Industrial Property Law

Intellectual property promotes creativity and investment, and to this end confers a monopoly on the right holder. However, the monopoly of exploitation conferred on the owner of an intellectual property right by national regulations on a territorial basis, is in direct conflict with the principles of free movement of goods and free competition established by the Treaty on the Functioning of the Eu …

Intellectual property and the free play of competition

Intellectual property covers all the rules applicable to intellectual creations and distinctive signs. It confers exclusive rights on an individual or a legal entity over intangible assets in a given territory, giving that person a monopoly on the use of the object of the right that is enforceable against all others. Any infringement of this monopoly constitutes an infringement of rights.

Intellectual property law comprises, on the one hand, literary and artistic property rights, comprising copyright, rights related to copyright and sui generis database rights, the regimes of which are detailed in Books I to III of the Intellectual Property Code, and, on the other hand, industrial property rights, which mainly comprise trademark, patent and design rights, developed in Books IV to VII of the same code. While the former arise from the mere legal fact of creating or realizing a service (Art. L. 111-1, L. 211-4 and L. 342-1 IP Code), the latter are granted by an administrative authority, through the legal act of filing an application for protection (Art. L. 511-9, L. 611-1 and L. 712-1 IP Code).

Intellectual property rights have distinct functions. The protection of designs, like that of patents, tends to stimulate creative effort by conferring a monopoly of exploitation on the title holder. But while a patent enriches society with an industrial discovery, the creator of a design merely gives a new appearance to a known product, for the sake of enjoyment rather than utility. The essential function of a trademark is to guarantee the identity of the product's origin  for consumers or end-users, enabling them to distinguish, without any possible confusion, the product from those of a different origin . Finally, copyright guarantees its proprietor moral protection of the work and remuneration for creative effort .

In addition to special protection against counterfeiting, the rules of unfair competition make it possible to punish the abusive use of a monopoly by someone other than the owner.

ECJ Case 119/75 Société Terrapin (Overseas) Ltd, Judgment of 22 June 1976, LawLex200400003454JBJ

Case C-10/89 CNL-SUCAL NV (SA) judgment of 17 October 1990, LawLex200500004633JBJ; Case C-379/97 Pharmacia & Upjohn SA, Judgment of 12 October 1999, LawLex200500004633JBJ.

Case T-69/89 Radio Telefis Eireann, Judgment of 10 July 199, LawLex200400002913JBJ; also see Case T-873/16 Groupe Canal + (SA), French Republic, Union des producteurs de cinéma (UPC), Judgment of 12 December 2018, LawLex201900000325JBJ, holding that the purpose of copyright protection is to ensure appropriate remuneration for the right holder and not the highest possible  remuneration resulting from arrangements that exclude any cross-border supply of television broadcasting services and thus entail absolute territorial protection.

Objectives and purposes of intellectual property law

The first major international agreement on intellectual property, the Paris Convention , adopted on 20 March 1883 , enables creators to protect their works in countries other than their territory of origin. It is complemented by the Berne Convention, signed by France on 9 September 1886 , which provides creators with the means to control how and under what conditions their works may be used. The Stockholm Convention of 14 July 1967  established the World Intellectual Property Organization (WIPO), which became a specialized agency of the United Nations family in 1974. In order to promote effective protection of intellectual property rights, without this protection constituting an obstacle to trade, the TRIPS Agreement of 15 April 1994  was adopted as part of the creation of the World Trade Organization (WTO) by the Marrakesh Agreement . It incorporates the main substantive provisions of the Paris Convention by way of reference, which become binding on member countries party to the agreement, and establishes, for each of the main intellectual property areas it covers, the minimum standards of protection to be adopted by each Member State. It notably lays down the scope of protection, such as the object of protection, the rights conferred and the exceptions allowed to those rights and the minimum duration of protection, as well as the procedures and national remedies for enforcing intellectual property rights.

Paris Convention for the Protection of Industrial Property of 10 May 1883.

Berne Convention for the Protection of Literary and Artistic Works of 9 September 1886.

Convention establishing the World Intellectual Property Organization of 14 July 1967.

Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement), annexed to the Marrakesh Convention establishing the WTO concluded on April 15, 1994, Annex 1 C.

International regulations

The European institutions have established European rules applicable to intellectual property in order to harmonize the regulations applicable within the EU and thus promote the free movement of goods and services. As a result, a uniform system for safeguarding intellectual property rights has gradually been put in place to remedy disparities in national legislation. As early as the Treaty of Rome of 25 March 1957, Article 36 included industrial and commercial property rights among the exceptions to the free movement of goods. The Charter of Fundamental Rights of the European Union of 18 December 2000 lays down the principle of protection of intellectual property . Over the course of time, numerous European regulations and directives have been adopted to regulate intellectual property. These include Directives No 98/71 of 13 October 1998 on the legal protection of designs , No 2001/29 of 22 May 2001 on the harmonization of certain aspects of copyright and related rights in the information society , No 2009/24 of 23 April 2009 on the legal protection of computer programs , and Regulation No 1257 of 17 December 2012 implementing enhanced cooperation in the area of the creation of unitary patent protection , Directive No 2015/2436 of 16 December 2015 to approximate the laws of the Member States relating to trade marks  and Directive No 2019/790 of 17 April 2019 on copyright and related rights in the digital single market . The protection of the exclusive rights of owners of intellectual property rights in the EU was to be ensured by Directive No 2004/48 of 29 April 2004  on the enforcement of intellectual property rights . However, it has only partially achieved its objective, due to its lack of severity with regard to counterfeiters and pirates, whose activities continue to grow , and the existence of less protective provisions in certain Member States. The fact that the directive is often non-binding is an advantage for the latter, who will enforce their more relaxed national provisions.

In addition, under Article 97a TFEU, the European Parliament and the Council shall establish measures for the creation of European titles to ensure uniform protection of intellectual property rights in the EU. EU trademarks and designs can thus be registered with the EUIPO. The European unitary patent came into being with the adoption of regulations 1257/2012 and 1260/2012 on 17 December 2012. On 19 February 2013, twenty-five Member States signed the international agreement relating to a unified patent court , which provides for the establishment of such a court with exclusive jurisdiction over litigation concerning the invalidation and infringement of European patents and European patents with unitary effect. The Ordinance of 9 May 2018  , which brought the Intellectual Property Code into line with these new rules, came into force on 1 June 2023 .

Art. 17(2): “Intellectual property shall be protected”.

Directive No 98/71 of 13 October 1998 on the legal protection of designs, OJEU L 289 of 28 October 1998, 28.

Agreement of 19 February 2013 on a Unified Patent Jurisdiction (AJUB), OJ EPO 2013, 287.

Ordinance 2018-341 of 9 May 2018 on the European patent with unitary effect and the unified patent jurisdiction, OJ of 10 May 2018.

See Unified Patent Court press release of 5 December 2022, Adjustment of the timeline - Start of the Sunrise Period on 1 March 2023, Unified Patent Court (unified-patent-court.org).

Directive No 2001/29 of 22 May 2001 on the harmonization of certain aspects of copyright and related rights in the information society, OJEU L 167 of 22 June 2001, 10.

Directive No 2009/24 of 23 April 2009 on the legal protection of computer programs, OJEU L 111 of 5 May 2009, 16.

Regulation No 1257/2012 of 17 December 2012 implementing enhanced cooperation in the field of the creation of unitary patent protection, OJEU L 361 of 31 December 2012, 1.

Directive No 2015/2436 of 16 December 2015 to approximate the laws of the Member States relating to trademarks, OJEU L 336 of 23 December 2015, 1.

Directive No 2019/790 of 17 April 2019 on copyright and related rights in the digital single market and amending Directives No 96/9/EC and No 2001/29/EC, OJEU L 130 of 17 May 2019, 92.

Directive No 2004/48 of 29 April 2004 on the enforcement of intellectual property rights, OJEU L 157 of 30 April 2004.

Law No 2007-1544 of 29 October 2007 on the fight against counterfeiting, OJ No 252 of 30 October 2007.

DG TAXUD and EUIPO, EU enforcement of intellectual property rights: results at the EU border and in the EU internal market 2021, December 2022; see also Communication from the Commission No 2009 467 of 11 September 2009 entitled “Enhancing the enforcement of intellectual property rights in the internal market”, which notes the increase in piracy and counterfeiting, in particular on the internet. 

European regulations

In national law, the first legislation governing intellectual property appeared very early on, in 1844 for patents and 1957 for literary and artistic property. They have been the subject of numerous reforms, in order to make the protection offered more effective and comply with the rules laid down by international and European provisions. The rules governing intellectual property rights were brought together in the Intellectual Property Code by Law No 92-597 of 1 July 1992. A number of laws have been passed with the aim of harmonizing the regimes governing the various intellectual property rights, such as the LME Law of 4 August 2008 , which provides for the exclusive jurisdiction of judicial courts specialized in intellectual property rights, or the Law of 11 March 2014 , which strengthens anti-counterfeiting measures.

Law No 2008-776 of 4 August 2008 on the modernization of the economy, OJ of 5 August 2008.

Law No 2014-315 of 11 March 2014 reinforcing the fight against counterfeiting, OJ of 12 March 2014.

National regulations

Intellectual property promotes creativity and investment, and to this end confers a monopoly on the right holder. However, the monopoly of exploitation conferred on the owner of an intellectual property right by national regulations on a territorial basis, is in direct conflict with the principles of free movement of goods and free competition established by the Treaty on the Functioning of the European Union (TFEU), which are intended simultaneously to combat any monopoly power and promote an integrated market. The exclusive nature of intellectual property rights must therefore be reconciled with these two fundamental freedoms. Under Article 345 TFEU, EU law cannot call into question the existence of a property right duly acquired by virtue of national rules. However, the exercise of this right can lead to an infringement of competition rules when, going beyond the legitimate rights of the proprietor, it is combined with anticompetitive conduct or forms part of an anticompetitive plan. To ensure a balance between free competition and the need to protect intellectual property, EU law, in addition to rules specific to each domain, has laid down general rules to ensure the coexistence of such rights.

Article 34 TFEU, which lays down the principle of the free movement of goods, seeks to reconcile the freedom of trade between Member States with the protection of intellectual property rights. In principle, the latter justifies quantitative restrictions on imports or exports, unless this would result in arbitrary discrimination or a disguised restriction on trade between Member States (Art. 36 TFEU). While the existence of intellectual property rights is not called into question by Articles 34 TFEU et seq., their exercise must not hinder free movement beyond what is required to safeguard the rights which constitute the specific subject matter of such protection. To take account of the EU's interests, the European authorities have been led to reduce the rights of proprietors by making their specific subject matter conditional on the safeguarding of their essential function. Only those prerogatives relating to the specific subject-matter, which correspond to the essential function of the intellectual property right, are then considered lawful with regard to the principle of free movement . In order to reconcile the prerogatives of the proprietor of an intellectual property right with the objectives of the Treaty, the Court of Justice has established the theory of exhaustion of rights . In application of this principle, the exclusive right conferred on the holder of the intellectual property title is exhausted for products marketed, with or without his or her consent, in one of the Member States of the EU. This precludes him opposing the import or marketing of the product on the territory of another Member State. The Court of Justice first laid down the principle of exhaustion of rights in respect of rights related to copyright , then extended it to trademark  and patent rights . Article 15 of Directive No 98/71 of 13 October 1998 expressly enshrines this principle for designs.

Articles 101 and 102 TFEU prohibit undertakings from entering into anticompetitive agreements or abusing a dominant position in such a way as to distort, either potentially or actually, competition on the market in which they operate. Very early on, the Court of Justice held that, while the existence of rights recognized by the legislation of a Member State in the field of intellectual property is not affected by Articles 101 and 102 TFEU, their exercise may nevertheless fall within the scope of the prohibitions laid down by these provisions . In effect, while the existence of an exclusive right cannot be contested , the conditions under which it is exercised may be declared contrary to European competition law, in particular where the exclusive right appears to be “the subject, means or consequence of a restrictive practice” . Thus, the exercise of trademark rights may fall within the scope of the prohibition if the effects of the concerted action exceed those attached to the trademark right . This is the case when a trademark license, which confers on the licensee the exclusive right to use the trademark in a Member State, as well as the status of exclusive distributor, creates an absolute territorial protection contrary to competition rules . While the mere existence of a patent does not constitute an infringement of Article 102 TFEU in the absence of an abusive exercise of this right , the fact that an undertaking in a dominant position preserves its monopoly on the PPI market for as long as possible, by means of procedures likely to mislead patent offices and judicial authorities, does constitute an abusive practice, alien to competition on the merits .

The concept of essential function was introduced by the Terrapin Terranova ruling (ECJ Case  119/75 Terrapin (Overseas) Ltd. v Terranova Industrie Ca Kapferer & Co, Judgment of 22 June 1976, LawLex200400003454JBJ). In this case, the Court held that since the essential function of the trademark, which was to guarantee the identity of the product's origin, had already been compromised, there was no reason to authorize the proprietor to exercise the prerogatives pertaining to its specific subject matter.

ECJ, Case 144-81 Keurkoop BV v Nancy Kean Gifts BV, Judgment of 14 September 1982, LawLex200500004094JBJ, which states that “the proprietor of an industrial or commercial property right protected  by the legislation of a Member State may not rely on that legislation in  order to oppose the importation of a product which has lawfully been marketed in another Member State by, or with the consent of, the  proprietor of the right himself or a person legally or economically  dependent on him”.

Case 24/67 Parke, Davis and Co. v  Probel, Judgment of 29 February 1968, LawLex200500005415JBJ.

Case C-457/10 P AstraZeneca AB and AstraZeneca plc, Judgment of 6 December 2012,  LawLex201200002414JBJ.

Case 78/70 Deutsche Grammophon Gesellschaft mbH v Metro-SB-Großmärkte GmbH & Co KG, Judgment of 8 June 1971, LawLex200400002881JBJ.

Case 16/74 Centrafarm BV and Adriaan de Peijper,  Judgment of

Case 40/70 Sirena Srl v Eda Srl, Judgment of 18 February 1971, LawLex200400002879JBJ.

Case 15/74 Centrafarm (BV) v Sterling Drug (Inc), Judgment of 31 October 1974, LawLex200400003277JBJ.

Case 40/70 Sirena Srl v Eda Srl, Judgment of 18 February 1971, LawLex200400002879JBJ; Case 86/75 EMI Records limited v CBS Grammofon A/S, Judgment of 15 June 1976, LawLex200400002898JBJ; Case 144-81 Keurkoop BV v Nancy Kean Gifts BV, Judgment of 14 September 1982, LawLex200500004094JBJ.

Case 40/70 Sirena Srl v Eda Srl, Judgment of 18 February 1971, LawLex200400002879JBJ; Case 86/75 EMI Records limited v CBS Grammofon A/S, Judgment of 15 June 1976, LawLex200400002898JBJ.

Commission Decision No 77/129, Theal/Watts, 21 December 1976, LawLex200500004047JBJ.

The expansion of online sales and the development of new digital tools such as connected devices, non-fungible tokens (NFTs), artificial intelligence, chatbots or programs that generate images from text descriptions like ChatGPT and Midjourney, raise the question of how to protect intellectual property in this virtual world. Although technology always seems to be one step ahead of the law, recent European reforms illustrate the efforts made by legislators to implement a framework that is conducive to the development of innovation and respect for the fundamental rights of European citizens.

On 19 October 2022, the European Council and Parliament signed the Digital Services Act (DSA) , which came into force on 25 August 2023. Adopted at the same time as the Digital Markets Act (DMA) , it provides for greater responsibility on the part of digital platforms in the fight against the distribution of illegal content online. In particular, it imposes binding obligations on all digital services that put consumers in touch with suppliers of goods, services or content, such as procedures for notification of illegal content by users and the rapid removal of such content. While primarily aimed at combating misinformation and hate speech online, this new regulation also provides right owners with tools to denounce the infringement of their works online.

2) Artificial intelligence and the protection of intellectual property rights

Intellectual property law in the age of artificial intelligence is still a work in progress. Noting that rapid technological developments are changing the way in which works and other protected objects are created, produced, distributed and exploited, particularly as a result of the rise of artificial intelligence, the EU legislature adopted Directive No 2019/790 of 17 April 2019 . The directive notably enshrines an exception for educational purposes, authorizing the use of extracts from protected works in the context of teaching and professional training, as well as exceptions to copyright in order to encourage algorithmic searches of digital content on the internet. It also provides for the creation of a neighboring right for press publishers, fair remuneration for authors and performers, transparency in rights exploitation agreements, and a mechanism for revoking the rights of an author or performer incorporated into such agreements.

A European Parliament resolution of 20 October 2020  confirmed the EU's goal of becoming the world leader in the area of artificial intelligence technologies. This objective is to be implemented through measures aimed at restoring and preserving the EU's digital and industrial sovereignty, ensuring its competitiveness, and promoting and protecting innovation. The proposal asserts that the EU's global leadership in the field of artificial intelligence makes it necessary to establish an effective intellectual property regime adapted to the digital age, to enable innovators to bring new products to market. This policy must include strong safeguards to protect the EU patent system against unlawful conduct that harms innovative developers in the field of artificial intelligence (recital E). Following on from Parliament's resolution, on 21 April 2021 the European Commission issued a proposal for a regulation establishing harmonized rules on artificial intelligence (AI Act) . However, the forthcoming regulation, which is due to be supplemented by a proposal for a directive on extra-contractual civil liability in the field of artificial intelligence , only addresses the issue of technological security, to the exclusion of that of the economic consequences of artificial intelligence for creators.

Despite these developments, contemporary intellectual property law is only able to provide a partial response to the challenges posed by artificial intelligence. The question of the legality of using works available on the internet for training purposes, some of which may be protected by copyright, is still the subject of debate. In a reply dated 31 March 2023 , the European Commission took the view that the reproduction of protected works for the purposes of developing artificial intelligence falls within the scope of the exception for text and data mining introduced by Directive No 2019/790 of 17 April 2019 . However, it has committed to closely monitoring the issues raised by the development of AI systems, their impact on the cultural and creative sectors, and the interaction with the legal framework.

Furthermore, the question of whether rights in creations generated by artificial intelligence should be attributed to its creator or user is the subject of ongoing doctrinal debate. In its guidance document of 16 March 2023 on artificial intelligence creations, the U.S. Copyright Office came out in favor of a case-by-case approach, depending on the degree of human intervention in the creation. Users of artificial intelligence enjoy no copyright if they merely provide the artificial intelligence with a simple instruction, whereas they are considered authors if they use the artificial intelligence only to assist them in creating their work . On the other hand, there seems to be an international consensus that artificial intelligence should not be considered an author . In a judgment issued on 14 February 2022, the U.S. Copyright Office refused to grant authorship to an artificial intelligence, pointing out that under U.S. law, copyright requires that the creation be the work of a human . This position was confirmed by the U.S. Copyright Office in its 16 March 12023 Guidance: Works Containing Material Generated by Artificial Intelligence. In patent law, the principle that only a natural or legal person can be granted the status of inventor was reaffirmed by the European Patent Office, which rejected two European patent applications in which an artificial intelligence system was designated as the inventor . The UK , US  and Australian  courts have adopted the same solution.

Reg. No 2022/2065 of 19 October 2022 on a single market for digital services and amending Directive No 2000/31/EC ("Regulation on digital services"), OJEU L 277, 27 October 2022.

Reg. No. 2022/1925 of 14 September 2022 on contestable and fair markets in the digital sector and amending Directives No 2019/1937 and No2020/1828 (Digital Procurement Regulation), OJEU L 265 of 12 October 2022.

US Copyright, 14 February 2022, A Recent Entrance to Paradise, 1-3ZPC6C3, SR # 1-7100387071.

Royal Courts of Justice, 21 September 2021, Stephen Thaler v Comptroller general of patents, trade marks and designs.

District Court for the Eastern District of Virginia, 2 September 2021, Thaler vs Andrew Hirshfled.

Federal Court of Australia, 13 April 2022, Thaler vs Commissionner of Patents, (2022) FCAFC 62.

Directive No 2019/790 of 17 April 2019 on copyright and related rights in the digital single market, OJEU L 130 of 17 May 2019, entered into force on 6 June 2019.

European Parliament Resolution of 20 October 2020 on intellectual property rights for the development of artificial intelligence-related technologies.

Proposal for a regulation laying down harmonized rules on artificial intelligence (artificial intelligence legislation) and amending certain Union legislative acts COM(2021) 206 final, 21 April 2021.

Proposal for a Directive adapting non-contractual civil liability rules to artificial intelligence (AI Liability Directive), COM/2022/496 final, 28 September 2022.

European Commission, Réponse donnée par M. Breton au nom de la Commission européenne, E-000479/2023, 31 March 2023.

U.S. Copyright Office, Guidance: Works Containing Material Generated by Artificial Intelligence, 16 March 2023.

The idea had been put forward in a European Parliament resolution in 2017 (European Parliament Resolution of 16 February 2017 with recommendations to the Commission on civil law rules on robotics, 2015/2103 [INL]). However, it was not subsequently taken up.

Industrial Property Law

5. Intellectual property and the free play of competition

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