On 27 April 2007, the European Court of Justice (the “ECJ”) handed down yet another decision in the case of Boehringer Ingelheim & others v Swingward Ltd and Dowelhurst Ltd, Case C-348/04 (“Boehringer II”). This second reference to the ECJ from the UK courts had raised further questions relating to the repackaging of pharmaceutical products for parallel trade in the EU and the exhaustion of trade mark rights.
The facts of the case are now well-known. The defendants , Swingward and Dowelhurst, are parallel importers of pharmaceutical products, including products manufactured and sold by the claimants: Boehringer Ingelheim, Glaxo, Wellcome, SmithKline Beecham and Eli Lilly. Once the products are sold in the EU by the claimants under their respective trade marks, the defendants purchase the products and import them into the UK. However, they then make certain alterations to the packaging and labelling of the products in order to sell them in the UK. In some cases, the defendants ’ repackage the products into boxes designed by the parallel importer, either bearing the claimants’ trade marks as well as its own marks (“co-branding”), or boxes which only bear the products generic names, and not their trade marks (“debranding”). In other cases, rather than repackaging the products, the importers merely relabel the original packaging with new label setting out certain critical information, such as the name of the parallel importer and its parallel import licence number. Thus, in such cases, wording in languages other than English remained visible and the trade mark was not covered up. However, in all cases, it is clear from the packaging that the goods come from the EU and are repackaged by the defendants .
The questions referred to the ECJ in this second reference from the Court of Appeal concerned both reboxed products and relabelled products, and the conditions under which parallel importers are entitled to repackage pharmaceutical products. These questions can be summarised as follows:
- Do the conditions in respect of repackaging, which need to be fulfilled by a parallel importer in order to be entitled to import trade marked goods, apply to relabelling as well as reboxing?
- Does the condition that repackaging must be necessary to market the product in a Member State only apply to the actual act of reboxing/relabelling or does it also apply to the precise manner and style of the reboxing/relabelling?
- Is the presentation of the repackaged product liable to damage the reputation of the trade mark only if the packaging is defective, of poor quality or untidy, or does it extend to anything which damages the reputation of the trade mark?
- Is it damaging to the reputation of a trade mark if the parallel importer either (i) fails to affix the trade mark to the new exterior carton (‘de-branding’) or (ii) applies either his own logo or a house-style or a get-up or a get-up used for a number of different products (‘co-branding’) or (iii) the additional label is positioned so as wholly or partially to obscure one of the proprietor’s trade marks or (iv) the additional label fails to state that the trade mark in question is a trade mark owned by the proprietor or (v) the name of the parallel importer is printed in capital letters?
- Who bears the burden of proving that the new packaging complies with the conditions of repackaging?
- What are the consequences of failing to give adequate prior notice to the trade mark owner that its products are going to be repackaged?
The ECJ answered as follows.
The ECJ reviewed the different methods of repackaging which were employed by the parallel importers and concluded that relabelling was a form of repackaging which was envisaged by the Court in Boehringer I. The ECJ found that relabelling poses the same risks as reboxing, to the trade mark owner in terms of potentially undermining the guarantee of origin of the mark. Thus, the conditions in respect of reboxing also apply to relabelling.
MANNER AND STYLE OF REPACKAGING
As per the Court’s earlier case law, repackaging must be necessary to market the product in the importing Member State. The ECJ confirmed that this condition is directed only to the fact of repackaging and not to the manner and style of the repackaging. In other words, a parallel importer does not have to show that the style and manner in which the products are repackaged are necessary, but merely that it is necessary to repackage the products.
DAMAGE TO REPUTATION
In respect of the question of what is liable to damage the reputation of a trade mark, the ECJ held that damage was not limited to cases where the repackaging was defective, of poor quality or untidy. Rather, there are other aspects of the presentation of repackaged products which may be judged to be inappropriate and therefore liable to damage the reputation of the trade mark. By way of example, the Court said that other features which would be liable to damage a trade mark’s reputation included the situation where the carton or label “are such as to affect the trade mark’s value by detracting from the image of reliability and quality attaching to such a product and the confidence it is capable of inspiring in the public concerned”.
However, the ECJ refused to provide any further clarification in respect of whether any of the actions listed by the Court of Appeal, including de-branding, co-branding and the manner of relabelling, in its reference were actually liable to damage the reputation of a trade mark. The ECJ said that this was a question of fact for the national courts to decide in the light of the circumstances of each case and provided no specific guidance.
THE BURDEN OF PROOF
The ECJ held that where it is established that the pharmaceutical products have been repackaged, it is for the parallel importers to prove the existence of the conditions under which they are entitled to repackage pharmaceutical products, and prevent trade mark owners from opposing further commercialisation of their trade marked pharmaceutical products.
However, in respect of the conditions that (i) the repackaging may not affect the original condition of the product inside the packaging; and (ii) the presentation of the repackaged product must not be such as to be liable to damage the reputation of the trade mark and of its proprietor; the parallel importer need only provide evidence that leads to the reasonable presumption that the condition has been fulfilled. Further, once the parallel importer has furnished such initial evidence that the latter condition has been fulfilled, it is then for the trade mark owner to prove that his reputation and that of the trade mark have been damaged by the repackaging.
In its first decisions in this case, the ECJ had confirmed that a parallel importer must fulfil the prior notice requirement in order to be entitled to repackage trademarked pharmaceutical products and that it was not sufficient that the trade mark owners be notified by other sources. In the present case, the ECJ added that it therefore followed that a parallel importer who fails to give prior notice to the trade mark owners will infringe the rights of those owners by subsequently imp orting repackaged products, so long as the proprietor has not received notice from that parallel importer. Therefore, trade mark owners are entitled to prevent importation of those products in the same way as they are entitled to prevent importation of spurious goods.
In terms of the consequences of failure to give prior notice, the ECJ once more shied away from laying down specific sanctions for such infringements. Again, ECJ said it was for the national courts to develop effective, reasonable and proportionate rules to deal with such situations and to determine any damages by reference to the circumstances of each case.
The case has now been referred back to the UK Court of Appeal. It will remain to be seen how this Court interprets and applies the ECJ’s decision to the facts of the case.