(a)

A trader, A, markets products in the Netherlands which are no longer covered bv any patent and which for no compelling reason are practically identical with products which have been marketed for a considerable period of time in the Netherlands by another trader, B, and which are different from similar kinds of articles, and in so doing trader A needlessly causes confusion;

(b)

Under Netherlands law trader A is thereby competing unfairly with trader B and acting unlawfully;

(c)

Netherlands law gives trader B the right to obtain an injunction on that ground restraining trader A from continuing to market the products in the Netherlands;

(d)

The products of trader B are manufactured in Sweden and those of trader A in the Federal Republic of Germany;

(e)

Trader A imports his products from the Federal Republic of Germany in which those products are lawfully put on the market by someone other than trader B, the Swedish manufacturer, someone who is associated with one of them or by someone who is authorized to do so by one of them,

1.

all acts of such a nature as to create confusion by any means whatever with the establishment, the goods, or the industrial or commercial activities, of a competitor.

3.

indications or allegations the use of which in the course of trade is liable to mislead the public as to the nature, the manufacturing process, the characteristics, the suitability for the purpose, or the quantity, of the goods.

(a)

In its observations the Commission rightly points out that national rules against unfair competition which allow a manufacturer to obtain an injunction restraining the sale of imported products in a Member State on the ground that they precisely imitate the goods which he manufactures may constitute a measure having equivalent effect referred to in Article 30 of the Treaty. The same is true of course if, as in this case, the injunction is obtained by the sole importer of the imitated products in question. On the basis of the principle established in the Dassonville judgment (Case 8/74 [1974] ECR 837) there can be no reasonable doubt about that. There is certainly a question here of “trading rules enacted by a Member State which are capable of hindering, directly or indirectly, actually or potentially, intra-Community trade”. According to its written observations, the United Kingdom has come to the conclusion that viewed on their own such legal rules cannot constitute a measure having equivalent effect. In this connection a response to that question is not necessary. The point is whether the national rules are or may be contrary to the principle laid down in the Dassonville judgment which I have just mentioned. The strict question whether the national rules themselves, or their construction or application by the courts, actually causes the principle to be contravened, will depend on the circumstances of the case. I believe that there is no need to investigate this point further for the purposes of this case since the application given to the legal rules in this case is in any event contrary to the aforesaid principle of the Dassonville judgment.

The question on which this case really turns is how far an injunction on sales issued in that way can be justified either on the ground of Article 36 or on the ground of the exceptions which the Court accepted to the main principle in inter alia the Dassonville judgment (Case 8/74 [1974] ECR 837) and the Cassis de Dijon judgment (Case 120/78 [1979] ECR 649). Those grounds of justification for a prohibition of sale on account of precise imitation, which must be fully distinguished at first instance, will now be examined in turn. I would however point out at the outset that the second ground of justification goes less far than the first. I refer here to paragraphs 9 to 18 of the decision in the Court's judgment of 17 June 1981 in Case 113/80 Commission v Ireland [1981] ECR 1625. Citing its relevant previous decisions the Court makes it particularly clear in those paragraphs that the “reasonableness rule” adopted in the Dassonville judgment can never justify discrimination detrimental to trade.

(b)

The application of Article 36 to the problem under consideration may be justified on two grounds.

In the first place it can be argued on the basis of Articles 1 (2) and 10 bis oi ihr International Convention revising the Paris Convention cited above that ihr concept of the “protection of industriji property” contained in Article 36 also has as its object protection against untur competition. I do not consider this first argument to be a compelling one. For it is possible to infer from the International Convention any prohibition against separately regulating the right to protection against unfair competition wholly outside the law of industrial property in its narrow sense. A study of the law of the Member States shows that to be the general rule. In view of that situation there is therefore perhaps more to be said for the view that in referring to the protection of industrial and commercial property Article 36 had in view only specific legislation to protect distinct industrial and commercial property rights. Patent law, trademark law, copyright law and possibly the law of designs spring to mind in particular, as well as specific laws comparable to them, where an object of industrial property right may be clearly distinguished.

However, I consider that a second argument which may be made out in favour of Article 36 applying to the general rule against precise imitation has greater force. It appears in fact from the case-law of all the Member States that the specific justification or subject-matter of a prohibition against precise imitation may be best grasped by examining the similarities and differences between such a prohibition and similar prohibitions arising from patent law, design law, copyright or trademark law. As regards the facts of this case, a comparison with patent law, design law and trademark law in particular seems to be relevant.

It may be observed first that justification of a prohibition of imitation cannot reside in protection against the imitation of technically functional elements or features of a product which do not or no longer qualify for patent protection. It is not without reason that patent laws impose special requirements for an invention to qualify for patent protection and that the exclusive right granted to the inventor by those laws to be the first to market the product in question is limited in time. Moreover, the quid pro quo from the inventor for his limited period of statutory monopoly is the contribution which his invention makes to technological and economic progress and also in particular the obligation to publish his invention. It is precisely when a product has been protected by a patent in the past, as in this case, that the chance of there arising a kind of informal standardization of the product in question will be particularly great. It is therefore necessary to be on the alert against patent protection being prolonged by a widely construed prohibition of imitation. The usual distinction in case-law between a product's functional elements, which must be regarded as necessary for the product to be equally competitive vis-à-vis buyers and cannot be affected by a prohibition of imitation, and its nonfunctional elements, which can be affected by such a prohibition, appears to have its justification in such a line of reasoning. A prohibition of imitation does not function like a patent nor should it because the general economic benefit of such a prohibition is smaller rather than greater than the economic benefit of patent protection on which many economists have doubts anyway.

Where a product does not fulfil the conditions for the statutory protection of designs it will not be possible to regard a prohibition of imitation as functioning like a design either. This twofold principle is also to be found in the judgment of the Hoge Raad in the Thole v Hijster case (Hoge Raad 26 June 1953, Nederlandse Jurisprudentie 1954, p. 90 et seq.). However, it was expressed particularly succinctly in a judgment of the Paris Court of 10 April 1962 (Annuaire, 1962, p. 240 et seq.): “Considérant que le fait de reproduire des objets qui ne sont protégés ni par un brevet ni par un dépôt de modèle n'est que l'exercice d'un droit dans le cadre de la liberté du commerce et de l'industrie ...”

What therefore remains as justification for a prohibition of imitation is in particular a needless risk of confusion which the Gerechtshof did correctly assume in the question which it has submitted. I pointed out previously that Article 10 bis (3) of the International Convention also refers in particular to the risk of confusion as a basis for prohibitory measures. The fact that under some legal systems other reasons for a prohibition of imitation, such as the improper appropriation of the fruits of someone else's efforts, or the exploitation of the prestige and good name of the work of others, may be a consideration is not material for the purposes of the question raised in this case. It is indeed a warning against making any attempts to arrive at a general definition of the justification for prohibiting precise imitation. The Bundesgerichtshof, for example, has steadfastly refused to give a general definition of the concept.

The ground of the justification relevant in this case, namely the risk of confusion, is somewhat like the ground of justification in trademark law. In paragraph 6 of its judgment in Case 119/75 Terrapin v Terranova [1976] ECR 1039 the Court stated that the basic function of a trademark is “to guarantee to consumers that the product has the same origin”. As justification for a prohibition of imitation the Commission submitted on the basis of similar considerations, therefore correctly I think, that it must also be sought in order to “prevent needless confusion being caused amongst the public as to the origin of particular products”. For the reasons given above, it would in my opinion have been more correct if the Commission had restricted that justification to cases like that now before the Court. The Commission also relies on Article 10 bis of the International Convention in order to support its argument. To that extent it might be possible to say that a prohibition of imitation has a function like a trademark which must have limits at least the same as those of trademark law itself. In its written observations the Government of the United Kingdom also points out how a prohibition of precise imitation and trademark law have similar justification.

However, it has to be said about that parallel justification or function that there is a considerable economic difference between a prohibition against imitating a trademark and a prohibition against imitating a product. As a rule a manufacturer or trader can escape the first prohibition without undue investment by selecting for the national market in question another trademark which does not create any risk of confusion. In most cases the importer will himself be able to choose and register another trademark, subject to any necessary approval of the manufacturer entitled to the trademark. On the other hand a prohibition of precise imitation requires the imitator of a product to make constant changes in his production process which cannot always be reasonably demanded of him. Particularly where the imitator of a product has lawfully marketed his product in another Member State, as the Gerechtshof assumes in its question, very appreciable obstacles to trade between Member States may occur. The producer concerned may then have to bear investment expenditure, which may be prohibitive in some circumstances, in order to make a differing line of product to sell in a country which accepts more readily than the country of manufacture that there is a case of precise imitation. An action for the infringement of a trademark will not have such an immediate prohibitive effect on imports of the products concerned because selection of another trademark allied with marketing activities which are necessary anyway will not involve immediate prohibitive costs. Besides, as I said, the importer can as a rule bear them himself.

Nor is it possible, as the Court considered possible in trademark law with the concept of the “risk of confusion”, for the Court to resolve the problem in this case by imposing harmonization of the relevant branch of the law on protection against unfair competition. For that reason in my view it is not possible as Community lawstands at present to give the court making the reference the answer proposed by the Commission. However, that does not necessarily mean that a complete closure of certain national markets to the import of products lawfully produced and marketed in another Member State must be regarded as unacceptable on the ground of the second sentence of Article 36. To that extent I consider that the principle laid down in Article 85 that competition may not be eliminated in respect of a substantial pan of the products concerned is also relevant as regards the limits which Community law snould place on the application of the general rule against precise imitation. Assuming Article 36 applies in this case I accordingly propose the following answer to the question from the Gerechtshof, The Hague:

“A disguised restriction on trade between Member States, as referred to in the second sentence of Article 36 of the EEC Treaty, may be said to exist if upon consideration of a question relevant under national law whether an imitator could have adopted a different course without detracting from the soundness and the utility of his product no account is taken of the extra costs which the alternative design would entail for the manufacturer concerned in a Member State in which the product is lawfully manufactured and marketed.”

In other words, in such a situation the alternative design must not only be technically feasible but commercially feasible as well. Such an answer fully observes the principles of national law yet requires the national court to look beyond its own national frontiers and take account of economic necessities besides technical ones when construing the term “needlessly” or “for no compelling reason”. I shall return to further qualifications to the Court's reply in the final pan of my opinion.

(c)

There are also powerful arguments to be made out in favour of Article 36 not having application in this case but Article 30 alone, together with the “reasonableness rule” applied by the Coun. As is apparent from the Court's decisions', the “reasonableness rule” used by the Coun in this context applies, so far as here material, only while there are it is a matter of adopting reasonable measures to prevent unfair competition which moreover may not constitute a means of arbitran' discrimination or a disguised restriction on trade between Member States. Hitherto in its decisions the Court has for its pan always treated protection against unfair competition as a pressing public interest which may justify mandatory measures entailing some obstacles to intra-Community trade. I refer here again to the Court's judgment in Dassonville cited above (Case 8/74 [1974] ECR 837) and also to the Court's judgments in Case 120/78 Cassis de Dijon [1979] ECR 649, Case 788/79 Gilli-Andres [1980] ECR 2071 and Case 113/80 Commission v Ireland [1981] ECR 1625. What is more, in the last-mentioned judgment the Court expressly stated that the measure concerned must apply equally to imported and domestic products. From the point of view of the public interest to be protected the origin of the products does not matter. Measures in the public interest which in particular affect trade may be justified at most in the context of Article 36 which does not, however, apply for the purposes of this hypothesis.

In the Dassonville judgment, and still more explicitly in the next two judgments which I cited, when weighing up the justification for a reasonable measure in the public interest, such as in issue here, and the obstacles to trade which it causes, the Court attached still greater importance to establishing whether the product in question has been lawfully manufactured and marketed in another Member State. An argument which goes even further may be deduced from the Court's judgments in the Béguelin (Case 22/71 [1971] ECR 949) and Dansk Supermarked v Imerco (Case 58/80 [1981] ECR 181) cases. The crux of that argument for the purposes of this case is that the right to protection against unfair competition may never prevent the importation as such of imitations of a product if they have been lawfully manufactured and marketed in another Member State. Only if, owing to circumstances distinct from importation itself and thus, in the case of imitations of a product, distinct from their composition and design, such as advertising, offers or the absence of a clear indication as to their origin, there is a risk of confusion with the product imitated, could action be taken on the basis of the law of the importing country against precise imitation. Such a solution would find support in particular in paragraph 16 of the decision in the judgment in Dansk Supermarked v /merco which refers to paragraph 15 of the decision in the judgment in Béguelin. The Court there held: “It must nevertheless be emphasized, as the Court of Justice has stressed in another context in its judgment of 25 November 1971 (Case 22/71 Béguelin [1971] ECR 949), that the actual fact of the importation of goods which have been lawfully marketed in another Member State cannot be considered as an improper or unfair act since that description may be attached only to offer or exposure for sale on the basis of circumstances distinct from the importation itself.” Meaningfully interpreted that passage seems to me to mean that the importer of the product lawfully imported in that way no relevant Community regulations and may be made liable only for what he has done or neglected to do in his own sales operations to cause the risk of confusion to arise. To me it even appears to follow from the summary of the Court's earlier decisions contained in paragraph 10 of the decision in its judgment in Commission v Ireland (Case 113/80 [1981] ECR 1625) that in the context of Article 30 the Court will never accept indirect obstacles to imports such as those at issue in this case. Whenever an authorized importer of the product imitated could in any one Member State impede every import of imitations lawfully produced and put on the market elsewhere in the Community, then, as I pointed out previously, that might also be said to be a “disguised restriction on trade” within the meaning of the Court's Dassonville judgment.

As appears from a recent judgment of the Bundesgerichtshof (judgment of 23 January 1981 in the Rollhocker case, Monatsschrift für Deutsches Recht 1981, p. 821), an interpretation such as that deduced from the Court's previous decisions would place a clear limit on what may apply under national law. In the judgment cited the Court expressly and without limitation states that the law against precise imitation applies to importers as well. The existence of such a limit in Community law to the application of national law has been affirmed countless times by the Court in its decisions on both Article 30 and Article 36.

Finally, still assuming that Article 30 alone of the EEC Treaty applies, I would like to look briefly at the Commission directive of 22 December 1969 concerning the abolition of measures having an effect equivalent to quantitative restrictions on imports (Directive 70/50/EEC, Official Journal, English Special Edition 1970 (I), p. 17). In so doing I assume that this Commission directive naturally leaves untouched the direct effect of the prohibition contained in Article 30 as construed by the Court.

This point is particularly relevant in connection with the somewhat different approximation of rules applying equally to domestic and imported products. According to the ninth recital in the preamble to the directive such measures are not in principle caught by the prohibition contained in Article 30 whereas in the Court's case-law they are not caught by that prohibition except on a large number of conditions which have been further defined since the Dassonville judgment. They do in fact come under the main principle laid down in the Dassonville judgment.

It must be assumed in the second place that Directive 70/50/EEC and the earlier directives concerning the implementation of Article 33 (7) of the EEC Treaty, but not relevant here, offer no comprehensive guarantee as regards the cases occurring in practice. There is express reference to that in the preamble to Directive 70/32/EEC (Journal Officiel 1970, L 13).

On the whole rules providing protection against unfair competition having an unnecessarily restrictive effen on trade are not mentioned in the directive in question. It may be deduced from the Commission's answer given to one of the questions put by the Court during the oral procedure that the reason for that is connected with the Commission's view chat Article 36 is applicable in this case. At the same time Article 3 of Directive 70/50/EEC does deal with rules governing a situation of a kind bearing some resemblance to the problem in this case.

That article reads as follows:

“This directive also covers measures governing the marketing of products which deal, in particular, with shape, size, weight, composition, presentation, identification or putting up and which are equally applicable to domestic and imported products, where the restrictive effect of such measures on the free movement of goods exceeds the effects intrinsic to trade rules.

This is the case, in particular, where:

Although that provision clearly relates to the so-called technical obstacles to trade and not to the law on protection against unfair competition, it may be said that a prohibition of precise imitation also relates amongst other things tc shape, size, weight, composition, presentation and identification. If, on the basis of that resemblance yet taking account of the differences, Article 3 is applied to the problem before us, it will be necessary in particular to ascertain whether the restrictive effect on the free movement of goods of a prohibition of imitation in a case such as this is out of proportion to its purpose (principle of proportionality). It will also be necessary to examine whether the same objective can be attained by other means which are less of a hindrance to trade (principle of alternative means).

In my opinion such an application of a prohibition of imitation which indirectly prevents the importation of products lawfully sold and marketed elsewhere is indeed contrary to both the principle of proportionality and the principle of alternative means as formulated above. It is contrary to the principle of proportionality because the justifiable aim to prevent confusion as to a product's origin and identity cannot justify such a restriction on imports. It is contran to the principle of alternative means because the risk of confusion can be prevented'quite easily by requiring steps to be taken by the importer after importation. A different view of the matter may be taken only if it can be demonstrated that the risk of contusion cannot be prevented by the importer alone and that it is technicalh and economically feasible for the manu facturer to take steps to avoid con t u nor.

Therefore on balance an analopouapplication of Article 3 of Director 70/50/EEC does not in my opinar if ic' to conclusions essentially diftcrrn Urr-those which I deduce from thr previous decisions on Aru.r. However, as I have observed based on a premise with rrn'v' t measures which apply ccil.j -domestic and imported product'i, different from that which I dedurr ! the Coun's decisions. Parts hMjr Article 3 evidently relates to traue r wholly different from those in question here I shall not therefore base my final conclusion on that directive as well.

Paragraphs 7 and 8 of the decision in the Court's judgment in Case 113/80 Commission v Ireland [1981] ECR 1625 in particular tend to support the view of course that only Article 30 may be relied upon when the law on protection against unfair competiton is invoked. Having held that Article 36 must be interpreted strictly the Court stated: “In view of the fact that neither the protection of consumers nor the fairness of commercial transactions is included amongst the exceptions set out in Article 30, those grounds cannot be relied upon as such in connection with that article.”

As argued above, this determination of the true place of the law against unfair competition, which to me also seems relevant for the purposes of the question submitted, does not necessarily preclude guidance also being drawn from the Court's decisions on Article 36 in order to answer that question.

The Court has already shown in paragraph 7 of the decision in Dassonville that the second sentence of Article 36 also applies in relation to reasonable measures which the Court permits in the context of construing Article 30. Furthermore, in paragraph 8 of the decision in Case 120/78 (Cassis de Dijon) the Court mentions together measures concerning the fairness of commercial transactions, which the Court evaluates on the basis of Article 30, and measures for the protection of public health, which fall under Article 36. The Court lays down the following principle for both cases:

“Obstacles to movement within the Community resulting from disparities between the national laws relating to the marketing of the products in question must be accepted in so far as those provisions may be recognized as being necessary in order to satisfy mandatory requirements relating in particular to the effectiveness of fiscal supervision, the protection of public health, the fairness of commercial transactions and the defence of the consumer.”

At most it could be said that in the context of Article 30 the Court attaches much greater importance to the question whether a product has been lawfully sold and marketed in another Member State than in the context of.Article 36.

Assuming that Article 30 alone applies my conclusion is therefore that an analysis of the Court's decisions in this context does not necessarily lead to the question submitted being answered otherwise than on the assumption that both Anieles 30 and 36 apply, although the Court's judgments in Dansk Supermarked (Case 58/80) and Commission v Ireland (Case 113/80) in particular may give rise to some doubt in this respect. In the final part of this opinion I shall further clarify the conclusion which I reach on the assumption that only Article 30 applies.

(d)

Before that, however, I should like to set out my own view on the feasibility of the two assumptions under consideration.

In particular it seems to me that it may be inferred from paragraph 8 of the decision in the Cassis de Dijon (Case 120/78) cited above that in its decisions on Article 36 the Court does not apply criteria essentially any different from those applied in its decisions on Article 30 where measures which apply equally to domestic and imported products are concerned. The measure at issue here is such a measure. In both cases the Court then applies criteria such as the necessity for trade restrictions on grounds of compelling public interests not of an economic nature, the principle of proportionality, the principle of alternative means md the unacceptability of disguise trictions on trade between Membe and of arbitrary discrimination, relevance of the question whethe iduct has been unlawfully market..nother Member State also enters ???????he Court's decisions, based on Article 36, on cases concerning industrial property rights as well as those, based on Article 30, on cases concerning protection against unfair competition.

If the recent judgments in Dansk Supermarked (Case 58/SC) and Commission v Ireland (Case 113/80) had not in the meantime thrown a new light on the issues now before the Court, my conclusion would accordingly have been that the question whether or not Article 36 applies could be left open as in the Dassonville judgment. However, since it is expressly stated in paragraph 8 of the decision in Commission v Ireland that fairness of commercial transactions cannot be brought under the exceptions set out in Article 36, that solution seems to me to be no longer possible. In the final analysis therefore 1 come down in favour of the application of Article 30 alone. Before the Court's judgment in Dansk Supermarked (Case 58/80) as I have already said, my decision to opt for Article 30 would not in my opinion have necessarily produced a result substantially different from that produced by the application of Article 36. However, as I said earlier, the Dansk Supermarked judgment raises some doubt about the matter. It is true that paragraph 15 of the decision states that the marketing of imponed goods may be prohibited if the conditions on which they are sold constitute an infringement of the marketing usages considered proper and fair in the Member State of importation. But paragraph 16 then concludes: “It must nevertheless be emphasized, as the Court of Justice has stressed in another context in its judgment of 25 November 1971, (Case 22/71 Bėguelin [1971] ECR 949) that the actual fact of the importation of goods which have been lawfully marketed in another Member State cannot be considered as an improper or unfair act since that description may be attached only to offer or exposure for sale on the basis of circumstances distinct from the importation itself”. That formulation is repeated with slightly different wording in paragraph 2 of the operative part of the judgment. In view of that formulation the question on which this case turns is whether a prohibition of imitation which is also applied to imported goods, albeit in principle not exclusively, relates to circumstances, here consisting of the imitation, distinct from the importation itself. Bearing in mind the Court's previous decisions and the special circumstances of the Dansk Supermarked case I consider that ultimately an affirmative answer to that question is not to be ruled out. In its extensive case-law on the subject the Court has never in principle ruled out the possibility that provisions adopted in the public interest such as those mentioned in paragraph 8 of the decision in the Cassis de Dijon case may result in indirect restrictions on trade. Such restrictions may well then have to be examined in the light of the strict criteria mentioned earlier in this part of this opinion.

(a)

If the question submitted to the Court is answered on the basis of both Article 30 and Article 36 of the EEC Treaty, in accordance with the assumption of the national court which has made the reference, my examination leads to the following answer:

“In circumstances such as those assumed by the Gerechtshof, The Hague, in subparagraphs (a) to (e) of its question Anieles 30 and. 36 of the EEC Treaty must be construed as meaning that an injunction of the kind referred to in the question may be justified on the ground of Article 36 of the EEC Treaty, despite being a measure having an effect equivalent to a quantitative restriction on imports within the meaning of Article 30, provided that, in examining whether an alternative design is possible, consideration is given not only to the state of technology but also to what may be reasonably required economically of a manufacturer who has lawfully sold and marketed the product at issue in another Member State. In so far as pans of the product at issue have been marketed separately they should be considered separately in the light of the aforesaid criteria. Particularly pans intended for products lawfully obtained elsewhere in the Community ought not to be made subject to conditions which make it virtually impossible to trade in them.”

(b)

On the other hand if for the reasons set out above the question submitted to the Court is answered on the basis of Article 30 alone the following answer is the most likely on the basis of the previously cited case-law of the Court:

“In circumstances such as those assumed by the Gerechtshof, The Hague, in subparagraphs (a) to (e) of its question, as Community law stands at present Article 30 of the EEC Treaty must be construed as meaning that it prevents the grant of an injunction of the kind mentioned in the question if the relevant product has been imported from another Member State in which it is lawfully sold and marketed. However, it does not do so in so far as the ascertained causes of the risk of confusion are attributable exclusively to the acts or omissions of the national dealer concerned and he may eliminate them without involving the manufacturer.”