## Facts

- Pharmaceutical patent holders owned United Kingdom patents covering certain medicinal products.
- The same products were marketed by the patent holders (or with their consent) in Spain and Portugal at a time when those states did not provide patent protection for pharmaceutical products.
- After Spain and Portugal joined the European Communities, parallel importers bought the products in Spain/Portugal and imported them into the United Kingdom for resale at lower prices.
- The patent holders sought to use their United Kingdom patents to prevent these parallel imports.
- The High Court of Justice (Patents Court) referred questions to the Court of Justice of the European Communities for a preliminary ruling on the effect of the 1985 Act of Accession transitional provisions and the interaction of free movement of goods with patent rights.

## Issues

1. When did the Act of Accession transitional periods in Articles 47 (Spain) and 209 (Portugal) expire, during which patent holders could oppose imports of pharmaceuticals they had marketed in Spain or Portugal?
2. After those transitional periods, do Articles 30 and 36 EC bar applying national patent law to prevent importation by third parties of products first marketed by the patent holder (or with its consent) in Spain/Portugal when the products were not patentable there at the time?
3. If such import restrictions are otherwise barred, can they be justified by (a) a legal obligation to market in the exporting state, (b) an ethical obligation to supply that market, or (c) price controls in the exporting state?

## Decision

- The Court held that the transitional period under Article 47 (Spain) expired on 6 October 1995, and the transitional period under Article 209 (Portugal) expired on 31 December 1994.
- The Court ruled that Articles 30 and 36 EC preclude applying national patent rules that allow a patent holder to oppose parallel imports of a pharmaceutical product where the holder first marketed the product in another Member State (or consented to its marketing) even if the product was not patentable there at that time.
- The Court indicated that a justification may exist where the patent holder was subject to a binding legal obligation to market the product in the exporting state.
- The Court rejected justifications based on an ethical obligation to supply the exporting market or on price controls imposed there.
- The ruling interpreted EU law and left application to the referring national court.

## Legal Principles

- EU “Community-wide exhaustion” applies to patent rights: when a product is put on the market in a Member State by the right holder or with its consent, patent rights cannot generally be used to control subsequent circulation of that same product within the EU.
- Exhaustion can apply even if, at the time of first marketing in the exporting Member State, the product was not patentable there.
- Transitional derogations from free movement under accession instruments are construed narrowly and end on fixed dates; once expired, the general exhaustion rule governs.
- National measures allowing a patent holder to block parallel imports of goods it marketed elsewhere in the EU constitute a restriction on imports contrary to Article 30 EC unless justified within Article 36 EC’s limited scope.
- Under Article 36 EC, protection of industrial property justifies trade restrictions only to safeguard the patent’s specific subject matter; market partitioning is not protected.
- A state-imposed legal duty compelling marketing in the exporting state may support a limited justification; ethical considerations and price regulation do not.

## Conclusion

The Court fixed the end dates of the Spain/Portugal accession transitional protections and held that, after those dates, EU free-movement rules generally prevent pharmaceutical patent holders from using national patents to stop parallel imports of products they themselves marketed (or authorized) in another Member State, with only a narrow potential exception where a binding legal obligation required marketing in the exporting state.


Merck & Co. v. Primecrown Ltd., Case C-267/95, [1996] E.C.R. I-6285 (C.J.E.U. 1996)