Boehringer: Parallel Imports and the Repackaging of Pharmaceuticals

The ECJ has taken the opportunity to re-examine the conditions that parallel importers must abide by when importing and repackaging the products of other manufacturers.

The Facts

Swingward Ltd and Doewelhurst Ltd are parallel importers of pharmaceuticals manufactured by Boehringer Ingelheim and others. The pharmaceuticals are imported to the UK where the packaging and information leaflets are altered. Boehringer Ingelheim and others objected to this practice.

The Law

Article 28 EC places restrictions on imports between Member States.

Article 30 EC states that restrictions are only justified on the grounds of the protection of industrial and commercial property and as long as they do not constitute a means of arbitrary discrimination or restriction on trade between Member States.

It can be difficult to reconcile the rights of property holders restricting the import and export of their products, and the attempts of the EC to prevent restriction on trade between Member States.

Article 7 of Directive 89/104 states that the rights of property holders are exhausted the moment he chooses to place his products on the market.

Situation Prior to Boehringer

It has previously been established over many years at the ECJ, and particularly in Bristol Myers Squibb in 1996 (BMS), that a Trade Mark owner can rely on their Trade Mark rights to prevent further marketing of their pharmaceutical products when the importer has repackaged the products.

However this right is not unconditional and the Trade Mark owner can only enforce their rights if the repackaging;

1. Is necessary;

2. Does not affect the original condition of the product;

3. Clearly identifies the name of the original manufacturer and importer,

And also that;

4. The presentation of the repackaged products is not such that it would damage the reputation of the Trade Mark or its owner;

5. The importer gives notice to the Trade Mark owner prior to importation.

Ruling of the ECJ

The Boehringer case has afforded the ECJ further opportunity to clarify the BMS conditions, with particular consideration given to the various ways that importers can repackage products.

Who has the Burden of Proof of the BMS Conditions?

Advocate General Sharpston had previously suggested in April 2006 that the burden should be shared between the Trade Mark owner and importer. However the ECJ have now stated that the burden lies with the parallel importer to demonstrate that the BMS conditions apply. Additionally to rely on Article 30 EC, the importer must show that if the proprietor were to enforce their Trade Mark rights then this would constitute a means of arbitrary discrimination or restriction on trade between Member States.

Necessity of Repackaging

The question of the “necessity” of the repackaging is directed solely as to whether repackaging is needed (e.g. so that the packaging has the language of the intended consumers), and not as to the manner and style of the repackaging.

Damage to Reputation and Types of Repackaging

The reputation of the Trade Mark and its owner must not be damaged by the presentation of the repackaged product. This is not limited to cases where the repackaging is defective, of poor quality, or untidy. As such, “damage” can also include the following:

• De-branding, i.e. a failure by importer to affix the Trade Mark to the new exterior packaging.

• Co-branding, i.e. importer also applies own logo.

• Failure by importer to state that the Trade Mark belongs to the proprietor.

However whether the Trade Mark's reputation is damaged by any of these acts is a question of fact for the relevant national court to consider.

Particular attention was given to the evidence that the importer must provide to demonstrate that the repackaging does not damage the condition of the product or the reputation of the Trade Mark, or its owner. The importer must simply provide evidence that leads to the reasonable presumption that there has been no damage. Thereafter the Trade Mark owner must prove damage has occurred.

Importers Must Give Notice

When a parallel importer fails to give prior notice, he infringes the proprietor's rights with any subsequent imports of the product. Sanctions must be both proportionate and act as a sufficient deterrent. The national court must decide as to the financial remedies.

Conclusion

The ECJ's decision is more favourable to Trade Mark holders than the proposals of the Advocate General. Therefore parallel importers who do not carefully abide by the BMS conditions as clarified in Boehringer risk findings of Trade Mark infringement. Bearing in mind that the ECJ has reasserted that sanctions for infringement must serve as a deterrent, then parallel importers could face heavy censure.

Edmund Harrison & Edward Carstairs