intellectual property rights in the eu: harmonization and unification

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Intellectual property rights in the EU Harmonization and unification instead of inconsistencies? Bachelor’s thesis in commercial and tax law (intellectual property law) Author: Lindahl, Filip Tutor: Humphreys, Edward Jönköping 2011-05-19

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Intellectual property rights in the EU

Harmonization and unification instead of inconsistencies?

Bachelor’s thesis in commercial and tax law (intellectual property law)

Author: Lindahl, Filip

Tutor: Humphreys, Edward

Jönköping 2011-05-19

Bachelor’s thesis in commercial and tax law (intellectual property law) Title: Intellecutal property rights – harmonization and unification instead of

inconsistencies?

Author: Lindahl, Filip

Tutor: Humphreys, Edward

Date: 2011-05-19

Subject terms: Intellectual property rights, the principle of free movement of goods, harmonization, unification, conflict, solution

Abstract The conflict between the principle of free movement of goods and intellectual property

rights is one of the obstacles that the EU has to overcome in order to create a common

market between the Member States. As of today the solution adopted by the ECJ is to jus-

tify derogations from the principle of free movement of goods on various grounds, incon-

sistent between different intellectual property rights. The fact that intellectual property

rights often are limited to the territory of a Member State means, furthermore, that incon-

sistencies also exist because of discrepancies in national law. Within this area progress has,

however, been made in all four principal areas. But when it comes to intellectual property

rights with unitary effect, patents and copyright are a long way from the same level of de-

velopment as trade marks and designs.

In other words, not only are there inconsistencies between different national laws within

the field of intellectual property rights, but also between the four principal forms due to the

development of unification and the grounds on which derogations from the principle of

free movement of goods are justified. The first two are unjustified inconsistencies which

the EU have worked, and still work, hard to eliminate. But the third has to be regarded as

justified, since different intellectual property rights have different purposes, subject matter

and specific subject matter.

The ultimate solution to the conflict between the principle of free movement of

goods and intellectual property rights would be a combination between complete

harmonization and the creation of unitary rights within the areas of patents, trade

marks, copyright and designs. This is so since the purpose of the unification of intel-

lectual property rights is not to replace the current system entirely, but to stand

alongside the national laws.

Table of Contents

Abbreviations ............................................................................ iii

1 Introduction ........................................................................... 1

1.1 Background ................................................................................... 1

1.2 Purpose and limitation ................................................................... 2

1.3 Method and material ...................................................................... 3

2 Intellectual property rights ................................................... 5

2.1 Justifications .................................................................................. 5

2.2 Purpose and subject matter ........................................................... 6

2.2.1 Patents ................................................................................ 6

2.2.2 Trade marks ........................................................................ 6

2.2.3 Copyright ............................................................................. 8

2.2.4 Design right protection ........................................................ 9

3 The principle of free movement of goods ......................... 11

3.1 The TEU, the TFEU and the case Cassis de Dijon ...................... 11

3.2 The conflict in relation to intellectual property rights .................... 13

3.2.1 Example in relation to patents ........................................... 13

3.2.2 Example in relation to trade marks .................................... 13

3.2.3 Example in relation to copyright ........................................ 14

3.2.4 Example in relation to design right protection ................... 14

3.3 Consent and international exhaustion ......................................... 14

3.4 Existence and exercise of rights .................................................. 15

3.5 Specific subject matter ................................................................ 15

3.5.1 Definition in relation to patents .......................................... 15

3.5.2 Definition in relation to trade marks ................................... 16

3.5.3 Definition in relation to copyright ....................................... 17

3.5.4 Definition in relation to design right protection .................. 17

3.6 Inconsistencies between intellectual property rights .................... 18

4 Solutions to the conflict ..................................................... 19

4.1 Harmonization ............................................................................. 20

4.2 Unitary intellectual property rights ............................................... 22

5 Conclusion .......................................................................... 25

References ................................................................................ 28

Abbreviations CDR – Community Design Regulation

CPR – Community Patent Regulation

CFI – Court of First Instance

ECJ – Court of Justice

EPC – European Patents Convention

EPO – European Patent Office

EU – European Union

TEU – Treaty on the European Union

TFEU – Treaty on the functioning of the European Union

1

1 Introduction

1.1 Background The numerous wars that tormented Europe during the 20th century did not only result in

death and destruction, but also a motivation to create a more peaceful and stable environ-

ment in which the different countries could develop and prosper.1 Instead of unifying

Europe by means of violence, peaceful measures began to evolve. The first steps towards

the European Union (EU) of today were taken in the 1950s,2 and in 1993 it was established

under its current name.3 The core of the EU is to create a common market between the

Member States.4 The benefits of achieving economic integration are many. It provides for

companies to grow and specialize, and thereby to compete internationally. This in turn cre-

ates a dynamic and competitive market for the benefit of producers, consumers and the

Member States themselves.5

Essential to the economic ideals of creating a single trading block is the principle of free

movement of goods, providing the infrastructure and constituting the very foundation of

the EU. Obstacles to the freedom of movement of all factors of production are to be abol-

ished; the Treaty on the functioning of the European Union (TFEU) expressly states that

trade barriers between Member States should not exist.6 This has, however, proved to be

much more of a challenge than first expected, especially when it comes to intellectual prop-

erty rights.7

The general nature of intellectual property rights is to give the owner a monopoly in the

subject matter of the right for a defined period of time,8 often limited to the territory of a

1 Foster, Nigel, Foster on EU-law, Second Edition, Oxford University Press 2009, p. 6.

2 Foster, Nigel, Foster on EU-law, Second Edition, Oxford University Press 2009, p. 9.

3 Foster, Nigel, Foster on EU-law, Second Edition, Oxford University Press 2009, p. 36.

4 Foster, Nigel, Foster on EU-law, Second Edition, Oxford University Press 2009, p. 254.

5 Foster, Nigel, Foster on EU-law, Second Edition, Oxford University Press 2009, p. 251.

6 Treaty on European Union, article 3 (2).

7 MacQueen, Hector, Waelde Charlotte, Laurie, Graeme, Contemporary Intellectual Property, Law and Policy, Sec-ond Edition, Oxford University Press 2010, p. 852.

8 MacQueen, Hector, Waelde Charlotte, Laurie, Graeme, Contemporary Intellectual Property, Law and Policy, Sec-ond Edition, Oxford University Press 2010, p. 854.

2

Member State.9 For example, the owner of a trade mark, patent, copyright or design right is

able to use these rights to prevent goods, marketed under a similar mark, infringing the

patent, protected by copyright or incorporating the design right, from entering a Member

State in which the right subsists.10 Such an outcome would partition the common market

and thereby create an obvious conflict between the principle of free movement of goods

and intellectual property rights.

In order to solve this conflict, derogations from the principle of free movement of goods

are justified on various grounds, inconsistent between different intellectual property rights,

outlined in the TFEU and subsequent case law. In other words, not only are there inconsis-

tencies between different national laws within the field of intellectual property rights, but

also between the four principal forms of patents, trade marks, copyright and design right

protection.

Measures of harmonization and unification began to evolve a few decades ago, and as of

today the EU has reached a position where evaluation can be made in some areas whereas

development continues in others. The common denominator and questioned to be asked

is, however, whether or not the inconsistencies outlined above, from the perspective of a

company, are defensible and what would constitute the ultimate solution to the conflict.

1.2 Purpose and limitation The purpose of this bachelor’s thesis is to investigate and outline the inconsistencies be-

tween intellectual property rights in terms of derogations from the principle of free move-

ment of goods within the EU. As explained in the introduction, the inconsistencies are

caused partly by discrepancies in national legislation and partly by differences between the

four principal forms of intellectual property rights. The focal point is aimed toward both of

these inconsistencies and whether or not, from the perspective of a company, they are jus-

tified. Furthermore, the derogations from the principle of free movement of goods are

compared to harmonization and unitary intellectual property rights as solutions to the con-

flict.

9 Keeling, David T., Intellectual Property Rights in EU Law, Free Movement and Competition Law, First Edition, Ox-

ford 2003, p. 23.

10 MacQueen, Hector, Waelde Charlotte, Laurie, Graeme, Contemporary Intellectual Property, Law and Policy, Sec-ond Edition, Oxford University Press 2010, p. 801.

3

The areas of patents, trade marks, copyright and design right protection are included. The

background information regarding these provides, however, no more than basic informa-

tion about the purpose and subject matter. Consent and international exhaustion are two

other concepts that are not explained in depth, nor is the general justification of intellectual

property rights in relation to the principle of free movement of goods. When it comes to

the grounds on which derogations from the principle of free movement of goods are justi-

fied, stated in article 30 of the TFEU and the case Cassis de Dijon,11 only the concept of pro-

tection of industrial and commercial property is of interest. Among the three methods of

harmonization, the main focus is directed toward the method of complete harmonization.

The reason for these limitations is that a deeper understanding of the subject is not needed

in order to understand the conflict between the principle of free movement of goods and

intellectual property rights.

The two main principles in the field of EU that often come into conflict with intellectual

property rights are the principle that trade in goods and services between Member States

should not be impeded without proper justification and the principle that competition

should not be distorted by agreements in restraint of trade or by abusive practices on the

part of dominant undertakings. Since this bachelor’s thesis is built around the principle of

free movement of goods, neither the principle of free movement of services nor competi-

tion law will be considered. Regarding the latter, the policy of securing the principle of free

movement of goods is in fact an objective distinct from that sought by the rules of compe-

tition.12

Finally, intellectual property rights are not a regional but a national matter and, beyond that,

an international concern.13 This bachelor’s thesis is, however, limited to the borders of the

EU. Interactions in relation to third countries will therefore not be considered.

1.3 Method and material This bachelor’s thesis is based upon comparisons between different legal sources within the

field of intellectual property rights in the EU. The main sources used are the primary legis-

11 Case 120/78, Rewe-Zentral AG v. Bundesmonopolverwaltung für Branntwein [1979].

12 Cornish, William, Llewelyn, David, Intellectual Property: Patents, Copyright, Trade Marks and Allied Rights, Sixth Edition, Sweet & Maxwell 2007, p. 47.

13 Harmonization and intellectual property in Europe, article from the Columbia Journal of European Law, Loewen-heim, Ulrich 1996, http://www.cjel.net/print/2_3-loewenheim/.

4

lation of the TEU, the TFEU, the European Patent Convention14 (EPC) and the Berne

Convention,15 along with case law from the Court of Justice (ECJ) and the Court of First

Instance (CFI) in order to interpret the treaties. The secondary legislation used is the

Community Design Regulation (CDR), the Trade mark directive of 2008,16 the directive on

the legal protection of designs of 199817 and the Copyright directives of 200118 and 2006.19

In other words, except from the EPC and the Berne Convention the legal material used

originates exclusively from the EU. National law is not used other than in a general fashion

in order to illustrate the conflict between the principle of free movement of goods and in-

tellectual property rights through examples.

Relevant literature and internet sources on the subject are used together with articles in or-

der to explain the interaction between intellectual property rights and EU-law, and possible

solutions to the conflict. Finally, and as a result of the latter, a proposal regarding the

Community patent will also be studied.

14 Convention on the grant of European Patents, 1973.

15 Berne Convention for the Protection of Literary and Artistic Works, 1886.

16 Directive 2008/95/EC of the European Parliament and of the Council of 22 October 2008 to approximate the laws of the Member States relating to trade marks.

17 Directive 98/71/EC of the European Parliament and of the Council of 13 October 1998 on the legal protection of designs.

18 Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society.

19 Directive 2006/116/EC of the European Parliament and of the Council of 12 December 2006 on the term of protection of copyright and certain related rights.

5

2 Intellectual property rights

2.1 Justifications The conflict between the principle of free movement of goods and intellectual property

rights is the main reason as to why the EU has taken increased interest in this area of trade

law.20 The balancing act between the moral and ethical, or fundamental, reasons for pro-

tecting intellectual property rights on the one hand and the aim toward economic integra-

tion on the other is by no means an easy task. Some legal and political philosophers have

even questioned the very existence of intellectual property rights,21 and argued that they act

as barriers to trade and are not justified in the form they currently take.22 But although in-

tellectual property rights by its nature have the potential to interfere with the aims of the

common market, or a single European market with no internal frontiers or national barriers

to trade,23 it can also be argued that they work the other way around and in fact stimulate

the economy.24 For example, patents acts as an incentive for the inventors and secures in-

dustrial progress,25 trade marks as an indicator of origin and a guarantee of quality for the

consumer,26 copyright as an incentive for creative works27 and design right protection as an

incentive for work of appearance and composition.28 As can be seen from the examples

above, intellectual property rights have different purposes and thus different subject matter.

20 MacQueen, Hector, Waelde Charlotte, Laurie, Graeme, Contemporary Intellectual Property, Law and Policy, Sec-

ond Edition, Oxford University Press 2010, p. 20.

21 Bentley, Lionel, Sherman, Brad, Intellectual Property Law, Second Edition, Oxford University Press 2004, p. 3.

22 Bentley, Lionel, Sherman, Brad, Intellectual Property Law, Second Edition, Oxford University Press 2004, p. 4.

23 Bentley, Lionel, Sherman, Brad, Intellectual Property Law, Second Edition, Oxford University Press 2004, p. 12.

24 Fazzani, Linda, Hart, Tina, Intellectual Property Law, Third Edition, Palgrave Macmillan 2004, p. 3.

25 Aplin, Tanya, Davies, Jennifer, Intellectual Property Law, Text, Cases and Materials, First Edition, Oxford Uni-versity Press 2009, p. 447.

26 Aplin, Tanya, Davies, Jennifer, Intellectual Property Law, Text, Cases and Materials, First Edition, Oxford Uni-versity Press 2009, p. 228.

27 Aplin, Tanya, Davies, Jennifer, Intellectual Property Law, Text, Cases and Materials, First Edition, Oxford Uni-versity Press 2009, p. 44.

28 Seville, Catherine, EU Intellectual Property, Law and Policy, First Edition, Elgar European Law 2009, p. 180.

6

2.2 Purpose and subject matter

2.2.1 Patents

The purpose of patents is to give the rightholder an absolute monopoly over a commercial

exploitation of an invention for a limited period of time of 20 years.29 According to the

EPC, the subject matter that may be protected by a patent is inventions which are new, in-

volves an inventive step and are capable of industrial application.30 Inventions are considered to

be new if they are not part of the state of art,31 to involve an inventive step if it is not obvious

to a person skilled in the art,32 and capable of industrial application if it can be made or used in

any kind of industry.33 The state of art comprises everything made available to the public in

any way before the date of filing of the European patent application,34 whereas the person

skilled in the art is an ordinary member of their field, aware of everything in the state of art

but unimaginative and lacking of inventive capacity.35 It is also expressly stated what are not

to be regarded as inventions, for example discoveries, scientific theories, mathematical me-

thods, aesthetic creations and presentation of information.36 Patents have no specific notice

once granted, but the term patent pending is commonly used to put competitors on notice

that an application is being considered.37 In other words, patents require registration in or-

der to subsist.

2.2.2 Trade marks

Trade marks give the rightholder a weaker monopoly than patents, but can through succes-

sive periods of registration last for an unlimited period of time.38 The purpose of trade

29 MacQueen, Hector, Waelde Charlotte, Laurie, Graeme, Contemporary Intellectual Property, Law and Policy, Sec-

ond Edition, Oxford University Press 2010, p. 547.

30 Convention on the grant of European Patents, 1973, article 52 (1).

31 Convention on the grant of European Patents, 1973, article 54 (1).

32 Convention on the grant of European Patents, 1973, article 56.

33 Convention on the grant of European Patents, 1973, article 57.

34 Convention on the grant of European Patents, 1973, article 54 (2).

35 MacQueen, Hector, Waelde Charlotte, Laurie, Graeme, Contemporary Intellectual Property, Law and Policy, Sec-ond Edition, Oxford University Press 2010, p. 446.

36 Convention on the grant of European Patents, 1973, article 52 (2).

37 MacQueen, Hector, Waelde Charlotte, Laurie, Graeme, Contemporary Intellectual Property, Law and Policy, Sec-ond Edition, Oxford University Press 2010, p. 17.

38 MacQueen, Hector, Waelde Charlotte, Laurie, Graeme, Contemporary Intellectual Property, Law and Policy, Sec-ond Edition, Oxford University Press 2010, p. 547.

7

marks is to indicate the origin of goods, and thus be a quality indicator for the benefit of the

consumers, along with providing means of advertising and a vehicle for investment.39 The

badge of origin is the primary function of a trade mark.40 It provides a guarantee of the

identity of the origin of the marketed product and enables consumers to distinguish the

product from others.41 Since the interest of the consumer is based on the assumption that

goods of the same origin will be of the same standard, the function of quality is how trade

marks reward the manufacturer who consistently produces high-quality goods.42 Advertis-

ing is a function in which many rightholders invest substantial time, effort and money, in a

hope that the mere recognition of the trade mark eventually will sell the goods in question.

Finally, the function of investment is a way to build consumer awareness, or reputation, of

a particular trade mark. The last three functions are also known as communicative func-

tions, and focuses as much on the effect on the consumers as on competitors taking unfair

advantage or being detrimental to the trade mark.43 The subject matter that may be pro-

tected by a trade mark is any sign capable of being represented graphically, for example

personal names, designs, letters, numerals, the shape of goods or of their packaging.44

Examples of signs not to be regarded as trade marks are them which are devoid of any

distinctive character or contrary to public policy.45

Trade marks can be either registered or unregistered. ® is the notice of the former and has

to meet the requirements outlined above. ™ is the notice of the latter and commonly used

when a trade mark has been refused or if the rightholder do not want to spend the time

and money needed in order to register. Within the EU, the symbol of the unregistered

trade mark has no legal effect at all.46

39 MacQueen, Hector, Waelde Charlotte, Laurie, Graeme, Contemporary Intellectual Property, Law and Policy, Sec-

ond Edition, Oxford University Press 2010, p. 540.

40 MacQueen, Hector, Waelde Charlotte, Laurie, Graeme, Contemporary Intellectual Property, Law and Policy, Sec-ond Edition, Oxford University Press 2010, p. 542.

41 Case C-206/01, Arsenal Football Club plc v. Matthew Reed [2003], para. 47.

42 Case C-10/89, SA Cnl-Sucal NV v. Hag GF AG [1991].

43 MacQueen, Hector, Waelde Charlotte, Laurie, Graeme, Contemporary Intellectual Property, Law and Policy, Sec-ond Edition, Oxford University Press 2010, p. 544.

44 Council Regulation (EC) No 207/2009 of 26 February 2009 on the Community trade mark, article 4.

45 Council Regulation (EC) No 207/2009 of 26 February 2009 on the Community trade mark, article 7.

46 MacQueen, Hector, Waelde Charlotte, Laurie, Graeme, Contemporary Intellectual Property, Law and Policy, Sec-ond Edition, Oxford University Press 2010, p. 17.

8

2.2.3 Copyright

Similar to trade marks, copyright gives the rightholder a weaker monopoly than patents,

but for a longer period of time of seventy years from the death of the author of the work .47

The latter is a level reached as soon as an expression is able to stand on its own,48 and a re-

quirement that has to be met along with them of fixation and originality. In other words, the

work in question must be transformed into some kind of fixed form, for example be writ-

ten down, recorded or filmed,49 and not be a copy of preceding works in order for copy-

right to subsist.50 In fact, and as suggested by the word itself, the very purpose of copyright

is to prevent copying and reproducing.51 The subject matter that may be protected by copy-

right is aesthetic and artistic creations,52 for example original literary, dramatic, musical and

artistic work, films, sound recordings and broadcasts.53 Unique for copyright, introduced by

the Berne Convention, is the concept of moral rights, recognizing certain non-economic

rights which the author can continue to exercise even though no longer the rightholder,54

for example the right to object derogatory treatment of the work in question.55

When it comes to registration, copyright arises automatically as soon as a qualifying work is

created.56 © is the notice of copyright, used in order to gain international recognition and

47 Directive 2006/116/EC of the European Parliament and of the Council of 12 December 2006 on the term

of protection of copyright and certain related rights.

48 MacQueen, Hector, Waelde Charlotte, Laurie, Graeme, Contemporary Intellectual Property, Law and Policy, Sec-ond Edition, Oxford University Press 2010, p. 47.

49 Fazzani, Linda, Hart, Tina, Intellectual Property Law, Third Edition, Palgrave Macmillan 2004, p. 149.

50 MacQueen, Hector, Waelde Charlotte, Laurie, Graeme, Contemporary Intellectual Property, Law and Policy, Sec-ond Edition, Oxford University Press 2010, p. 52.

51 Fazzani, Linda, Hart, Tina, Intellectual Property Law, Third Edition, Palgrave Macmillan 2004, p. 149.

52 MacQueen, Hector, Waelde Charlotte, Laurie, Graeme, Contemporary Intellectual Property, Law and Policy, Sec-ond Edition, Oxford University Press 2010, p. 4.

53 Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society.

54 MacQueen, Hector, Waelde Charlotte, Laurie, Graeme, Contemporary Intellectual Property, Law and Policy, Sec-ond Edition, Oxford University Press 2010, p. 104.

55 Berne Convention for the Protection of Literary and Artistic Works, 1886, article 6bis.

56 Berne Convention for the Protection of Literary and Artistic Works, 1886, article 5 (2).

9

reciprocity of protection. The symbol should appear together with the name of the author

and the date when the work was first made publicly available.57

2.2.4 Design right protection

Similar to trade marks and copyright, design right protection gives the rightholder a weaker

monopoly than patents. The purpose of design rights is to protect the appearance and

composition of designs in a vast range of fields, from fashion and interior to industrial and

software design.58 A design right can be either registered or unregistered, but not in the

same way as for trade marks. In order to be registered the design must, due to the CDR, be

new and have individual character.59 Furthermore, it has to fall within the definition of a de-

sign.60 The meaning of the latter is the appearance of the whole or a part of a product, result-

ing from, among other things, its features of lines, contours, colours, shape or texture.61

The product is in turn defined as any industrial handicraft item other than a computer pro-

gram.62 When it comes to novelty and individual character, a design is regarded as new if no

identical design has been available to the public before the date of application,63 and as hav-

ing individual character if the overall impression differs from the overall impression of pre-

vious designs.64 Registered designs give the rightholder a monopoly for a limited period of

time of twenty-five years.65 Unregistered designs are defined in the same way as registered

designs,66 but only give the rightholder a monopoly for a limited time of three years.67 The

main reason for the existence of unregistered design rights is that the design in question is

57 MacQueen, Hector, Waelde Charlotte, Laurie, Graeme, Contemporary Intellectual Property, Law and Policy, Sec-

ond Edition, Oxford University Press 2010, p. 17.

58 Seville, Catherine, EU Intellectual Property, Law and Policy, First Edition, Elgar European Law 2009, p. 180.

59 Community Design Regulation 2002, article 4 (1).

60 Community Design Regulation 2002, article 4 (1).

61 Community Design Regulation 2002, article 3 (a).

62 Community Design Regulation 2002, article 3 (b).

63 Community Design Regulation 2002, article 5.

64 Community Design Regulation 2002, article 6 (1).

65 Community Design Regulation 2002, article 12 (1).

66 MacQueen, Hector, Waelde Charlotte, Laurie, Graeme, Contemporary Intellectual Property, Law and Policy, Sec-ond Edition, Oxford University Press 2010, p. 349.

67 Community Design Regulation 2002, article 11 (1).

10

being market-tested prior to registration.68 Examples of designs not to be protected are

those dictated solely by its technical function69 or contrary to public policy.70

68 MacQueen, Hector, Waelde Charlotte, Laurie, Graeme, Contemporary Intellectual Property, Law and Policy, Sec-

ond Edition, Oxford University Press 2010, p. 350.

69 Community Design Regulation 2002, article 8 (1).

70 Community Design Regulation 2002, article 9.

11

3 The principle of free movement of goods

3.1 The TEU, the TFEU and the case Cassis de Dijon The two treaties constituting the basis of the EU are the TEU and the TFEU.71 The main

principle of the TEU is to establish the EU among the Member States.72 From a strictly

economic perspective the EU has as its task to, by establishing a common market and an

economic union, promote a balanced and sustainable development of economic activities, a

high degree of competitiveness and convergence of economic performance and economic

and social cohesion and solidarity among the Member States.73 The principle of free

movement of goods in relation to the common market is stated in article 3 (2) of the

TFEU:

The internal market shall comprise an area without internal frontiers in which the free

movement of goods, persons, services and capital is ensured in accordance with the provi-

sions of the Treaties.

Due to the case Commission v. United Kingdom,74 and in the absence of harmonization and

unitary intellectual property rights, article 345 of the TFEU gives the Member States exclu-

sive competence as long as the principle of free movement of goods is not harmfully af-

fected:

This Treaty shall in no way prejudice the rules in Member States governing the system

of property ownership.

Part three of the TFEU focuses upon union principles and is divided into twenty four ti-

tles, the second one devoted in its entirety to the principle of free movement of goods.

Similar to article 3 of the TEU, articles 34 and 35 of the TFEU states that quantitative restric-

tions on imports, exports and all measures having equivalent effect shall be prohibited between

Member States. The concept of quantitative restrictions means quotas and prohibitions75

71 Foundation for EU democracy, 23/4 2011, http:/ / www.ffeud.eu/ stealth.php.

72 Treaty on European Union, article 1.

73 Treaty on European Union, article 2.

74 Case C-30/90, Commission v. United Kingdom [1992], para. 18.

75 Keeling, David T., Intellectual Property Rights in EU Law, Free Movement and Competition Law, First Edition, Ox-ford 2003, p. 10.

12

and is, due to the case Geddo v. Ente Nazionale Risi,76 the same in relation to both imports

and exports. When it comes to measures having equivalent effect, however, the ECJ has

always taken a less strict attitude in relation to exports than in relation to imports, possibly

because Member States are less likely to hinder exports.77 In case law the ECJ has stated

that article 35 only applies to measures specifically constructed to restrict exports,78 whereas

article 34 has been given a much wider definition. In the case Procureur du Roi v. Dassonville79

the ECJ stated that article 34 applies to all trading rules capable of hindering trade between

Member States. Exceptions to these prohibitions are outlined on certain grounds in article

36:

The provisions of Articles 34 and 35 shall not preclude prohibitions or restrictions on

imports, exports or goods in transit justified on grounds of public morality, public policy

or public security; the protection of health and life of humans, animals or plants; the pro-

tection of national treasures possessing artistic, historic or archaeological value; or the pro-

tection of industrial and commercial property. Such prohibitions or restrictions shall not,

however, constitute a means of arbitrary discrimination or a disguised restriction on trade

between Member States.

In other words, quantitative restrictions on imports, exports and all measures having

equivalent effect are prohibited within the EU, unless they are justified by article 36. This

was at least the case until the ECJ, in the case Cassis de Dijon,80 recognized additional

grounds, or mandatory requirements, on which a measure restricting trade could be justified.

The meaning of this concept is that measures acting as barriers to trade may be acceptable

if they protect a certain interest that the Member State has the right to protect,81 for exam-

ple the effectiveness of fiscal supervision, the protection of public health, the fairness of

consumer transactions and the defence of the consumer.82 The main focus of this bache-

lor’s thesis is, however, directed toward article 36 and the concept of protection of industrial 76 Case 2/73, Riseria Luigi Geddo v. Ente Nazionale Risi [1973].

77 Keeling, David T., Intellectual Property Rights in EU Law, Free Movement and Competition Law, First Edition, Ox-ford 2003, p. 11.

78 Case 15/79, Groenveld v. Produktschap voor Vee en Vlees [1979].

79 Case 8/74, Procureur du Roi v. Benoît and Gustave Dassonville [1974].

80 Case 120/78, Rewe-Zentral AG v. Bundesmonopolverwaltung für Branntwein [1979].

81 Foster, Nigel, Foster on EU-law, Second Edition, Oxford University Press 2009, p. 281.

82 Foster, Nigel, Foster on EU-law, Second Edition, Oxford University Press 2009, p. 282.

13

and commercial property, applicable to all rights of intellectual property.83 The expressions arbi-

trary discrimination and disguised restriction therefore need to be clarified. The first is defined as

a difference in treatment which is not objectively justified,84 for example a Member State

that applies higher levels of environmental requirements to imported goods within the EU

than to domestic goods. The latter is defined as a measure that is protectionist in intent,85

for example a rightholder who uses his trade mark in order to block parallel imports of

goods, marketed under that trade mark, from a Member State in which the prices are

lower.86

3.2 The conflict in relation to intellectual property rights

3.2.1 Example in relation to patents

Company A has a patent in Sweden, but not in Finland. Company B manufactures goods,

incorporating the patented invention, and markets them in Finland. Company C buys and

imports the goods into Sweden. As a result of this, company A sues company C for patent

infringement. If company A were to succeed and thereby prevent company C from import-

ing the goods into Sweden, the free movement of goods between the Member States will

be restricted. On the other hand, if company C were allowed to import the goods into

Sweden the value of company A: s patent would have been impaired.

3.2.2 Example in relation to trade marks

Company A manufactures goods in Sweden and markets them under a registered trade

mark. Company B manufactures similar goods in Finland and markets it under a similar

mark. In other words, it is likely that consumers would be confused if the goods were on

the market in the same Member State. This is a situation unsatisfactory for both compa-

nies, but if company A were allowed to exclude company B, and vice versa, the free

movement of goods between the Member States would have been restricted.

83 European Parliament, 18/4 2011,

http:/ / circa.europa.eu/ irc/ opoce/ fact_sheets/ info/ data/ market/ legislation/ article_7203_en.htm.

84 Keeling, David T., Intellectual Property Rights in EU Law, Free Movement and Competition Law, First Edition, Ox-ford 2003, p. 17.

85 Case 40/82, Commission v. United Kingdom [1982].

86 Keeling, David T., Intellectual Property Rights in EU Law, Free Movement and Competition Law, First Edition, Ox-ford 2003, p. 18.

14

3.2.3 Example in relation to copyright

Company A is the owner of a copyright in Sweden, a country that in this example has a

longer duration of the exclusive right than Finland. If company A were allowed to prevent

Company B from importing goods no longer protected by the copyright in Finland into

Sweden, the free movement of goods between the Member States would have been re-

stricted.

3.2.4 Example in relation to design right protection

Company A has a design right that extend to the manufacture of different auto parts for

their cars in Sweden. Company B is an independent manufacturer of different auto parts

for the same types of cars in Finland, and exports the goods to Sweden. Company A sues

company B for design right infringement. If company A were to succeed and thereby pre-

vent company B from exporting the goods to Sweden, the free movement of goods be-

tween the Member States will be restricted. On the other hand, if company B were allowed

to export the goods to Sweden the value of company A’s design right would have been im-

paired.

3.3 Consent and international exhaustion If company A were allowed to hinder the importation into and exportation to Sweden in

the examples above, a measure having equivalent effect to the quantitative restrictions

stated in articles 34 and 35 would arise. As stated in part 3.1, such a measure is only com-

patible with EU trade law if it is justifiable under article 36 or the case Cassis de Dijon,87 pro-

vided that the goods in question have been lawfully placed on the market in another Mem-

ber State.88 In other words, consent is a central concept of the principle of free movement of

goods. Where protected goods have been placed on the market by, or with the consent of,

the rightholder, no objection to further movement of goods within the common market is

allowed.89 In this case, the rightholder has exhausted its rights and can no longer control the

87 Case 120/78, Rewe-Zentral AG v. Bundesmonopolverwaltung für Branntwein [1979].

88 Keeling, David T., Intellectual Property Rights in EU Law, Free Movement and Competition Law, First Edition, Ox-ford 2003, p. 23.

89 MacQueen, Hector, Waelde Charlotte, Laurie, Graeme, Contemporary Intellectual Property, Law and Policy, Sec-ond Edition, Oxford University Press 2010, p. 806.

15

resale, importation or exportation of the goods.90 This is the case for all types of intellectual

property rights.91

3.4 Existence and exercise of rights An intellectual property right consists not only of a single right, but of several rights whose

content may vary under national legislation and between patents, trade marks, copyright

and design right protection.92 As a result of this, the ECJ has developed a difference be-

tween the existence and the exercise of a right through case law.93

It is expressly stated in article 345 that the existence of a right, recognized under national

legislation, is not affected by the TFEU. But the exercise of a right may, however, be re-

stricted by the prohibitions in the TFEU. Article 36 and the case Cassis de Dijon94 only ad-

mits exceptions to the principle of free movement of goods if they are justified for the

purpose of protecting rights which constitute the specific subject matter of the property in

question.95 In other words the existence of the specific subject matter is guaranteed,

whereas the exercise of national intellectual property rights is only guaranteed if they con-

stitute the specific subject matter.96

3.5 Specific subject matter

3.5.1 Definition in relation to patents

In the case Centrafarm v. Sterling97 the ECJ stated that the specific subject matter in relation

to patents is:98

the guarantee that the patentee, to reward the creative effort of the inventor, has the ex-

clusive right to use an invention with a view to manufacturing industrial products and

90 Bentley, Lionel, Sherman, Brad, Intellectual Property Law, Second Edition, Oxford University Press 2004, p.

13.

91 Case 78/70, Deutsche Grammophon GmbH v. Metro SB Grossmarkte GmbH & Co. [1971].

92 Seville, Catherine, EU Intellectual Property, Law and Policy, First Edition, Elgar European Law 2009, p. 321.

93 Case C-119/75, Terrapin Ltd v. Terranova Industrie CA Kapferer & Co. [1975].

94 Case 120/78, Rewe-Zentral AG v. Bundesmonopolverwaltung für Branntwein [1979].

95 Case C-119/75, Terrapin Ltd v. Terranova Industrie CA Kapferer & Co. [1975].

96 Seville, Catherine, EU Intellectual Property, Law and Policy, First Edition, Elgar European Law 2009, p. 322.

97 Case 15/74, Centrafarm BV v. Sterling Drug Inc. [1974].

98 Seville, Catherine, EU Intellectual Property, Law and Policy, First Edition, Elgar European Law 2009, p. 322.

16

putting them into circulation for the first time, either directly or by the grant of licences to

third parties, as well as the right to oppose infringements.99

Two main rights for the patentee can be identified from this statement; the right to put the

products derived from the invention into circulation for the first time and the right to op-

pose infringements. The specific subject matter in this regard is to reward the creative ef-

fort of the inventor, but this does not extend to the right for the patentee to control the

products after they have been placed on the market. As long as the products have been put

into circulation by patentee himself or with his consent, derogation from the principle of

free movement of goods is unjustified.100

3.5.2 Definition in relation to trade marks

In the case Centrafarm v. Winthrop101 the ECJ stated that the specific subject matter in rela-

tion to trade marks is:102

the specific subject matter of the industrial property is the guarantee that the owner of the

trade mark has the exclusive right to use that trade mark, for the purpose of putting

products protected by the trade mark into circulation for the first time, and is therefore

intended to protect him against competitors wishing to take advantage of the status and

reputation of the trade mark by selling products illegally bearing that trade mark.103

Two main rights for the trade mark owner can be identified from this statement; the right

to put products protected by the trade mark into circulation for the first time and the right

to hinder competitors to take advantage of the trade mark. In the same way as for patents,

trade marks are not allowed to hinder the movement of protected products, marketed by

the owner or with his consent, between Member States.104

99 Case 15/74, Centrafarm BV v. Sterling Drug Inc. [1974], para 9.

100 Case 15/74, Centrafarm BV v. Sterling Drug Inc. [1974], para 11.

101 Case 16/74, Centrafarm BV v Winthrop BV [1974], para. 8.

102 Seville, Catherine, EU Intellectual Property, Law and Policy, First Edition, Elgar European Law 2009, p. 323.

103 Case 16/74, Centrafarm BV v Winthrop BV [1974], para 8.

104 Case 16/74, Centrafarm BV v Winthrop BV [1974], para 10.

17

3.5.3 Definition in relation to copyright

In the case Phil Collins v. Imtrat105 the ECJ stated that the specific subject matter in relation

to copyright is:106

to ensure the protection of the moral and economic rights of their holders. The protection

of moral rights enables authors and performers, in particular, to object to any distortion,

mutilation or other modification of a work which would be prejudicial to their honour or

reputation. Copyright and related rights are also economic in nature, in that they confer

the right to exploit commercially the marketing of the protected work, particularly in the

form of licences granted in return for payment of royalties.107

Two main rights for the copyright owner can be identified from this statement; the right to

protection of moral rights and the right to exploit commercially the marketing of the pro-

tected work. In other words, and as stated by the CFI in subsequent case law, copyright af-

fords the creator of original works the exclusive right to exploitation in order to reward the

creative effort.108 Similar to patents and trade marks, copyright is not allowed to hinder the

movement of protected products between Member States.109

3.5.4 Definition in relation to design right protection

In the case Volvo v. Veng110 the ECJ stated that the specific subject matter in relation to de-

sign right protection is:111

the right of the proprietor of a protected design to prevent third parties from manufacturing

and selling or importing, without his consent, products incorporating the design.112

The main right for the owner of the design right protection identified from this statement

is the right to prevent production of products incorporating the design. In the same way as

for patents and trade marks, and similar to copyright, design right protection is not allowed 105 Joined Cases C-92/92 and C-326/92, Phil Collins v. Imtrat [1993], para. 20.

106 Seville, Catherine, EU Intellectual Property, Law and Policy, First Edition, Elgar European Law 2009, p. 324.

107 Joined Cases C-92/92 and C-326/92, Phil Collins v. Imtrat [1993], para. 20.

108 Case T-184/01, IMS Health Inc. v. Commission [2001], para. 125.

109 Case 78/70, Deutsche Grammophon GmbH v. Metro SB Grossmarkte GmbH & Co. [1971], paras. 11 and 12.

110 Case 238/87, Volvo v. Erik Veng Ltd [1988].

111 Seville, Catherine, EU Intellectual Property, Law and Policy, First Edition, Elgar European Law 2009, p. 325.

112 Case 238/87, Volvo v. Erik Veng Ltd [1988], para. 8.

18

to hinder the movement of protected products marketed by the owner, or with is consent,

between Member States.113

3.6 Inconsistencies between intellectual property rights As can be seen from the examples in part 3.2 and the definitions in part 3.5, there are sev-

eral inconsistencies but also many similarities between intellectual property rights in the

EU. For example, whereas patents, trade marks and design right protection focuses on

preventing infringements of the patent, competitors from taking advantage of the trade

mark and products incorporating the design, copyright is unique in the introduction of the

concept of moral rights.

Part 2.2 clearly shows that it is not only the specific subject matter that differs, but also the

qualification, procedure, form, duration, width and notices of protection.114 For example,

whereas a copyright is valid not only in the EU, but in all of the 160 countries throughout

the world that has signed the Berne Convention for 70 years plus the life of the author as

soon as the production meets the requirements of being a work, a patent is only valid for a

limited time of 20 years in each and every Member State in which protection has been

sought. Furthermore, the ECJ has stated that, in the absence of harmonization and unitary

intellectual property rights, it is for national law to determine procedures and conditions

surrounding grants of intellectual property rights.115 In other words, it is possible that in-

consistencies in terms of derogations from the principle of free movement of goods within

the EU exists not only between the various types of intellectual property rights, but also be-

tween the same types of protection in relation to different Member States.

113 Case 238/87, Volvo v. Erik Veng Ltd [1988], para. 8.

114 MacQueen, Hector, Waelde Charlotte, Laurie, Graeme, Contemporary Intellectual Property, Law and Policy, Sec-ond Edition, Oxford University Press 2010, p. 16.

115 Keeling, David T., Intellectual Property Rights in EU Law, Free Movement and Competition Law, First Edition, Oxford 2003, p. 30.

19

4 Solutions to the conflict As stated in the introduction, one of the main goals of the EU is to create a common mar-

ket between the Member States.116 This is the third step in the progress towards economic

integration, and adds the free movement of all factors of production to the first two steps

of establishing a free trade area and a customs union. The free trade area involves the removal

of customs duties between the Member States, even though the Member States still are al-

lowed to decide their external policies and custom duties in relation to third countries indi-

vidually.117 The customs union adds a common external tariff to the free trade area, were

the same duties are imposed on goods entering the EU regardless of where the importing

or exporting country is situated. The final step is to achieve an economic union, involving

all of the above along with the harmonization or unification of economic, monetary and

fiscal policies.118 As of today, the EU has established a free trade area119 and a customs un-

ion,120 and is approaching the penultimate step of the ladder. But there are still a great

number of obstacles to overcome in order to create a common market,121 one of the most

obvious being the conflict between the principle of free movement of goods and intellec-

tual property rights.

In order to solve this conflict, and at the same time take into account article 345 in the

TFEU, the ECJ has decided to focus upon the reason for the existence, along with the spe-

cific subject matter, of intellectual property rights. Since the core of intellectual property

rights is to obtain economic return, the articles of the treaties outlined in part 3.1 and the

case law from the ECJ on the conflict between intellectual property rights and the principle

of free movement of goods gives the rightholder the exclusive right to place the goods in

question on the common market for the first time. Thereafter the rightholder has ex-

hausted the rights conferred by the patent, trade mark, copyright or design right in relation

to the movement throughout the EU, as explained in part 3.3.122 This solution does not,

116 Foster, Nigel, Foster on EU-law, Second Edition, Oxford University Press 2009, p. 254.

117 Foster, Nigel, Foster on EU-law, Second Edition, Oxford University Press 2009, p. 253.

118 Foster, Nigel, Foster on EU-law, Second Edition, Oxford University Press 2009, p. 254.

119 Treaty on the functioning of the European Union, article 26 (2).

120 Treaty on the functioning of the European Union, article 28 (1).

121 Foster, Nigel, Foster on EU-law, Second Edition, Oxford University Press 2009, p. 254.

122 MacQueen, Hector, Waelde Charlotte, Laurie, Graeme, Contemporary Intellectual Property, Law and Policy, Sec-ond Edition, Oxford University Press 2010, p. 856.

20

however, solve the aspects of the conflict outlined through the examples in part 3.2. More

suitable in this regard would instead be the concept of harmonization.

4.1 Harmonization The concept of harmonization is often divided into three different forms; complete, op-

tional and minimum harmonization. It is easy to understand why complete harmonization

is also called exhaustive harmonization. The point of this method is to enact a rule for all

Member States of the EU, precluding national legislation in the same area. Less strict is the

method of optional harmonization, where the provision of a directive needs only to be fol-

lowed when trade of goods is taking place between Member States of the EU. If export or

import is not intended, it is optional to follow the provision in question. Finally, the me-

thod of minimum harmonization is the same as the establishment of minimum standards

which should be seen as a floor rather than a roof. The Member States are at any time free

to impose higher domestic standards, but not lower.123 The main focus of this bachelor’s

thesis is, however, directed toward the method of complete harmonization.

Foreign law and languages along with time-consuming and costly procedures are some of

the problems, within the field of intellectual property rights, facing companies wanting to

expand within the EU.124 As can be seen from the examples in part 3.2, discrepancies in na-

tional law in this regard may lead to situations where lawfully produced goods in one

Member State become infringing goods when imported to or exported into another Mem-

ber State. This would obviously not be a problem if the scope of protection were the same

throughout the EU.125

The method of complete harmonization erases the discrepancies between different national

laws and thereby ensures that intellectual property rights are granted the same protection in

all Member States.126 The European Patent Convention in 1973, the Trade mark directive

123 Foster, Nigel, Foster on EU-law, Second Edition, Oxford University Press 2009, p. 260.

124 Gateway to the EU, 2/5 2011, http:/ / europa.eu/ legislation_summaries/ internal_market/ businesses/ intellectual_property/ l26033_en.htm.

125 Keeling, David T., Intellectual Property Rights in EU Law, Free Movement and Competition Law, First Edition, Oxford 2003, p. 25.

126 Gateway to the EU, 2/5 2011, http:/ / europa.eu/ legislation_summaries/ internal_market/ businesses/ intellectual_property/ l26033_en.htm.

21

in 2008,127 the directive on the legal protection of designs in 1998128 and the Copyright di-

rectives in 2001129 and 2006130 were all initiated for that reason but did not, however, solve

the conflict between intellectual property rights and the principle of free movement of

goods entirely.

Returning to the examples in part 3.2, it goes without saying that a situation where a copy-

right in Finland has expired, whilst still in force in Sweden, would not occur if the Member

States copyright laws all provided for the same term of protection. Similarly, the problem

arising when auto parts are being manufactured in Finland, a country supposed not to ex-

tend the exclusive design right to spare parts, and exported to Sweden, a country supposed

to extend the exclusive design right to spare parts, would not occur if all Member States

granted car makers the exclusive right to manufacture auto parts for their models during

the same amount of time or not at all. As long as the law of intellectual property rights is

harmonized in all 27 Member States, the conflict between the principle of free movement

of goods and intellectual property rights will not exist. Such a solution has been reached by

the implementation of the copyright directives in 2001131 and 2006132 and the directive on

the legal protection of designs in 1998,133 but when it comes to the two remaining examples

of patents and trade marks harmonization is not what to aim for. The reason for this is that

harmonization can solve problems caused by discrepanacies in national law, but do nothing

about problems due to the territoriality of intellectual property rights.134 For example, a

patent obtained in Sweden that can prevent goods lawfully produced in Finland from being

127 Directive 2008/95/EC of the European Parliament and of the Council of 22 October 2008 to

approximate the laws of the Member States relating to trade marks.

128 Directive 98/71/EC of the European Parliament and of the Council of 13 October 1998 on the legal protection of designs.

129 Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society.

130 Directive 2006/116/EC of the European Parliament and of the Council of 12 December 2006 on the term of protection of copyright and certain related rights.

131 Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society.

132 Directive 2006/116/EC of the European Parliament and of the Council of 12 December 2006 on the term of protection of copyright and certain related rights.

133 Directive 98/71/EC of the European Parliament and of the Council of 13 October 1998 on the legal protection of designs.

134 Keeling, David T., Intellectual Property Rights in EU Law, Free Movement and Competition Law, First Edition, Oxford 2003, p. 26.

22

traded is a problem not to be solved with harmonization, neither is the problem of similar

trade marks belonging to unrelated rightholders. In these cases, the solution would instead

be the concept of unitary intellectual property rights.

4.2 Unitary intellectual property rights Whilst the method of complete harmonization solves the problems relating to foreign law,

the point of unitary intellectual property rights is to establish a unified system for obtaining

uniform protection in the common market.135 The reason as to why the example in part 3.2

regarding patents, where a patent obtained in Sweden could prevent goods lawfully pro-

duced in Finland from being traded, is not able to be solved by mere harmonization is ob-

vious. Suppose that Swedish and Finish patent law were harmonized. As long as Company

A does not bother to seek protection in Finland, Company B can still lawfully produce

goods which would infringe the patent if exported into Sweden. The same goes for the ex-

ample regarding trade marks, the confusion of the consumers is not caused by discrepan-

cies in national law but because the trade marks in question have acquired an association

with the products of Company A and Company B in different countries. In other words,

the problems outlined in these two examples are caused by the territoriality of intellectual

property rights and can only be solved by unification.

Most developed of the four principal forms of intellectual property rights in this regard are

trade marks and design right protection, followed by patents and copyright. The EU-trade

mark was introduced in 1996,136 and the EU-design in 2001.137 Prior to these establish-

ments, a trader wanting to have a trade mark or design right registered throughout the EU

had to file an application in each and every Member State.138 The Community Trade Mark

Regulation (CTMR) and the Community Design Regulation (CDR) changed this time-

consuming and costly procedure, and at the same time solved the problems relating to for-

eign languages, by initiating a simple and inexpensive way of registering trade marks and

designs with the Office for Harmonization in the Internal Market in Alicante, Spain. Fur- 135 Gateway to the EU, 2/5 2011,

http:/ / europa.eu/ legislation_summaries/ internal_market/ businesses/ intellectual_property/ l26033_en.htm.

136 Wadlow, Christopher, Enforcement of Intellectual Property in European and International Law, First Edition, Sweet & Maxwell Ltd 1998, p. 214.

137 MacQueen, Hector, Waelde Charlotte, Laurie, Graeme, Contemporary Intellectual Property, Law and Policy, Sec-ond Edition, Oxford University Press 2010, p. 268.

138 MacQueen, Hector, Waelde Charlotte, Laurie, Graeme, Contemporary Intellectual Property, Law and Policy, Sec-ond Edition, Oxford University Press 2010, p. 585; p. 273.

23

thermore, they put an end to the legal uncertainty caused by differences in national law, by

providing equally reliable protection throughout the EU.139

The idea of a Community Patent Regulation (CPR) arose in 2000, when renewed efforts to

achieve unification within the area of patents were made by the EU.140 Earlier attempts of

creating an Community patent, starting already in the 1950s, have all failed. The main rea-

son for this has been that of translation, the fact that a patent had to be translated into each

and every EU-language in order to obtain unitary effect was an obstacle to high to over-

come.141

A Community patent would be a way for the EU to catch up on foreign markets such as

the American and the Japanese in terms of transforming research results and technological

and scientific progress into industrial and commercial success stories.142 But since 1973,

when the EPC established the European Patent Office (EPO) in Munich, Germany, the

EU has not reached longer than to make it possible for companies to apply for European pa-

tents. The meaning of this concept is that only one application and one examination process

is needed in order to grant collections of patents, a significant simplification to the earlier

system where each and every application had to be granted by the different domestic intel-

lectual property offices.143 Important to point out is, however, that European patents does

not provide unitary effect throughout the EU. This is the main difference between the CPR

establishing the Community patent and the EPC establishing the European patent, since

the former would function as a single patent throughout the EU both when it comes to the

EPO-process of obtaining and granting and the system of litigation. As of today, a Euro-

pean patent can be challenged in each and every country in which it is valid, causing both

uncertainty and high costs.144 This will all be changed through the establishment of an

139 Gateway to the EU, 2/5 2011,

http:/ / europa.eu/ legislation_summaries/ internal_market/ businesses/ intellectual_property/ l26033_en.htm.

140 Proposal, of 1 August 2000 for a Council Regulation on the Community patent.

141 MacQueen, Hector, Waelde Charlotte, Laurie, Graeme, Contemporary Intellectual Property, Law and Policy, Sec-ond Edition, Oxford University Press 2010, p. 383.

142 Gateway to the EU, 2/5 2011, http:/ / europa.eu/ legislation_summaries/ internal_market/ businesses/ intellectual_property/ l26033_en.htm.

143 MacQueen, Hector, Waelde Charlotte, Laurie, Graeme, Contemporary Intellectual Property, Law and Policy, Sec-ond Edition, Oxford University Press 2010, p. 381.

144 Proposed Community patent regulation, article from Times Higher Education, 17/4 2004, http://www.timeshighereducation.co.uk/story.asp?storyCode=188725&sectioncode=26.

24

Community patent court.145 Furthermore, calculations show that the Community patent

will cost no more than a European patent covering five countries, a significant saving.146

The purpose is by no means to replace the existing national and European systems, but to

complement them. In other words, the implementation of an Community patent would not

change the fact that rightholders are free to choose the patent protection best suited for

their needs. The CPR will work alongside the EPC, and the EPO no longer only issue pat-

ents of individual Member States but also for the territory of the EU. When it comes to the

subject matter, limitations, the application and conditions for granting a patent as outlined

in part 2.2, the EPC will still be the used system of law. In the area of copyright, no pro-

posal for a unitary right has been made.

145 Proposal for a Council decision establishing the Community Patent Court and concerning appeals before

the Court of First Instance.

146 Proposed Community patent regulation, article from Times Higher Education, 17/4 2004, http://www.timeshighereducation.co.uk/story.asp?storyCode=188725&sectioncode=26.

25

5 Conclusion In the introduction, two questions are raised. The first one relates to the inconsistencies be-

tween intellectual property rights and whether or not they are justified from the perspective

of a company, the second to the conflict in relation to the principle of free movement of

goods and what would constitute the ultimate solution. Three types of inconsistencies are

identified in relation to the four principal forms of intellectual property rights. Firstly, the

grounds on which derogations from the principle of free movement of goods are allowed

are inconsistent between different types of intellectual property rights. Secondly, discrepan-

cies in national law cause inconsistencies not only between different types of intellectual

property rights, but also between the same types of protection. Thirdly, there are inconsis-

tencies between different types of intellectual property rights as a result of the different

level of development in regard of harmonization and unification.

As can be seen in part 2.1 and 3.5, intellectual property rights have different purposes, sub-

ject matter and specific subject matter. The latter is the criteria developed by the ECJ for

when the exercise of an intellectual property right is or is not contrary to the principle of

free movement of goods and, in the absence of complete harmonization and unitary intel-

lectual property rights, the current solution to the conflict. Since the substance varies be-

tween different types of intellectual property rights the inconsistent grounds on which

derogations from the principle of free movement of goods are allowed have to be regarded

as justified. The additional inconsistencies between the four principal forms of intellectual

property rights outlined in part 3.6, in terms of the qualification, procedure, form, duration,

width and notices of protection, are all justified by the same reason.

When it comes to the inconsistencies caused by discrepancies in national law, progress has

been made in all four principal areas of intellectual property rights. The Member States of

the EU began working toward harmonization and unification in the areas of patents, trade

marks and designs already in the 1950s.147 A few decades later, in the 1990s, the same could

be said about copyright.148 As of today numerous directives and regulations have been

implemented, and proposals to harmonize and unify the EU even more in the future have 147 Wadlow, Christopher, Enforcement of Intellectual Property in European and International Law, First Edition, Sweet

& Maxwell Ltd 1998, p. 215.

148 See for example the Council Directive 93/98/EEC of 29 October 1993 harmonizing the term of protection of copyright and certain related rights, repealed by the Directive 2006/116/EC of the European Parliament and of the Council of 12 December 2006 on the term of protection of copyright and certain related rights.

26

been made. Patents, trade marks, copyright and design rights have all been harmonized in

one way or another, and thereby many of the problems in this regard have been erased.

Instead, it is in relation to the next step of creating intellectual property rights with unitary

effect throughout the EU where most of the inconsistencies originate today. Whereas

Community intellectual property rights have been implemented in the areas of trade marks

and design right protection, the areas of patents and copyright are still a long way from the

same level of unification. As far as copyright goes it is understandable, it is simply not in

the need for unification in the same way as trade marks and design right protection since

harmonization solve most of the problems. For example, the term of protection for the

same types of work begins simultaneously149 and lasts for the same amount of time in all

Member States.150 Furthermore, neither a harmonized nor unified process of registration is

needed since copyright arises automatically as soon as a qualifying work is created.151 When

it comes to patents, however, there is a significantly greater need for unification and a

Community patent, and even the establishment of an Community patent court,152 has been

worked on for more than a decade.153 In other words, the unification of intellectual proper-

ty rights is a long and laborious process that may never complement the current system entire-

ly. This is an important word in this regard, since the purpose of the unitary intellectual

property rights is not to replace the national laws, but to stand alongside them. The

rightholders will still be free to choose the type of protection best suited for their needs

and in the absence of unitary intellectual property rights it is for national law to determine

procedures and conditions surrounding grants of intellectual property rights.154 Therefore a

combination between complete harmonization and the initiation of unitary intellectual

property rights would be the ultimate solution to the conflict in relation to the principle of

free movement of goods. The EU has come a long way, but whether or not it will ever

reach the final step an economic union, including a single patent legally valid throughout

149 Directive 2006/116/EC of the European Parliament and of the Council of 12 December 2006 on the

term of protection of copyright and certain related rights, article 8.

150 Directive 2006/116/EC of the European Parliament and of the Council of 12 December 2006 on the term of protection of copyright and certain related rights, article 1.

151 Berne Convention for the Protection of Literary and Artistic Works, 1886, article 5 (2).

152 Proposal for a Council decision establishing the Community Patent Court and concerning appeals before the Court of First Instance.

153 Proposal, of 1 August 2000 for a Council Regulation on the Community patent.

154 Keeling, David T., Intellectual Property Rights in EU Law, Free Movement and Competition Law, First Edition, Oxford 2003, p. 30.

27

the EU and a centralized system of litigation along with a Community copyright, is for the

future to reveal.

28

References Primary legislation

Treaty on European Union, 2009.

Treaty on the functioning of the European Union, 2009.

Convention on the grant of European Patents, 1973.

Berne Convention for the Protection of Literary and Artistic Works, 1886.

Secondary legislation

Council Regulation (EC) No 207/2009 of 26 February 2009 on the Community trade mark.

Council Regulation (EC) No 6/2002 of 12 December 2001 on Community designs.

Directive 2008/95/EC of the European Parliament and of the Council of 22 October 2008 to approximate the laws of the Member States relating to trade marks.

Directive 2006/116/EC of the European Parliament and of the Council of 12 December 2006 on the term of protection of copyright and certain related rights.

Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society.

Directive 98/71/EC of the European Parliament and of the Council of 13 October 1998 on the legal protection of designs.

Case law

Case C-206/01, Arsenal Football Club plc v. Matthew Reed [2003], ECR I-10273.

Case T-184/01, IMS Health Inc. v. Commission [2001], ECR II-00817.

Joined Cases C-92/92 and C-326/92, Phil Collins v. Imtrat [1993], ECR I-05145.

Case C-30/90, Commission v. United Kingdom [1992], ECR I-00829.

Case C-10/89, SA Cnl-Sucal NV v. Hag GF AG [1991], ECR I-03711.

Case 238/87, Volvo v. Erik Veng Ltd [1988], ECR-6211.

Case 40/82, Commission v. United Kingdom [1982], ECR-283.

Case 15/79, Groenveld v. Produktschap voor Vee en Vlees [1979], ECR-3409.

Case 120/78, Rewe-Zentral AG v. Bundesmonopolverwaltung für Branntwein [1979], ECR-649.

Case C-119/75, Terrapin Ltd v. Terranova Industrie CA Kapferer & Co. [1975], ECR I-03657.

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Case 15/74, Centrafarm BV v. Sterling Drug Inc. [1974], ECR-1147.

Case 16/74, Centrafarm BV v Winthrop BV [1974], ECR-1183.

Case 2/73, Riseria Luigi Geddo v. Ente Nazionale Risi [1973], ECR I-00711.

Case 78/70, Deutsche Grammophon GmbH v. Metro SB Grossmarkte GmbH & Co. [1971], ECR-487.

Literature

Aplin, Tanya, Davis, Jennifer, Intellectual Property Law, Text, Cases and Materials, First Edition, Oxford University Press 2009.

Bentley, Lionel, Sherman, Brad, Intellectual Property Law, Second Edition, Oxford University Press 2004.

Cornish, William, Llewelyn, David, Intellectual Property: Patents, Copyright, Trade Marks and Al-lied Rights, Sixth Edition, Sweet & Maxwell 2007.

Fazzani, Linda, Hart, Tina, Intellectual Property Law, Third Edition, Palgrave Macmillan 2004.

Foster, Nigel, Foster on EU-law, Second Edition, Oxford University Press 2009.

Keeling, David T., Intellectual Property Rights in EU Law, Free Movement and Competition Law, First Edition, Oxford University Press 2003.

MacQueen, Hector, Waelde Charlotte, Laurie, Graeme, Contemporary Intellectual Property, Law and Policy, Second Edition, Oxford University Press 2010.

Seville, Catherine, EU Intellectual Property, Law and Policy, First Edition, Elgar European Law 2009.

Wadlow, Christopher, Enforcement of Intellectual Property in European and International Law, First Edition, Sweet & Maxwell Ltd 1998.

Internet

European Parliament, 18/4 2011, http:/ / circa.europa.eu/ irc/ opoce/ fact_sheets/ info/ data/ market/ legislation/ article_7203_en.htm

Foundation for EU democracy, 23/4 2011, http:/ / www.ffeud.eu/ stealth.php

Gateway to the EU, 2/5 2011, http:/ / europa.eu/ legislation_summaries/ internal_market/ businesses/ intellectual_property/ l26033_en.htm

Articles

Proposed Community patent regulation, Times Higher Education, 2004, http://www.timeshighereducation.co.uk/story.asp?storyCode=188725&sectioncode=26.

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Harmonization and intellectual property in Europe, article from the Columbia Journal of Euro-pean Law, Loewenheim, Ulrich 1996, http://www.cjel.net/print/2_3-loewenheim/.