IMPORT-ANT EFTA CASE

In a rare ruling given earlier this summer but virtually ignored by the legal press, the EFTA Court has advised the Norwegian Supreme Court that the trade mark rights of a original drugs manufacturer were not exhausted by first sale to the point that those rights could not be enforced against an importer of branded goods who used the colours of the original trade mark in stripes along the edges of its repackaged versions of the trade mark owner’s products. The case was referred to the EFTA Court after Panarova started employing tributary colour schemes on its repackaged versions of RENITEC, SINEMET and other Merck products.

Citing the ECJ’s decision in Case C-143/00 Boehringer Ingelheim v Swingward, the EFTA Court advised that derogations from the principle of free movement of goods are justifiable only to the extent permitted to enable a trade mark owner to safeguard rights that form part of the specific subject-matter of the mark, as understood in the light of its “essential function”. This means that, once products are marketed with his blessing, the trade mark owner has to show the necessity for exhaustion doctrine not to apply to subsequent sales within the EEA. The way to do this, under Article 7(2) of Directive 89/104, is to show “legitimate reasons” for being able to enforce his trade mark.

The generic importer/repackager is allowed to fix the original manufacturer’s products where there is a necessity for it to do so, following the ECJ’s case law in Case C- Bristol-Myers Squibb v Paranova [1996] ETMR 1 as long as the other factors mentioned in that case’s 4 factor test (para. 32) are also satisfied. However the EFTA Court advised that the necessity for the original manufacturer, as trade mark owner, to protect his trade mark where he has a “legitimate reason” to do so trumps the repackager’s necessity to repackage goods and resell them in the single European market.

Even where the four Bristol Myers requirements are met, the EFTA Court confirmed, following previous ECJ case law, that a trade mark owner can also oppose further commercialisation of his goods that take place in a way that is likely to damage his reputation, for example, if the repackager uses untidy new packaging or unsuitable advertising methods with regard to the trade mark owner’s product. In particular, the national court should take into account whether there is inappropriate presentation of the repackaged product. Additionally, following the ECJ’s judgment in BMW v Deenik, the EFTA Court held that a trade mark owner can also oppose the use of his trade mark in the further commercialisation of his product by third parties where the mark is used in such a way that it may give rise to the impression that there is a commercial connection between the reseller and the trade mark proprietor. The use of coloured stripes on pharmaceutical packaging though would neither damage the trade mark owner’s reputation nor cause confusion as to a commercial link between the repackager and the mark owner. Any confusion would be dispelled by the requirement that the names of the parallel importer and the manufacturer be clearly stated on the new packaging.

Finally, the EFTA Court agreed with the trade mark owner that repackaging that causes “degeneration” of the trade mark because the trade marked goods are sold in different packaging by different repackagers could also constitute a legitimate reason to oppose repackaging. At the same time though, it was recognised that common use of one trade mark by more than one repackager was an inevitable result of allowing parallel importers to take advantage of exhaustion.

The IPKat welcomes the EFTA Court’s careful consideration of the interests of both trade mark owners and repackagers and consequently of the availability reliable indications of origin and the principle of the free movement of goods. He is also intrigued by the “degeneration” of trade marks ground for opposing repackaging. This will require further development because a degree of degeneration is a price that we pay for allowing repackaging, though this could be combated if repackagers had to use repackaging that was as close as possible to the goods’ original packaging. The IPKat notes that the EFTA Court used the term “blurring” in this case, but not in the dilution sense. Instead, it was referring to confusion between the manufacturer and the repackager that could be prevented by clearly stating the name of the two parties on the new packaging.

Imports to Norway here and here
Norwegian exports here, here and here