EC: Judgment of ECJ upon the second reference in the Boehringer Ingelheim v Dowelhurst parallel import proceedings (Case C-348/04)

29 May 2007

Gerry Kamstra

The European Court of Justice (Timmermans, Klučka, Makarczyk, Arestis and Larsen, Judges) finally handed down on 26 April 2007 its long-awaited judgment on the questions referred by the English Court of Appeal in the Boehringer Ingelheim v Dowelhurst cases.

These conjoined cases have been running for some 8 years and concern the circumstances in which owners of trade marks covering medicinal products may enforce their rights to prevent the parallel importation of products placed by them on the market in the European Economic Area which have been repackaged by parallel importers for sale in the country of importation.

The ECJ has over the years dealt with many such repackaging cases, one of the key judgments being that in Bristol-Myers Squibb v Paranova ([1996] ECR I-3457) in which the so-called “BMS conditions” laid down when a trade mark owner may legitimately enforce his rights under Article 7(2) of Trade Marks Directive 89/104 notwithstanding the principle of exhaustion of rights under Article 7(1) of the Directive and Article 28 of the EC Treaty. In short (as summarised by Lord Justice Jacob in this case) “the importer who repackages and re-applies the mark will infringe unless he satisfies all five of the BMS conditions…:

  1. Necessary to repackage to market the product

  2. No effect on original condition and proper instructions

  3. Clear identification of manufacturer and importer

  4. Non-damaging presentation

  5. Notice [to trade mark owner]

When the Dowelhurst cases first went before Mr Justice Laddie, following his judgment of 28 February 2000, he referred a number of questions to the ECJ in relation to the “necessity” and “specific subject matter” (non-damaging to the trade mark) tests. The ECJ in its judgment of 23 April 2002 held that a parallel importer must fulfil all the BMS conditions even if the repackaging causes no harm to the specific subject matter of a trade mark; and that repackaging is necessary where effective access to the market is hindered as a result of strong resistance from a significant proportion of consumers to relabelled products. Following the ECJ judgment the cases went back before Mr Justice Laddie who gave his second judgment, on 6 February 2003.

The parties appealed both the judgments of Mr Justice Laddie and with its order of 17 June 2004 the Court of Appeal referred questions to the ECJ concerning the following areas of continued uncertainty (1) where the burden of proof should lie in relation to the BMS conditions (2) whether the necessity test applies merely to the fact of repackaging or also to the manner of repackaging (3) whether damage to the reputation of a trade mark encompasses anything, not just defective, poor quality or untidy repackaging or re-labelling (4) whether the BMS conditions apply to a product which has simply been overstickered (5) whether de-branding or co-branding are to be regarded as damaging (6) whether failure by the parallel trader to give notice to the trade mark owner per se means that all products subsequently imported are infringing and if so what relief should be available.

In its judgment the ECJ held that (1) all the BMS conditions apply to overstickering (2) the requirement of necessity only applies to the fact of repackaging, not the manner of repackaging (3) the requirement that the repackaging should not be damaging is not limited to cases where the repackaging is defective, of poor quality or untidy (4) whether de-branding, co-branding or failure to identify the owner of the trade mark are damaging is a question of fact for the national courts (5) the onus of proving that the repackaging complies with the BMS conditions lies with the parallel importer (who must supply a sample if requested) although the burden of proof can be reversed by providing evidence that “leads to the reasonable presumption that the condition has been fulfilled” (6) it follows from the failure by the parallel trader to give notice of the repackaged product that the trade mark is infringed on any subsequent importation of the product (7) it is for the national courts to address the sanctions for failure to give notice but they must not only be proportionate but also sufficiently effective and deterrent to ensure that Directive 89/104 is fully effective.