The free movement of capital, people, services, and goods are the four fundamental pillars upon which the European Union ("EU") stands. The free movement of goods across the EU often creates friction with trade mark owners wanting to control how third parties deal with goods bearing their trade marks.
The EU's rules on the free movement of goods state that once goods have been placed on the market anywhere in the EU, they can be freely exported and imported into a different EU member state. As a result of this principle, subject to certain conditions, it is not an infringement of a trade mark to deal with goods which have been put on the market by the trade mark owner or with its consent. Once this has occurred, the trade mark owner has "exhausted" its rights unless:
"there exist legitimate reasons for the proprietor of a trade mark to oppose further dealings in the goods, particularly where the condition of the goods has been changed or impaired after they have been put on the market."
The Court of Justice of the European Union ("CJEU") has had to consider on numerous occasions how this exception relates to the repackaging, re-labelling, de-branding and co-branding of pharmaceutical products. In the recent CJEU decision of Junek v Lohmann, the CJEU was asked by the German courts to give a preliminary ruling as to whether CJEU case law relating to the repackaging of pharmaceutical products applied equally to medical devices and, in particular, whether the conditions set out in Bristol-Myers Squibb v Paranova apply (the "BMS Conditions").
See Note 1 below for further details about the BMS Conditions.
In the present case, Lohmann & Rauscher International GmbH ("Lohmann") is a manufacturer of medical devices namely, medical sanitary preparations and dressings under its EU trade mark "Debrisoft". Junek Europ-Vertrieb GmbH ("Junek") markets in Germany Debrisoft-branded products, parallel imported from Austria where they are originally manufactured and put onto the market by Lohmann.
Before the sale of the parallel imported products, Junek had neatly affixed a label to an unprinted part of the box (so as not to conceal or otherwise obscure Lohmann's Debrisoft trade mark) and it contained identifying information about the importer. Junek had not given Lohmann prior notice of the importation of the products and nor had Junek supplied Lohmann with a sample of the modified packaging which are two of the BMS Conditions.
In previous rulings, the CJEU have held that a trade mark owner cannot object to the repackaging of its goods if the objection constitutes a disguised restriction of trade between member states. A disguised restriction of trade will occur if the trade mark owner's objection would create an artificial partition between member states and the repackaging of the goods still respects the legitimate rights of the trade mark owner (e.g. it does not tarnish the trade mark's reputation or the condition of the product).
The CJEU held in the Boehringer cases, that "repackaging" can be interpreted broadly to include re-labelling the packaging of products. However, the CJEU distinguished the circumstances of this present case from those that had related to earlier decisions where in addition to re-labelling, the original packaging had been opened, modified to varying degrees and in some cases additional (translated) information leaflets had been inserted – in short, the trade mark owner's rights were not respected.
Here, the CJEU held that the simple act of adding a small label containing the importer's contact information but otherwise leaving the packaging (internally and externally) intact, did not constitute "repackaging". The CJEU ruled that such a level of activity did not affect the central function of the proprietor's trade mark – i.e. to guarantee the origin of the product itself – or otherwise adversely affect the trade mark proprietor's rights. Accordingly, the CJEU ruled that Lohmann could not legitimately oppose the further commercialisation of trade mark by Junek.
The CJEU's decision gives some welcome guidance to parallel importers of goods in the EU. Parallel importers who add small informational labels but take care not to obscure or dominate the original packaging of goods, are unlikely to have to fulfil the BMS Conditions in order to lawfully deal in parallel imports. Inevitably, with Brexit looming and the departure of the UK, there will be greater interest in how the body of law relates to parallel imports into and across the EU.
Note 1: BMS Conditions
The "BMS Conditions" parallel importer must be able to demonstrate are the conditions which were established by the CJEU in the Bristol-Myers Squibb case which must be satisfied by a parallel importer of repackaged goods so as to avoid infringing the trade mark owner's rights. If the parallel importer fails to satisfy these conditions, a trade mark proprietor would be able to enforce its trade mark rights. The parallel importer must be able to demonstrate that:
- The trade mark owner's objection to the parallel trade contributes to an artificial partitioning of different EU markets;
- The repackaging does not affect the original condition of the product;
- The repackaging clearly states who has repackaged the product and the name of the manufacturer;
- The repackaging of the product is not liable to damage the reputation of the trade mark and its owner; and
- The parallel importer gives notice to the trade mark owner before the product is put on sale and, on demand, supplies him with a specimen.