The repackaging of a product must not damage the trademark's reputation. However, is the trademark's reputation damaged if a trademark statement mentioning the trademark owner is omitted from the outer packaging of a neutral package, even if the package identifies both the manufacturer and the parallel importer? According to a recent Supreme Court decision – the first of its kind in Europe – the answer is yes.(1)
The parties in the matter were Merck Sharp & Dohme and Orifarm. Orifarm parallel imported several medicinal products and repackaged them into white, neutral packages without any logos. The packages stated the product name (Merck Sharp & Dohme's trademark) several times in large font and the name of the parallel importer and the manufacturer in small font. Neither the outer package nor the package insert included a statement that mentioned the trademark owner.
Orifarm argued that there was no legal requirement to state the name of the trademark owner when applying the trademark to the repackaged product. Further, it argued that the five so-called 'BMS conditions' were satisfied and that trademark infringement was thus precluded.
Regarding the condition that the presentation of the product must not damage the reputation of the mark, Orifarm referred to a previous Supreme Court judgment (Case 72/2005, December 3 2008), which stated that de-branding in itself does not generally damage the trademark or the owner. Orifarm argued that this also applied to the present case and that Merck Sharp & Dohme had not established that its trademark had suffered any actual damage.
Merck Sharp & Dohme argued that it was an essential consideration under general trademark law that the end user not be made to believe that Orifarm was the holder of Merck Sharp & Dohme's trademarks. In this regard, Merck Sharp & Dohme referred to Reason 74 of Bristol-Myers Squibb (C-427/93, C-429/93 and C-436/93).
Merck Sharp & Dohme further argued that, in principle, a trademark's reputation may be damaged if the parallel distributor does not state on the outer packaging that the trademark is owned by the relevant trademark owner. In this regard, reference was made to Reason 75 of Bristol-Myers Squibb, Reason 30 of Wellcome v Paranova (C-276/05) and Reasons 45 to 47 of Boehringer II (C-348/04).
The Supreme Court emphasised that a trademark's reputation may, in principle, be damaged even if the parallel importer is stated on the package, in cases of de-branding or if the use of the trademark creates the impression of a certain connection between the distributor and the trademark owner.
The Supreme Court found that Orifarm's repackaging constituted unlawful partial de-branding, as only the product name – and not Merck Sharp & Dohme's logo or any other indication of Merck Sharp & Dohme being the trademark owner – was applied to the outer packaging.
The Supreme Court found that the repackaging might cause doubt for users as to the identity of the trademark owner and create the impression of a certain connection between Orifarm and Merck Sharp & Dohme. Consequently, the Supreme Court ruled that Orifarm must apply a trademark statement to the white, neutral packages (eg, "Merck Sharp & Dohme is the owner of the trademark XX").
Repackaging may not create the impression of a certain connection between the trademark and the parallel distributor. However, it is uncertain where this line is drawn. This point is illustrated by two earlier Danish Supreme Court decisions regarding co-branding. In a 2009 case, the court found that the arrangement of a predominant co-mark in close connection with the product name meant that the parallel import could harm the trademark (Case 40/2008, September 21 2009). Conversely, in a 2012 case, the co-branding did not create the impression of a certain connection, as the co-mark was not predominant and information on the manufacturer, parallel importer, repackager and trademark owner appeared distinctly (Case 234/2008, October 17 2012).
The 2015 decision confirms the degree of care that must be taken by parallel importers when using third-party trademarks. As the main purpose of a trademark is to function as an indication of origin, third-party marks cannot be used in a way which confuses the consumer as to its origin. However, hitherto, repackaging which informed consumers of the parallel importer and the name of the manufacturer was deemed by many to be sufficient. This decision illustrates that the reputation of a trademark can also be damaged by omitting a trademark statement along with use of the trademark.
The Supreme Court decision appears to be the first to consider this specific question in the European Union. Similar proceedings are pending in other EU jurisdictions and it will be interesting to see whether the judgment will affect these proceedings.
For further information on this topic please contact Jeppe Brinck-Jensen or Kamilla Kelm Demant at Accura Advokatpartnerselskab by telephone (?+45 3945 2800) or email (email@example.com or firstname.lastname@example.org). The Accura Advokatpartnerselskab website can be accessed at www.accura.eu.
(1) For further details of the judgment (in Danish) please see www.hoejesteret.dk/hoejesteret/nyheder/Afgorelser/Pages/Ompakningafparallelimporteredelaegemidler.aspx.
This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.