April 2007
The Never Ending Pharmaceutical Story
Proprietors of trade marks received a boost yesterday with the European Court of Justice’s (ECJ) most recent decision in the long running saga known as Boehringer Ingelheimand Others involving a number of pharmaceutical companies and parallel importers. This case began back in 2003 when Boehringer Ingelheimand Others sued parallel importers for trade mark infringement over the unlawful repackaging and relabelling of officially licensed products. Parallel imports are branded goods that are imported into the EU from countries which sell those goods at a lower price. The importers are therefore able to sell the goods more cheaply than the trade mark holder intends. Within the EU trade mark owners are generally prevented from restraining parallel importers from doing this if they have legitimately assigned the rights to those goods because of the free movement of goods. This is known as the doctrine of exhaustion of rights. However in recent years trade mark owners have successfully argued that if parallel importers have altered the packaging of goods either to re-brand them with their own logos or to meet domestic standards this can lead to the excessive commercialisation and damage to the brands especially if this is done without giving prior notice. The European Court of Justice and the British Courts have accepted this argument but are very aware of so-called “disguised restrictions” aimed at the “artificial partitioning of the markets between Member States” where “the repackaging is done in such a way that the legitimate interests of the proprietor are respected.”
Yesterday’s decision dealt specifically with “over-stickering” and clarified the position with regards burden of proof. This time the claimants had argued that placing stickers on branded goods which either showed languages other then English on the packaging or had covered up the original mark completely, damaged the reputation of the marks and failed to show the origin of the goods. The court agreed stating “In that regard, it should be borne in mind that the relabelling of the trade-marked medicinal products, just like the reboxing of those products, are prejudicial to the specific subject-matter of the mark and it is not necessary in that context to assess the actual effects of the activity performed by the parallel importer”. It should be noted that the relabelling does not need to be poor quality or untidy to damage the trade marks reputation. Finally the ECJ also stated that it is up to the parallel importer to show that the re-labeling is necessary to meet domestic standards and for them to notify trade mark owners of any changes, and, on request provide samples of the modified packaging.
Briffa’s Opinion
This decision by Europe’s
highest court should bring an end to this long running saga by clarifying
the position in relation to parallel importers and the doctrine of
exhaustion of rights. While it is a generous decision by the ECJ
in light of the overriding free market objective of the EU, the courts
will be alert to any attempts by trade mark owners to divide up the
market. The two leading cases in this area, Boehringer Ingelheimand
Others and Bristol Myers Squib, have both involved pharmaceutical
companies and this heavily regulated sector is likely to benefit
most from this decision. Parallel importers will become increasingly
prevalent as internet based selling continues to increase, and while
trade mark owners should be aware of the further commercialisation
of their brands, it is likely that it may prove difficult to claim
infringement if the goods have legitimately been assigned. Therefore
it is imperative that trade mark owners choose the correct companies
to license their marks to and keep a close eye on parallel importers
insisting on samples where possible.