (2) of the Copyright Act 1956. In defence Harlequin and Simons, which intervened in support of Harlequin, contended that such action constituted a measure having an effect equivalent to quantitative restrictions on imports within the meaning of Article 14 (2) of the Agreement concluded by Regulation (EEC) No 2844/72 of the Council of 19 December 1972 between the European Economic Community and the Portuguese Republic.

The Chancery Division of the High Court granted an injunction restraining Simons and Harlequin from distributing the sound recording in question in the United Kingdom. The matter was brought by those companies before the Court of Appeal, which referred to the Court of Justice four questions seeking to determine whether the case-law concerning the free movement of gramophone records and copyright which the Court has developed in the context of the Treaty of Rome may be applied to the relations between the EEC and Portugal.

As a result of the possible implications for a whole series of agreements concluded with non-member countries, the importance of the problem has not escaped the five Member States which submitted observations. The expression quantitative restrictions on imports indeed appears in Article XI of the General Agreement on Tariffs and Trade and in Article 10 of the Convention establishing the European Free Trade Association and in six other agreements concluded between the European Economic Community and States still belonging to that Association.

In order that Simons and Harlequin may succeed in their defence, each of the following three conditions must be fulfilled:

The preamble to Regulation No 2844/72 of the Council refers in particular to Article 113 of the EEC Treaty, which appears in the chapter on commercial policy.

Article 1 of the regulation provides :

The Agreement between the European Economic Community and the Portuguese Republic, the Annexes and Protocols thereto, and the Declarations annexed to the Final Act are hereby concluded, adopted and confirmed on behalf of the Community.

According to Article 5 of the regulation :

A regulation is the instrument which is generally used to conclude with non-member countries the commercial agreements referred to in Article 113 of the Treaty and the final wording of Regulation No 2844/72 merely reproduces the terms of Article 189 of the Treaty.

Although the regulation is directly applicable in all Member States, it nevertheless does not necessarily follow that Articles 14 and 23 of the Agreement have direct effect, that is to say that they confer on Community nationals rights which the courts of the Member States are bound to protect.

Regulation No 2844/72 merely adopts the agreement concluded by the Council, which institution alone is competent to act under Article 113 of the Treaty. Its effect is to transpose the provisions of the Agreement into the Community legal order, but it alters neither the terms nor the scope thereof. Its function is therefore merely instrumental. Five Member States were anxious to intervene in these proceedings. The Council itself did not submit any observations.

According to the case-law of the Court, it is therefore necessary to go beyond the letter of the provisions and to have regard to the spirit and the general scheme of the Agreement as a whole.

The reasoning underlying the interpretation which the Court has placed on Articles 30 and 36 of the EEC Treaty and on all the provisions which have direct effect is based on the premise that the Treaty has established a common or single market.

1. Harlequin and Simons argue that since the Agreement was signed on 22 July 1972, that is to say after the judgment of 8 June 1971 in Case 78/70 Deutsche Grammophon Gesellschaft mbH [1971] ECR 487, Article 14 of the Agreement would have been drafted in terms different to those which resemble fairly closely Article 30 of the Treaty, if the draftsmen had intended to exempt from its provisions the exercise of copyright resulting in a restriction of trade. That argument scarcely seems convincing. On the contrary, it might be argued that the negotiations in progress concerning Portugal's accession to the European Economic Community are intended in particular to extend to that country the Community arrangements concerning the free movement of goods and that to recognize the right of Harlequin and Simons to rely upon the direct effect of the relevant provisions of the Agreement would be to prejudge the outcome of negotiations in progress for Portugal's accession to the EEC.

2. The third paragraph of Article 234 of the Treaty provides as follows :

3. The right asserted by Harlequin and Simons would have to be accorded to imports into Portugal of Community products protected in that country by industrial and commercial property rights equivalent to those attaching to the products in the Community.

4. The previous decisions relied upon by Harlequin and Simons do not appear to me to be conclusive.

5. Polydor also rightly points out that the last recital in the preamble to the Agreement between the EEC and Portugal states that no provision of this Agreement may be interpreted as exempting the Contracting Parties from the obligations which are incumbent upon them under other international agreements. The international agreements on industrial and commercial property (for example, the Convention for the Protection of Industrial Property, signed in Paris in 1883 and last revised in Stockholm in 1967; the Berne Convention of 1886 for the Protection of Literary and Artistic Works) do not entail the exhaustion of rights. The international Agreement between the EEC and Portugal may not therefore be interpreted in a different manner from the international conventions for the protection of industrial and commercial property.

Consequently, it appears to me to be unnecessary to consider whether the wording of Article 14 of the Agreement (any measures having an effect equivalent to quantitative restrictions on imports shall be abolished ...) may be distinguished from that of Article 30 of the Treaty (Quantitative restrictions on imports and all measures having equivalent effect shall ... be prohibited ...) or whether an injunction prohibiting the importation and sale of the records in question in the United Kingdom constitutes a means of arbitrary discrimination or a disguised restriction on trade within the meaning of Article 23 of the Agreement.

I propose that in reply to the questions asked the Court should rule that a company importing into a Member State sound recordings lawfully put into circulation in Portugal cannot rely upon the provisions of Regulation No 2844/72 of the Council of 19 December 1972 before a court of that Member State in order to prevent the exercise of exclusive marketing rights in that Member State by the exclusive licensee of the copyrights in those recordings.

1 Translated from the French.