Deutsche Grammophon-Gesellschaft mbH v. Metro-sb-Grossmarkte GmbH & CO. KG—Case 78/70

• DOI: 10.1177/0003603X7201700305
• Date: 01 September 1972
• Published date: 01 September 1972
• Subject Matter: Article

DEUTSCHE

GRAMMOPHON.GESaLSCHAFT mbH

Y.

METRO.S

..

GROSSMARKTE

GmbH &

CO.

KG-Case 78/70

Opinion

of the Court of

Justice

of the

European

Communities.

June

8.

1971

FACTS

The Deutsche Grammophon-Gesellschaft mbH (herein-

after

called DG) is a subsidiary of Philips Gloeilampen-

Fabrieken, Eindhoven (Netherlands), and Siemens AG of

Berlin and Munich.

It

chiefly manufactures gramophone rec-

ords, which it distributes either directly or through its sub-

sidiaries established in several States of the

EEC

and of the

EFTA.

Among others, the firm of Polydor S. A. of Paris,

with branches in

Paris

and Strasbourg, is a 99.55% subsidiary

ofDG.

In

Germany, records

are

sold direct through retailers and

through two wholesale booksellers. DG sells the records to its

dealers

at

a price of 12.33 DM (plus value-added tax) and the

fixed retail price is

19.-

DM. The records are only supplied

to dealers who bind themselves by signing a written under-

taking to observe the fixed price.

In

the other

EEC

countries and in the

EFTA,

DG dis-

tributes its records by entering into licence agreements either

with its own subsidiaries or with those of N.V. Philips Phono.

graphische Industrie in Baarn

(Netherlands)-a

subsidiary

of Philips Gloeilampen-Fabrieken and Siemens AG. Clause 1

of these licence agreements states, inter alia,

that

DG grants

to the licence holder the exclusive right of making commercial

EDITOR'S

NOTE: Arecent decision by the Court of Justice of the

European Communities in a case involving phonograph records sets

forth the fullest interpretation of the bearing of the

EEC

Treaty

upon intellectual property rights that has yet appeared in the relevant

litigation. What follows is the full text of the EEC's

official

English

translation of the decision. Certain introductory passages have been

omitted.

835

836

THE

ANTITRUST

BULLETIN

use of its recordings in the

area

covered by the agreement.

DG entered into such an agreement with

its

subsidiary Poly-

dor in

Paris.

The firm of METRO-SB-Grossmarkte GmbH &Co. KG

(hereinafter called METRO) during the period from April to

the end of October 1969 purchased from DG records with the

Polydor

trade

mark. Not being bound by a licence agreement,

it

offered these records to its customers

at

aprice of 14.85DM

in May 1969 and 13.50 DM in August 1969 (plus VAT in each

case).

In

October 1969 DG discovered

that

it was not in pos-

session of a written undertaking by METRO to observe the

fixed prices. Since METRO refused to sign such an under-

taking, DG broke off business relations. METRO thenceforth

obtained supplies of Polydor records from the firm of Rosner

&Co. in

Hamburg

and offered them to its customers

at

aprice

of

11.95

DM in

January

1970 and 12.95 DM in

February

1970,

plus VAT.

These were records DG

had

pressed in Germany and sup-

plied to its subsidiary Polydor in

Paris.

Polydor had sold

some of these records to a firm in an non-Member country

which

had

re-sold some of them to Rosner &Co. The

latter

had then sold the records to METRO-SB-Grossmarkte GmbH

Hamburg, acompany sharing personal liability with METRO

under a

partnership

agreement.

DG regarded the sale of its records by the firms mentioned

as a violation of § 85 of the German Law of Copyright and

Related Rights (Gesetz tiber Urheberrecht und verwandte

Schutzrechte

)-hereinafter

called the

URG-and

an infringe-

ment of its sole marketing

right

for Germany; in

its

view this

marketing

right

was not "exhausted" within section 17 (2) 6f

the URG, since the records

had

been marketed abroad and

not on the

territory

of the

Federal

Republic. On 20th March

1970 DG obtained atemporary injunction from the Hamburg

Landgericht

under§

97 of the URG, whereby METRO was

forbidden to sell or to distribute in any other way specified

catalogue numbers of DG records bearing the

mark

"Poly-

dor",