Exclusive licenses of patent and plant breeders’ rights under EEC law after Maize Seed

• DOI: 10.1177/0003603X8302800305
• Published date: 01 September 1983
• Date: 01 September 1983
• Subject Matter: Article

The Antitrust Bulletin/Fall 1983

Exclusive licenses

of

patent

and plant breeders' rights

under EEC law after Maize Seed

BY VALENTINE KORAH*

I.

Introduction

699

The problems associated with the grant

of

exclusive licenses in

Europe differ greatly from those in the United States. The

differences arise in part from the lack

of

market integration in

Europe. The European Communities have not achieved a federa-

tion. When the Sherman Act was passed, the United States was

far more integrated than Europe was in 1958 or even in 1983.

National laws differ. Patents and other intellectual property

rights in Europe, unlike those in the United States, cover only a

single member state (except for the Benelux trademark and

registered designs, which cover three).

For

nearly two decades the

institutions

of

the European Communities have been cutting

down those elements

of

intellectual property rights that they

think might be used to delay the integration

of

the common

market.

In 1962, the Commission announced its view'that a patent

license limited to a part

of

the territory for which a patent was

Reader in English Law, University College, London; Barrister.

1J.O. 24 Dec. 1962, 139/2922, colloquially known as "the Christ-

mas Message."

©1984by Federal Legal Publications. Inc.

700 The antitrust bulletin

granted did

not

infringe article

85,2

since it was the

patent

and

not

collusion

that

restrained sales elsewhere. This was widely read as

permitting licenses limited to the area protected by a national

patent, so

that

the holder

of

counterpart patents in several

member states could divide the common market by assigning or

granting exclusive licenses under his patent rights in different

member states to different persons,' retaining the rights in a third

area

himself. Alternatively, the owner could discriminate by

invoking the

patent

rights in

the

higher-price areas to restrain the

import

or marketing

of

goods

that

had

been sold at lower prices

in other member states. The law

of

several member states pro-

vides

that

a

patent

is exhausted by a sale within the state made or

authorized by

the

holder, so

that

once the patentee or his licensee

has sold the protected article, he cannot use his

patent

rights to

restrain subsequent sales.

It

is thought

that

no

patent

law,

however, is similarly limited when the protected goods

had

been

first sold

abroad.'

The Commission also stated in the notice

of

1962

that

exclusivity was not contrary to article 85(1), since it

2Art.

85(1)

prohibits as incompatible with the common market

collusion between firms that may affect trade between member states

and has as its object or effect the prevention, restriction, or distortion

of competition within the common market. Paragraph (3) provides for

exemptions that can be

given

only by the Commission of the European

Communities, and paragraph (2) provides that agreements that infringe

the article shall be automatically void.

3The notice was expressed not to apply to "multiple parallel

licenses," so there were limits to the device, but two licenses are

probably not multiple. Contrast the

view

later adopted by the Commis-

sion, in the text accompany note 23 infra.

4The position differs for different kinds of right. International

exhaustion is not unusual in the case of trademarks. The U.K. does not

have a doctrine of exhaustion

exactly,

but there is an implied

license

to a

licensee

or purchaser to sell a protected article. See Revlon v. Cripps &

Lee,

[1980]

Fleet St. Reports 85, in relation to marks, and Betts v.

Willmott,

[1871]

L.R. 6, ch. 239, in relation to patents. Of course,

subject to art. 85, the implied license may be expressly restricted. See

also

w'R.

CORNISH,

INTELLECTUAL PROPERTY: PATENTS, COPYRIGHT,

TRADE

MARKS

AND

ALLIED

RIGHTS

199

(1981).

Maize Seed 701

would seldom affect trade between member states. Both views

were, however, modified in the light

of

the case law of the Court

of

Justice

of

the European Communities, hereafter referred to as

the

"Court"

or the "Community Court."

In Consten and Grundig v. Commission? the Court held that

although national industrial and commercial property rights are

guaranteed by article 222

of

the

Treaty,"

their exercise is limited by

the application

of

other provisions in the Treaty. The existence

of

a right may be defined as the sum of the ways in which it may be

exercised. So the distinction between its existence and exercise

cannot be drawn by logical analysis,' but only by balancing the

relative importance

of

the functions served by the intellectual

property right and the integration of the market. Consequently,

the distinction does not lead to clear predictions and the Court

gave itself a very free hand to decide the extent to which

intellectual property rights should be cut down to facilitate the

integration

of

the common market (recognizing that in 1966 the

market's legislative body had ceased to function owing to the

French boycott

of

the Council

of

Ministers). In Consten and

Grundig v. Commission, the Court decided that the absolute

territorial protection conferred by Grundig on its exclusive dis-

tributor in France did infringe article 85(1),8 and that the Com-

5(56 and 58/64),

[1966)

E.C.R. 299;

[1966)

C.M.L.R. 418;

C.M.R. para. 8046.

6"This Treaty shall in no way prejudice the rules in Member States

governing the system

of

property ownership."

7On quick reading, the Court's judgments appear to be based on

logical analysis, but it rarely states why one objective is more important

than another.

It

tends to assert its conclusions at key points in the

judgment.

8Cited in note 5 supra. At p. 342 of the E.C.R., the Court stated

that an agreement tending to restrict intrabrand competition should not

escape the prohibition of art. 85(1) merely because it might increase

interbrand competition, but went on to add that there is no need to take

account

of

the concrete effects of an agreement once it is clear that its

object is to restrict competition. "Object" is a double concept. The