Is a prohibition to use also a proper reason not to use? AG Szpunar thinks not necessarily

In the first trade mark opinion of 2019, (C-668/17), the Advocate General (AG) Maciej Szpunar weighs in on two issues related to the “genuine use” requirement under EUTMR. Although the Opinion (in French but not yet available in English) only addresses trade marks for medicinal products, the observations regarding trade mark use prior to regulatory approval will no doubt be of interest to other regulated industries as well. 

The questions before the Court of Justice are: (1) whether the use of a trade mark for a medicinal product in clinical trials prior to marketing authorization (MA) amounts to “genuine use” within the meaning of Art. 58(1)(a) EUTMR; and (2) whether, alternatively, the statutory prohibition of marketing and advertisement of drugs prior to obtaining an MA (see Art. 87(1) of the Community Code Directive) constitutes a “proper reason for non-use” within the meaning of the Article. The Advocate General suggests that both questions should be answered in the negative.

The origin of the dispute is Viridis Pharmaceutical’s EU trade mark “BOSWELAN”, registered in 2007 in class 5 for “pharmaceutical products and health-care products”. In 2010, Viridis filed a request for authorization of a clinical trial of a medicinal product (containing boswellic acids as the active ingredient) for the treatment of multiple sclerosis in Germany. “BOSWELAN”-branded capsules (400,000 of them according to the allegations made before the General Court) were delivered to a hospital for the clinical trial. Nevertheless, as of the date of the Opinion, no MA has been issued for a drug under this brand nor has any seemingly been applied for. 

In 2013, Hecht-Pharma GmbH filed an application for revocation of the trade mark for lack of genuine use under Art. 58(1)(a) EUTMR. The EUIPO, the Board of Appeal and the General Court all agreed that the trade mark should be revoked for all goods. 

Trying is Not Using
Trade mark use has been considered to be “genuine” if (1) the use is related to “create or preserve an outlet” for those goods or services for which it is registered; and (2) the mark is used in accordance with its essential function, which is to guarantee the identity of origin of the goods or services for which it is registered (C-689/15 – Gözze). “Creating or preserving an outlet” for the claimed goods of services is necessarily “directed outwards” and supposes actual or at least imminent marketing (C-40/01 – Ansul). 

But how to use a trade mark “genuinely” when both actual marketing and preparatory acts for future marketing are legally prohibited, such as under Art. 87(1) of the Community Code Directive? Although the Advocate General agrees that the peculiarities of the relevant industry should be taken into account, clinical trials cannot be regarded as “preparatory acts” of imminent marketing. They are conducted not to create or preserve an outlet, but to understand the effects of a drug and to assess efficacy and safety.

Even though clinical trials involve people outside of the trade mark owner’s business (such as study participants and medical professionals) who “may associate the drug with the corresponding trade mark”, the trial does not “create or preserve an outlet”; in fact, many drugs in clinical trials never eventually hit the market. Thus, clinical trials do not constitute “genuine use”.

Is the Prohibition to Use a Proper Reason for Non-Use?
Under the case law of the Court of Justice, an obstacle to “genuine use” constitutes a “proper reason” for non-use if it: (1) arises independently of the will of the proprietor of the mark; (2) has a sufficiently direct relationship with the trade mark; and (3) makes its use impossible or unreasonable (C-246/05 – Häupl). 

If this Kat were to think of a “proper reason” not to use a trade mark, a statutory prohibition to use would be on the top of his list. AG Szpunar suggests a more balanced view. While conditions (2) and (3) (as set out in the paragraph above) seem a given whenever genuine use is legally prohibited, the Advocate General has some genuine doubts with regard to condition (1).

Since “any commercial activity must be carried out in line with specific legal constraints”, proper reasons for non-use should be interpreted narrowly. In particular, if the trade mark owner can eliminate a regulatory obstacle that prevents genuine use (or at least shorten the delay it is causing), the obstacle cannot be deemed to be “independent of the will of the proprietor”. The rule suggested by the AG is that if a “change in the commercial strategy” would have allowed to circumvent or shorten a regulatory delay and thus allowed genuine use before the end of the grace period, the obstacle cannot be considered a proper reason of non-use. 

In the case at hand, the trade mark owner has merely invoked the on-going clinical trials, without referring to any specific circumstances “independent of the trade mark owner’s will” (in particular why the trials could not be completed faster in this case), which leads the AG to advise the Court to reject the appeal.

Genuine use of boswellic acid
as the active ingredient of incense
If clinical trials do not create or preserve an outlet for drugs, why, you may ask, would anyone apply for trade mark protection so early? The Opinion provides one possible answer: drug manufacturers wish to raise the awareness of “influential circles” (in particular, professionals who participate in the trials and will later publish about and/or prescribe the drugs) early and want them to remember the trade mark rather than the molecule’s generic name. This is at least a hint that some “genuine use” may actually take place long before even filing for an MA. The Advocate General suggests disregarding such practices for purposes of consistency: If marketing is prohibited under regulatory law, these acts should not count as marketing under trade mark law either. 

This Kat agrees that the lack of a marketing authorization should not automatically count as a “proper reason” for non-use. However, the retrospective analysis of whether a “change in the commercial strategy” would have allowed a shortening of the regulatory process may in practice prove a difficult (and subjective) test in practice, especially given its subjective nature. As such, it may not greatly decrease the uncertainty about whether the lack of use of a mark is justified in a particular case. 

Picture on the left from Köhlers Medizinal-Pflanzen (public domain) 

Picture on the right by Pryzkuta under Creative Commons license BY-SA 3.0
Is a prohibition to use also a proper reason not to use? AG Szpunar thinks not necessarily Is a prohibition to use also a proper reason not to use? AG Szpunar thinks not necessarily Reviewed by Peter Ling on Thursday, January 24, 2019 Rating: 5

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