AS TO THE ADMISSIBILITY OF
Application No. 12633/87
by SMITH KLINE and FRENCH LABORATORIES LTD
against the Netherlands
The European Commission of Human Rights sitting in private on
4 October 1990, the following members being present:
MM. C.A. NØRGAARD, President
F. ERMACORA
G. SPERDUTI
E. BUSUTTIL
G. JÖRUNDSSON
A. WEITZEL
H.G. SCHERMERS
H. DANELIUS
Mrs. G.H. THUNE
Sir Basil HALL
Mrs. J. LIDDY
MM. L. LOUCAIDES
J.C. GEUS
A.V. ALMEIDA RIBEIRO
M.P. PELLONPÄÄ
Mr. H.C. KRÜGER, Secretary to the Commission
Having regard to Article 25 of the Convention for the
Protection of Human Rights and Fundamental Freedoms;
Having regard to the application introduced on 12 December
1986 by SMITH KLINE and FRENCH LABORATORIES LTD against the
Netherlands and registered on 16 December 1986 under file No. 12633/87;
Having regard to:
- reports provided for in Rule 47 of the Rules of Procedure of
the Commission;
- the observations submitted by the respondent Government on
17 March 1988 and 25 August 1989 and the observations in reply
submitted by the applicant on 17 May 1988 and 10 October 1989;
- the submissions made by the parties at the hearing on
4 October 1990;
Having deliberated;
Decides as follows:
THE FACTS
The facts of the case as they have been submitted by the
parties may be summarised as follows:
The particular circumstances of the case
The applicant is a company registered in the United Kingdom
with its registered office in Welwyn Garden City, England. In the
proceedings before the Commission it is represented by Mr. A.
Pickford, a barrister employed by the applicant in London.
The applicant is the owner of Netherlands Patent No. 162073
which relates to cimetidine. This patent relates to the discovery
by the applicant of an entirely new class of drugs known as H2
antagonists which are of particular value in treating gastric and
duodenal ulcers. Cimetidine was the first such drug to be
commercialised.
The applicant's patent has three claims, respectively claiming
a process (and all analogous processes), the substance, and solid
compositions (e.g. tablets) containing the substance, all of which
relate to cimetidine.
By Dutch Patent No. 171054, a Dutch company, Centrafarm BV,
obtained a patent on a process for making a group of compounds,
including cimetidine. The applicant submits that this process uses a
known carcinogene, which is also mutagenic, as an intermediate and for
this reason cannot be used cheaply and its safe use presents serious
problems as it has to be certain that the final product does not
contain a residue of the carcinogene. As a result, this process is
not used by any commercial manufacturer of cimetidine. Patent No.
171054 has a later priority date than Patent No. 162073 (the
applicant's patent), and cannot be worked without a licence under
Patent No. 162073. The applicant was unwilling to grant such a
licence.
On 29 November 1983 Centrafarm BV petitioned for the grant of
a compulsory licence under the applicant's patent pursuant to section
34 (4) of the Patent Act (Rijksoctrooiwet) 1910, as amended by the Act
of 13 December 1978 (hereafter "the Patent Act"). This petition was
considered by a Special Division of the Patent Office (Octrooiraad)
set up by the Central Division and comprising one legally qualified
member and two other members expert in the chemical field. These
members had not been involved in the procedure relating to the issue
of either the applicant's or Centrafarm's patent.
The applicant sought in separate proceedings before the
District Court (Arrondissementsrechtbank) of the Hague to have the
Centrafarm BV Patent No. 171054 declared a nullity under section 51 of
the Patent Act. The District Court sought the technical advice of the
Patent Office, which sets up a Special Division which fulfils the
obligation under section 57 of the Patent Act to provide the court
with any necessary information and technical advice. The Special
Division consisted of the same members as those appointed to consider
Centrafarm's application for a licence.
On 11 September 1984 the Special Division of the Patent Office
allowed the petition by Centrafarm BV and granted the latter a
compulsory licence based upon its patent number 171054 in respect of
the applicant's patent subject to the condition that annulment by the
District Court would entail the lapse of the licence. The terms of
the compulsory licence gave the licensee rights over the applicant's
invention of a new chemical substance and of its use in medicinal
dosage forms as well as over the applicant's process. The Special
Division of the Patent Office in its opinion to the court expressed a
view partially supporting the validity of Centrafarm's patent. On
18 April 1986, the District Court granted part of the application for
nullity but upheld part of the patent. The applicant appealed to the
Hague Appeal Court (Gerechtshof).
The applicant appealed against the grant of the compulsory
licence. The Central Division set up an Appeal Division to consider
the appeal, which comprised two legally-qualified ordinary members,
two ordinary members with expertise in the chemical field, the
legally-qualified extraordinary member (the former President of the
European Patent Office and former President of the Patent Office).
None of these members had been involved in any of the earlier
procedures relating to the patents of the applicant and Centrafarm.
By a decision of 8 September 1986, the Appeal Division of the Patent
Office rejected the applicant's appeal and affirmed the decision of
the Special Division of the Patent Office in respect of the compulsory
licence application. As a result of the grant of this compulsory
licence, the applicant lost the exclusive right to its patent.
The applicant's appeal to the Hague Court of Appeal was never
decided, since to avoid the threat of the compulsory licence, the
applicant accepted Centrafarm's offer to pay 50.000 Dutch Guilders for
the surrender of Centrafarm's patent.
Relevant domestic law and practice
The grant and enforcement of patents in the Netherlands is
governed by the Patents Act 1910, as amended by the Act of 13 December
1978 (hereafter "the Patent Act"). A patent is granted for a new
product or process if the invention was not an obvious development
given the current state of the art and is capable of industrial
application.
A patent is deemed, subject to the provisions of the Patents
Act, to be personal property, assignable and otherwise transferable
in full or joint ownership (section 37).
Subject to the provisions of the Act, a patent confers on its
proprietor the sole right, inter alia, to make, use, put on the
market, hire out or deliver the patented product or, when applicable,
to apply the patented process in aid for his business or to make, use,
put on the market, resell, hire out or to deliver the product obtained
directly from the application of the patented process (section 30).
The proprietor of a patent may enforce his patent vis-à-vis any person
who, without being entitled to do so, performs any of the acts referred
to in section 30 (section 43).
By section 33, the right to perform acts prohibited to any
other person other than the proprietor of the patent may be acquired
from the proprietor by means of a licence.
By section 34(4), the proprietor of a patent shall be obliged
to grant a licence required for the working of another patent granted
in respect of an application which has the same or a later filing
date. Such licence should not extend beyond that which is necessary
for the working of the patented invention of the licensee. The
licensee is obliged to grant a reciprocal licence under his patent to
the proprietor of the dominant patent. The licence shall be granted
at the request of the party concerned by the Patent Office if the
Patent Office determines that the obligation to grant it has not been
met (section 34(5)).
Pursuant to section 34(9), the Patent Office may be requested
by the parties to fix the amount of remuneration payable. In the
absence of such request and the agreement of the parties as to the
appropriate sum, the Court may be called upon to fix the amount.
The Patent Office is empowered by the Patent Act to grant
patents (section 13). It consists of a Central Division, Examining
Divisions, Appeal Divisions and Special Divisions (section 14). Its
organisation and procedure are regulated by Order in Council (section
15).
Pursuant to the Patent Rules of 1921 (as amended by Order in
Council of 6 January 1979), the Patent Office consists of a maximum of
90 ordinary and deputy members divided into legally qualified and
technically qualified members and of at least 12 extraordinary members
appointed for five year periods. There are no rules governing the
dismissal of extraordinary members before completion of their
five year period in office, except for the internal departmental
guideline pursuant to which the Patent Office does not recommend the
appointment or reappointment of persons over 67, and the Central
Division of the Patent Office does not nominate persons of 69 or over
as extraordinary members of Divisions. Members are appointed by the
Crown. The ordinary and deputy members are appointed from among the
technical and legal staff of the Patent Office. Their appointments
remain valid until retirement. The extraordinary members are
appointed for a five year period, which may be extended for five years
at a time. They are recruited on the basis of expertise in a
particular field and, in general, are university professors in one of
the technical or applied sciences. No members may take part in
proceedings in which they have a direct or indirect interest or in
which they are in any way involved (section 3 of the Patent Rules).
On taking up their duties, members are required to take a pledge of
diligence, confidentiality and impartiality.
The Central Division of the Patent Office is responsible for
the formation of the Divisions (Examining Divisions, Special Divisions
and Appeal Divisions). The Central Division comprises five members
(and five deputy members). The President of the Patent Office is an
ex officio member of the Central Division. The other members and
deputy members are appointed by the Minister for Economic Affairs from
among the ordinary members of the Patent Office, on the basis of a
wide-ranging knowledge of the various specialist fields.
Appeal lies from the decision of an Examining Division to
an Appeal Division. Members involved in the examination of an
application or in any of the proceedings of an Examining Division,
which decides on whether a patent should be granted, are not allowed
to take part in proceedings before the Appeal Division (section 24).
Section 24 A lays down the formal requirements for the appeals
procedure: the parties must be given a hearing, a written reasoned
decision must be produced, and the members of the Appeal Division must
not have been previously involved in the case.
Pursuant to section 6 subsection 1 of the Patent Rules and
section 8 of the Patent Rules, the Central Division sets up an Appeal
Division drawn from the ordinary or extraordinary members of the
Patent Office. The Appeal Division normally has three members,
though the number may be extended to five if this is justified by the
nature of the issue.
In cases where the Patent Office is called upon to examine an
application for a compulsory, the Central Division sets up a Special
Division with members drawn from the ordinary, extraordinary or deputy
members of the Patent Office, pursuant to section 6 subsection 2 of
the Patent Rules. They are nominated on the basis of their expertise
in the relevant field. Section 9 subsection 2 of the Patent Rules
states that the Special Division shall always comprise two technically
qualified members and one legally qualified member, or, if the case
mainly involves a point of law, two legally qualified members and one
technically qualified member. The application is sent to the person
under whose patent the licence is being requested. This person is
obliged to observe a deadline in producing a written reply to the
application.
The Division does not arrive at a decision until the parties
have been heard, or at any rate summoned in the proper manner. The
parties' pleadings are followed by a discussion of the issues with
members of the Division, who then retire to confer in chambers. The
decision, which is given in writing, sets out reasons. These
procedural requirements are laid down in section 34 subsections 6 and
7 of the Patents Act.
Patent legislation does not provide for the proceedings before
the Patent Office to be open to the public. At no time has the public
been admitted. The argument advanced in defence of this established
practice is that arguments based upon confidential company matters and
expertise which must not be made public are often used to convince the
Division of a particular point of view. It is for the same reason
that the reports of the sessions held by the Divisions of the Patent
Office are not placed among the documents which are open to inspection.
A patent shall be annulled if it should not have been granted
under the provisions of the Patent Act or if it is in contravention of
any other patent granted to a person entitled thereto under the Act
(section 51). The District Court of the Hague has exclusive
jurisdiction with regard to all actions for annulment or invalidation
of a patent as well as actions in respect of the fixing of
remuneration (section 54).
Pursuant to section 57, the Patent Office shall be required to
provide the court with all the information and technical advice the
court may require to reach a decision. A Special Division is formed
for this purpose. It is provided that this advice shall have the same
effect as advice given by experts as referred to in sections 222-236
of the Netherlands Code of Civil Procedure.
Appeal lies from the District Court to the Hague Court of
Appeal.
COMPLAINTS
1. The applicant alleges a breach of Article 6 of the Convention.
It submits that its right to Patent No. 162073 is a civil right and
that the decisions by the Special Division and Appeal Division on the
dispute between the applicant and Centrafarm constituted a
determination of the applicant's rights. However the applicant
complains that the Patent Office does not constitute an independent
tribunal within the meaning of Article 6 para. 1 of the Convention and
its decision to uphold the compulsory licence is not subject to review
by any court or other judicial body.
2. The applicant also complains that the grant of the compulsory
licence interfered with the applicant's peaceful enjoyment of its
patent and deprived it of the exclusive right to the use of the
patented invention contrary to Article 1 of Protocol No. 1. The
applicant complains that the licence was not in the public interest
and that the relevant law does not require the public interest to be
taken into account. The applicant further submits that even if the
licence could have properly been granted, it should have been
restricted to the scope required by the process and not extended to
medical use or to the manufacture and sale of the substance and
compositions containing the substance.
3. The applicant also invokes Article 13 of the Convention, in
that the decision of the Patent Office is not subject to review or
appeal by any judicial body or court. The applicant submits that
provisions for royalties from the compulsory licencee are inadequate
compensation for deprivation of the sole right to exploit their
product and the substantial investment and research put into the
development of the product.
PROCEEDINGS BEFORE THE COMMISSION
The application was introduced on 12 December 1986 and
registered on 16 December 1986. On 12 December 1987, the Commission
decided to invite the respondent Government to submit observations on
the admissibility and merits of the application. The Government
submitted their observations on 17 March 1988 and the applicant
submitted its observations in reply on 17 May 1988.
The Commission considered the application further on 10 July
1989 and decided to invite the parties to submit further observations
on the admissibility and merits of the complaints made under Article 6
of the Convention. The Government submitted their further
observations on 25 August 1989 and the applicant submitted its
observations on 10 October 1989.
The Commission resumed its examination of the admissibility of
the application on 5 March 1990 and decided to invite the parties to
make further submissions on the admissibility and merits of the
application orally at a hearing.
At the hearing, which was held on 4 October 1990, the parties
were represented as follows:
For the Government
Mr. K. de Vey Mestdagh, Agent, Ministry of Foreign
Affairs
Mr. I.W. van der Eyk, Ministry of Economic Affairs
Mrs. M.W.J. Bechger, Ministry of Justice
For the applicant
Mr. A. Pickford, barrister
Mr. D.H. de Witte, lawyer.
THE LAW
The applicant alleges a breach of Article 6 para. 1 (Art. 6-1)
of the Convention in relation to the grant by the Patent Office of a
compulsory licence in respect of one of its patents. The applicant
also complains that the grant of the compulsory licence interfered
with its peaceful enjoyment of its patent contrary to Article 1 of
Protocol No. 1 (P1-1) and that it had no remedy for its complaints
contrary to Article 13 (Art. 13) of the Convention.
Article 26 (Art. 26) of the Convention
The respondent Government contend that the applicant has not
exhausted domestic remedies in respect of its complaints since it has
not pursued its appeal before the Hague Appeal Court in its action
challenging the validity of Centrafarm's patent. The applicant
submits that these proceedings did not allow it to challenge the grant
of the licence itself.
The Commission recalls that Article 26 (Art. 26) of the
Convention only requires the exhaustion of such remedies which relate
to the breaches of the Convention alleged and at the same time can
provide effective and sufficient redress. An applicant does not need
to exercise remedies which, although theoretically of a nature to
constitute a remedy, do not in reality offer any chance of redressing
the alleged breach (cf. No. 9248/81, Dec. 10.10.83, D.R. 34 p. 78).
It is furthermore established that the burden of proving the
existence of the available and sufficient domestic remedies lies upon
the State invoking the rule (cf. Eur. Court H.R., Deweer judgment of
27 February 1980, Series A No. 35 p. 15, para. 26, No. 9013/80, Dec.
11.12.82, D.R. 30 p. 96, p. 102).
The Commission notes that the invalidating of Centrafarm's
patent in the court proceedings would also have the effect of
extinguishing the compulsory licence. The grant of a compulsory
licence however under the Patent Act involved an assessment of whether
the licence was necessary for the operation of Centrafarm's patent.
The applicant also complains that even if the licence was properly
granted, the terms of the licence exceed what is necessary. These
matters cannot be brought before the courts in the proceedings
challenging the validity of Centrafarm's patent. The Government have
not satisfied the Commission that any other effective remedies exist
before the courts.
In these circumstances, the Commission finds that the
application cannot be declared inadmissible for non-exhaustion of
domestic remedies.
Article 6 (Art. 6) of the Convention
The applicant complains of being deprived of the exclusive
right to exploit its patented drug as a result of the grant of a
compulsory licence to Centrafarm. The applicant complains that the
Patent Office in effect determined its civil rights in respect of its
patent but did not constitute an independent or impartial tribunal
within the meaning of Article 6 para. 1 (Art. 6-1) of the Convention,
which provides, inter alia:
"In the determination of his civil rights and
obligations or of any criminal charge against him,
everyone is entitled to a fair and public hearing
within a reasonable time by an independent and
impartial tribunal established by law."
The Government submit that the right to a licence is
automatically conferred by the Patent Act itself and the procedure by
which the Patent Office grants a licence does not determine any civil
rights within the meaning of Article 6 para. 1 (Art. 6-1) of the
Convention. They also submit that in any case the Patent Office is an
independent and impartial tribunal within the meaning of that
provision.
The Commission has made a preliminary examination of the
parties' observations on the merits of these complaints. It considers
that they raise questions of fact and law which are of such complexity
that their determination should depend upon an examination of the
merits. It follows that this part of the application cannot be
declared manifestly ill-founded within the meaning of Article 27 para.
2 (Art. 27-2) of the Convention, but must be declared admissible, no
other ground for declaring it inadmissible having been established.
Article 1 of Protocol No. 1 (P1-1) to the Convention
The applicant also complains that the grant of a compulsory
licence to Centrafarm has interfered with its rights under Article 1
of Protocol No. 1 (P1-1) to the Convention, which provides:
"Every natural or legal person is entitled to the peaceful
enjoyment of his possessions. No one shall be deprived of
his possessions except in the public interest and subject
to the conditions provided for by law and by the general
principles of international law.
The preceding provisions shall not, however, in any way
impair the right of a State to enforce such laws as it
deems necessary to control the use of property in
accordance with the general interest or to secure the
payment of taxes or other contributions or penalties."
The Commission notes that under Dutch law the holder of a
patent is referred to as the proprietor of a patent and that patents
are deemed, subject to the provisions of the Patents Act, to be personal
property which is transferable and assignable. The Commission finds
that a patent accordingly falls within the scope of the term
"possessions" in Article 1 of Protocol No. 1 (P1-1).
The Commission has therefore examined whether there has been
any interference with the applicant's rights under Article 1 of
Protocol No. 1 (P1-1).
The Government submit that patents are granted subject to the
provisions of the Patent Act which expressly limits the scope of the
patent owners' rights by providing for the grant of compulsory
licences to dependent patent-holders. The grant of such a licence can
therefore not constitute an interference within the meaning of the
above provision. The Commission however recalls that a patent
initially confers on its owner the sole right of exploitation. The
subsequent grant of rights to others under that patent is not an
inevitable or automatic consequence. The Commission finds therefore
that the decisions of the Patent Office, conferring on Centrafarm a
right of compulsory licence in respect of the applicant's patent,
constituted a control of the use of property. The Commission must
therefore consider whether this control is lawful, in accordance with
the general interest and pursues a legitimate aim in a proportionate
manner (Eur. Court H.R., Tre Traktörer AB judgment of 7 July 1989,
Series A no. 159, pp. 22-24, paras. 56-63).
The Commission recalls that the exclusive rights of a patentee
are limited in many of the Contracting States and that provision for
other persons to make use of a particular patented product or process
is commonly made for the purpose of preventing the long term hampering
of technological progress and economic activity. The Commission notes
that Centrafarm was granted a compulsory licence under the applicant's
patent since, otherwise, it could not work under another patent which
it held. Pursuant to the Patent Act, the dependent patent would only
have been granted if it was considered to introduce a new product or
process that was not an obvious development given the current state of
the art and was capable of industrial application. The Commission is
satisfied that the grant of the compulsory licence was lawful and
pursued a legitimate aim of encouraging technological and economic
development.
As regards proportionality, the Commission notes that the
provision only comes into effect where such licence is necessary for
the working of a patent of the same or later date and the licence
should be limited to what is required for the working of the patent.
Further, the owner of the dominant patent is entitled to royalties in
respect of each compulsory licence granted under the legislation and
receives reciprocal rights under the dependent patent. While the
Commission recalls that the Patent Office is not required to
investigate in each particular case whether the grant of the
compulsory licence is necessary in the general interest, the
Commission finds that the framework imposed by the legislation is
intended to prevent abuse of monopoly situations and encourage
development and that this method of pursuing that aim falls within the
margin of appreciation accorded to the Contracting State. The
Commission accordingly finds that the control of use in the
circumstances of this case did not fail to strike a fair balance
between the interests of the applicant company and the general
interest and is in accordance with the requirements of Article 1 of
Protocol No. 1 (P1-1) to the Convention.
It follows that this part of the application is manifestly
ill-founded within the meaning of Article 27 para. 2 (Art. 27-2) of the
Convention.
Article 13 (Art. 13) of the Convention
The applicant complains of not having an effective remedy in
respect of its complaints contrary to Article 13 (Art. 13) of the
Convention, which provides:
"Everyone whose rights and freedoms as set forth in
this Convention are violated shall have an effective
remedy before a national authority notwithstanding that
the violation has been committed by persons acting in
an official capacity."
The complaint under Article 13 (Art. 13) of the Convention is
closely linked to the complaint under Article 6 (Art. 6) of the
Convention. It should therefore also be declared admissible.
For these reasons, the Commission
by a majority, DECLARES THE APPLICATION ADMISSIBLE,
with regard to the applicant's complaints under Article 6
para. 1 and Article 13 (Art. 6-1, 13) of the Convention,
without prejudging the merits;
unanimously,
DECLARES THE REMAINDER OF THE APPLICATION INADMISSIBLE.
Secretary to the Commission President of the Commission
(H.C. KRÜGER) (C.A. NØRGAARD)
Full & Egal Universal Law Academy