Exhaustion of trade mark rights: Pharmacia (Upjohn) and Paranova

The European Court of Justice has ruled on the re-affixing of trade marks on re-packaged good so that they can be sold in different jurisdictions and the control of the proprietor of a trade mark in relation to parallel imports. The Court held that the proprietor may not oppose the replacement by an importer of the trade mark on goods bought in one Member State with the trade mark used on the same product in a different Member State, if it is objectively necessary for the parallel importer to use the trade mark used in the Member State of import in order to enable the imported products to be marketed. Pharmacia (formerly Upjohn), a Danish company, marketed in the EC an antibiotic, Clindamycin, in a variety of forms. In each of Denmark, France and Greece it used different trade marks. Another company, Paranova, purchased Clindamycin capsules in France marketed under the French trade mark and sold them in Denmark under the Danish trade mark. Paranova also purchased Clindamycin in Greece marketed under the Greek trade mark and, after repackaging the product, sold it in Denmark under the Danish trade mark. Pharmacia applied for an injunction prohibiting Paranova from selling those products under the Danish trade mark. The national court stayed the proceedings before it and referred to the ECJ for a preliminary ruling on the interpretation of Articles 28 and 30 EC and of Article 7 of Council Directive 89/104 on trade marks. The national court asked: (1) Whether the EC law issue relating to the opposition of the trade-mark proprietor is to be assessed by reference to Article 7 of the Directive or to Articles 28 and 30 (ex Articles 30 and 36) of the Treaty? The ECU held that under Article 7(1) of the Directive there is exhaustion of the trade mark rights only in relation to goods which have been put on the market in the EC “under that trade mark” by the proprietor or with his consent. It follows that Article 7 of the Directive is applicable where, after repackaging of the product, the original trade mark is riffled. In contrast, where, as in the present case the parallel importer replaces the original trade mark with a different one, the case is assessed with reference to Articles 28 and 30 EC. (2) What criteria are to be used in order to determine whether the proprietor of trade marks may, under national law, prevent a parallel importer from replacing the trade mark used by the proprietor in the exporting Member State by the mark the proprietor uses in the importing Member State? The ECU held that the trade-mark proprietor’s possibility under national law to oppose such replacement is justified under Article 30 EC, unless it is established that such opposition contributes to the artificial partitioning of the markets between Member States. The proprietor may not oppose the replacement of the trade mark if it is objectively necessary for the parallel importer to use the trade mark used in the Member State of import in order to enable the imported products to be marketed. It is for the national courts to examine this question. This condition of necessity is satisfied if the prohibition imposed on the importer against replacing the trade mark hinders effective access to the markets of the importing Member State. That would be the case if the national rules prevent the product in question from being marketed in that State under its trade mark in the exporting Member State. In contrast, the condition of necessity will not be satisfied if replacement of the trade mark is explicable solely by the parallel importer's attempt to secure a commercial advantage. (Pharmacy & Upjohn and Paranoia, Case C-379/97, Opinion of ERG delivered on 19.11.98, Judgement of 12.10.99)