Netherlands: ECJ Affirms Biotech Directive

The Directive concerning legal protection of Biotechnological inventions (98/44/EC) has not been annulled according to a judgement made by the European Court of Justice (ECJ) on October 9, 2001 ( C 377/98)

In October 1998, the Netherlands, among other countries, requested that the ECJ should annul the Biotech Directive. It did so because article 100a of the treaty was seen as flawed for the following reasons.

• it was the incorrect legal basis for the Directive;
• it was in breach of the principle of subsidiarity,
• it was in breach of the principle of legal certainty;
• it was in breach of obligations in international law;
• it was in breach of the fundamental right to respect for human dignity; and
• it was in breach of procedural rules in the adoption of the commission’s proposal.

The arguments as forwarded by the applicant, the opinion of the Advocate-General Jacobs, delivered on June 14, 2001, and the grounds of the decision of the EJC could all be relevant to how the Directive is interpreted and to some of the issues addressed.

I INCORRECT LEGAL BASIS

The Netherlands has submitted that it has not been proved that differences in national laws on the patenting of biotechnological inventions in fact hinder or can hinder trade. Even if they did, the obstacles would be to trade with the United States and Japan, where the manufacture and patenting of biotechnological invention is more advanced and not within the internal market. For this reason the Netherlands is of the opinion that in the absence of any evidence of differences in national law or of effect on trade, harmonisation by way of a Directive cannot be justified.

The Advocate-General has concluded that the Council and Parliament were entitled to take the view that a harmonising measure was necessary to deal with disparities between the laws of the Member States concerning the patent protection of biotechnological inventions. He also agrees with the Parliament that it is consistent with Article 100a that the harmonisation sought should improve the competitive position of European undertakings on the world markets.

The ECJ stated that Article 100a could be used as a legal basis to prevent the emergence of future obstacles to trade. Such obstacles are likely and the measure in question should be designed to prevent them. According to the ECJ, the purpose of harmonisation is to reduce obstacles. The Court is of the opinion that the Directive was correctly adopted on the basis of Article 100a of the Treaty.

II BREACH OF THE PRINCIPLE OF SUBSIDIARITY

According to the parties requesting annulment of the biotech directive, harmonisation is inappropriate and ineffective. These parties are of the opinion that harmonisation should be reached by amending the European Patent Convention. The advocate-general does not agree. An amendment of the European Patent Convention, for instance, would not guarantee harmonisation as in proceedings at national level to annul European patent divergences of interpretation would develop. This is in contrast to the position under the Directive where national courts can refer questions of interpretation to the ECJ. Moreover, the Convention does not concern the extent of protection conferred by a patent.

The argument that harmonisation is an incidental or ancillary aim or effect of the Directive does not apply to the opinion of the Advocate-General because of harmonisation is the principle aim of the Directive. (Article 1 requires Member States to adjust their national patent law to take account of its provisions).

The argument that the Directive infringes Article 100a (3) and creates a new Intellectual Property right – according to the opinion of the advocate-general - does not comply because of the Directive does not fall within the scope of Article 100a (3). This paragraph applies to proposals concerning health, safety, environmental protection and consumer protection, and the proposed Biotechnical measure does not seek to regulate these issues. Moreover, the Directive does not concern a new intellectual property right since it is solely concerned with limiting the scope of protection convert by a patent granted pursuant to the Directive.

The Court simply invalidates this issue by stating that he objective pursued by the Directive - to ensure smooth operation of the internal market by preventing or eliminating differences between the legislation and practice of the various Member States in the area of the protection of biotechnological inventions - could not be achieved by action taken by the Member States alone. As the scope of that protection has immediate effects on trade, and, therefore, on intra-EU trade, it is clear that, given the scale and effects of the proposed action, the objective could be better achieved by the EU.

III LEGAL CERTAINTY

According to Article 6 of the Directive inventions are considered unpatentable where their commercial exploitation would be contrary to ordre public or morality.

The Netherlands and other countries in favour of annulling the biotech directive have also argued that the Directive infringes the principle of legal certainty on the grounds that it gives insufficient guidance and is too general and equivocal in determining whether there is an infringement ordre public or morality are general and equivocal.

The Advocate-General states that the Directive does not infringe the principle of legal certainty because, among other things, the application by national authorities of the concepts of ordre public and morality will always be subject to review by the Court. "Although it might seem to be purposeless to grant a patent for an invention of which the exploitation has been prohibited, it could be relevant if the patent will acquire value once the restrictions or limitations have been removed."

"Even if it would be usual for a legislator to provide a (non-exhaustive) list of examples of situations where the public exemption will apply, it would not mean that the measure should be annulled for lack of legal certainty."

Referring to the argument of breach of the principle of legal certainty the Court states: "The Directive gives the national authorities a discretion in applying concepts expressed in general and ambiguous terms, such as ordre public and morality. Moreover, there are unclear provisions whose relationship with one another is ambiguous existing side by side in the Directive, particularly as regards the patentability of plant varieties." The Court has concluded that the grounds relied on by the applicant to support its plea that the Directive give rise to legal uncertainty do not justify its annulments for the following reasons:

• The provisions of the Patent Law, which allow patents to be refused where there is a threat to ordre public or morality, are well-known and appear inter alia in the relevant international legal instruments.
• The EU legislature gives guidelines for applying the concepts at issue which do not otherwise exist in the general law on patents.
• A directive cannot be considered contrary to the principle of legal certainty if it relies, as regards the conditions for its implementation, on concepts known to the laws of the Member States, specifying, as here, their scope and limit and taking account of the specific nature of the subject-matter.
• As regards the patentability of plant varieties, inventions which incorporate only one gene and concern a grouping wider than a single plant variety may be patented. The protection conferred by the patent may therefore cover a plant variety, without that variety being patentable in itself.

IV BREACH OF OBLIGATIONS IN INTERNATIONAL LAW

Regarding to the arguments concerning breach of obligations in international law (incompatibility with the European Patent Convention, incompatibility with the Agreement on Technical Barriers to Trade) the Advocate-General is of the opinion that the Netherlands submission on this should be dismissed and he is also of the opinion that the Directive does not infringe fundamental rights.

Concerning the argument of breach of obligations in international law, the Court states – among other things, that it is common ground that, as a rule, the lawfulness of an EU instrument does not depend on its conformity with an international agreement to which the EU is not a party, such as the EPC. Nor can its lawfulness be assessed in the light of instruments of international law which, like the WTO (World Trade Organisation) agreement and the TRIPS (Trade Related Aspects of Intellectual Property Rights) and TBT (The Agreement on Technical Barriers to Trade) agreements. Such agreements are not in principle among the rules in the light of which the Court is to review the lawfulness of measures adopted by EU institutions.

The Court has stated: "as regards the possibility that the Directive might represent an obstacle in the context of the international co-operation necessary to achieve the objectives of the CBD (Convention on Biological Diversity), it should be borne in mind that, under Article 1(2) of the Directive, the Member States are required to apply it in accordance with the obligations they have undertaken as regards inter alia biological diversity".

As regards respect for human dignity, this is guaranteed in principle by Article 5(1) of the Directive, which provides that the human body at the various stages of its formation and development cannot constitute a patentable invention.

The ECJ has stated the following: "It is clear from the Directive that, as regards living matter of human origin, the Directive frames the law on patents in a manner sufficiently rigorous to ensure that the human body effectively remains unavailable and inalienable and that human dignity is thus safeguarded".

However: "Reliance on this human integrity is clearly misplaced when considering a directive which concerns only the grant of patents and whose scope does not therefore extend to activities before and after that grant, whether they involve research or the use of the patented products".

The Directive’s legal protection of biotechnological inventions remains in force. Practice will demonstrate whether the national Courts and Member States will follow the interpretation as set out by the ECJ.