Success for pharmaceutical companies on Parallel Imports Judgment

Boehringer Ingelheim & Others -v- Swingward & Others

High Court: Judgment of Mr Justice Laddie dated 6 February 2003

The Judgment in detail

The main findings of the Judgment are as follows:

• Laddie J firstly makes reference to his preliminary view in February 2000 that a trade mark owner may only object to parallel importation from another Member State when the importation or repackaging/relabelling causes significant and substantial damage to the specific subject matter of the mark. He acknowledges that following the ECJ Judgment his view was "considerably over-stated or was simply wrong" and that the ECJ's view is that " it is the repackaging of the trade-marked pharmaceutical products in itself which is prejudicial to the specific subject-matter of the mark, and it is not necessary in that context to assess the actual effects of the repackaging by the parallel importer". He therefore accepts that damage to the trade mark must be assumed. This assumption creates "an irrebuttable legal fiction unconnected with the facts".
• However, the ECJ had gone on to make clear that opposition to repackaging is not justified if it hinders effective access of the imported product to the market in the state of import. It was for the national court to determine whether reboxing, as opposed to mere relabelling, was necessary to achieve effective access and whether there was on the market or a substantial part of it "such strong resistance from a significant proportion of consumers to relabelled pharmaceutical products that there must be held to be a hindrance to effective market access." Laddie J had found in his first judgment in 2000 that there was in fact substantial resistance to the use of relabelled (overstickered) product in the UK, and this was not thereafter challenged by the pharmaceutical companies, the point being reserved to any appeal.
• Notwithstanding this, an importer does not have "a free hand to use whatever type or style of packaging he likes", in particular:
  • All repackaging must be treated as harmful and only be tolerated to the extent that it can be shown to inflict the minimum collateral damage on the claimant's mark; it should be as unobtrusive from a trade mark point of view as possible.
  • Two forms of packaging (at least) can be said to meet these requirements:
    • a replica box, consisting of packaging which imitates the manufacturer's original packaging save in respect of features which have no trade mark significance; and
    • a plain box which depicts nothing but the claimant's trade mark.
  • The name and address of the importer (which must in any event appear on packaging) should be no more prominent in terms of script or location than that of the manufacturer.
  • Partial debranding is not permitted. If the manufacturer's mark could in practice be removed from every aspect of the product and its packaging, there would be no trade mark infringement at all. However, that was not the case here as the mark appeared on the product capsules themselves and/or blister packs and patient leaflets. Partial debranding by removal of the mark from outer packaging, or significant diminution of its significance, may reduce the extent to which the trade mark owner can build reputation in his mark, and if not necessary, can be prevented by the trade mark owner.
  • Similarly, co-branding is not permitted if it is not necessary. The use of the importers' own marks is likely to diminish the build up of the trade mark proprietor's exclusive reputation, and to some extent the goodwill generated by the use of the proprietor's mark will benefit the importer.
• Laddie J referred to a difference in approach with relabelled (overstickered) product. He said that the ECJ's view appeared to be that reboxing is inherently harmful whereas overstickering is not (otherwise, he said, a simple price sticker could be deemed harmful). Where products are overstickered, the absence of the "legal fiction" as to damage means that the proprietor has to demonstrate that overstickering causes real harm to his trade mark. (Our view is that Laddie J's point here is incorrect and that the ECJ's view, based on its Judgment in this case and previous case law, on the inherent harmfulness of repackaging applies equally to overstickered product as it does to reboxed product.)
• Advance notice to the trade mark owner - notice was relevant only to a small number of the complaints raised. The ECJ had made very clear that advance notice of repackaging to the trade mark owner was a requirement and that failure to give notice would render the repackaging a trade mark infringement. A notice period of 15 working days was suggested by the ECJ (Laddie J acknowledges this, but refers only to a "15 day" requirement and to the fact that final resolution of the matter was left to the national courts). Reluctantly he accepts that the notice rule applies to overstickered as well as to reboxed product. He concludes by finding that in the case of overstickering 15 days is excessive and that a time period of 7 working days should apply. This means that the time limits for giving notice for overstickered packaging and reboxed packaging will be different.

Relief for the pharmaceutical companies

Laddie J found that the claimants were entitled to:

• an injunction to restrain infringement of their trade marks;
• delivery up of infringing packaging within 14 days (it being disproportionate to order a delivery up of product, when the product could still be sold by the defendants in replacement packaging which is acceptable);
• information sufficient for the claimants to decide whether to elect to receive damages or, alternatively, an account of the defendants' profits.

This Judgment clarifies the law following a long period of uncertainty and marks a change in stance from Laddie J. It will come as a welcome relief to pharmaceutical companies and also to all brand owners, as its relevance extends not only to the pharmaceutical industry, but potentially to any repackaged branded products within the EEA.

If you would like to receive a copy of the Judgment or have any queries or comments, please contact Stephen Whybrow at [email protected] or on +44 (0)20 7367 2175, or Lucy Kilshaw at [email protected] or on +44 (0)20 7367 2044.