On 28 July the Court of Justice of the European Union ("CJEU") handed down a preliminary ruling in two joined references from the Danish Supreme Court concerning whether a trade mark proprietor could object to the parallel import of pharmaceutical products on the basis that the entity named on the packaging, and holding the marketing authorisation, was not the same as the entity performing the physical repackaging.
The case highlights the restricted basis upon which a trade mark proprietor can object to the repackaging and parallel import of its goods. We suggest that it also recognises the commercial realities of repackaging, a process likely to involve a number of entities within one group of companies.
Whilst a careful evaluation must still made of any goods subject to parallel import, so that legitimate grounds for objecting to the parallel import might be identified, it is now clear that, so long as the entity responsible for the repackaging is named on the new packaging, the fact that the repackaging has been performed by a third, unidentified, party is irrelevant.
Both referrals related to cases brought by Merck, in Denmark. In C-400/09, a referral following the Supreme Court's consideration of two appeals, the defendants were Orifarm, holder of a marketing authorisation ("MA") and Orifarm Supply, the repackager and holder of the repackaging authorisation; and Handelsselskabet, the MA holder and Ompakninggsselskabet, the repackager and holder of the repackaging authorisation. In C-207/10, Paranova Danmark was the holder of the MA, and Paranova Pack was the holder of the RA.
Merck objected to the repackaging and subsequent parallel import of its medicinal products into the Danish Market on the basis that such import infringed its trade mark rights under Directive 89/104. In each of the referred cases, the name that appeared on the repackaged product was that of the MA holder, not the physical repackaging entity. Merck argued that the defendants' failure to name the actual repackager on the outer packaging, entitled Merck to oppose the import on the basis of Article 7(2) of Directive 89/104/EEC, which sets out the principle of exhaustion of trade mark rights:
"1. The trade mark shall not entitle the proprietor to prohibit its use in relation to goods which have been put on the market in the Community under that trade mark by the proprietor or with his consent.
2. Paragraph 1 shall not apply where there exist legitimate reasons for the proprietor to oppose further commercialisation of the goods, especially where the condition of the goods is changed or impaired after they have been put on the market."
It should be noted that, since the start of these disputes, Directive 89/104 has been repealed and replaced by Directive 2008/95. That said, the relevant sections of 2008/95 are almost identical to those in 89/104 and we suggest that the decision will be equally applicable under the new Directive.
The Danish Court referred a number of questions pertaining to whether Article 7(2) must be interpreted as meaning that a proprietor of a trade mark relating to a pharmaceutical product which is the subject of parallel import, may oppose that import on the basis that whilst the repackaging was performed on the instructions of the party named on the outer packaging, who is also the holder of the MA, the party that actually physically performed the repackaging is not named.
The CJEU has, in a number of decisions1, specified the conditions under which a parallel importer may repackage medicinal products. From these decisions, it is settled case law that repackaging may not be opposed where:
- such opposition would contribute to the artificial partitioning of the markets between Member States, in particular where the repackaging is necessary;
- the repackaging cannot affect the original condition of the product;
- the new packaging clearly indicates the repackager of the product and the name of the manufacturer;
- the presentation of the repackaged product is not liable to damage the reputation of the trade mark and its proprietor; and
- the importer gives notice to the proprietor.
It was the third of these conditions that concerned the Court in this instance. The CJEU held that the interest of the trade mark owner is fully protected where the entity named on the outer packaging is the entity on whose order and instructions the repackaging is carried out. The Court placed particular emphasis on the fact that the named entity, in each case, assumed full responsibility for the repackaging operations.
The CJEU did not directly address the referred question of whether it mattered that the MA holder and the physical repackager were in the same Group of companies. That said, the Court concurred with the Opinion of Advocate General Bot, that the situation would be different if it appeared that the repackaging was carried out independently by a repackaging entity which assumed responsibility for it. We suggest therefore that, whilst it may not be necessary for companies to be in the same Group, it is possible that a different conclusion might be reached in circumstances in which the marketing entity was less closely related to the repackager. This would depend upon an analysis of the facts in each case.
Finally, the CJEU rejected an argument put forward by Merck, that the physical repackager should be named on the outer packaging, so as to protect consumers. The Court held that Article 7(2) of Directive 89/104 is directed only towards protecting the trade mark proprietor. Consumers may rely upon other legal instruments to protect their legitimate rights.
In conclusion, Article 7(2) of Directive 89/104 does not allow a trade mark proprietor to object to parallel import of a repackaged pharmaceutical product on the sole ground that the entity responsible for the repackaging, and the holder of the MA, is named on the outer packaging, rather than the entity who physically performs the repackaging. Any such objection is a disguised restriction on trade.
This case emphasises that the CJEU will look to the overriding principle of the free movement of goods when considering the parallel import of pharmaceutical products, and interpret narrowly the derogations therefrom.