On 21 September and 20 October 2009, following preliminary injunction proceedings, the Court of Milan issued two interesting decisions concerning the parallel importation into Italy of diagnostic devices.
In each case, the trade mark owner (Roche Diagnostics) opposed the importation of products, the original package of which had been substituted by the importer (an Italian company) with original trade mark being re-affixed to the new packaging.
This claim was based on the principles established by ECJ concerning the enforcement of the trade mark exhaustion rule in relation to parallel imports of medicinal products.
Where the exclusive rights of the trade mark owner have been prima facie “exhausted” once the products bearing such trade mark have been put on the European Community market by the owner or with his consent, that exhaustion does not in fact occur where there are legitimate reasons for the owner to oppose the further commercialisation of goods, especially when the condition of the goods is changed or impaired after they have been placed on the market (Art. 5.2 of the Italian Intellectual Property Rights Code, correspondent to Art. 7.2 of the EC Directive 1989/104).
The repackaging and re-affixing of the original trade mark is generally believed to constitute one such legitimate reason.
According to the ECJ, however, the strict application of this principle could result in an “artificial partitioning of the markets between Member States”, in particular if “the proprietor has put an identical pharmaceutical product on the market in several Member States in various forms of packaging, and the repackaging carried out by the importer is necessary in order to market the product in the Member State of importation” (Case C-276/05 – Wellcome v Paranova).
Therefore, the ECJ set out a number of conditions (the so-called BMS conditions) which, if complied with, limit the ability of the trade mark owner to legitimately oppose the further marketing of a pharmaceutical product, as follows:
- the repackaging is necessary in order to market the product in the Member State of importation;
- the repackaging cannot affect the original condition of the product;
- the new packaging must clearly state who repackaged the product and the name of the manufacturer;
- the presentation of the repackaged product must be not such as to be liable to damage the reputation of the trade mark and of its proprietor; thus, the packaging must not be defective, of poor quality, or untidy; and
- the importer must give notice to the trade mark proprietor before the repackaged product is put on sale, and, on demand, supplies him with a specimen of the repackaged product.
The Court of Milan, taking into account these conditions, stated that the trade mark owner can oppose the repackaging of a diagnostic device if the repackaging is not objectively and strictly necessary for the sales of the product in the country of destination. In addition, the Court also clarified that this necessity does not exist if a mere relabelling of the original packaging is sufficient for commercialisation in Italy.
This conclusion is consistent with the prior decisions by the ECJ, according to which “The trade mark proprietor may oppose replacement packaging where the parallel importer is able to reuse the original packaging for the purpose of marketing in the Member State of importation by affixing labels to that packaging” (Case C- 143/00 - Boehringer Ingelheim and Others v Swingward and Others) and “The owner may oppose the repackaging of the product in new external packaging where the importer is able to achieve packaging which may be marketed in the Member State of importation by, for example, affixing to the original external or inner packaging new labels in the language of the Member State of importation, or by adding new user instructions or information in the language of the Member State of importation” (Case C- 436/93 - Bristol-Myers Squibb and Others v Paranova).
Moreover, the Italian Court clearly rejected that the goal of achieving economic and commercial benefits could constitute legitimate reasons for the repackaging of the imported product. This aspect of their decision is also consistent with the principles set forth by the ECJ: “The condition that it be necessary is not fulfilled if repackaging of the product is explicable solely by the parallel importer’s attempt to secure a commercial advantage” (Case C-348/04 - Boehringer Ingelheim and Others v Swingward and Others) and “The trade mark proprietor may oppose the repackaging if it is based solely on the parallel importer's attempt to secure a commercial advantage” (Case C- 143/00 - Boehringer Ingelheim and Others v Swingward and Others).
The Italian Court did however hold that repackaging could be allowed when it is required as a result of national laws or praxis. In this regard, the Court quoted a previous decision issued by ECJ: “The resistance to relabelled pharmaceutical products does not always constitute an impediment to effective market access such as to make replacement packaging necessary … there may exist on a market, or on a substantial part of it, such strong resistance from a significant proportion of consumers to relabelled pharmaceutical products … in those circumstances, repackaging of the pharmaceutical products would not be explicable solely by the attempt to secure a commercial advantage. The purpose would be to achieve effective market access” (Case C-443/99 - Merck, Sharp & Dohme v Paranova).
Finally, the Italian Court stated that the importer could repackage the product when the size of the packets used by the trade mark owner in the Member State where the importer purchased the product could not be marketed in the Member State of importation because of, in particular, national rules permitting packaging of a certain size only, a national practice to the same effect, or well-established medical prescription practices based on, inter alia, standard sizes recommended by medical professional and medical insurance institutions (see the ECJ decision in joined Cases C-427/93, C-429/93 and C-436/93 - Bristol-Myers Squibb and Others v Paranova).