## Facts

- Merck & Co., Inc. owned Dutch patents covering the medicinal product Moduretic and its manufacturing process.
- Merck marketed Moduretic in multiple Member States, including Italy, through its corporate structure.
- At the time, Italian law did not permit patent protection for pharmaceutical products and their manufacturing processes; Merck could not obtain patent protection in Italy for Moduretic.
- Stephar B.V. bought Moduretic in Italy (where Merck had put it on the market) and imported it into the Netherlands for resale, taking advantage of lower Italian prices.
- Dutch patent law provided Merck a remedy to stop third parties from marketing the patented product in the Netherlands, even if the product had been marketed in another Member State by or with the patentee’s consent.
- A Dutch court sought a preliminary ruling on whether the Treaty rules on free movement of goods, including the industrial property exception, allowed Merck to use its Dutch patents to prevent these imports.

## Issues

1. Whether Treaty rules on free movement of goods, including the industrial and commercial property exception, permit a patentee to stop parallel imports into a patent-protecting Member State when the patentee itself marketed the goods in another Member State where the product was not patentable.

## Decision

- The Court held that the Treaty rules on free movement of goods precluded Merck from relying on its Dutch patents to prevent marketing in the Netherlands of Moduretic imported from Italy after Merck had placed it on the Italian market.
- The Court reasoned that the essential function of a patent is to secure the exclusive right of first marketing of the product, not to ensure the patentee recovers a monopoly return in every market.
- By choosing to market in a Member State without patent protection, the patentee must accept the consequences of that choice for intra-Community movement of the goods.
- The industrial property exception could not justify restricting trade to offset effects stemming from the absence of patent protection in the exporting Member State.

## Legal Principles

- A patent’s specific subject-matter primarily protects the patentee’s exclusive right to place the product on the market for the first time.
- When a right holder voluntarily markets goods within the internal market, the right holder generally may not use national patent rights to partition markets by blocking subsequent parallel imports of those goods.
- The industrial and commercial property exception permits import restrictions only within limits consistent with preventing arbitrary discrimination or disguised trade restrictions; it does not allow a patentee to block parallel imports of goods the patentee itself marketed in a Member State lacking patent protection.

## Conclusion

The Court ruled that, after Merck marketed Moduretic in Italy where patent protection was unavailable, free movement of goods barred Merck from using its Dutch patents to stop parallel imports and resale of those goods in the Netherlands.


Merck & Co. v. Stephar B.V., Case C-187/80 (C.J.E.U. 1981)