NOT SO FAST, COURT OF APPEAL TELLS GLAXO

In Glaxo Group Ltd v Dowelhurst Ltd and another [2004] EWCA Civ 290, 15 March, noted in the LexisNexis subscription-only All England Direct service, the Court of Appeal took the side of the defendant parallel traders when hearing their appeal against an order for summary judgment against them.

Glaxo sold certain pharma products bearing its registered trade marks to various parties at low prices, on the understanding that they were for use in Africa. The goods were diverted to a Swiss company which sold them on to Dowelhurst, who in turn imported 16 consignments of the drugs into the UK and sold them to hospitals. Glaxo sued for summary judgment in respect of trade mark infringement, seeking an injunction to stop further importation. Glaxo’s argument was that each importation and subsequent sale was an obvious infringement, since it was clear that none of the original batches of drugs had been destined for the European Economic Area (EEA). Dowelhurst argued that the drugs as bought had been in the claimant’s standard French packaging and included the appropriate European Medicines Evaluation Agency number, indicating approval for sale within the EEA. Dowelhurst said that, since there was nothing to advise traders that the drugs were meant for Africa or weren’t to be sold in the EEA, Glaxo’s trade mark rights were exhausted. Peter Prescott QC held there was real prospect of successfully defending the claim in relation to 15 out of the 16 batches, but found that there was no prospect of a successful defence regarding the remaining batch. He therefore ordered Dowelhurst to stop infringing and awarded an account of profits against the in respect of the single batch. He also granted an injunction against Dowelhurst’s boss, whom he found responsible in law for the infringement. Glaxo appealed against the refusal of summary judgment in respect of the 15 batches and the decision to qualify the injunction, while the defendants cross-appealed.

The Court of Appeal dismissed Glaxo’s appeal but allowed the cross-appeals, saying that the case was unsuitable for summary judgment and should go to a full trial on all 16 consignments. While documentary evidence suggested that an ultimate destination in Africa was identified in respect of the consignments concerned, that didn’t mean that their buyer actually had to take the goods to their ultimate destination. Since not all the details of Glaxo’s contracts of sale were known, it could still be shown that Glaxo knew and consented to some of the goods going on the EEA market. Only a full trial could make these things clear. The Court of Appeal explained that normally, when you buy goods, you can resell them. A sale conveys the right of onward disposal to the buyer: a buyer who buys goods in the EEA with one intention (i.e. to export to Africa) might change his mind and resell within the EEA, since they are his goods. Sellers can change their minds too. In the circumstances, it was plain that Glaxo was a long way from showing that there was no real prospect of a successful defence in respect of each of the consignments. On the present information, it could not be said that Dowelhurst knew, or should have known, that the goods were intended for Africa and that was not the sort of point that could be resolved on a summary application. Accordingly there was enough of an arguable defence for the action to go to trial, even for the sixteenth consignment.

The IPKat notes that it’s getting a lot harder for IP owners to get summary judgment these days. This decision follows in the footsteps of the decision of the Vice-Chancellor Sir Andrew Morritt in Beiersdorf v Ramlort (blogged by the IPKat on 16 January). This downside is counterbalanced by the fact that it’s become easier to get interim injunctions. So, claimants, ask yourselves: do you really need summary judgment, or will interim relief suffice?

What is summary judgment? UK Civil Procedure Rules here; US explanation here
Other summary judgments here
Speedy justice here, here and here