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Published: Fri, 02 Feb 2018
European Communities | Free European Law Essay
The European Communities were established with the aim of providing peace and economic stability within Europe. This essay will consider how the European Union has sought to establish:
a single market;
ultimately abolish barriers to trade;
approximate laws of
the Member States;
promote research and
technological development and respect property rights.
A single market
2 of the EC Treaty explicitly sets out the primary goal of the Community of
creating a common market.
3 provides a list of activities that must be put into effect by the Community
to ensure that these aims are achieved.
Article 3(c ) provides that all
obstacles to the free movement of goods, persons, services and capital are
b) diminish and ultimately
abolish barriers to trade
movement of goods
3a sets out the principle for the free movement of goods. Article 14 provides
that the internal market will comprise an area without frontiers in which free
movement is ensured. Free movement of goods will be restricted by quantitative
measures, such as customs quotas. Customs quotas would for example, provide
that only so many widgets may be imported from a specified state each year.
is dealt with within Article 28, which provides quantitative restrictions on
imports and all measures having equivalent effect shall be prohibited between
Member States. Article 29 makes similar provisions for quantitative
restrictions on experts.
right of a patent or trade mark holder to restrain importers, which effectively
means that no products may be imported without the right holder’s consent, may
be perceived as having equivalent effect to a nil quota.
30 assists by providing exceptions for measures that are justified on specified
grounds. These include the protection of industrial and commercial property’.
It however is also provided that the provisions of Articles 28 and 29 shall
not preclude prohibitions or restrictions on imports, exports or goods in
transit justified on grounds ofthe protection of industrial and commercial
property. Such prohibition or restrictions shall not, however, constitute a
means of arbitary discrimination or disguised restriction on trade between
it is submitted that intellectual property rights may be of equivalent effect
to quantitative restrictions.
intellectual property rights
the 1970’s, the Court developed the doctrine of exhaustion of rights, in an
attempt to prevent limited national intellectual property rights dividing the
Treaty provides a closed list of grounds under which Member States may claim
derogation from the provisions of articles 28 and 29. Ground 11 provides that
there will be no justification to an obstacle to the free movement of patented
goods where the product has been put onto the market in a lawful manner, by
the patentee himself or with his consent, in the Member State from which it has
been imported, in particular in the case of a proprietor of parallel patents.
The courts have subsequently applied this ground literally, and treated a
patent as exhausted by any sale in another Member state by or with the consent
of the holder, whether or not a monopoly profit could be earned in the country
of export. The holders consent is however required if the doctrine of
exhaustion is to apply – as confirmed in Keurkoop v Nancy Kean Gifts.
has argued that the principle of free movement does not require international
exhaustion between Member States. He explains that exhaustion of rights
expands the number of peiole selling products that are already on the market in
Member States. It does not however increase the amount of different products
moving across Europe. On the contrary, it acts as a barrier to entry as
parallel trading will be expected to prevent the recover of the costs of
introducing the new product on to the market.
81 and 82 prohibit undertakings from entering into anti-competitive agreements,
or from abusing a dominant market position. The aim of these provisions is to
prohibit distortion of free competition resulting from collusion or other
conduct between two or more undertakings, or the abuse of predominant market
power by an undertaking.
81 provides that an anti-competitive agreement that may have a restrictive
effect on inter-community trade will be declared void, unless there is a
sufficiently valid reason to allow an exception. To invoke Article 18, there
must be an ‘actual’ effect – rather than mere potential for such an outcome.
It does not however matter whether such effect is detrimental or not.
include block or individual exemptions. A system of comfort letters has also
82 seems to prevent undertakings from becoming involved in anti-competitive
behaviour by prohibiting abuse by one or more undertaking of a dominant market
position. Such abuse will be prohibited as incompatible with the common
market in so far as it may affect trade between member states. Before abuse
can be shown, it must be established that the relevant undertaking is in a
dominant potition. It was held in Michelin v Commission
that a firm in a dominant position has a special responsibility not to allow
its conduct to impair competition. Abuse is considered objectively and it is
not necessary to show that the undertaking intended harm. No exemptions apply
to Article 82.
Encourage international trade
to trade fall into two categories – pecuniary, and non-pecuniary. Pecuniary
barriers include the imposition of for example a customs duty for goods
entering and leaving each state.
23 creates a customs union, with all customs duties and charges on goods of
equivalent effect being removed. Article 24 provides that once non-domestic
goods have been subject to a commons customs tariff (raised by the EC – not
member states), they are in free circulation, and are to be treated the same as
25 provides that Member States shall refrain from introducing between
themselves any new customs duties or changes having equivalent effect. This
applies to both imports and exports. Goods include products which can be
valued in money and which are capable of forming the subject of a commercial
This will clearly include intellectual property.
court has also taken care to encourage international trade through the
harmonisation of the laws of member states – as detailed below. Without
harmonisation, inter-state trade would be impeded wherever a right holder in
the country of import had no rights in the country of export, and the protected
product was put on the market by a third party without consent.
approximate laws of member states.
limitations on intellectual property right are contrary to the concept of a
Jones & Survin EC Competition Law
it is noted that despite the introduction of some community-wide rights,
intellectual property rights are still typically granted by national laws and
enforced on a national basis, conferring protection within national
territories. This inevitably leads to a conflict with the community provisions
governing the free movement of goods and services.
particular example of the difficulty is seen with patents. For example, a UK
patent extends only through the UK. Similarly, a French patent extends only
and Grundig v Commission
was an early case looking to prevent the division of the common market along
frontiers through intellectual property rights. Grundig was permitted Grundig
to allow its exclusive distributors to register its trade mark ‘Gint. Its
French distributor, Consten, was then able to sue a parallel importer under
French law for trade mark infringement, in addition to unfair competition. The
ECJ distinguished the ownership of trade mark rights under national law
(protected under Article 295) from their exercise, subject to the Treaty
provisions. This avoided the conclusion that Grundig was acting in abuse of
trade mark law.
of intellectual property rights is essential to prevent free riders from
selling into countries where there are weaker intellectual property rights,
which would lead to the creation of piracy havens.
to the Harmonisation Directive
copyright protection lasted for different periods in different Member States,
which led to divisions within the Common Market. The Directive has led to
copyright being extended throughout the Community from the life of the author
plus 50 years (as applied in most member states) to the German period of the
life of the author plus 70 years.
has been further harmonisation through the Software Directive
which introduced the requirement of all Member States to protect software by
copyright. This Directive provides that each member states must incorporate
into national law the rights of third parties to decompile programmes
sufficiently to permit one programme to work with another.
was intended to harmonise database law. The implementation of the directive
through national states has however been varied, and has therefore not
completely harmonised the position.
Trade Mark Directive
was adopted in 1993. The Community trade mark office
began accepting filings in 1996. National marks still exist, and there will
continue to be divisions within the market since honest and concurrent users of
independent marks will continue to cause difficulties. However, Community
marks will be effective throughout the EEA unless they are challenged within a
county on the basis of confusion with a local mark.
f) promote research and technological development
and respect property rights.
Exclusive intellectual property rights are by their very
nature anti-competitive. They restrain third parties from taking advantage of
the property right. By their nature, they constitute a barrier to entry.
without encouragement of investment in intellectual property, it would not be
beneficial for creators to spend time creating new patented goods, artwork,
music, literature etc. Investors of intellectual property would not gain
return on their investment, which would cause a massive reduction in the
production of new and innovative designs and works.
of intellectual property rights would allow inventions, designs and other
intellectual property to be copied, without the expense of the investment of
development time. This is of particular relevance to pharmaceutical products,
which are extremely costly to develop as a result of the necessary clinical
trials. They can however be cheaply copied. This would have dyer consequences
for the advancement of medicine throughout the world, since investment in
pharmaceutical products would vanish in such circumstances.
marks similarly are essential in order to increase consumer choice, and make
the economy more competitive.
the EC must endeavour to strike the correct balance.
its judgments since the 1970’s, and in particular cases such as Keurkoop v
Nancy Kean Gifts
considering exhaustion of rights, the Courts have stressed the importance not
to undermine the importance of intellectual property rights. The court is
clearly conscious of the importance of rewards and incentives.
Treaty, 25th March 1957 as amended OJ 2002 C325/1
Regulation (EC) No 772/2004
- Council Dir 93/98/EEC of 29
October 1993, Harmonising the term of protection of copyright and certain
related rights OJ 1993, L290/9
- Council Dir 91/250, OJ 1991,
L122/42, Software Directive
Dir 96/9 OJ 1996, L77/20, The Database directive
- Council Dir 89/104 to approximate
the laws of the Member States relating to trade marks, OJ 1989, L40/1
bv and de Peijper v Sterling Drug Inc (15/74) ECR 1147 31 Oct 1974
and Grundig v Commission (56 & 58/64)  ECR 299
v Nancy Kean Gifts (144/81)  ECR 2853
v Commission 322/81
K – Understanding European Union, 2nd Edition 2003, Cavendish
& Surfin EC Competition Law: Test Cases and Materials (2001)
V – An Introductory guide to competition law and practice, 8th Edition 2004, Hart Publishing
- Hansen, H international
exhaustion: an economic and non-economic policy analysis’ -Intellectual
Property Law and Policy – vol 6 (New Jersey, Juris Publishing (2001)
- Centrafarm bv and de Peijper v Sterling
Drug Inc (15/74) ECR 1147 31 October 1974
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