2. The claim of the third party is based on intellectual property Art

2. The claim of the third party is based on intellectual property

Art. 42 CISG sets forth that the goods delivered must be free from any rights or claims of third parties based on “industrial property or other intellectual property” [CISG Art. 42(1)]. However, CISG does not explicitly define what constitutes “intellectual property” in the sense of Art. 42 [scholar views]. Therefore, the meaning of this notion is “to be settled in conformity with the general principles on which it is based or in conformity with the law applicable by virtue of the rules of private international law” as stipulated in Art. 7(2) [CISG Art. 7 (2)]. Art. 2 (viii) of the 1967 Convention Establishing the WIPO defines it as “…rights resulting from intellectual activity in the industrial, scientific, literary or artistic fields” [1967 WIPO convention Art. 2]. Consequently, third party claims based on patents, trademarks, service marks, commercial names and designations, appellation of origin and copyrights fall within the scope of Art. 42 CISG [krol; needs revising + other scholars].

Case law provides that industrial property or other intellectual property rights mentioned in the Art. 42 CISG encompass all kind of patents, including license rights. In the CD media case, the seller sold blank CDs the buyer in Austria. The seller had bought the CDs from its Taiwanese parent company which had the license to produce and sell them. The license allowed the licensee to sell the CDs in Germany but was silent about Austria. After some time, a dispute on the license fees arose between Taiwanese parent company and the licensor. The Austrian Supreme Court applied Art. 42 CISG because the claim of third parties was based on intellectual property. [CD media case].

In this case, the rights of Ross Pharmaceuticals on GorAdCam vector are based on the exclusive license which grants Ross Pharmaceuticals to use GorAdCam vector exclusively in the field of malaria and related infectious diseases [Res. Ex. 3; Cl. Ex. 4]. Furthermore, the claim made by Ross Pharmaceuticals is based on the interpretation of this IP right. [Cl. Ex. 4]