The Metropolitan Appeal Court (Budapest) recently ruled in a trademark infringement action between two pharmaceutical manufacturers that the mere existence of a marketing authorisation (MA) for a pharmaceutical product, without any further evidence in relation to an actual launch, cannot be considered as an imminent threat of trademark infringement. While case law confirming the same in relation to patents exists, this ruling was widely anticipated by the Hungarian pharmaceutical industry, because the first instance court ruled to the contrary, and established that applying for and/or holding an MA is an imminent threat of trademark infringement.

The claimant's arguments

The case covered several issues, but the claimant's key argument was that the defendant applied for an MA of an over-the-counter painkiller and anti-inflammatory drug, and the Hungarian pharmaceutical regulator also granted this MA. The claimant argued that, based on this MA, the defendant has sole discretion to launch the product, and the claimant does not have any legal instruments to gather evidence on further preparatory actions just on the launch of the product, which is to be considered as infringement rather than a threat thereof. The claimant cited Article 27(2)(b) of the Hungarian Trademark Act, which implemented Article 9(1)(a) of the IP Enforcement Directive, according to which a trademark owner can request the court to issue an injunction to prevent any imminent infringement of an intellectual property right.

The defendant's arguments

The defendant asserted inter alia that an MA is simply an administrative requirement for an eventual future launch, but does not mean that the launch will necessarily occur in the near future as an MA is valid for five years and can also be extended. Therefore, according to the defendant, there was no imminent threat of launch. The defendant further referred to previous decisions in patent infringement cases in which the court found that holding an MA alone did not constitute an imminent threat of patent infringement either.

No preliminary injunction

The claimant applied for a preliminary injunction (PI) before commencing the main action, but the Metropolitan Court, which has exclusive jurisdiction in relation to first instance trademark matters in Hungary, rejected to grant the PI. In its decision the Metropolitan Court agreed with the defendant and accepted that holding an MA alone cannot be considered as an imminent threat of infringement.

It is also worth mentioning that this PI decision was ground breaking, but due to a different reason. For several years, Hungarian courts had been dismissing trademark infringement actions where the defendant had its own identical or similar trademark. Therefore, trademark owners were forced to file a cancelation action against the later trademark and then file an infringement suit. As there is bifurcation in Hungary, this meant that it took several years to obtain a final ruling on the cancellation, during which the trademark owner was unable to take actions against the infringement. However, in this matter the Metropolitan Court decided to ignore previous Hungarian case law and applied the approach of the Court of Justice of the European Union (CJEU) in FCI (C-561/11), i.e. that there is no need to first obtain a declaration of invalidity in relation to a later identical or similar national trademark before bringing an infringement action as the exclusive right of a trademark proprietor to prohibit third parties from using an identical or confusingly similar sign in the course of trade extends to circumstances where the defendant has its own later registered identical or similar national trademark. This PI decision and the likely consequences were reported on 6 August 2013 on Marques Class 46 blog (https://www.marques.org/class46/Default.asp?XID=BHA3312).

Infringement on first instance

In the main infringement action the claimant relied on the same factual background and legal provisions and argued inter alia that after obtaining the MA, the defendant has sole discretion to launch the product, and the claimant cannot gather any evidence before an actual launch. The Metropolitan Court accepted these arguments and ruled that, contrary to the PI decision, there is an imminent threat of trademark infringement, and issued an injunction prohibiting use of the designation in question. The Metropolitan Court established that there is no intermediate action or step between obtaining an MA and an actual launch which would precede the actual sale of the defendant's product and could also be discovered by the claimant.

No infringement on second instance

The Metropolitan Appeal Court (Budapest), acting as second instance court, overruled the first instance ruling and rejected the claimant's request. The appeal court accepted the defendant's position, noting that it is relevant that Article 27(2)(b) of the Trademark Act contains the attribute 'imminent' and the existence of an MA cannot be considered as an imminent threat of infringement as it does not mean the threat of necessarily launching the defendant's product in question. According to the appeal court, only the actual use of the MA, i.e. any further steps towards a launch, can be considered as imminent threat of infringement. This also means that the appeal court disagreed with the lower court's approach, according to which an actual launch was solely at the defendant's discretion, and this triggered threat of infringement even if launch could have only occurred in the distant future.

The second instance ruling is final and enforceable. While there is an option to file an extraordinary appeal with the Curia it is rather unlikely that this will be happen, or this will be successful, as the Curia can overrule the final ruling only if it is contrary to the law.

Summary

The final ruling confirming that the mere existence of an MA cannot be considered an imminent threat of trademark infringement is in line with previous case law in patent matters. Backed by this decision generic pharmaceutical companies now have confirmation from both the trademark and patent law perspective that holding an MA alone will not be considered as an imminent threat of infringement in Hungary.