European Intellectual Property Law

Terence Prime

• Publisher: Routledge
• Year: 2017
• ISBN:
  9781351812368
• Edition: 1
• Topic: Law
• Subtopic: Property Law
• Index: Law

This title was first published in 2000: European Intellectual Property is a survey and discussion of the impact of the economic principles of the European Community, upon the legal regime for the protection of intellectual property rights within the Community and the laws of its Member States. Beginning with a discussion of the issues arising from the treaty itself and the efforts of both the European Court of Justice and the European Commission through the liberalization of licensing procedures to meet these specific issues, the survey goes on to consider the attempts to achieve harmonization of national laws in the fields of trade marks, patents, industrial design and the wider efforts to create Community wide intellectual property rights.

1
Introduction

The experience of the Western world of the impact of its intellectual property laws since the end of the second world war has been an interesting one. The last half century has been an era in which trade in the world has been made progressively freer. The inevitable result has been that it has become increasingly international. This process has been largely deliberate since there has been a firm belief that increasing internationalisation of trade produces international interdependence which makes the consequences of large scale conflict so economically disruptive as to be politically unacceptable. With internationalisation of trade there has been a desire both by politicians and market leaders¹ that restrictions on the movement of goods and capital should be reduced and bypassed so that profitable commercial activity should be maximised as much as possible.

At a political level these developments have shown themselves at two international levels. On the one hand there has been a general international movement to the reduction of barriers on a world scale through the structure put in place by the General Agreement on Tariffs and Trade. On the other at a transnational level less than totally international there has been a move to regional free trade areas with or without the additional ideal of increased political integration. Of this latter system the structure of the European Community has been the prime example. In both cases an interesting phenomenon has been discovered. As traditional political barriers to freedom of trade represented by tariffs and restrictions on the flow of capital have been reduced it has thrown into sharp relief the way in which intellectual property rights, being essential national in character, can be the instrument by which intellectual property right owners can control markets to increase their profits and restrict competition and the full free flow of goods. This has confronted mankind with an undoubted problem. On the one hand there has been the need to protect intellectual property rights since these have been an essential ingredient adding to the increase of goods and services to be traded. On the other hand there is the need to prevent these rights being used in anticompetitive ways since these created barriers to the increase in trade which is sought.

On the international scale this has, indeed, evidenced itself quite clearly with the insistence by the United States that those aspects of intellectual property rights that are trade related be included in the Uruguay round of negotiations of the General Agreement on Tariffs and Trade leading to the TRIPS agreement.² Central to that agreement is not merely a simple insistence that all countries properly protect intellectual property rights but also clear provisions to allow national governments to take steps to prevent intellectual property right owners from so using their rights as to be guilty of unfair competition and restrictive practices.³ The conclusion that uncontrolled intellectual property rights exploited by right-holders without hindrance represents an unacceptable restriction on freedom of trade and a proper competitive environment is thus the basis of the whole TRIPS agreement.

This conflict between essential principles of modern commercial life has also had to be met by the European Community. Confronted with national rights which clearly restricted the creation of the competitive free trade area on which the economic and political union on which the new Europe was to be based, European institutions were obliged to meet the challenge head on. At a political level this book is an account of the way in which both the European Court and the European Commission have met the challenge. It is, however, fundamentally a law book. It cannot be otherwise since the combined effect of the efforts of the two principal instruments creating the new Europe has been to completely rewrite national intellectual property laws in a process which still continues. No area of law has been so fundamentally recreated by the instruments of the new Europe as its intellectual property laws.

The story begins with the European Court and its need to develop doctrine to make sense and balance of the various provisions of the Treaty of Rome itself, and it is here that the story begins.

Notes

1 Market leaders have certainly played an important role. Thus the international bond market under which capital freely moves internationally was created by the vision of bankers and the ingenuity of their legal advisers. For an account of the subject see T. Prime ‘International Bonds and Certificates of Deposit’ (Butterworths, London 1990).

2 For accounts of the TRIPS agreement and the negotiation which led to it see inter alia., The GATT Uruguay Round: A Negotiating History (1986–1992)’ Terence P. Stewart (ed.), vols 1–111 (Kluwer, Devanter, Boston, 1993); Michael Blakeney, Trade Related Aspects of Intellectual Property Rights: A Concise Guide to the TRIPS Agreement’ (Sweet & Maxwell, London, 1996); and Daniel Gervais, The Trips Agreement – Drafting History and Analysis’ (Sweet & Maxwell, London, 1998).

3 Section 8 of the Agreement (Art. 40).

2
Intellectual Property and the EC Treaty – the Jurisprudence of the European Court

1. Introduction

Intellectual property is a comprehensive term used to cover a network of legal rights protecting intangible assets which are often of great economic significance. The rights created are property rights in the sense that they are effective against any third party which acts contrary to them, even if he acts in ignorance of their existence. The range of assets covered by these rights are diverse and extensive. They are well summarised in the opening words of the foremost legal text book on the subject;

’Patents give temporary protection to technological inventions and design rights to the appearance of mass produced goods, copyright give longer lasting rights in, for instance, literary, artistic and musical creations; trade marks are protected against imitation so long at least as they continue to be employed in trade. ‘¹

From this it will be seen that one form of intellectual property (trade marks) can continue indefinitely, whereas the others exist for only a limited duration of varying periods, eg 15 years in the case of unregistered design right and the life of the creator plus seventy years in the case of copyright. Some forms of protection arise automatically (copyright, unregistered design right), whereas others require registration if protection is to be achieved (trade marks, patents, registered design right). In the case of rights obtained by registration the protection given is in principle that of an exclusive right to use the material registered; in the case of rights not requiring registration to secure protection the right achieved is that of not having the work copied or adapted without consent.

It is therefore apparent that there can be little doubting the importance of intellectual property in the modem world. A successful patented invention can make a fortune for the inventor, or a business empire for the commercial operation created to exploit it. The vast western entertainment industry is dependent for its importance on the protection given to books, performances, records and films by the law of copyright, right in performance, and recording right. Western industry is increasingly aware of the significance to its success of its trade secrets, industrial designs, and confidential internal information. Finally, and by no means of least importance, in an image-conscious and advertising-led consumer society the importance of trade marks as the primary means by which brands names and image may be protected gallops on apace, a development emphasised by the now general practice of putting a value on the brand names of a business and including the values in the business balance sheet.² Indeed often the value of the brands constitute the major assets of the business. Thus, the value of the large US brands Marlboro and Coca-Cola have been estimated at nearly 40 billion and 34 billion US dollars respectively, and the largest British brand Guinness at nearly 2.75 billion US dollars.

A. What is Europe?

Before exploring the impact of Europe on intellectual property it is desirable to specify what it is that we mean by Europe in this context. There are in fact two European trading areas which need to be differentiated, but which interconnect because they have established trading relations between themselves and whose complex relationships have impacted on intellectual property law. The first is the European Community (EC) created under the umbrella of the Treaty of Rome aimed at ever closed political and economic union and dedicated to the principles of both free movement of goods and firm controls over anti-competitive practices within its borders. The UK is, of course, a member as are Greece, Sweden, Denmark, Austria, Finland, Republic of Ireland, Spain, Portugal, France, Germany, Italy and the Benelux Countries. The second is the European Economic Area (EEA) constituted in 1994 to establish free trade obligations between the EC and the rump of the former European Free Trade Area members of Iceland, Liechtenstein and Norway. The Europe with which this book is concerned is the European Community except for the specific discussion of the problem of parallel imports.³ This is because it has uniformly been the initiatives of the European Community which have changed the shape of the intellectual property law of its member states, and promoted the transnational arrangements which are transforming the picture of intellectual property protection yet further.

B. The EC and Intellectual Property Rights

Given the importance of the intellectual property rights framework to the national economies of the Member States of the European Community created by the Treaty of Rome in 1957, the common market has shown itself to be but poorly designed to handle the consequences of such rights within the community-wide commercial arrangements which it sought to establish. In particular, it has found that the existence of such rights as essentially national rights created by national legislation has an entirely natural tendency to fragment and divide markets on a purely national basis, to the detriment of the principles which caused the creation of the Community in the first place, and which are intended to inform and direct its everyday operation. National rights are an inherent obstacle to the creation of a true common market with free movement of goods and services.

It is perhaps understandable that in the 1950s the drafters of the Treaty should have failed to appreciate the full extent of the problems which intellectual property potentially posed to the ideals to which they were endeavouring to bring practical expression. The ever onward march of the commercial significance of intellectual property rights both nationally and internationally was still at a much earlier stage. By a process of change which has proceeded at an ever increasing rate of velocity, the commercial world of the 1990s is barely recognisable if placed in direct comparison with the 1950s. It is small wonder that the fathers of European commercial integration should fail to foresee changes which, even with the advantages of retrospect, are incompletely known and understood.

The failure to appreciate the future is demonstrated by the unsolved conflicts expressed within the Treaty itself. While essaying to create a market within which goods and services might move freely and anticompetitive practices be controlled, the drafters of the Treaty were concerned to protect property rights which would necessarily depend for their existence on the rules of national legal systems. Thus, while Arts 30 to 37 provided for the elimination of quantitative restrictions on trade between Members States to accomplish the free movement of goods, Art. 36 provided explicitly and clearly that this did not preclude protection of industrial and commercial property provided only that such limitations did not constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States. At its most obvious level this raises issues as to what constitutes industrial and commercial property which might be protected despite the general policy, thrust and expressions of the free movement provisions. While such expressions clearly cover such main areas as patent and trade mark protection, it is by no means clear from the expressions themselves that they embrace copyright, despite its commercial significance both within the entertainment and media industries and more widely.⁴ Further and more generally the commercial terms of the Treaty are the subject of the provision of Art. 222 that their provisions in no way prejudice the rules in Member States governing the system of property ownership.⁵ Since intellectual property rights were protected under the Treaty despite their national basis and frequently national exploitation, problems were bound to arise as national rights intruded on community wide trade, particularly in the field of parallel imports, where goods released in one part of the Community might be prevented from importation into another Member State on the grounds that importation would conflict with an intellectual property right existing in that state.

2. The Jurisprudence of the Courts

If the drafters of...