Harmonization and Intellectual Property in Europe

2 Colum. J. Eur. L. 481 (1996)

Ulrich Loewenheim. Professor of Law, Johann Wolfgang Goethe-Universität, Frankfurt; Dr. iur. Frankfurt.

In any discussion of the “harmonization of laws in federal systems,” European intellectual property law unquestionably deserves inclusion. Intellectual property, as a rule, is not a regional but a national matter and, beyond that, an international concern. Consequently, the necessity of federal regulation at the national level is undoubted. This fact is recognized in Art. 73(9) of the German constitution which exclusively assigns legislative competence in this domain to the federal legislator, reflecting the need for a uniform law governing the whole of Germany. In other Members States of the European Union the situation is more or less similar.

In addition, on the European level, there has also been a good deal of activity intended to harmonize intellectual property law among the Member States. It is my purpose here to describe that activity. My analysis is divided into three parts. First, I examine the needs and reasons for a harmonization of intellectual property law or, respectively, for other regulatory measures in this field, with the following question in mind: Why has the European Community expended so much effort to create a uniform or, at least, harmonized intellectual property law? Second, I discuss briefly the role of the European Court of Justice in the harmonization of intellectual property law. Third, in the main part of my presentation I review the harmonization measures already in effect as well as those under consideration on the European level. Based on the foregoing discussion, I will venture a number of conclusions.


The interaction of two basic principles (the principle of territoriality and the principle of exhaustion or, in other words, the first-sale doctrine) has been the driving force behind Europe’s efforts to harmonize intellectual property law. Intellectual property protection, according to the principle of territoriality, is limited to national jurisdictions. Thus, a patent-owner seeking worldwide protection can only achieve international patent protection through a bundle of individual national patents limited to the states that have granted them. Each patent is governed by the laws of that state and can be enforced only in the territory of that state.

The principle of exhaustion, on the other hand, limits the right of an owner to control the further distribution of goods protected as intellectual property. When the first sale of such goods has occurred, either by the right-owner or with his or her consent, the goods can be resold freely without the right-owner’s further permission (which is to say that the intellectual property right is “exhausted”). It is, however, a crucial question in which state the exhaustion takes place. Basically this question is answered by the territoriality principle: because the exhaustion doctrine is part of national law, the scope of its application is confined to the territory of a particular state.’ That means that the first sale of goods protected as intellectual property can exhaust the intellectual property right only in that territory but not elsewhere. As a consequence, the right-owner is entitled to enjoin the importation of previously sold goods into other countries where the intellectual property right has not been exhausted. This rule holds even if the goods have been marketed with the right owner’s consent. Consequently, the owner may control the distribution of goods by setting up trade barriers against unwanted imports. This is the situation which confronted the European Community prior to establishing its own rules on intellectual property.

It is not only the interplay of the territoriality and the exhaustion principles that endanger free intra-Community trade. The mere existence of disparities in national intellectual property laws can also constitute a barrier to trade. Consider the facts of the EMI Electrola judgment rendered by the European Court in 1989. This case involved sound recordings imported from Denmark into Germany. In Denmark, the sound recordings were already in the public domain while in Germany they were still protected. The German right-owner brought action against the imports on the grounds of copyright. The Court held that, in absence of Community legislation governing the terms of copyright protection, the Member States were free to determine the conditions of copyright protection. Consequently, the import ban did not violate European law.

Such an outcome seemingly ran contrary to the very purpose of the Common Market: free trade within the Community. Article 3(c) of the EC Treaty provides that the activities of the European Community include, among other things, abolishing obstacles between Member States to freedom         of movement for persons and services. This goal appeared to be seriously endangered by national intellectual property rights. In addition, disparities in national intellectual property laws endangered namely the principle of undistorted competition, provided for in Article 3(g) of the Treaty. Different intellectual property laws create unequal conditions for the production and distribution of goods and the rendering of services. The European Commission has referred to this effect in most of its directives on harmonization of intellectual property laws. Needless to say, this situation required some action at the European level, in accordance with Article 3(h) of the EC Treaty, which identifies as one of the activities of the Community the approximation of laws of the Member States to the extent required for the functioning of the Common Market.