IP case law Court of Justice

Judgment of 21 Sep 1999, C-44/98 (BASF)



JUDGMENT OF THE COURT (Fifth Chamber)

21 September 1999 (1)

(Free movement of goods — Measures having equivalent effect — Europeanpatent ruled void ab initio for failure to file a translation)

In Case C-44/98,

REFERENCE to the Court under Article 177 of the EC Treaty (now Article 234EC) by the Bundespatentgericht, Germany, for a preliminary ruling in theproceedings pending before that court between

BASF AG

and

Präsident des Deutschen Patentamts

on the interpretation of Articles 30 and 36 of the EC Treaty (now, afteramendment, Articles 28 EC and 30 EC),

THE COURT (Fifth Chamber),

composed of: J.-P. Puissochet, President of the Chamber, P. Jann, J.C. Moitinhode Almeida, C. Gulmann (Rapporteur) and D.A.O. Edward, Judges,

Advocate General: A. La Pergola,


Registrar: H.A. Rühl, Principal Administrator,

after considering the written observations submitted on behalf of:

—    BASF AG, by Kornelia Zimmermann, Sachbearbeiter,

—    the German Government, by Ernst Röder, Ministerialrat at the FederalMinistry of the Economy, and Claus-Dieter Quassowski, Regierungsdirektorat the same Ministry, acting as Agents,

—    the Belgian Government, by Jan Devadder, Director of Administration inthe Legal Service of the Ministry of Foreign Affairs, acting as Agent,

—    the Danish Government, by Jørgen Molde, Legal Adviser, Head ofDirectorate at the Ministry of Foreign Affairs, acting as Agent,

—    the Greek Government, by Galateia Alexaki, Adviser in the SpecialCommunity Legal Service of the Ministry of Foreign Affairs, and VasileiosKyriazopoulos, Legal Agent at the State Law Council, acting as Agents,

—    the Spanish Government, by Monica Lopez-Monis Gallego, Abogado delEstado, acting as Agent,

—    the French Government, by Kareen Rispal-Bellanger, Head of theSubdirectorate for International Economic Law and Community Law at theLegal Affairs Directorate of the Ministry of Foreign Affairs, and Anne deBourgoing, Chargé de Mission in the same directorate, acting as Agents,

—    the Irish Government, by Michael A. Buckley, Chief State Solicitor, actingas Agent,

—    the Netherlands Government, by Marc Fierstra, Deputy Legal Adviser atthe Ministry of Foreign Affairs, acting as Agent,

—    the Austrian Government, by Christine Stix-Hackl, Gesandte at the FederalMinistry of the Economy, acting as Agent,

—    the Portuguese Government, by Luis Fernandes, Director of the LegalService of the Directorate-General for the European Communities of theMinistry of Foreign Affairs, and Paulo Borges, Lawyer in the sameDirectorate-General, acting as Agents,

—    the Finnish Government, by Tuula Pynnä, Legal Adviser at the Ministry ofForeign Affairs, acting as Agent,

—    the Swedish Government, by Erik Brattgård, Departementsråd in theExternal Trade Department of the Ministry of Foreign Affairs, acting asAgent,

—    the United Kingdom Government, by Dawn Cooper, of the TreasurySolicitor's Department, acting as Agent, and Daniel Alexander, Barrister,

—    the Commission of the European Communities, by Richard B. Wainwright,Principal Legal Adviser, acting as Agent, assisted by Bertrand Wägenbaur,Rechtsanwalt, Hamburg,

having regard to the Report for the Hearing,

after hearing the oral observations of BASF AG, represented by Winfried Tilman,Rechtsanwalt, Düsseldorf, Uwe Fitzner, Rechtsanwalt, Rathingen, and KorneliaZimmermann; of the Danish Government, represented by Jørgen Molde; of theGreek Government, represented by Vasileios Kyriazopoulos; of the SpanishGovernment, represented by Monica Lopez-Monis Gallego; of the FrenchGovernment, represented by Jean-François Dobelle, Assistant Director in the LegalAffairs Directorate of the Ministry of Foreign Affairs, acting as Agent, and Annede Bourgoing; of the Irish Government, represented by David Barniville, BL; of theItalian Government, represented by Francesca Quadri, Avvocato dello Stato, actingas Agent; of the Finnish Government, represented by Tuula Pynnä; of the UnitedKingdom Government, represented by Daniel Alexander; and of the Commission,represented by Bertrand Wägenbaur, at the hearing on 11 February 1999,

after hearing the Opinion of the Advocate General at the sitting on 22 April 1999,

gives the following

Judgment

1.     By order of 29 January 1998, received at the Court on 20 February 1998, theBundespatentgericht (Federal Patents Court) referred to the Court for apreliminary ruling under Article 177 of the EC Treaty (now Article 234 EC) aquestion on the interpretation of Articles 30 and 36 of the EC Treaty (now, afteramendment, Articles 28 EC and 30 EC).

2.     The question has been raised in proceedings between BASF AG (hereinafter'BASF‘) and the Präsident des Deutschen Patentamts (President of the GermanPatent Office) concerning the latter's ruling that a European patent belonging toBASF was void in Germany on the ground that its proprietor had not filed aGerman translation of the patent specification.

3.     According to Articles 1 and 2(1) thereof, the Convention on the Grant of EuropeanPatents (hereinafter 'the Convention‘) establishes a system of law, common to theContracting States (the Member States of the European Union, the SwissConfederation, the Principality of Liechstenstein, the Principality of Monaco andthe Republic of Cyprus), for the grant of patents for invention, called 'Europeanpatents‘. Those patents are granted by the European Patent Office, the officiallanguages of which are English, French and German. Applications for a Europeanpatent must be lodged in one of those languages.

4.     Application may be made for the grant of a European patent covering all theContracting States, a number of them or only one of them. From the date ofpublication of the mention of its grant, a European patent confers on its proprietor,in each of the Contracting States for which it was granted, the same rights as thosewhich would be conferred on him by a national patent granted in that State.

5.     Article 14(7) of the Convention provides that the specifications of Europeanpatents are to be published in the language of the proceedings, that is to say thelanguage in which the application for a patent is lodged. The claims of Europeanpatents are translated into the other official languages of the European PatentOffice.

6.     Article 65 of the Convention allows the Contracting States to prescribe that aEuropean patent shall be deemed to be void ab initio in the State in question if,where the text of the European patent for that State is not drawn up in that State'sofficial language, the proprietor of the patent does not file a translation of that textin that language.

7.     The Federal Republic of Germany has exercised that power and introduced intothe Gesetz über internationale Patentübereinkommen (Law on International PatentConventions, BGBl 1991 II, p. 1354, hereinafter 'the IntPatÜG‘) an Article II(3),which provides:

'1.    If the text in which the European Patent Office intends to grant a Europeanpatent for the Federal Republic of Germany is not drawn up in German,the applicant for or proprietor of the patent shall supply to the GermanPatent Office within three months of the publication of the mention of thegrant of the European patent in the European Patent Bulletin a Germantranslation of the patent specification and shall pay a fee in accordance withthe scale of fees.

    ...

2.    If the translation is not filed within the prescribed period or in a formsuitable for publication or if the fee is not paid within the prescribed period,the European patent shall be deemed to be void ab initio in the FederalRepublic of Germany.

...‘.

8.     BASF is the proprietor of a European patent concerning an 'automotive paintsealer composition‘, which was transferred to it, by entry in the German registeron 26 August 1997, by its former proprietor, BASF Corporation, a companyestablished in the United States of America. Mention of the grant of the patentdrafted in English and with effect inter alia in the Federal Republic of Germanywas published on 24 July 1996 in the European Patent Bulletin.

9.     By order of 5 May 1997, the German Patent Office found, under Article II(3) ofthe IntPatÜG, that the patent in question was to be deemed void ab initio inGermany, since the former proprietor of the patent had not filed a Germantranslation of the patent specification within the prescribed period.

10.     On 27 May 1997, the former proprietor of the patent brought an action forannulment of that decision. That action was taken over by BASF. In support ofits action BASF claims that Article II(3) of the IntPatÜG is contrary to Articles 30and 36 of the Treaty in so far as the penalty for failing to file a translation of aEuropean patent within the period prescribed is that the European patent becomesvoid ab initio in Germany.

11.     In those circumstances, the Bundespatentgericht decided to stay proceedings andto refer the following question to the Court for a preliminary ruling:

'Is it compatible with the principles of the free movement of goods (Articles 30and 36 of the EC Treaty) for a patent granted by the European Patent Office witheffect in a Member State which is drafted in a language other than the officiallanguage of that Member State to be deemed void ab initio if the patent holderdoes not file with the patent office of the Member State in question a translationof the patent specification in the official language of that Member State withinthree months of the publication in the European Patent Bulletin of the mention ofthe grant of the patent?‘

12.     BASF contends in particular that the costs of translating patent specifications arevery high, so that many patent holders are forced to be selective in filingtranslations and therefore to forgo patent protection in some Member States. Therequirement at issue thus prevents those patent holders from benefiting from theeffects of patents granted in all the Member States of the Community. Accordingto BASF, this restriction results in the division of the internal market, with a patentbeing protected in some Member States (the 'protected zone‘) but not in others(the 'free zone‘). The requirement in question therefore constitutes an obstacleto the free movement of goods contrary to Article 30 of the Treaty, which is notjustified under Article 36.

13.     This division of the market into protected zones and free zones has, according toBASF, two consequences. First, unlike the patent holder, his licensees andcompetitors from the free zone or from third countries, competitors from theprotected zone cannot compete in the free zone on the market for the product inquestion. They would commit an infringement of the patent if they exported thepatented product from the protected zone into the free zone. Second, the patentholder may be forced to refrain from marketing the invention in the free zone soas not to undermine the higher prices in the protected zone through parallel re-imports and would thereby be excluded in practice from competition in the freezone.

14.     All the intervening governments and the Commission, however, consider thatlegislation requiring patent holders to file a translation of the specifications of theirpatents in the official language of the Member State concerned is not contrary tothe Treaty since in their view it does not constitute a measure having an effectequivalent to a quantitative restriction on imports within the meaning of Article 30of the Treaty or at any rate it is justified under Article 36 of the Treaty.

15.     The Court finds that the question to be examined first of all is whether legislation,such as that in question in the main proceedings, requiring patent holders to filea translation of the specifications of their patents in the official language of theMember State concerned, constitutes a measure having an effect equivalent to aquantitative restriction on imports within the meaning of Article 30 of the Treaty.

16.     It has been held that all trading rules enacted by Member States which are capableof hindering, directly or indirectly, actually or potentially, intra-Community tradeare to be considered as measures having an effect equivalent to quantitativerestrictions on imports (see Case 8/74 Dassonville [1974] ECR 837, paragraph 5). However, the restrictive effects which a piece of national legislation has on the freemovement of goods may be too uncertain and too indirect for the obligation whichthe legislation enacts to be regarded as being capable of hindering trade betweenMember States (see, in particular, the judgment in Case C-266/96 Corsica FerriesFrance [1998] ECR I-3949, paragraph 31).

17.     In assessing whether legislation such as that in question in the main proceedingsimpedes intra-Community trade within the meaning of that case-law, it has to beassumed, according to BASF, that owing to the high costs of translation aconsiderable number of patent holders decide not to apply for protection of theirinventions in all the Member States of the Union but choose protection in onlysome of those States, thus dividing the internal market into 'protected zones‘ and'free zones‘, with the consequences mentioned in paragraph 13 above.

18.     Here, it has to be observed that one of the choices facing an inventor whenplanning to obtain protection for his invention by the grant of a patent concerns theterritorial scope of the desired protection, limited to a single Member State orcovering several Member States. That choice is in principle the same, irrespective

of whether the inventor applies for a European patent or uses the systems for thegrant of national patents at present in force in the Member States. The choice willbe made after an overall assessment of the advantages and drawbacks of eachoption, which includes complex economic evaluations of the commercial interest ofhaving protection in the various States compared with the sum of the costs entailedin obtaining the grant of a patent in those States, including translation costs.

19.     Again, according to BASF, the obstacle in question arises from the fact that theinvention is not protected in all the Member States of the Union. It says that thereis an obstacle to intra-Community trade since that market is divided into twoseparate markets, one on which the product is protected and another on which itis not, that is to say a situation in which the inventor has no complete protectionagainst competition from other economic operators who, in the Member States inwhich it is not protected by the grant of a patent, are entitled to produce andmarket the product in question.

20.     Whilst it must be accepted that there will probably be differences in movements ofgoods depending on whether inventions are protected in all the Member States oronly in some of them, it still does not follow that such a consequence of the divisionof the market must be characterised as an obstacle within the meaning of Article30 of the Treaty. The repercussions on intra-Community trade of any competitionon the non-protected markets will depend above all on the actual, unforeseeabledecisions taken by each of the operators concerned in the light of the economicconditions existing on the various markets.

21.     In those circumstances, it must be held that, even supposing that in somecircumstances the division of the internal market may have restrictive effects on thefree movement of goods, those repercussions are too uncertain and too indirect tobe considered to be an obstacle within the meaning of Article 30 of the Treaty.

22.     The answer to be given to the question raised must therefore be that Article 30 ofthe Treaty does not preclude the application of provisions such as Article II(3) ofthe IntPatÜG, according to which a patent granted by the European Patent Officewith effect in a Member State which is drafted in a language other than the officiallanguage of that Member State is to be deemed void ab initio if the patent holderdoes not file with the patent office of the Member State in question a translationof the patent specification in the official language of that Member State withinthree months of the publication in the European Patent Bulletin of the mention ofthe grant of the patent.

Costs

23.     The costs incurred by the German, Belgian, Danish, Greek, Spanish, French, Irish,Italian, Netherlands, Austrian, Portuguese, Finnish, Swedish and United KingdomGovernments and by the Commission, which have submitted observations to theCourt, are not recoverable. Since these proceedings are, for the parties to the mainproceedings, a step in the proceedings pending before the national court, thedecision on costs is a matter for that court.

On those grounds,

THE COURT (Fifth Chamber),

in answer to the question referred to it by the Bundespatentgericht by order of 29January 1998, hereby rules:

Article 30 of the EC Treaty (now, after amendment, Article 28 EC) does notpreclude the application of provisions such as Article II(3) of the Gesetz überinternationale Patentübereinkommen, according to which a patent granted by theEuropean Patent Office with effect in a Member State which is drafted in alanguage other than the official language of that Member State is to be deemedvoid ab initio if the patent holder does not file with the patent office of the MemberState in question a translation of the patent specification in the official languageof that Member State within three months of the publication in the EuropeanPatent Bulletin of the mention of the grant of the patent.

PuissochetJannMoitinho de Almeida

GulmannEdward

Delivered in open court in Luxembourg on 21 September 1999.

R. Grass J.-P. Puissochet

RegistrarPresident of the Fifth Chamber

1: Language of the case: German.


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