Patents

Case Note C-44/98 BASF AG v President of the German Patent Office

John Lambert

24 Oct 1999
Last updated 15 Nov 2005

This article formerly appeared on the Lancaster Buildings website

The balance to be struck between promoting the single market and protecting national intellectual property rights was considered yet again by the European Court in this reference under art 234 of the Treaty of Rome. In an application to annul a decision of the President of the German Patent Office that BASF AG's European Patent (Germany) was void ab initio because BASF had not filed a German translation of the  specification of its invention within the prescribed time as required by a federal statute,
the German federal patents court (the Bundespatentgericht) referred the following question to the European Court:

"Is it compatible with the principles of the free movement of goods (articles 30 and 36 of the EC Treaty) for a patent granted by the European Patent Office with effect in a Member State which is drafted in a language other than the official language of that Member State to be deemed void ab initio if the patent holder does not file with the patent office of the Member State in question a
translation of the patent specification in the official language of that Member State within three months of the publication in the European Patent Bulletin of the mention of the grant of the patent?"

Article 30 has been renumbered 28 and article 36 is now article 30.

Background

Article 65 of the European Patents Convention ("the EPC") allows each contracting state to declare a patent void ab initio within its borders unless the patentee files a translation of the specification in its official language within a specified time. The German Federal Parliament took advantage of that article in article II (3) of its international patent convention law (Gesetz uber internationale Patentubereinkommen ("the IntPatUG"):

1. If the text in which the European Patent Office intends to grant a European patent for the Federal Republic of Germany is not drawn up in German, the applicant for or proprietor of the patent shall supply to the German Patent Office within three months of the publication of the mention of the grant of the European patent in the European Patent Bulletin a German translation of the patent specification and shall pay a fee in accordance with the scale of fees.
2. If the translation is not filed within the prescribed period or in a form suitable for publication or if the fee is not paid within the prescribed period, the  European patent shall be deemed to be void ab initio in the Federal Republic of Germany."

BASF AG is the proprietor of a European patent for an automotive paint sealer composition ("the invention") which its American holding company assigned to it on the 26 Aug 1997. The specification was drawn up in English and the grant published in the European Patent Bulletin on the 24 July 1996. On the 5 May 1997, the German Patent Office held that the patent was void ab initio in Germany pursuant to article II (3) of the IntPatUG because the patentee had failed to file a German translation of the specification within 3 months. The patentee challenged the decision in the federal
patents court on the grounds that art 11 (3) contravenes art 28 of the Treaty of Rome. As the issue challenged the validity of an international convention as well as a federal statute the court stayed the proceedings pending the decision of the ECJ.

The Contentions

BASF contended that the costs of translating patent specifications are so high that many patentees are forced to forgo patent protection in some member states thereby defeating the objects of both the EPC and Rome Treaty. The internal market is therefore partitioned into a protected zone, where the patent is in force, and a free zone, where it is not. Such partition impedes the free movement of goods contrary to article 28 in a way not justified under article 30. Manufacturers from the free zone cannot compete in the protected zone without infringing the patent. Conversely, the patentee and licensees in the protected zone cannot sell to the free zone without fear of undermining price structures in the protected zone by distributing goods that could be re-imported as parallel imports. The Commission and the governments of Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands,
Portugal, Spain, Sweden and the United Kingdom disagreed. They argued that neither article 65 of the EPC nor article II (3) of the IntPatUG constituted a measure equivalent to a quantitative restriction on imports.

The Decision

The Court replied to the German court that article 28 does not preclude the application of provisions such as Article II (3) of the IntPatUG, by which a patent granted by the European Patent Office with effect in a member state which is drafted in a language other than the official language of that member state is to be deemed void ab initio if the patentee does not file with the patent office of the member state in question a translation of the patent specification in the official language of that member state
within three months of the publication in the European Patent Bulletin of the mention of the grant of the patent. Although the Court had held in Case 8/74 Dassonville,  [1974] ECR 837 that any trading rule capable of hindering, directly or indirectly, actually or potentially, trade within the Community may have an effect equivalent to quantitative restrictions on imports, it had also held in Case C-266/96 Corsica Ferries France  [1998] ECR I-3949 that art 28 does not apply where the restrictive effects of national
legislation on the free movement of goods are too uncertain or too indirect to be forecast with certainty. Giving patentees the choice of seeking patent protection in all member states or just some might partition the market in the case of some inventions but it would not do so in the case of others. Everything would depend on demand for the invention and other market conditions. Those were so uncertain that the partitioning of the market by reason of art II (3) of the IntPatUG could be regarded as
too indirect to constitute an obstacle to the free movement of goods within the meaning of art 28.

 Comment
This case illustrates how the balance is to be struck when evaluating the compatibility of a national statute with a Community treaty. The starting point is to consider the objective of the treaty provision and to assess the impact on such objective of the national law. The logic of BASF's argument would have required not only modification of the EPC but effectively the abolition of national patents and other intellectual property rights. Those consequences would have been disproportionate to the advantage of
reducing any impediments to inter-state trade that might occasionally occur. Furthermore, the reason for BASF's failure to file a translation of its specification is unlikely to have been a deliberate decision not to incur the costs of obtaining such a translation. Expensive though it may well have been, translating a patent must have been less than litigation in the federal patents court and ECJ.

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