Repackaging of parallel imported pharmaceuticals – ECJ Judgment

The European Court of Justice has today given its long awaited judgment in Boehringer Ingelheim & others -v- Swingward & others, Case C-348/04 which concerns the extent to which importers may change the original packaging of branded pharmaceuticals which are traded across EU borders. The judgment is a positive one and differs from the Opinion of the Advocate General in the case, delivered over a year ago, in a number of aspects which are favourable to trade mark owners.

In more detail:

The case of

Boehringer Ingelheim & others -v- Swingward & others

has been active since 1999 and is thought to be the first ever case to be referred twice to the European Court of Justice. It concerns a battle between a number of pharmaceutical companies seeking to protect their trade marks and parallel traders who deal in branded pharmaceuticals across EU borders.

The repackaging of branded products by third parties has been the subject of a long line of ECJ case law for decades, with the well known case of Bristol Myers Squibb in 1996 (“BMS”) confirming that the trade mark owner may rely on trade mark rights to oppose the further marketing of a pharmaceutical product where the importer has repackaged the product and reaffixed the trade mark unless:

• it is established that reliance on trade mark rights by the owner in order to oppose the marketing of repackaged products under that trade mark would contribute to the artificial partitioning of the markets between Member States;
• it is shown that the repackaging cannot affect the original condition of the product inside the packaging;
• the new packaging clearly states who repackaged the product and the name of the manufacturer;
• the presentation of the repackaged product is not such as to be liable to damage the reputation of the trade mark and of its owner; thus, the packaging must not be defective, of poor quality, or untidy; and
• the importer gives notice to the trade mark owner before the repackaged product is put on sale, and, on demand, supplies him with a specimen of the repackaged product.

The Boehringer case concerns the interpretation of these principles in relation to different types of repackaging, notably “debranding” (removal of the trade mark owner’s brand), “co-branding” (addition of the importer’s brand to packaging which also bears the trade mark owner’s brand) and various methods of overstickering.

1. Overstickered packs

The importers had argued that the BMS criteria did not apply to overstickered packs, but only to reboxed packs, and the Advocate General had agreed with them. However, the Court now confirms that its established rules apply to repackaging generally, including overstickered packs. The Court comments that overstickering, as with reboxing, is prejudicial to the specific subject matter of the mark and creates real risks for the guarantee of origin. This finding means, in particular, that the requirement for importers to give advance notice to trade mark owners prior to marketing will continue in relation to all types of repackaging.

2. The necessity test

Previous case law has discussed the principle of “necessity” to repackage, with a principle established that the trade mark owner may oppose repackaging which is not “necessary” in order for the product to be marketed in the country of import. The issue then arose as to whether the importer had also to show that the manner in which he had repackaged was necessary. The Court’s view is that the necessity test applies only to the fact of repackaging (eg. the decision to rebox) and not also to the particular manner or style of repackaging.

3. Damage to reputation

The Court confirms that the fourth BMS criterion that the repackaged product must not damage the reputation of the mark is not limited to a defective, poor quality or untidy pack. A repackaged product could also damage the reputation of the trade mark 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.”

4. Co-branding, de-branding and overstickering

The Court agrees that methods of repackaging such as co-branding, de-branding and overstickering are in principle liable to damage the reputation of the mark. However, this is a question of fact for the national court to decide in each case. Disappointingly, there is no further guidance given, leaving the way open for further litigation in national courts, and the probability of a difference of opinion as between national courts.

5. Burden of proof

The burden of proving each of the BMS conditions is to lie with the importer (and not shared between the trade mark owner and importer, as the Advocate General had said). However, in relation to the conditions that the original condition of the product must not be affected, and that there must not be damage to the reputation of the mark, the importer must provide evidence that leads to a reasonable presumption that these conditions have been fulfilled. Thereafter, the trade mark owner must prove that the condition is affected or the reputation damaged.

6. Notice

Lack of notice is a trade mark infringement and the sanction for infringement must be proportionate, effective and a sufficient deterrent. The trade mark owner’s right to prevent imports of products marketed without notice is no different to its right to prevent imports of “spurious” goods. The Court sees no reason why a financial remedy imposed by national law of the same type as imposed for any other kind of trade mark infringement should be said to be disproportionate. The national courts should assess each case to determine the amount payable and in accordance with the principle of proportionality.

The Advocate General had taken a different view, less favourable to trade mark owners, saying that the sanction to be imposed where there is a lack of notice only must be a lesser sanction than would be applicable if there were other breaches of the

BMS

conditions.

Boehringer Ingelheim & others -v- Swingward & others, Case C-348/04