EU Property Law

The Protection of Property Rights in the EU Legal Order

The European Union does not possess a general legislative competence to harmonise national property law; property rights remain primarily within the competence of the Member States under the principle of conferral. However, the protection of property rights has been recognised as a general principle of EU law and has been given binding force through the Charter of Fundamental Rights. The Court of Justice of the European Union (CJEU) first recognised the right to property as a general principle in Hauer v. Land Rheinland-Pfalz (Case 44/79, 1979), holding that the right to property is protected in the Community legal order, but that its exercise may be restricted provided that restrictions correspond to objectives of general interest and do not constitute a disproportionate and intolerable interference with the rights of the owner. The Hauer formulation — proportionality review of restrictions on property — established the analytical framework applied in subsequent cases including Booker Aquaculture (Joined Cases C-20/00 and C-64/00), concerning the destruction of fish stocks without compensation, and Kadi (Joined Cases C-402/05 P and C-415/05 P), concerning the freezing of assets of persons suspected of terrorist involvement.

Article 17 of the Charter of Fundamental Rights of the European Union (the Charter), which has the same legal value as the Treaties following the Lisbon Treaty (Article 6(1) TEU), provides: (1) everyone has the right to own, use, dispose of, and bequeath their lawfully acquired possessions; no one may be deprived of their possessions except in the public interest and subject to fair compensation paid in good time; the use of property may be regulated by law insofar as is necessary for the general interest; (2) intellectual property shall be protected. Article 17 of the Charter is modelled on Article 1 of Protocol 1 to the European Convention on Human Rights (ECHR), and the CJEU has held that the Charter provision must be interpreted consistently with the ECHR as a minimum standard of protection. The Charter’s explicit protection of intellectual property in Article 17(2) is significant, affirming the status of intellectual property rights as fundamental rights within the EU legal order, though the CJEU has recognised that intellectual property rights are not absolute and must be balanced against other fundamental rights, including the freedom of expression and the freedom to conduct a business (Scarlet Extended, Case C-70/10; Promusicae, Case C-275/06).

Harmonisation of Intellectual Property Rights

The EU has achieved the most far-reaching harmonisation of property law in the field of intellectual property. The EU Trade Mark Regulation (Regulation (EU) 2017/1001, codifying and replacing earlier regulations) established the European Union trade mark (EUTM), administered by the European Union Intellectual Property Office (EUIPO) in Alicante, Spain. The EUTM confers a unitary right of equal effect throughout the EU, governed by a single application, examination, and registration procedure. The EU Trade Mark Directive (Directive (EU) 2015/2436) harmonised national trade mark laws, approximating the substantive provisions on registrability, grounds for refusal, the scope of protection, and enforcement across Member States. The Community Design Regulation (Regulation (EC) No 6/2002) created a unitary Community design right, both registered and unregistered, protecting the appearance of the whole or part of a product. The harmonisation of copyright has been achieved through a series of directives, most notably: the InfoSoc Directive (Directive 2001/29/EC), which harmonised the rights of reproduction, communication to the public, and distribution, and the exceptions and limitations to those rights; the Digital Single Market Copyright Directive (Directive (EU) 2019/790), which introduced new provisions on online content-sharing platforms, press publisher rights, text and data mining, and the use of out-of-commerce works; and the Database Directive (Directive 96/9/EC), which created a sui generis right for the maker of a database.

The Enforcement Directive (Directive 2004/48/EC) harmonised the measures, procedures, and remedies necessary to ensure the enforcement of intellectual property rights, including the right of information, provisional and precautionary measures, injunctions, corrective measures, damages, and the costs of proceedings. The Directive requires Member States to provide proportionate remedies while avoiding barriers to legitimate trade. The Unitary Patent system — a long-awaited reform creating a European patent with unitary effect — was established by the Unitary Patent Regulation (Regulation (EU) No 1257/2012) and the Unified Patent Court Agreement (2013), which entered into force on 1 June 2023 following Germany’s ratification. The Unified Patent Court (UPC) has exclusive jurisdiction over European patents with unitary effect and, during a transitional period, concurrent jurisdiction with national courts over traditional European patents. The Unitary Patent system represents the most significant reform of European patent law since the European Patent Convention of 1973.

Harmonisation of Security Interests in Movables

The EU has taken limited but significant steps toward the harmonisation of security interests in movable property. The Financial Collateral Directive (Directive 2002/47/EC, as amended by Directive 2009/44/EC) removed obstacles to the use of financial collateral — cash, financial instruments, and credit claims — by providing for the rapid and non-formalistic creation, perfection, and enforcement of security interests in financial collateral. The Directive provides that financial collateral arrangements may be created by entry in the books of the collateral taker without registration, and that the right of use (right of use) of financial collateral by the collateral taker is legally effective. The Directive also provides for the enforcement of financial collateral arrangements by appropriation (subject to the valuation of the financial instruments) and by sale.

The Regulation on the European Account Preservation Order (Regulation (EU) No 655/2014), effective 18 January 2017, established a European procedure enabling a creditor to obtain a preservation order requiring a bank to freeze the bank account of a debtor up to the amount of the claim, facilitating cross-border debt recovery within the EU. The creditor may apply for the order without prior notification to the debtor (ex parte), and the order must be enforced in the Member State where the account is located without any further formalities. The Regulation establishes uniform grounds for issuing the order, conditions for its enforcement, and remedies for the debtor. It does not harmonise the underlying national law of enforcement but provides a supplementary EU mechanism available at the creditor’s option. The European Commission has also undertaken work on the harmonisation of conflict-of-laws rules for property effects of transactions in securities, through the Settlement Finality Directive (Directive 98/26/EC) and the Financial Collateral Directive, which together address the cross-border holding and disposition of securities.

Free Movement of Property Rights and the Internal Market

The free movement of property rights within the internal market is governed by the Treaty provisions on the free movement of goods (Articles 28-37 TFEU) and the application of competition law (Articles 101-102 TFEU) to intellectual property rights. The CJEU developed the exhaustion of rights principle (also known as the first sale doctrine) in Deutsche Grammophon v. Metro (Case 78/70, 1971), holding that the owner of an intellectual property right cannot use that right to prevent the importation of products that have been lawfully placed on the market in another Member State by the right holder or with their consent. The principle ensures that intellectual property rights cannot be used to partition the internal market. The principle of exhaustion applies to trade marks, copyright, and design rights — but not to patents, where the principle has been applied only in the context of specific Treaty provisions.

The distinction between the existence and the exercise of intellectual property rights, established in Consten and Grundig (Joined Cases 56/64 and 58/64, 1966), provides that the existence of intellectual property rights is not affected by the Treaty competition rules, but the exercise of those rights may be subject to the prohibitions of Articles 101 and 102 TFEU if it constitutes a disguised restriction on trade. The Technology Transfer Block Exemption Regulation (Regulation (EU) No 316/2014, the TTBER) exempts certain categories of technology transfer agreements — patent licensing, know-how licensing, and software copyright licensing — from the prohibition of Article 101(1), provided they do not contain hardcore restrictions and do not exceed the market share thresholds (20% for competitors, 30% for non-competitors). The TTBER is accompanied by the European Commission’s Guidelines on the application of Article 101 TFEU to technology transfer agreements.

Cross-Border Dimensions of Property Law

Beyond intellectual property, the EU’s engagement with property law has been primarily through the law of judicial cooperation, private international law, and the harmonisation of specific areas affecting the functioning of the internal market. The European Account Preservation Order (Regulation 655/2014) is the principal instrument for cross-border enforcement in property matters, enabling creditors to freeze bank accounts in multiple Member States through a single application. The European Succession Regulation (Regulation (EU) No 650/2012) applies uniform conflict-of-laws rules to cross-border successions, including the law governing the devolution of property on death, but does not harmonise the substantive law of property or succession. The Regulation on Property Regimes of International Couples (Regulations (EU) 2016/1103 and 2016/1104) provides uniform conflict-of-laws rules for matrimonial property regimes and the property consequences of registered partnerships.

The European Commission’s proposal for a Common European Sales Law (CESL, COM(2011) 635 final) included rules on the transfer of ownership, retention of title, and the passing of risk, but the proposal was withdrawn in 2014 after the European Parliament’s legal affairs committee raised concerns about its legal basis and scope. The European Law Institute (ELI) has undertaken significant work on the harmonisation of property law, including its project on European Property Law Principles, which seeks to identify common principles and best practices across European property law systems to facilitate cross-border transactions and the further development of EU property law. The ELI’s work builds on the earlier efforts of the Study Group on a European Civil Code and the Acquis Group, which produced the Draft Common Frame of Reference (DCFR) including Book VIII on the acquisition and loss of ownership of goods, Book IX on proprietary security rights in movable assets, and Book X on trusts. While the DCFR has not been adopted as binding law, it has informed academic debate and legislative development in the field of European property law.