European Unions Principles of Free Movement of Goods - Essay Example

To what extent is the principle of protection in relation to property rights reconciled with European Union’s principles of free movement of goods and prohibition of anti-competitive behaviours. Introduction Intellectual Property Rights are those rights granted to creators and owners of works that are the results of human intellectual creativity. These works can be in the industrial, scientific, literary or artistic domains. They can be in the form of inventions, a manuscript, a suite of software or a business name as examples. They are recognized and protected in the some way in all developed countries and involve a broad spectrum of different rights. For instance, intellectual property rights safeguards the creators of aesthetic and artistic works from having their creations distorted and purloined by others, they provide incentive for invention and innovation by enabling those who develop new products and processes to reap the financial rewards of their efforts and they also allow those who develop brand names to exploit the reputation attached to the brand. In general, intellectual property law grants the creator of a work certain controls over the exploitation of that work as the unfettered ability of others to copy the work or invention may deprive the creator of reward and incentive. For some intellectual property right laws, the grant of protection is in return for the creator making the work accessible to the general public. Intellectual property law maintains a balance by granting the rights for a limited time. Some rights require registration such as patent rights whiles other rights are accrue automatically upon the work’s creation as in copyright. The value and importance of intellectual property rights is without question but their interaction with European Community laws is sometimes very complicated. Types Of Intellectual Property Rights. Intellectual Property rights accords holders an exclusionary and sometimes exclusive right to the exploitation of an emanation of the intellect. The nature of the rights varies from one type of intellectual property to another. Intellectual property also varies in duration. Some arise only upon registration whiles others arise from the act of creation itself: Patents: Patents relate to invention. It is a monopoly rights granted by the government through the Patent Office to an individual who has invented a product or process. The grant of the patent confers on the holder (patentee) for a maximum period usually of 20 years a monopoly to exploit a new and inventive product or process and the right to prevent others from making, disposing of or from using the patented process itself. Patent protects applied technology and not abstract ideas. They are granted in respect of the product or processes disclosed in the specification when the patent is applied for and on the expiry of the patent, anyone else in the world may use the information contained in the specification. The basic objective for granting this right are – to inform the public through publication of details from the application of the latest technological advances, provide an incentive for innovation and thereby stimulate economic activity and to provide a reward for creative and innovative effect. Trade Mark: These are signs or marks used to differentiate a product. They can also be words or symbols used in relation to goods and services that distinguish the owner’s goods and services from those of another. Registration of a trade mark gives the holder an exclusive right to use it as such although if it is a non-invented word. It does not the word out of general use but only prevents its use by others as a trade mark. Current legislation allows for the possibility of distinctive smells and sounds also attracting protection (Hart, Fazzani and Clark 2006:2). Other parties remain free to offer competing goods and services under other marks and brand names. The law in this area restrains others from applying the owners brand to their goods and services. The trade mark owner’s rights are protected by statutes if registered or by common law when the rights in the trade mark are based on use and goodwill. If renewal procedures are complied with, trade mark registration can continue indefinitely. Trade mark laws in the European Union was harmonized by the First Trade Mark Directive of 21st December 1988 (Jones and Sufrin 2001:557). Marks and brand names which are not registered may also be protected by other means. In the United Kingdom, this is by the law on Passing-Off and in many European Union countries, by laws on unfair competition. Copyright: Copyright protects works such as literary, dramatic, musical and artistic works, films, sound recordings and broadcasts from unauthorized exploitation by third parties. As well as protecting the fruits of creative efforts, the legislation also protects those who have invested in those efforts by providing protection for sound recordings, films and published editions of literary work. Unlike patents, copyright does not confer monopoly because it prevents only copying. Thus, if a third party independently comes up with the same melody or words, he will not be liable for breach of copyright. Copyright does not depend on registration. Or formal procedures but arises automatically when the work is set down or recorded in some form. Copyright in the EU lasts the lifetime of the author plus seventy years. Currently, copyright law in the United Kingdom is governed by the Copyright, Designs and Patents Act of 1988. The first part of the Act deals with copyright law and has been subject to various amendments over time including those of October 2003 which were aimed at bringing the Act in line with European Union Directive on Copyright and Related rights in the Information Society (EU Copyright Directive) 2001 and the challenges posed by the internet. As the UK is a member of various international conventions and treaties on copyright law, it has been amended on a number of occasions to harmonise it with provisions of international treaties. There are greater differences between the laws of EU member states in respect to copyright than there are with other forms of intellectual property (Jones and Sufrin 2001:558). Common law notions of copyright emphasise the right of the author to prevent others exploiting his work for commercial gain whereas civil law emphasise the right of the creator of a work to be recognized as such and to morally entitled to protect its integrity. UK copyright law for instance covers performer’s rights and similar rights but in most EU countries, there is a distinction drawn between author’s rights and neigbouring rights – those accorded to sound recordings, broadcast and performers. Under UK law, works created by the “sweat and brow” (Jones and Sufrin 2001:558) such as compilations and information are accorded copyright protection whereas civil law system require a greater degree of creativity. Design: Designs that give visual appeal to mass produced goods may be protected as registered design. Whereas designs that are merely functional are registered as unregistered designs. Under the Berne Convention, countries are free to choose the way in which they protect industrial design. In the UK, designs which have the features which in the finished article “appeal to and judged by the eye” can be registered. Registration in effect, gives the proprietor a monopoly over its use for a maximum of twenty-five years in respect of articles for which it has been registered. Like copyright, it protects the holder against copyrighting and not against independent creation whereas registered designs rights is like patent in protecting against independent creation. The 1998 Directive on the legal protection of designs dealt only with registered designs and is a partial harmonization measure only. Under the directive, protection is for twenty-five years and entitles holder to prevent the marketing, offering, putting on the market, importing, exporting and stocking of a product incorporating the design. Database Rights: Information arranged in a methodical and systematic way, usually accessible by electronic means such as databases was originally protected under copyright law. However, with the implementation of the EU Directive on the legal protection of databases by the Copyright and Rights in Databases Regulation of 1997, a new database right was created. Know-How: Although strictly speaking, this is not an intellectual property right, but it often features in commercial transactions such as licensing arrangements to which article 81 of the EU Directive applies. Know-how is confidential, technical, commercially valuable information which is not patented or registered in any way. Know-how is defined in the block exemption on technology transfer agreements and is protected by contractual provisions and breach of confidence laws. Provision Of Intellectual Property Rights In European Union Laws: Perhaps, surprisingly for a document purporting to lay down the foundations for a single market, the European Community treaty itself contains very little about intellectual property. Article 295 however contains a general rule about property rights: “This treaty shall in no way prejudice the rules in member states governing the system of property ownership” (Jones and Sufrin 2001:560) Community law therefore recognizes the existence and ownership of rights given by national law. Nevertheless, there is a fundamental conflict between this and the principle of free movement of goods. In article 28, the basic provision on the free movement of goods states: “Qualitative restrictions on the imports and all measures having equivalent effect shall without prejudices to the following provisions be prohibited between member states” (Jones and Sufrin 2001:560). However, if widgets made in France by company F cannot be imported into Germany because they would infringe company G’s German patent, the market is divided along national lines. Not only that but company G may wish to use its German patent to prevent its own widgets which it has manufactured in the UK from being imported into Germany by a parallel importer. In both these examples, the free circulation of goods can be seriously impeded by national intellectual property rights. Intellectual property rights are specifically dealt with in Article 30 which provides derogation from Article 28. It is the only place in the treaty where they are mentioned. Article 30 states: “The provisions of Article 28 and 29 shall not preclude prohibitions or restrictions on imports, exports or goods in transit justified on grounds of public morality, public policy or public security; the protection of health and life of humans, animals or plants; the protection of national treasures possessing artistic, historic or archaeological value; or the protection of industrial and commercial property. Such prohibition or restriction shall not however constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States” (Foster 2003:8). Community law therefore accepts that restrictions on free movement of goods may be justified to protect national intellectual property rights. Article 30 however, contains a final provision in the last sentence. The restrictions are not to constitute “a means of arbitrary discrimination or a disguised restriction” on inter-member state trade (Jones and Sufrin 2001:561). Intellectual property rights also affect the free movement of services. Article 49 is the basic provision on services: “ Within the framework of the provisions set out below, restrictions on freedom to provide services within the community shall be prohibited in respect of nationals of member states who are established in a state of the community other than that of the person for whom the services are intended” (Foster 2003:13). Restrictions on the movement of services may therefore be justified by the need to protect intellectual property rights in the same way as they are justified in respect of the movement of goods. The value and importance of intellectual property rights in the modern commercial world is not only for competition law but also for the free movement of goods and services and the operation of a single market. This is because: Despite the introduction of some community-wide rights, intellectual property rights are still typically granted by national laws and enforced on a national basis, conferring protection within national territories. This inevitably leads to conflict with the community provisions governing the free movement of goods and services. Intellectual property rights may erect barriers to entry to a market thereby affecting the determination of whether an undertaking is in a dominant position for the purposes of the provisions of article 82. In addition, the use by a dominant undertaking of its intellectual property rights may constitute an abuse. Transactions involving intellectual property rights may be agreements falling within article 81 of EU Directives. Holders of intellectual property rights often exploit them by licensing others to use them. The terms of such licenses may involve restrictions of competition including territorial restrictions which divide the common market. Principle of Free Movement of Goods The aspiration to create a barrier-free internal market was the logical outcome of the economic philosophy underlying the founding treaties (Cairns 2002:155). Thus, through the principle of free movement of goods, the European Community combines elements of a customs union, a common market, common economic policies and provisions for economic and monetary union, striving towards economic integration. The community was intended from its inception to be more than a free trade area, an agreement between member states in which they agree to remove customs duties and quotas in trade between them but where they remain free individually to determine the duties on imports from third countries (Horspool and Humphreys 2006:283). A customs union being a customs area involving various states cordoned off by a single external tariff and within whose boundaries no customs duties or quotas apply to all goods regardless of their origin. Once goods originating from a third country have been admitted anywhere in the custom union, they may circulate freely throughout the member states. A common market on the other hand entails yet closer integration among the participating states. The objective of a common market is to achieve not just free movement of goods but also free movement of services and of the means of production (labour and capital). It comprises common external regulation for goods and services as well as production factors. Thus, a common market encompasses a customs union and in addition needs free movement of labour. However, in order for goods to move without obstacles within the community, it is necessary to abolish the customs duties and similar charges through Article 25 which states that: “Custom duties on imports and exports and charges having equivalent effect shall be prohibited between member states. This prohibition shall also apply to customs duties of a fiscal nature” (Foster 2003:7), deal with internal taxation through Article 90 which also states that: “No member state shall impose directly or indirectly on the products of other member states any internal taxation of any kind in excess of that imposed directly or indirectly on similar domestic product” (Foster 2003:23) and to see to it that non-pecuniary obstacles such as quantitative restrictions and similar barriers should not exist without good reasons. However, the EC Treaty recognizes that there were obstacles to the principles of free movement of goods. Among them are: Customs duties on imports and exports Charges having equivalent effect to customs duties Discriminatory internal taxation on imported goods Quantitative restrictions on imports and exports State monopolies of a commercial character. Principle Of Prohibition The abolition of customs duties and charges having equivalent effect alone would not have been sufficient to guarantee the free movement of goods within the single market. In addition to pecuniary restrictions, there are other barriers to trade of a non-pecuniary nature usually in the form of administrative rules and practices, protectionist or otherwise which are usually capable of hindering the free flow of goods from one member state to another. Articles 28 and 29 of the European Union Directives are designed to eliminate these barriers and cover a much wider range of measures than article 23 and 25. Under articles 28 and 29, the term “measures taken by member states” is not necessarily concerned with binding measures. Thus, there have been cases where protectionist measures by government-backed bodies have been questioned by the European Community. For instance, in 1978, the Republic of Ireland launched a programme to promote Irish products. An action was brought by the Commission under article 226 to put a stop to this. Certain activities by the Irish Goods Council, a government-sponsored body charged with promoting Irish goods mainly through advertising and the use of a Guaranteed Irish symbol were held to be in breach of Article 28 of the EC Directive. The council’s actions were seen as having the capability to influencing the behaviours of traders and thereby frustrating the aim of the community in relation to the free movement of goods. The campaign was a reflection of the Irish government’s considered intention to substitute domestic products for imported products on the Irish market and thereby to check the flow of imports from other member states. The European court indicated the potential effect of the campaign on imports from other member states was comparable to that resulting from government measures of a binding nature. Also, although articles 28 and 29 of the EU legislation are addressed to member states, this does not mean that community institutions or individuals are free to act in breach of these provisions. Thirdly, the prohibition as between member states covers quantitative restrictions which usually relates specifically to quotas and bans. The courts in 1973 interpreted quantitative restrictions as “measures which amount to a total or partial restraint of , according to circumstances, imports, exports or goods in transit” (Horspool and Humphreys 2006:307). Conclusion In conclusion, there seem to be a ‘thin line’ between what European Law is and what national law is when it comes to the issue of intellectual property right. Although it is given prominence in European legislation, the actual implementation of the letter as well as the spirit of the law is often the preserve of national governments. In terms of its implementation, there are some divergences as a protectionist clause often makes the whole idea of the common market not suitable for countries. Although the European courts have ruled against such legislations by national governments, there is still the reluctance by national governments to allow blanket implementation of common market policies as it is often seen as being disingenuous to the economy of member states. Bibliography Cairns, Walter (2002) Introduction To European Union Law. 2nd Edition. Cavendish Publishing Limted. London Christie, Andrews and Gare, Stephen (2006) Blackstone’s Statutes On Intellectual Property. 8th Edition Oxford University Press, Oxford. Jones, Alison and Sufrin, Brenda (2001) EC Competition Law: Texts, Cases and Materials. Oxford University Press, Oxford. Hart, Tina et al (2006) Intellectual Property Law. 4th Edition. Palgrave Macmillan, Hampshire Foster, Nigel (2003) Blackstone’s EC Legislation: 2003-2004. 14th Edition Oxford University Press, Oxford. Rodgers, Barry and MacCulloch, Angus (2004) Competition Laws and Policy In The EC and UK. 3rd Edition Cavendish Publishing Limited, London. Horspool, Margot and Humphreys Matthews (2006) European Union Law: Core Text Series. 4th Edition. Oxford University Press, Oxford. Owen, Richard (1998) Essential European Community Law. 2nd Edition. Cavendish Publishing Limited, London. Weatherill, Stephen (2006) Cases And Materials On EU law. 7th Edition Oxford University Press, Oxford. Intellectual Property Right Overview http://www.jisclegal.ac.uk/ipr/IntellectualProperty.htm 28th May 2009. History of the European Union http://europa.eu/abc/history/index_en.htm date accessed 22nd May 2009. The European Union http://www.direct.gov.uk/en/Governmentcitizensandrights/UKgovernment/TheUKandtheworld/DG_073417?cids=Google_PPC&cre=Government_Citizens_Rights date accessed 22nd May 2009 Read More