Opinion of Mr Advocate General Van Gerven

Mr President,

Members of the Court,

1. The Court is asked to rule in these cases on the question whether various provisions of the Italian and British legislation on compulsory licences are compatible with Articles 30 and 36 of the EEC Treaty.

Background

2. For the legal context, the course of the procedure and the pleas and arguments of the parties and interveners, I refer to the Reports for the Hearing. However, I would like to focus particular attention on the following.

3. The Commission's position in these cases accords with the provisions of the Community Patent Convention. As regards the grant of compulsory licences under a Community patent, Article 46 of the Convention provides that:

The contested provisions fall under the prohibition of Article 30 of the EEC Treaty

4. I agree with the Commission that the contested provisions constitute measures having equivalent effect to quantitative restrictions on imports in so far as they provide for the grant of a compulsory licence when domestic demand is not, or is not sufficiently, satisfied by products manufactured in the national territory. Such provisions are discriminatory against products imported from other Member States because importers are treated less favourably than producers established within the territory. Support for that view is to be found in the case-law of the Court of Justice, in particular the judgment in the Allen & Hanburys case.

5. It is plain from the Court's answer to the questions referred to it in Allen & Hanburys that it regarded those provisions as discriminatory against imported products and therefore held that they were in any event prohibited by Article 30 of the EEC Treaty, so much so that it barely considered it necessary to give reasons for that view. On the contrary in its answer to the first question it directly examined whether those discriminatory provisions could be justified on the basis of Article 36 of the EEC Treaty. It concluded (in paragraph 22):

6. There are obvious differences between the provisions at issue in these cases and the provisions considered by the Court in Allen & Hanburys. That case concerned licences of right which were available to anybody provided that certain conditions were met, including in some cases the obligation to manufacture in the national territory; these cases, on the other hand, are concerned with compulsory licences which, where domestic production of the protected product is insufficient, may be granted to undertakings prepared to manufacture the product in the Member State in question. In Allen & Hanburys the national provisions were detrimental to undertakings which wished to obtain a licence to import the patented product and to undertakings infringing the patent by importing products from abroad; the present cases concern national provisions that are detrimental to patent proprietors holding parallel patents in various Member States which export the product from the Member State in which they manufacture it to the Member State in question.

7. In Allen & Hanburys the Court made it clear that national provisions which are less favourable for importers of products in order to promote national production are incompatible with Articles 30 and 36 of the EEC Treaty. In this case too, as Italy and the United Kingdom concede, the provisions in question are directed to encouraging undertakings (in this case the patent proprietor himself) to manufacture, or allow the manufacture of, the product protected by the patent in the territory of the Member State adopting the rule rather than importing it from other Member States so that the Member State concerned derives from the grant of the patent the maximum benefit in terms of investment and employment.

Rebuttal of the defence arguments

1. The argument that the contested provisions are solely a matter for the Member States

8. Italy and the United Kingdom, supported by Spain and Portugal, argue that the rules on the grant of compulsory licences are within the exclusive competence of the Member States. Consequently such provisions do not fall under the prohibition of Article 30 of the EEC Treaty.

9. That argument is based on the premiss that a rule which falls within the scope of Article 222 of the EEC Treaty automatically cannot be declared incompatible with the provisions on the free movement of goods. However, as will become apparent, that supposition is erroneous.

2. The argument that the contested rules do not have the effect of restricting imports and are scarcely applied

10. Italy and the United Kingdom, supported by Spain and Portugal, submit that the grant of a compulsory licence does not exclude the importation of the product protected by the patent. Italy adds that the only effect of the measure is that the patent proprietor loses his exclusive rights on the national market and must face competition there from the products manufactured by the compulsory licensee.

11. The foregoing considerations also serve to counter the argument put forward by the United Kingdom, supported by Spain, that compulsory licences are granted only very seldom. I would first point out generally that the fact that a national rule is only seldom applied in practice is not sufficient, in the Court's view, to negate the infringement of Community law. But even if compulsory licences are not actually granted or are seldom granted, the fact remains, as pointed out above, that national rules envisaging the possibility of compulsory licences may obstruct trade in goods between the Member States in so far as they may prompt the patent proprietor himself to set up production facilities in the Member State applying those rules or else to grant a licence to a third party on terms which the patent holder would not have accepted in the absence of those rules.

3. The argument that the contested rules are justified pursuant to Article 36 of the EEC Treaty

12. The United Kingdom submits, in the event that the Court should consider that the British rule falls within the scope of Article 30 of the EEC Treaty, that the rule is justified on grounds of the protection of industrial and commercial property.

4. The argument that the Commission's position would not benefit the free movement of goods

13. Italy, supported by Spain, points out that the Commission's contentions are not directed to ensuring the free movement of goods within the common market. According to Italy, they rather aim at protecting the rights of the patent proprietor. Spain adds that the contested rules promote competition between imported products and products manufactured on the national territory by the compulsory licensee. Such competition is in the interests of consumers whose protection is an imperative requirement justifying a restriction on the free movement of goods.

5. The argument that the contested rules are in accordance with the Paris Convention

14. According to Italy the contested provisions are consistent with the Paris Convention, in particular with Article 5(A)(2) which provides:

6. The argument that the Commission's position is at variance with the Community Patent Convention

15. Italy and the Untied Kingdom, supported by Portugal and Spain, rely on the Community Patent Convention in order to refute the Commission's objections. I discern two arguments in this plea.

16. The second argument, primarily expounded by the United Kingdom, lays emphasis on the major differences between the national rules on compulsory licences, whose harmonization is envisaged by the Community Patent Convention. Without such prior harmonization, the object pursued by the Commission cannot be achieved and initiating a number of proceedings under Article 169 of the EEC Treaty will only create new disparities.

Conclusion

Having regard to the foregoing, I propose that the Court:

In Case C-235/89:

1. Uphold the Commission's application;

2. Order the Italian Republic to bear the Commission's costs;

3. Leave the Kingdom of Spain, the United Kingdom and the Portuguese Republic to bear their own costs;

In Case C-30/90:

1. Uphold the Commission's application;

2. Order the United Kingdom to bear the Commission's costs;

3. Leave the Kingdom of Spain to bear its own costs.

1 Original language: Dutch.

2 Gazzetta Ufficiale della Repubblica Italiana (GURI) No 189 of 14 August 1939.

3 GURI No 193 of 31 July 1968.

4 GURI No 109 of 26 April 1976.

5 Convention for the European patent for the common market, annexed to the Agreement relating to Community patents, done at Luxembourg on 15 December 1989 (OJ 1989 L 401, p. 1). For the sake of brevity I shall refer in my Opinion only to the provisions of this Convention and not to the identical provisions, which are numbered differendy, of the Convention for the European patent for the common market (Community Patent Convention) signed at Luxembourg on 15 December 1975 (OJ 1976 L 17, p. 1). When the abovementioned Agreement of 15 December 1989 comes into force, it will replace the latter Convention that in fact never came into force for lack of ratification by all the Member States.

6 European patents granted for a Contracting Sute are patents granted on the basis of one single patent application for all or some Contracting States or for one of those States pursuant to the Convention on the Grant of European Patents signed in Munich on 5 October 1973 which came into force on 7 October 1977.

7 Sec OJ 1989 L 401, p. 58.

8 Judgment in Case 434/85 Allen & Hanburys v Generics [1988] ECR 1245.

9 Judgment in Case 113/80 Commission v Ireland [1981] ECR 1625.

10 Sec in particular page 8 of the note of the Ministry of Industry, Trade and Craft Trades annexed to the Italian Permanent Representative's answer to the Commission's letter of formal notice.

11 See in particular point 7.2 of the defence.

12 Judgment in Case 238/87 Volvo v Veng [1988] ECR 6211.

13 Judgment in Case 15/74 Centra/arm v Sterling Drug [1974] ECR 1147.

14 Paragraph 12 of the judgment in Case 35/87 Theţford v Fiamma [1988] ECR 3585. The United Kingdom refers to two other judgments: Case 144/81 Keurkoop v Nancy Kern Gifts [1982] ECR 2853 and Case 341/87 EMI Electrola v Patricia lm-und Export [1989] ECR 79.

15 Judgment of 21 March 1991 in Case C-305/89 Italy v Commission [1991] ECR I-1603.

16 Judgment in Case 182/83 Fearon v Irish Land Commission [1984] ECR 3677.

17 See the judgment of 4 October 1991 in Case C-246/89 Commission v United Kingdom [1991] ECR I-4585, paragraph 12, in conjunction with the Member States' powers regarding registration of ships. See also the judgments in Case 57/86 Greece v Commission [1988] ECR 2855, paragraph 9, and in Case 127/87 Commission v Greece [1988] ECR 3333, paragraph 7, in conjunction with the Member States' powers in monetary matters.

18 Judgment in Case 8/74 Procureur du Roi v Dassonville [1974] ECR 837.

19 Judgment in Case 249/81 Commission v Ireland [1982] ECR 4005.

20 Judgment in Case 166/82 Commission v Italy [1984] ECR 459, paragraph 24.

21 Judgment in Case C-10/89 CNL-SUCAL v HAC [1990] ECR I-3711.

22 Cited above, footnote 8.

23 Judgment in Case 187/80 Merck v Stephar and Exler [1981] ECR 2063.

24 Judgment in Case 19/84 Pharmon v Hoechst [1985] ECR 2281.

25 Cited above, footnote 12.

26 Since it is noi in issue here, I can leave open the question whether the grant of a compulsory licence may be justified on one of the other grounds mentioned in the first sentence of Article 36 of the EEC Treaty, for example for reasons of national defence pursuant to the protection of public security under Article 36 (in conjunction with Article 223) of the EEC Treaty. In this connection I would point out that the second sentence of Article 46 of the Community Patent Convention provides that the rule in the first sentence of Article 46 does not apply to compulsory licences granted in the public interest

27 Paris Convention for the protection of industrial property of 20 March 1883, as revised at Brussels on 14 December 1900, at Washington on 2 June 1911, at The Hague on 6 November 1925, at London on 2 June 1934, at Lisbon on 31 October 1958 and at Stockholm on 14 July 1967 (United Nations Treaty Series, Volume 828, No 11851, p. 306).

28 Judgment in Case 121/85 Conegate v H M Customs & Excise [19861 ECR 1007. See also the judgments of the Court of First Instance of 10 July 1991 in Cases T-69/89 Radio Telefis Eireann v Commission [1991] ECR II-485, paragraphs 102, 103 and 104, T-70/89 BBC v Commission [1991] ECR II-535, paragraphs 76, 77 and 78, and T-76/89 Independent Television Publications v Commission [1991] ECR II-575, paragraphs 75, 76 and 77.

29 As regards the Community Patent Convention of 1975, also signed in Luxembourg, see the similar provision in Article 93 of that Convention.

30 Judgment in Case C-200/88 Commission y Grtece [1990] I-4299, paragraph 9.