STUDENT NOTE: Patents and the Free Movement of Goods: a Shift Towards European Arbitrariness?

15 Colum. J. Eur. L. 495 (2009)

Tim Volkheimer. Columbia Law School/University College London, J.D./LL.B. expected 2010. Co-Head Articles Editor, Columbia Journal of European Law, Volume 16. I wish to thank Mathilde Cohen, Zachary L. Craft, and Abraham Shaw for their assistance in preparing this Note.

This Note discusses the tension between nationally granted patents and the establishment of a European common market. Due to patents’ territorial application and their grant of monopoly-like rights to their holders, patents partition the market along nation state lines, thus conflicting with Article 28 EC (formerly Article 30 EC) on the free movement of goods within the European common market. This conflict is further increased by the application of Article 295 EC (formerly Article 222 EC) which prohibits a replacement of national property systems through European Community rules and the application of Article 30 EC (formerly Article 36 EC) which allows for a derogation from Article 28 EC to protect industrial and commercial property.

In this light, the Note will particularly focus on the case law of the European Court of Justice and critically examine the Court’s attempts to solve the aforementioned problem. This Note argues that the Court developed its existence/exercise dichotomy as well as the principle of the specific subject-matter of a patent only to arrive at the principle of Community-wide exhaustion of patents. However, the Note finds that the Court’s disregard of the underlying principles of Article 28 and its inconsistent application of the principle of exhaustion lead to legal uncertainty and unfair results not warranted by the EC Treaty.

The Note concludes with the proposition that the Court should abandon its aforementioned principles and should rather apply a two-stage test to determine whether a patent case violates Article 28: at the first stage, the Court should consider whether the situation in which a party relies on national patent law would lead to discrimination or unfavorable treatment of imported good to the benefit of domestic goods if the law was upheld. While the inquiry should end at this stage if the answer was negative, the Court should question at the second stage whether such derogation was justified under Article 30 in order to protect industrial and commercial property if discriminatory treatment was found.