IP case law Court of Justice

Judgment of 5 Dec 1996, C-267/95 (Merck & Co)



Judgment of the Court of 5 December 1996. - Merck & Co. Inc., Merck Sharp & Dohme Ltd and Merck Sharp & Dohme International Services BV v Primecrown Ltd, Ketan Himatlal Mehta, Bharat Himatlal Mehta and Necessity Supplies Ltd and Beecham Group plc v Europharm of Worthing Ltd. - References for a preliminary ruling: High Court of Justice, Chancery Division - United Kingdom. - Act of Accession of Spain and Portugal - Interpretation of Articles 47 and 209 - End of transitional period - Articles 30 and 36 of the EC Treaty - Parallel imports of unpatentable pharmaceuticals. - Joined cases C-267/95 and C-268/95.

European Court reports 1996 Page I-06285


Summary
Parties
Grounds
Decision on costs
Operative part

Keywords

1 Accession of new Member States to the Communities - Spain - Portugal - Free movement of goods - Industrial and commercial property - Patent rights - Pharmaceutical products - Right of a holder of a patent for a pharmaceutical product to prevent during a transitional period products put on the market in Spain and Portugal by himself or with his consent from being marketed and imported - Dates on which the respective transitional periods expired

(1985 Act of Accession, Arts 47 and 209)

2 Free movement of goods - Industrial and commercial property - Patent rights - Protection - Limits - Principles laid down by the judgment in Case 187/80 Merck v Stephar - Pharmaceutical product covered by a patent in a Member State marketed by the patent holder for the first time in another Member State after that State's accession to the Communities but before it became patentable in that State - Grant to the holder, by the legislation of the Member State which issued the patent, of the right to oppose importation of that product into that State by a third party - Not permissible - Justification based on the patent holder's legal obligation to market the product in the Member State of exportation - Permissible - Justification based on an ethical obligation to supply the market of that State or on price controls imposed by that State - Not permissible

(EC Treaty, Arts 30 and 36)

Summary

3 The transitional periods provided for in Articles 47 and 209 of the Act concerning the Conditions of Accession of the Kingdom of Spain and the Portuguese Republic and the Adjustments of the Treaties, according to which the holder of a patent for a pharmaceutical product may, until the end of the third year after that type of product has become patentable in those new Member States, invoke the rights granted by that patent in order to prevent the import and marketing of pharmaceutical products put on the market in Spain or Portugal by himself or with his consent, expired on 6 October 1995 in the case of the Kingdom of Spain and on 31 December 1994 in the case of the Portuguese Republic.

Because they introduce a derogation from the principle of free movement of goods, those articles are to be interpreted strictly, which, in the present case, requires the transitional periods to expire as early as possible, that is to say exactly three years after the actual introduction of patentability and not three years after the end of the calendar year in which this occurred. As it is, pharmaceutical products became patentable on 7 October 1992 in Spain and on 1 January 1992 in Portugal.

4 Articles 30 and 36 of the Treaty preclude application of national legislation which grants the holder of a patent for a pharmaceutical product the right to oppose importation by a third party of that product from another Member State in circumstances where the holder first put the product on the market in that State after its accession to the European Community but before the product could be protected by a patent in that State, unless the holder of the patent can prove that he is under a genuine, existing legal obligation to market the product in that Member State.

According to the judgment in Case 187/80 Merck v Stephar, the substance of a patent right lies essentially in according the inventor an exclusive right to put the product on the market for the first time. Neither the reasoning of that judgment nor the principles which it affirms as regards the parallel importation of patented products have been called in question by later legislative developments entailing generalized patentability of pharmaceutical products at national level and enhanced protection under Community law for holders of patents for such products. That right of the inventor, by allowing him a monopoly in exploiting his product, enables him to obtain the reward for his creative effort without, however, guaranteeing such reward in all circumstances. It is for the holder of the patent to decide, in the light of all the circumstances, under what conditions he will market his product and to decide whether or not to market it in a Member State in which there is no protection under the law for the product in question, but once he makes his choice he must then accept the consequences of that choice as regards free movement of the product within the common market, this being a fundamental principle forming part of the legal and economic circumstances which the holder of the patent must take into account in determining how to exercise his exclusive right.

It is only where a patentee is legally bound under either national law or Community law to market his products in a Member State that he cannot be deemed, within the meaning of the ruling in Merck, to have given his consent to the marketing of the products concerned. He is therefore entitled to oppose importation and marketing of those products in the State where they are protected.

On the other hand, such a derogation from the principle of free movement of goods cannot be justified by the fact that the holder of the patent considered himself bound by an ethical obligation to satisfy demand for his product in a Member State even though pharmaceutical products are not patentable there, because such an obligation may be difficult to apprehend and distinguish from commercial considerations. Nor can it be justified by the fact that the patent holder could not decide freely on the marketing price of his product owing to price controls imposed by the public authorities, because the distortions of competition which such controls might cause in trade between Member States must be resolved through measures adopted by the Community institutions and not through unilateral national measures incompatible with the rules on the free movement of goods.

Parties

In Joined Cases C-267/95 and C-268/95,

REFERENCES to the Court under Article 177 of the EC Treaty by the High Court of Justice of England and Wales, Chancery Division, Patents Court, for a preliminary ruling in the proceedings pending before that court between

Merck & Co. Inc., Merck Sharp & Dohme Ltd, Merck Sharp & Dohme International Services BV

and

Primecrown Ltd, Ketan Himatlal Mehta, Bharat Himatlal Mehta, Necessity Supplies Ltd,

and between

Beecham Group plc

and

Europharm of Worthing Ltd,

on the interpretation of Article 47 and Article 209 of the Act concerning the Conditions of Accession of the Kingdom of Spain and the Portuguese Republic and the Adjustments to the Treaties (OJ 1985 L 302, p. 23), and of Articles 30 and 36 of the EC Treaty,

THE COURT,

composed of: G.C. Rodr


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