Since even before the European Patent Convention came into effect, the case law of the European Court of Justice has held that an intellectual property right generally cannot be enforced in one member state of the EU to prevent importation into that state of goods first put onto the market by the owner of the right in question or with its consent in another member state, since this would infringe one of the underlying principles of the Treaty of Rome, namely the free flow of goods doctrine.

Spain and Portugal were required as a condition of joining the European Community to agree to join the European and Community Patent Conventions and also to amend their national laws to provide for full protection for chemical and pharmaceutical inventions. Prior to their accession only the processes, not the products, were patentable in Spain and Portugal.

For a transitional period of three years after full patent protection became available for chemical and pharmaceutical inventions in Spain and Portugal, such products originating in these countries were subject to a derogation from the normal free flow of goods provisions. Up to the end of the transitional period, patents in other Member States could be used to prevent imports of chemicals and drugs from Spain and Portugal even if the goods were first marketed there by or with the consent of the patent owner. These transitional provisions expired at the end of 1995, despite attempts by pharmaceutical companies in other countries to have them extended by political means. An attempt by the drug companies to have the European Court of Justice modify its basic approach to parallel imports, as noted above, also failed in the case of Merck & Co v. Primecrown Ltd., notwithstanding that, as reported in our August 1996 Newsletter (N.S. 187), the Court's advocate general had proposed a limited exception from the general rule in cases where at the time an invention was made it was not possible to secure patent protection for the goods in question. The only concession that the Court itself made was to agree that the patentee might be able to use its patents in one country to prevent importation of goods it had marketed or consented to being marketed in another EU country if it was required by law to market the goods in the country of first sale. A mere ethical obligation to supply the best available drugs in a given market was not sufficient.