No surprise as pharma repackaging rulings rush through

The labels on the box never troubled the IPKat,
but the contents sometimes caused surprise ...

Not every case which is bound for the Court of Justice of the European Union for a preliminary ruling takes forever.  The two cases noted here, Joined Cases C‑400/09 and C‑207/10, Orifarm v Merck Sharpe & Dohme; Paranova v Merck Sharp & Dohme, sped through in pretty good time.  One was referred in October 2009, attracting a ruling in substantially less than two years, while the other hurtled past the judges' noses at almost the speed of light, having been referred as recently as April 2010.  Speedy cases aren't usually the sign of an efficient court, though: they're an indication that the questions referred for a reference were too easy to spend a lot of time on -- as is the case here.

In Case C‑400/09 pharma giant Merck made trade mark-protected medicinal products which Orifarm imported in parallel on to the Danish market by the Orifarm group. Orifarm and another company, Handelsselskabet, held the authorisations to market and sell those medicinal products, while Orifarm Supply and Ompakningsselskabet, which carried out the repackaging, held authorisations to do so. All decisions concerning the purchase, repackaging and sale of these products, including decisions relating to the design of the new packagings and their labelling, were taken by Orifarm or Handelsselskabet. Ompakningsselskabet and Orifarm Supply bought and repackaged the medicinal products, assuming liability for compliance with the requirements for repackagers laid down by the Danish Medicinal Products Agency. The packaging of the products indicated that they had been repackaged by Orifarm or Handelsselskabet, as the case may be.

Merck sued Orifarm, Handelsselskabet and Ompakningsselskabet, on the ground that the name of the actual repackager did not appear on the packaging of the products. The trial court agreed that the defendants had infringed Merck’s trade mark rights by failing to indicate on the packaging the name of the undertaking which had actually performed the repackaging, ordering them to pay damages. The defendants appealed to the Danish Supreme Court, which decided to stay the proceedings and refer the following questions to the Court for a preliminary ruling:

‘(1) The Court of Justice is requested to clarify whether [Bristol-Myers Squibb and Others and MPA Pharma --earlier ECJ decisions] are to be interpreted as meaning that a parallel importer which is the holder of the marketing authorisation for, and possesses information on, a medicinal product imported in parallel, and which issues instructions to a separate undertaking for the purchase and repackaging of a medicinal product, for the detailed design of the product’s packaging and for arrangements in relation to the product, infringes the rights of the trade mark proprietor by indicating itself – and not the separate undertaking which holds the repackaging authorisation, has imported the product and has carried out the physical repackaging, including (re)affixing of the trade mark proprietor’s trade mark – as the repackager on the outer packaging of the medicinal product imported in parallel. 

(2) The Court of Justice is requested to clarify whether it is of significance in answering Question 1 that an assumption might be made that, where the marketing authorisation holder indicates itself as the repackager instead of the undertaking which physically carried out the repackaging to order, there is no risk that the consumer/end user might be misled into assuming that the trade mark proprietor is responsible for the repackaging. 

(3) The Court of Justice is requested to clarify whether it is of significance in answering Question 1 that an assumption might be made that the risk of misleading the consumer/end user into assuming that the trade mark proprietor is responsible for the repackaging is excluded if the undertaking which physically carried out the repackaging is indicated as being the repackager. 

(4) The Court of Justice is requested to clarify whether it is only the risk that the consumer/end user might be misled into assuming that the trade mark proprietor is responsible for the repackaging which is of significance in answering Question 1, or whether other considerations regarding the trade mark proprietor are also relevant, for example 

(a) that the entity which undertakes the importation and physical repackaging and (re)affixes the trade mark proprietor’s trade mark on the product’s outer packaging potentially on its own account infringes the trade mark proprietor’s trade mark by so doing, and 

(b) that it may be due to factors for which the entity that physically carried out the repackaging is responsible that the repackaging affects the original condition of the product or that the presentation of the repackaging is of such a kind that it must be assumed to harm the trade mark proprietor’s reputation (see, inter alia, … Bristol-Myers Squibb and Others …). 

(5) The Court of Justice is requested to clarify whether it is of significance in answering Question 1 that the holder of the marketing authorisation, which has indicated itself as being the repackager, at the time of the notification of the trade mark proprietor prior to the intended sale of the parallel imported medicinal product once repackaged, belongs to the same group as the actual repackager (sister company).’

In Case C‑207/10 much the same thing happened, but the same court referred slightly different questions:

‘(1) Are Article 7(2) of [Directive 89/104] and the associated case-law, in particular the judgments of the Court of Justice in … Hoffmann-La Roche … and … Pfizer … and … Bristol-Myers Squibb and Others … to be interpreted as meaning that a trade mark proprietor may rely on these provisions in order to prevent a parallel importer’s marketing company, which is the holder of a marketing authorisation for a medicinal product in a Member State, from selling that product with an indication that the product is repackaged by the marketing company, although the marketing company has the physical repackaging carried out by another company, the repackaging company, to which the marketing company gives instructions for the purchasing and repackaging of the product, for the detailed design of the product’s packaging and for other arrangements in relation to the product, and which holds the repackaging authorisation and reaffixes the trade mark on the new package in the course of repackaging? 

(2) Is it of significance in answering Question 1 that an assumption might be made that the consumer or end-user is not misled with regard to the origin of the product and will not be led to believe that the trade mark proprietor is responsible for the repackaging through the indication by the parallel importer of the manufacturer’s name on the packaging along with the indication as described of the undertaking responsible for the repackaging? 

(3) Is it only the risk that the consumer or end-user might be misled into assuming that the trade mark proprietor is responsible for the repackaging which is of significance in answering Question 1, or are other considerations regarding the trade mark proprietor also relevant, for example 

(a) that the entity which in fact undertakes the purchasing and repackaging and reaffixes the trade mark proprietor’s trade mark on the product’s packaging thereby potentially infringes independently the trade mark proprietor’s trade mark rights, and that that may be due to factors for which the entity that physically carried out the repackaging is responsible, 

(b) that the repackaging affects the original condition of the product, or 

(c) that the presentation of the repackaged product is of such a kind that it may be assumed to harm the trade mark or its proprietor’s reputation? 

(4) If, in answering Question 3, the Court finds that it is also relevant to take account of the fact that the repackaging company potentially infringes independently the trade mark rights of the trade mark proprietor, the Court is asked to indicate whether it is of significance to this answer that the marketing company and repackaging company of the parallel importer are jointly and severally liable under national law for the infringement of the trade mark proprietor’s trade mark rights. 

(5) Is it of significance in answering Question 1 that the parallel importer which holds the marketing authorisation and has indicated itself as being responsible for repackaging, at the time of the notification of the trade mark proprietor prior to the intended sale of the repackaged medicinal product, belongs to the same group as the company which undertook the repackaging (sister company)? 

(6) Is it of significance in answering Question 1 that the repackaging company is indicated as the manufacturer in the package leaflet?’

What with all these questions, some readers might have been expecting a lengthy set of answers -- but not this Kat. He knew they'd be short and sweet:

"Article 7(2) of First Council Directive 89/104 ... must be interpreted as not allowing the proprietor of a trade mark relating to a pharmaceutical product which is the subject of parallel imports to oppose the further marketing of that product in repackaged form on the sole ground that the new packaging indicates as the repackager not the undertaking which, on instructions, actually repackaged the product and holds an authorisation to do so, but the undertaking which holds the marketing authorisation for the product, on whose instructions the repackaging was carried out, and which assumes liability for the repackaging".

In other words, never mind the technicalities as to whose name appears on the packaging -- look at the reality. The trade mark owner's interest in preserving the integrity of its trade marks is unaffected and the consumer is not threatened or misled,  End of story.

Sun in August? Summery but not so summary

Readers may remember this dispute as Sun Microsystems Inc v M-Tech Data Ltd and another (noted by the IPKat here), but it has resurfaced today -- at a time when Court of Appeal judges should be out in the sun, not judging it -- as Oracle America Inc (formerly Sun Microsystems Inc) v M-Tech Data Ltd and Lichtenstein [2010] EWCA Civ 997. The Court consisted of Lady Justice Arden, who delivered the judgment, aided and abetted by the Master of the Rolls and Lord Justice Tomlinson.

Sun owned a series of UK and Community trade marks comprising or consisting of the word 'Sun' for computers, computer hardware, computer software and computer peripherals. M-Tech, a UK company, supplied computer hardware in the "secondary market" for hardware originally sold by major manufacturers like Sun and its rivals. M-Tech bought 64 Sun disk drives from a US broker and sold them in the UK. Sun sued for trade mark infringement, alleging that M-Tech had put the drives on the UK market without Sun's consent. M-Tech maintained however that, since Sun hadn't shown where the drives had been first marketed, its attempt to enforce its trade mark rights was contrary to Articles 28 to 30 of the EC Treaty since its effect would be to prevent the attainment of a single market in hardware. Further, the enforcement of Sun's rights in this way was contrary to Article 81 of the EC Treaty and therefore prohibited.

Sun, maintaining that there was no evidence to suggest it had ever consented to the importation of these drives into the EEA, sought and obtained summary judgment, having furnished evidence that the drives had initially been placed on the market outside the European Economic Area (EEA). According to Mr Justice Kitchin:

* The court had to ask whether the claimant had a 'realistic' as opposed to a 'fanciful' prospect of success, one which carried some degree of conviction and which was more than merely arguable.

* In reaching its conclusions the court should not conduct a mini-trial, but had to take account of evidence that could reasonably be expected to be available at trial.

* The court should not be hasty to reach a final decision without a full trial where reasonable grounds existed for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case.

* Summary disposition was not appropriate in any area of law that was still developing.

* 'Consent' -- the parallel importer's favourite defence to a trade mark infringement -- had to be a pan-European concept under harmonised European law. It was thus up to the European Court of Justice to supply a uniform interpretation of the concept of 'consent' to the placing of goods on the market within the EEA. In view of its serious effect in extinguishing the exclusive rights of proprietors of trade marks, consent had to be expressed in such a way that an intention to renounce those rights was unequivocally demonstrated. While such an intention would normally be gathered from an express statement of consent, it was conceivable that consent might be inferred from the facts and circumstances surrounding the placing of the goods on the market outside the EEA that unequivocally demonstrated that the proprietor had renounced his rights.

* Implied consent to the marketing within the EEA of goods put on the market outside that area could not be inferred from the mere silence of the trade mark proprietor, from the fact that the proprietor had not communicated his opposition to goods placed on the market outside the EEA being placed on the market within the EEA or from the fact that the goods carried no warning of a prohibition on their being placed on the market in the EEA.

The Court of Appeal, in a relatively short decision, granted the defendants permission to appeal, since M-Tech was entitled to argue that Articles 28 to 30 and 81 of the EC Treaty prevented Oracle from obtaining summary judgment for trade mark infringement. Reminding the parties that the fact that this application for permission to appeal was allowed didn't mean that M-Tech wouldn't have to substantiate its defences, the court directed Oracle to call for a case management conference as soon as possible, perhaps for the strange reasons that (i) it has the potential to establish an industry precedent and (ii) it looks like a good prospect for a reference to the Court of Justice of the European Union. Thus the court said (at para. 41):

“... This case clearly has important financial and economic implications not just for the parties but also for others involved in the grey market in Oracle, and possibly other, computer hardware and goods. The economic function of parallel imports and the grey market is controversial”,

adding ominously (at para. 42):

"If M-Tech's allegations are established, the trial judge will have to consider whether to make a reference to the Court of Justice to enable him to decide the issues in the action. In the absence of any material change in European Union law or in M-Tech's case, there would be a strong case for a reference by the trial judge. The point is not acte clair, and in this case where the issues involve questions of economic policy likely to affect the European Union as a whole and where this court has already considered the points of European Union law in issue, there would be a good reason to make a reference without waiting for the case to reach this court again".

The IPKat is unhappy. He thinks that, strictly speaking, the Court of Appeal is correct to say that, as it stands, the raising of Euro-defences under the Treaty or its renumbered successor in title the TFEU is not likely to be a strong candidate for summary judgment. If this is so, parallel traders can routinely plead Euro-defences and thereby avoid summary judgment and cause havoc among legitimate rights owners.

Summary judgment here and here

Summery judgment here

Parallels, Paranova, packaging and paramnesia

People who complain about the European Union often grumble about its large and expensive bureaucracy. One thing it doesn't have is an official Department of Déjà Vu. Fortunately it doesn't need one since the national courts of Member States, in combination with the Court of Justice, can easily give us a regular diet of paramnesia.

Right: the IPKat's warm feelings regarding repackaged products do not, it seems, extend to the repackaging of cats ...

If you have read what seems to be the same dispute over parallel importation of repackaged pharma products on more than one occasion, brace yourself for Case C-207/10 Paranova Danmark A/S, Paranova Pack A/S v Merck Sharp &Dohme Corp. (formerly Merck & Co. Inc.), Merck Sharp & Dohme B.V. and Merck Sharp & Dohme is upon us. The questions, according to the UK's Intellectual Property Office (it's not yet available on Curia, it seems) do not merely follow the well-trodden path of déjà-vu but thankfully depart from it, as they lead us up a fresh garden path or two. They ask as follows:

"(i) Are Article 7(2) of [the repealed and re-enacted but regularly cited] Council Directive 89/104 ... to approximate the laws of the Member States relating to trade marks and the associated case-law, in particular the judgments of the Court of Justice in Cases 102/77 Hoffmann-La Roche v Centrafarm and 1/81 Pfizer v Eurim-Pharm and Joined Cases C-427/93, C-429/93 and C-436/93 Bristol-Myers Squibb and Others v Paranova, to be interpreted as meaning that a trade mark proprietor may rely on these provisions in order to prevent a parallel importer's marketing company, which is the holder of a marketing authorisation for a medicinal product in a Member State, from selling that product with an indication that the product is repackaged by the marketing company, although the marketing company has the physical repackaging carried out by another company, the repackaging company, to which the marketing company gives instructions for the purchasing and repackaging of the product, for the detailed design of the product's packaging and for other arrangements in relation to the product, and which holds the repackaging authorisation and reaffixes the trade mark on the new package in the course of repackaging? [Given the current state of the law, is it really necessary to ask this question? Does the secret lie in the facts before the referring court?]

(ii) Is it of significance in answering Question (i) that an assumption might be made that the consumer or end-user is not misled with regard to the origin of the product and will not be led to believe that the trade mark proprietor is responsible for the repackaging through the indication by the parallel importer of the manufacturer's name on the packaging along with the indication as described of the undertaking responsible for the repackaging? [How interesting that, since the Google AdWord ruling, confusion-like concepts such as 'misled' have entered the vocabulary of same-mark, same-goods infringement, via the concept of the essential function]

(iii) Is it only the risk that the consumer or end-user might be misled into assuming that the trade mark proprietor is responsible for the repackaging which is of significance in answering Question (i), or are other considerations regarding the trade mark proprietor also relevant ["Are other considerations also relevant ...?" looks like a fishing expedition, hoping to catch some fresh comment or suggestion from the Court of Justice which will be closely examined, jurisprudentially tested and then sent back to the Court in the form of further questions and requests for clarification], for example (a) that the entity which in fact undertakes the purchasing and repackaging and reaffixes the trade mark proprietor's trade mark on the product's packaging thereby potentially infringes independently the trade mark proprietor's trade mark rights, and that that may be due to factors for which the entity that physically carried out the repackaging is responsible that (b) the repackaging affects the original condition of the product or that (c) the presentation of the repackaged product is of such a kind that it may be assumed to harm the trade mark or its proprietor's reputation? [Once 'reputation' is mentioned, the Kat suddenly wonders whether this is a tarnishment issue rather than regular infringement ...]

(iv) If, in answering Question (iii), the Court finds that it is also relevant to take account of the fact that the repackaging company potentially infringes independently the trade mark rights of the trade mark proprietor, the Court is asked to indicate whether it is of significance to this answer that the marketing company and repackaging company of the parallel importer are jointly and severally liable under national law for the infringement of the trade mark proprietor's trade mark rights? [issues concerning joint and several liability, like vicarious liability, look like something that it is for the national court to determine rather than for the Court of Justice to rule on -- is this correct?]

(v) Is it of significance in answering Question (i) that the parallel importer which holds the marketing authorisation and has indicated itself as being responsible for repackaging, at the time of the notification of the trade mark proprietor prior to the intended sale of the repackaged medicinal product, belongs to the same group as the company which undertook the repackaging (sister company)?

(vi) Is it of significance in answering Question (i) that the repackaging company is indicated as the manufacturer in the package leaflet?"

The IPKat would love to know more about this reference. Can any readers supply some background? Also, if you would like to comment on this case so that the IPO can ponder your thoughts before deciding whether to participate, please email the office here before 25 June 2010.

Paranova here

Paranoia here (or if you want a bit of cheering up) here

Paramnesia here

Letter from AmeriKat - Costco Wholesale v Omega SA

Last Friday night the AmeriKat, in true display of her geekiness, was at the Royal Albert Hall for the cinematic screening of the Lord of the Rings Two Towers with live soundtrack played by the London Philharmonic Orchestra. Besides entertaining herself by listing the number of IP works and permissions in and required for execution of the performance, the performance itself was simply breathtaking. The amount of precision and timing required by the conductor and musicians to ensure the scoring was keeping time to the film was incredible. It was challenging of course to determine where to keep one's attention - the screen where Legolas was looking extremely pretty or the orchestra and choir who were booming ferociously away? (picture left - the AmeriKat becomes cross-eyed after trying to watch two things at once) In the end the AmeriKat managed to implement a duel-attention action plan which, although not most effective, enabled her to get the best of the artistry occurring in parallel.

Supreme Court to hear copyright parallel importation case

Artistry occurring in parallel will also be subject to attention soon, but this time judicial attention. Last Monday the US Supreme Court granted the writ of certiorari in the Costco Wholesale Corp v Omega SA case. The Supreme Court will have to decide whether Costco can be held liable for copyright infringement for re-selling luxury Swiss watches including the Omega Seamaster line (picture bottom right - an example of a Seamaster watch) that Costco obtained through third-party sources.

In 2004 Omega, owned by The Swatch Group Ltd, brought copyright infringement proceedings against Costco alleging that by selling Omega Seamaster watches obtained from a New York-based third-party who had imported them into the US, Costco had violated US copyright law. The Omega Seamaster watch includes an engraved emblem of a globe on the back of the watch. Omega had registered this emblem with the US Copyright Office. Costco then went on to sell the watches for $1,299 - $700 less than Omega's suggested retail price. Costco argued that Omega was unable to impose limits on the manner in which its watches are re-sold after Omega makes its first sale of the watches.

At first instance a Californian federal judge agreed with CostCo's reasoning, but Omega appealed to the Court of Appeals for the Ninth Circuit. Costco argued that precedent that should have been relied upon was the Supreme Court ruling of Quality King Distributors v L'Anza Research International (1998) which held that copyright owners do not have a right to control the market of their goods that have been imported and re-sold in the US. The Court of Appeals disagreed and overturned the lower court's decision in 2008 holding that copyright owners did have the right to control the manner in which their goods are imported and sold in the US irrespective of the first-sales doctrine (a.k.a. the exhaustion rule) enshrined in section 109(a) because this did not apply to goods manufactured abroad. The Court of Appeals decision relied substantially on section 602(a) of the Copyright Code which deals with infringing importation of copies and the case of BMG Music v Perez (1991) where BMG Music was able to prohibit a reseller's business.

In particular, the appeals court refused to overrule BMG Music by virtue of the Supreme Court's decision in Quality King because they felt that the latter case was concerned with "round trip" importation and not the type of importation at issue in Omega's case. In addition the appeals court held that to benefit from the exemption in section 109 the watches had to be "lawfully made under this title". "Lawfully made made under this title", the court held, meant "lawfully made in the US" and because the watches were made overseas Costco could not rely on this section and the doctrine of first-sales. Unhelpfully, Justice Stevens dicta in the Quality King case appeared to help support this definition, but other commentators believe that the case actually left this issue unresolved.

Costco then appealed to the Supreme Court citing that the appeals court's ruling was inconsistent with the plain language of copyright law and the implication of the appeal's court decision was too onerous on retailers. The question that the Supreme Court will have to answer is:

Whether the Ninth Circuit correctly held that the first-sale doctrine does not apply to

imported goods manufactured abroad.

Several business groups and companies such as eBay have filed amicus curiae briefs in support of Costco's appeal but the US Department of Justice (DoJ) argued that the Supreme Court should reject Costco's appeal because the legal position was apparently clearly in Omega's favor. eBay's filing stated that the lower court's ruling

"could have a detrimental effect on the ability of buyers and sellers of secondary-market goods to engage in commerce in the United States."

It will not come as a surprise that high-end retail companies actively try to control distribution of their products to ensure that they do not retail for less or are sold in otherwise undesirable channels. However, these companies may often offer their products at a cheaper price to distributors based in countries other than where the product is inevitably retailed. Retailers such as Costco will buy the products from these overseas distributors and import them into the US to sell at a discount. This secondary market, so to speak, is known as the "gray market". According to a 2008 study by KPMG and the Alliance for Gray Market and Counterfeit Abatement represents $58 billion in products in just the technology industry alone and an overall potential loss of $10 billion annually. [The AmeriKat has been trying to find some recent data in regards to the gray market's impact on the fashion industry - please let her know if you know where any resides!] Richard Galanti, Chief Financial Officer for Costco however states that "vast majority" of what Costco buys is "directly from the manufacturers" and that goods from the gray market only account for a small proportion of their $70 billion revenue (which is still a large sum!).

The Supreme Court's decision will have a substantial impact on what goods retailers, especially those on-line retailers such as eBay or Amazon, can sell and import into the U.S. If luxury brands and companies are concerned to control the distribution and retail prices of their goods, then they should be charged with ensuring that their contract with the distributor stipulates that the subsequent retail price is set in stone and/or restricted to non-US countries or just cut out the middle man and sell straight to the retailer or consumer. To hold otherwise would in essence allow companies to overly control trade channels through the guise of copyright law (and you can just predict the increased litigation if the Supreme Court were to uphold the 9th Circuit's ruling).

(picture top right - if the AmeriKat had a Seamaster watch, it would let her know it was nap-time)

The AmeriKat is hopeful that the doctrine of first-sale should come out fighting strong. There are too many interests, commercial and consumer alike, that could be severely affected if the Supreme Court held otherwise. The oral arguments are expected to be heard this September.

Rainy November, but Sun shines in Court

It's not every day that the IPKat starts to peruse a judgment and finds himself reading a set of FAQs, but today was that day, in Sun Microsystems Inc v M-Tech Data Ltd and another [2009] EWHC 2992 (Pat), decided last week by Mr Justice Kitchin in the Chancery Division, England and Wales. This is another splendidly interesting decision on parallel trade -- this time in Sun computers and workstations -- that really sets the pulse racing. Are the goods really grey, bravely crossing national boundaries in their quest to further the aims of price competition, or are they eternally damned as trade mark infringements? More to the point, in one of the rainiest Novembers ever, would the Sun penetrate the cloud of European jurisprudence on exhaustion of rights and triumph in court?

In this case Sun (the US computer and workstation folk) owned a series of United Kingdom and Community trade marks comprising or consisting of the word 'Sun' for computers, computer hardware, computer software and computer peripherals. M-Tech, a UK company, supplied computer hardware in the "secondary market" for hardware originally sold by major manufacturers like Sun and its rivals. M-Tech bought 64 Sun disk drives from a US broker and sold them in the UK. Sun sued for trade mark infringement, alleging that M-Tech had put the drives on the UK market without Sun's consent. Not so fast, said M-Tech: since Sun hadn't shown where the drives had been first marketed, its attempt to enforce its trade mark rights was contrary to Articles 28 to 30 of the EC Treaty since its effect would be to prevent the attainment of a single market in hardware. Not only that, but the enforcement of Sun's rights in this way was contrary to Article 81 of the EC Treaty and therefore prohibited. No way, said Sun, and can we please have summary judgment since M-Tech doesn't have a leg to stand on?

What did Sun base its case on? The company provided evidence that the drives had initially been placed on the market outside the European Economic Area (EEA) and they said that there was no evidence to suggest that it had ever consented to their importation into the EEA.

Mr Justice Kitchin sided with Sun and granted summary judgment. In his view

* The court had to ask whether the claimant had a 'realistic' as opposed to a 'fanciful' prospect of success, one which carried some degree of conviction and which was more than merely arguable.

* In reaching its conclusions the court should not conduct a mini-trial, but had to take account of evidence that could reasonably be expected to be available at trial.

* The court should not be hasty to reach a final decision without a full trial where reasonable grounds existed for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case.

* Summary disposition was not appropriate in any area of law that was still developing.

* 'Consent' -- the parallel importer's favourite defence to a trade mark infringement -- had to be a pan-European concept under harmonised European law. It was thus up to the European Court of Justice to supply a uniform interpretation of the concept of 'consent' to the placing of goods on the market within the EEA. In view of its serious effect in extinguishing the exclusive rights of proprietors of trade marks, consent had to be expressed in such a way that an intention to renounce those rights was unequivocally demonstrated. While such an intention would normally be gathered from an express statement of consent, it was conceivable that consent might be inferred from the facts and circumstances surrounding the placing of the goods on the market outside the EEA that unequivocally demonstrated that the proprietor had renounced his rights.

* Implied consent to the marketing within the EEA of goods put on the market outside that area could not be inferred from the mere silence of the trade mark proprietor, from the fact that the proprietor had not communicated his opposition to goods placed on the market outside the EEA being placed on the market within the EEA or from the fact that the goods carried no warning of a prohibition on their being placed on the market in the EEA.

The thing the IPKat found most interesting about this decision wasn't the legal analysis but the lengthy cut-and-paste of Sun's FAQs, which if not actually decisive are quite instructive. The Kat thinks that any business that wants to make its position on grey goods crystal clear would do well to execute a similar document and ensure that it is promulgated and made easily accessible. Citing the FAQs, the judge said this:

"25 It is a consequence of the size and nature of this secondary market in Sun hardware that it is practically impossible for brokers or traders who are outside the Sun authorised network to discover whether any particular item of Sun hardware was first marketed by Sun inside or outside the EEA and, if the latter, whether it has subsequently been imported into and put upon the market in the EEA by Sun or with its consent. Such is not apparent from the hardware itself, nor is this information likely to be available from the broker or trader from whom it is bought. All of these matters are recognised by Sun which says on its website in a "Frequently Asked Questions" section:

"Q. What is meant by "unlawfully imported product"?
A. Sun Microsystems is entitled through the enforcement of its trademark rights to control into which market products are placed and must remain. Only with the explicit permission of Sun, as the trademark owner, can product bearing Sun's trademarks be migrated between markets. Therefore, any Sun product brought into the UK from outside the European Economic Area without Sun's explicit permission is considered to have been unlawfully imported.
...
Q. How do I know if a reseller who is offering me Sun product is authorised by Sun to do so?
A. Sun UK maintains a full list of all UK and Ireland based resellers who are authorised to sell the full range of Sun Microsystems products. This list can be …. If the name of the party offering you Sun product is not on that list and they are a UK and Ireland based company then they are not authorised by Sun to sell Sun product. Please contact your local Sun Sales Office to obtain validation of a Sun reseller based inside the EEA.

Q. What other hidden dangers are there in buying grey market Sun product?
A. Apart from the issues of the product not being on the market in the UK lawfully and the validity (or otherwise) of all software licences there are other factors to consider. Sun will not place grey market product on a Sun support contract so you would not benefit from Sun's world-class hardware and software support infrastructure. Sun does not in any way guarantee the quality of any Sun product purchased from an unauthorised source. Unlike within Sun's authorised reseller network, Sun has no knowledge of how its products are transported, handled and stored within the unauthorised broker network. Sun has seen instances where Sun product offered for sale in the grey market has been stolen and also situations where Sun product has been "upgraded" with 3rd party and/or counterfeit parts. All these factors add to the significant business risk associated with obtaining Sun product from unauthorised sources.
…
Q. How can grey market brokers offer Sun product much cheaper than the authorised resellers?
A. Much of the new product offered for sale by unauthorised brokers has been unlawfully imported by the brokers from other global markets. Sun Microsystems, like all vendors with a global sales and distribution model, is entitled to ring fence those markets from each other. It is the price differential between these markets, that is being unlawfully exploited by the brokers and allows them to offer seemingly cheap products for sale. It is also worth noting that the price of a Sun product from a grey market broker may seem cheaper than that available from an authorised reseller but there are many hidden costs associated with the grey product - lack of warranty support, no support eligibility, invalid Solaris licence, etc.
...
Q. What is Sun doing to kerb the unlawful activities of some of the unauthorised brokers?
A. Sun Microsystems globally monitors the activities of unauthorised brokers and does act when appropriate to protect its IP rights and its reputation as a supplier of high quality and reliable computer products. Sun has taken legal action against some brokers involved in unlawful activity and won all the cases it has embarked on. Sun takes these measures to protect its customers from unscrupulous brokers and to protect its IP rights as a global supplier.
…

Q. What is an "EU serial number"?
A. Many brokers, trying to allay the concerns of their potential customers regarding the source of their product, use the term "EU Serial number". The term is designed to make the customer feel that the product is on the market in the UK legitimately and that it has not been unlawfully imported. Usually the basis for this assertion is either where the product was manufactured (e.g. "Made in Ireland") or where the broker obtained the product (e.g. another broker within the EU). Neither of these factors gives any protection against the likelihood that the product has been unlawfully imported. Sun manufactures product in a number of plants in the EU but the product those plants produce is just as likely to be placed on the market by Sun outside the EU as it is to be sold inside the EU. Therefore, an unauthorised broker is unlikely to know the true provenance of Sun product they obtain from other unauthorised brokers, even if those brokers are within the EU."

It emerges particularly from the last question and answer that Sun maintains that an unauthorised broker is unlikely to know the true provenance of Sun products it obtains from other unauthorised brokers, even if those brokers are located within the EEA. In any event, traders jealously guard their own sources to avoid being cut out".

Sun King here
Sun Cat here

Government U-turn on downloaders; parallel imports blames for pharma shortages

Government revives downloader cut-off proposal

The IPKat has learned from the BBC that the Department for Business Innovation and Skills is to consult on whether the forthcoming Digital Economy Bill should include a requirement that ISPs cut off persistent downloaders. Although Lord Carter's Digital Britain report recommended that Ofcom should explore the issue thoroughly before such a measure was taken, this would take until 2012. The Government feels that this the threats posed by online infringement could mean that this would be too long to wait. To take account of the change in position, the Digital Britain consulation period has been extended to 29 September.

The IPKat isn't hugely impressed. What's the point of commissioning such a report if you're going to brief against its measured recommendations? And wouldn't it have been more sensible to have put this proposal forward at the beginning of the consulation period, rather than halfway through?

BIS press release here.

Parallel imports lead to UK drug shortages

Also from the BBC, the news that a survey by Chemist and Druggist magazine has revealed that 90% of pharmacies have experienced difficulties in obtaining stocks of branded medicines. Some patients have suffered health problem as a result (either physical problems, or caused by anxiety when the correct drug cannot be obtained). A good deal of the blame has been placed on parallel imports into other countries of medicines intended for the UK market.

The IPKat wonders if this is another effect of the credit crunch, with the weakish pound making the UK a good place to source goods for export. He wonders if a similar phenomenon is apparent is other products. The problem though is a serious one. He has a dim and distant recollection of an ECJ case saying that sales of parallel imported goods could be stopped on competition grounds where parallel trade leads to a shortage on the exporting market, but he never thought that the UK would be affected in this way.

A Wellcome relief?

Last week the IPKat was too busy stuffing himself with chocolate mice to notice the ruling of the Court of Justice of the European Communities in Case C 276/05, The Wellcome Foundation Ltd v Paranova Pharmazeutika Handels GmbH, a reference for a preliminary ruling made by the Austrian Oberster Gerichtshof in May 2005 -- which is a longer time ago than most Kats can remember. 

Wellcome owned two Austrian trade marks -- the word ZOVIRAX and a figurative representation of that word -- each of which was registered for pharmaceutical products in Class 5; the mark is used for a top-selling treatment for genital herpes. Paranova, as many regular readers of this blog and of the inscriptions on the boxes containing their medicaments will know, is a pharmaceutical product wholesaler. In Austria Paranova marketed genuine pharma products bearing the mark ZOVIRAX in packs of 60 x 400 mg tablets (ZOVIRAX 400/60), which were legitimately put on the market in the countries of the European Economic Area and which Paranova's parent company bought in the normal course of trade. Paranova however sold its lawfully acquired ZOVIRAX in new packaging, the appearance of which was completely different from the packaging of the original. The words "Repackaged and imported by Paranova" were written in big bold block capitals on the front of its packaging which mentioned the details of the original manufacturer (in rather smaller print) but also sported Paranova's distinctive blue band. 

In May 2003 Paranova wrote to tell Wellcome of its intention to market ZOVIRAX 400/60 in Austria, enclosing colour prints of the outer packaging, of the blister packs and of the instructions for use. Wellcome then asked that, in future, Paranova inform its related company Glaxo of the details of its marketing activities, attaching a complete sample of every type of packaging and disclosing the state of export and the exact reasons for the repackaging. Paranova, having disclosed the reasons for the repackaging which it carried out, but not the State of export of the pharmaceutical product in question, was again asked by Glaxo to disclose the State of export and the precise reasons for the repackaging.Glaxo also told Paranova that there was no reason to state the information concerning the parallel importer in such a noticeable manner and in larger, clearer type than that of the manufacturer’s name. Glaxo also objected to the distinctive coloured bands on the edges of the box. Glaxo then asked that a sample of all packaging be sent to it; Paranova refused, saying this wasn't technically possible -- particularly if Glaxo wasn't willing to bear the costs. Paranova actually imported ZOVIRAX from Greece, where it was marketed in packs of 70 tablets, repackaging it as 400/60 for resale in Austria. 

Wellcome applied to the Handelsgericht Wien (Vienna Commercial Court) for an interim order prohibiting Paranova from offering and/or marketing repackaged ZOVIRAX where the repackaging included Wellcome trade marks if (i) the reference to Paranova was bigger on the repackaging than the reference to Wellcome, (ii) Paranova's coloured bands were placed on the edge of the repackaging and (iii) Paranova did not duly inform Wellcome, before marketing the repackaged ZOVIRAX, of the impending marketing, specifying both the State of export and the precise reasons as to why repackaging was necessary. That court granted Wellcome’s application in part. On appeal, the Oberlandesgericht Wien (Vienna Higher Regional Court) granted the application as regards points (i) and (iii), but rejected it in relation to (ii). Both parties then appealed on a point of law to the Oberster Gerichtshof (Supreme Court), which stayed the proceedings and referred the following questions to the Court for a preliminary ruling:

"1. (a) Are Article 7 of … Directive 89/104 … and the case-law of the Court … which has been pronounced on it to be interpreted as meaning that proof that reliance on the trade mark would contribute to an artificial partitioning of the market must be furnished not only as regards the repackaging itself, but also as regards the presentation of the new packaging? If the answer to that question is in the negative: 

(b) Is the presentation of the new packaging to be measured against the principle of minimum intervention or (only) against whether it is such as to damage the reputation of the trade mark and its proprietor? 

2. Are Article 7 of Directive [89/104] and the case-law of the Court … which has been pronounced on it to be interpreted as meaning that the parallel importer fulfils his duty of notification only if he informs the proprietor of the trade mark also of the State of export and the precise reasoning for the repackaging?"

The European Court of Justice has now ruled as follows:

"1. Article 7(2) of Council Directive 89/104 ... is to be interpreted as meaning that, where it is established that repackaging of the pharmaceutical product is necessary for further marketing in the Member State of importation, the presentation of the packaging should be assessed only against the condition that it should not be such as to be liable to damage the reputation of the trade mark or that of its proprietor. 

2. Article 7(2) of Directive 89/104 ... is to be interpreted as meaning that it is for the parallel importer to furnish to the proprietor of the trade mark the information which is necessary and sufficient to enable the latter to determine whether the repackaging of the product under that trade mark is necessary in order to market it in the Member State of importation".

The IPKat knows how pleased the Court of Appeal for England and Wales will be now that this ruling has been given, since that court was awaiting this decision before giving its own final decision in the long-running saga of Boehringer Ingelheim v Swingward, which was itself twice referred to the European Court of Justice for a preliminary ruling (see most recently the IPKat note here).  Merpel says, I'm getting all confused again.  The court says "the presentation of the packaging should be assessed only against the condition that it should not be such as to be liable to damage the reputation of the trade mark or that of its proprietor"; I can understand that damage to the reputation of the trade mark is part of the formula that constitutes trade mark infringement, but I just don't get the bit about damaging the reputation of the trade mark's proprietor.

Horrible website for online sale of ZOVIRAX here

Organic treatments for genital herpes here

Best protection against genital herpes here

Contempt of court in parallel trade proceedings

Another chapter in the tale of Honda v Neesam , bits of which have been reported by the IPKat(here and here ). The defendants in that case imported Honda bikes from Australia, which were sold in the UK. Ultimately it was found that Honda's trade mark rights were exhausted since Honda's consent to their sale in the EEA could be implied. The existence of that consent depended on Honda's expectations, as conveyed to the exporter from Australia, as to where the bikes were to be sold on leaving Australia. Honda's witness, Mr Hinton, originally claimed in his witness statement:

"From time to time, without having any continuous contact, Honda Australia deals with Lime Exports ("Lime"). Lime fulfils a useful role in servicing the Pacific Islands (e.g. Fiji, New Caledonia and Vanuatu) which Honda Australia does not have the capacity or desire to service. This is the only reason Honda Australia deals with Lime. Honda Australia advises Lime verbally that it is only allowed to sell to the Pacific Islands. By so advising Lime Honda Australia tries to ensure that product supplied to Lime finishes in the Pacific Islands. . . . Honda Australia does not authorise those to whom it sells to export, except to the Pacific Islands as mentioned above."

This implied a lack of consent to sale outside the Pacific Islands. However, documents that came to light in the course of the proceedings made it clear that the statement was untrue. The defendant's solicitors wrote to Hinton, pointing out that it was contempt of court to include in a witness statement verified by a statement of truth a statement that is false and that the witness does not honestly believe to be true. Hinton then made a second statement, admitting that what he had said in the first statement was untrue, but pointing out that his intention was not to mislead the court, but rather to protect Honda Australia's reputation in the eyes of the wider Honda group.

At trial, the defendant attempted to bring a private action for contempt of court against Mr Hinton. This was refused by Sir Andrew Parke, who held that it would be disproportionate for contempt proceedings to be brought since Hinton had already had a stressful experience, the expense would be great and the public interest of promoting the integrity of the legal system wouldn't necessarily be served.

Yesterday the Court of Appeal allowed an appeal on this point, and held that contempt proceedings could be brought. The contempt was serious since, if the falsity of the statement hadn't been uncovered, the defendant would be been liable to pay Honda hundreds of thousands of pounds in damages. The fact that the witness had had a difficult time in cross-examination was not relevant, nor was the fact that he had shown remorse for his lies (though this might be relevant to the sentence). The judge had been wrong to conclude that a contempt action in these circumstances wouldn't promote the integrity of the legal system. Instead it would be 'likely to have a salutary effect in bringing home to those who are involved in claims of this kind, of which there are many, the importance of honesty in making witness statements and the significance of the statement of truth'. The fact that the proceedings would be costly was relevant, but was given too much weight in the light of the seriousness of the contempt at issue. In any event, it would be the applicant for contempt proceedings who bore the cost, and not the public purse. There was also a question-mark over whether it was worth bringing proceedings at this stage since Mr Hinton had returned to Australia, and so was outside the reach of British contempt action unless he returned to England or appointed someone to accept service on his behalf, but this wasn't fatal since refusing the action on those grounds would send out the message that foreign witnesses wouldn't need to maintain the same standards of honesty as those in the UK.

The IPKat finds this decision hard to fault. Witnesses should know that it's wrong to lie in the witness box, or in a witness statement. Although the trial judge may have felt sympathy for the witness, Mr Hinton brought it on himself. Granted, he was trying to protect the reputation of his business, but this was at the expense of someone else's business, and their liability to pay a huge sum in damages. It's always going to be difficult to imply consent in parallel importation cases - at least this decision should make it clear that those who provide false evidence that suggests that there was no consent will feel the full force of the law.

Boxing pharmaceuticals: another piece in the case law jigsaw

Today -- while her Opinion on 'extraction' of data and the European sui generis database right in Directmedia was being affirmed by the Court of Justice of the European Communities in Directmedia (see the IPKat's comment below) -- Advocate General Sharpston was delivering another Opinionm Case C‑276/05 Wellcome Foundation Ltd v Paranova Pharmazeutika Handels GmbH, yet another trade mark infringement and pharmaceutical repackaging case.

Right: Zovirax in a box (not the version that's litigated here)

What's this all about? Wellcome owns the Austrian trade mark registration of ZOVIRAX for pharmaceutical products that relieve the symptoms of genital herpes. These products are marketed within the EEA by Wellcome or with its consent. Paranova imported branded ZOVIRAX products from Greece, where they are marketed in lots of 70 tablets. Since Austria requires that they be sold in packs of 60 tablets, Paranova repackaged them in packs of 60. The new packaging also differs from that of the original product in that the words ‘Repackaged and imported by Paranova’ are in bold type and block capitals on the front; the manufacturer is referred to on the sides and on the back in normal type; the box also features the blue band which Paranova regularly uses for the pharmaceutical product it markets.

Paranova naturally informed Wellcome of its intention to market ZOVIRAX in Austria, sending colour prints of the outer packaging, of the tablets' blister packs and of the instructions for use. Wellcome asked that, in future, Paranova should (i) add a complete sample of each type of packaging it proposed to use and (ii) disclose the State of export and the exact reasons for the repackaging. Paranova disclosed the reasons for the repackaging (different size of packaging), but not the State of export; it also refused to provide a sample unless Wellcome paid. It was again asked to communicate the State of export and the precise reasons for the repackaging. Wellcome, which also objected to the aspects of the new packaging described above, then sought an injunction to stop Paranova marketing ZOVIRAX in packaging with those features and without having informed it of the State of export and the precise reasons for the repackaging. The dispute got to the Oberster Gerichtshof, which referred the following questions for a preliminary ruling:

‘1(a) Are Article 7 of the Trade Marks Directive and the case-law of the Court of Justice of the European Communities which has been pronounced on it to be interpreted as meaning that proof that reliance on the trade mark would contribute to an artificial partitioning of the market must be furnished not only as regards the repackaging in itself, but also as regards the presentation of the new packaging?

If the answer to this question is in the negative:

(b) Is the presentation of the new packaging to be measured against the principle of minimum intervention or (only) against whether it is such as to damage the reputation of the trade mark and its proprietor?

2 Are Article 7 of the Trade Marks Directive and the case-law of the Court of Justice of the European Communities which has been pronounced on it to be interpreted as meaning that the parallel importer fulfils his duty of notification only if he informs the proprietor of the trade mark also of the State of export and the precise reasons for the repackaging?’

Given the overlap between these questions referred, this reference was suspended until the Court had delivered judgment in Boehringer II on 26 April 2007 (see the IPKat's note here). Question 1(a) was in effect answered "no" in that judgment. The referring court in the present case indicated that it wished to maintain its questions 1(b) and 2, which were not specifically answered. Advocate General Sharpston today recommended that these questions be answered thus:

"(1) Where a parallel importer of pharmaceutical products repackages the products in new packaging on the ground that repackaging is necessary in order to market the product in the Member State of importation, the lawfulness of the new packaging is to be measured solely against whether it is such as to damage the reputation of the trade mark and its proprietor.

(2) In such circumstances, the parallel importer, in order to fulfil his duty of notification under Article 7 of the Trade Marks Directive as interpreted by the Court of Justice, must give the proprietor of the trade mark information which objectively demonstrates that the repackaging was necessary. Such information may, but need not necessarily, include identification of the Member State of export".

The IPKat marvels at how much case law and legal analysis has been devoted to the issue of giving notice of intention to import repackaged products, an area of jurisprudence which has been developed entirely by the European Court without any assistance from Council Directive 89/104 on the approximation of national laws: it looks very much like the way doctrine develops under the common law system of precedents, he considers. Merpel says, it's amazing how these repackaging cases intertwine with one another: the final UK version of the Boehringer dispute has been held up, pending the outcome of this reference: see the IPKat's note here.

Somewhere to Park those Aussie bikes?

Here's the latest on Honda Motor Co Ltd and another v Neesam and others [2008] EWHC 338 (Ch). This is a decision last Thursday from Sir Andrew Park, sitting as a judge of the Chancery Division, England and Wales. It originates from the increasingly useful LexisNexis Butterworths subscription service and is not, so far as the Kat is aware, available anywhere else.

Right: the IPKat with his freshly-imported bike. The red triangle is an allusion to the famous beer trade mark of the same shape and colour ...

By way of background, both claimants were companies within the Honda group. Neesam and his colleague were partners in the third defendant, a business that parallel-imported genuine Honda motorbikes from places were they were cheap and sold them at a decent profit where they were more expensive. Initially Honda got summary judgment against all three defendants, and against another defendant in respect of certain bikes that were the subject of proceedings noted by the IPKat here.

This case was about the parallel importation of Honda motorcycles into the UK and their subsequent resale by the fourth defendant . Between 1999 and 2004 the fourth defendant purchased a substantial number of bikes from an Australian company that had, in turn, purchased them from Honda Australia and from the worldwide parallel imports market. Honda Australia knew the Australian company was a dealer within the trade, and that it would be reselling the bikes it had bought to non-Australian purchasers who would resell the bikes in the course of retail or wholesale businesses. Honda however sued the fourth defendant in the UK, alleging trade mark infringement. The fourth defendant denied liability: since Honda, through its Honda Australia operation, had consented to it putting the motorcycles on the UK market and selling them (before that consent was officially withdrawn in May 2003), its trade mark rights were exhausted. Honda denied that any consent had been given to market the bikes on the UK market or elsewhere in Europe but added, just in case it was wrong, that any consent it might have given was terminated at the end of June 2002, when it discovered the final destination of the bikes it had sold to the Australian company.

Sir Andrew Park held for the defence. On the evidence, Honda Australia had impliedly consented to the sale of bikes to the fourth defendant, so that they could be resold in the course of its own business. Honda's claim for relief, except in respect of consignments of bikes supplied by the Australian company after consent was explicitly withdrawn on May 2003, failed.

Highly popular Australian exports here and here
Less highly popular Australian exports here and here