European law - Repackaging of parallel imported pharmaceuticals
The Boehringer Ingelheim cases
On April 27 the European Court of Justice (ECJ) gave its long awaited judgment in the Boehringer Ingelheim set of cases concerning the parallel importation of repackaged pharmaceuticals.
The two-pronged issue under debate in these cases was whether a trademark holder has a right to stop cross-border trade of pharmaceutical products by parallel importers in order to protect its trademark, and the extent to which such importers may change the original packaging of branded pharmaceuticals in order to freely deal in them across EU borders.
At the outset it must be pointed out that parallel trading is a lawful form of trade within the internal market, based as it is on the principle of free movement of goods. Parallel imports are genuine goods traded in the country of import without the authorisation of the trademark holder. These parallel imports would be in direct competition with the trademark holder's authorised goods and often due to currency exchange rates, taxes and government regulations, the price of parallel imports may well be below that of the authorised goods.
The battle fought by Boehringer Ingelheim, a large pharmaceutical company, was based on Boehringer Ingelheim's objection to the alteration of the packacing of its products by two parallel traders, Swingward and Dowelhurst. The alterations changed the original packaging to various degrees: on some products only a label was stickered over the whole package leaving the trademark uncovered; on others the product was repackaged in new boxes reproducing the trademark of the original manufacturer; on others still the product just bore the generic name of the product without the original trademark.
These types of alterations are considered acceptable only insofar as the repackaging does not affect the original condition of the product inside the packaging and clearly identifies the name of the manufacturer and the repackager. Naturally, the quality of the repacking must be such as to give credit to the trademark and its holder.
Moreover, repackaged products cannot be marketed without the prior consent of the holder of the trademark. These requirements enable the trademark holder to maintain a degree of control over the presentation of the product. If any of these conditions is not met with, the trademark holder has a legitimate right to prevent the marketing of the repackaged product.
The Boehringer Ingelheim cases concerned the interpretation of these conditions in relation to different types of repackaging.
Of importance is the conclusion reached by the ECJ that these conditions must be fulfilled in all types of repackaging since potentially any type of repackaging is potentially capable of detracting from the image of a product. Thus, the ECJ affirmed that parallel importers who meddle with branded products by overstickering them must give advance notice to the trademark holder prior to putting the overstickered product on sale.
The court confirmed that in all cases the repackaged product must not damage the reputation of the mark. Damage can take various forms: inappropriate presentation of the trademark, including defective, poor quality or untidy packaging as well as incorrect or misleading suggestions of a commercial link with the trademark holder are capable of damaging the reputation of the trademark holder's reputation.
A repackaged product could also damage the reputation of the trademark where the new packaging is such as to affect the trademark's value by detracting from the image of reliability and quality and the confidence it is capable of inspiring in the public concerned.
The court further held that that all methods of repackaging such as cobranding, which involves the addition of the importer's brand to the package, and debranding, which involves the removal of the trademark holder's brand as well as overstickering, albeit the least harmful, are in principle liable to damage the reputation of the mark.
The ECJ's ruling is more favourable to trademark holders than previous judgments by giving trademark holders complete control over the marketing of repackaged pharmaceuticals.
• Dr Grech is an associate with Guido de Marco & Associates and heads its European Law Division.
The two-pronged issue under debate in these cases was whether a trademark holder has a right to stop cross-border trade of pharmaceutical products by parallel importers in order to protect its trademark, and the extent to which such importers may change the original packaging of branded pharmaceuticals in order to freely deal in them across EU borders.
At the outset it must be pointed out that parallel trading is a lawful form of trade within the internal market, based as it is on the principle of free movement of goods. Parallel imports are genuine goods traded in the country of import without the authorisation of the trademark holder. These parallel imports would be in direct competition with the trademark holder's authorised goods and often due to currency exchange rates, taxes and government regulations, the price of parallel imports may well be below that of the authorised goods.
The battle fought by Boehringer Ingelheim, a large pharmaceutical company, was based on Boehringer Ingelheim's objection to the alteration of the packacing of its products by two parallel traders, Swingward and Dowelhurst. The alterations changed the original packaging to various degrees: on some products only a label was stickered over the whole package leaving the trademark uncovered; on others the product was repackaged in new boxes reproducing the trademark of the original manufacturer; on others still the product just bore the generic name of the product without the original trademark.
These types of alterations are considered acceptable only insofar as the repackaging does not affect the original condition of the product inside the packaging and clearly identifies the name of the manufacturer and the repackager. Naturally, the quality of the repacking must be such as to give credit to the trademark and its holder.
Moreover, repackaged products cannot be marketed without the prior consent of the holder of the trademark. These requirements enable the trademark holder to maintain a degree of control over the presentation of the product. If any of these conditions is not met with, the trademark holder has a legitimate right to prevent the marketing of the repackaged product.
The Boehringer Ingelheim cases concerned the interpretation of these conditions in relation to different types of repackaging.
Of importance is the conclusion reached by the ECJ that these conditions must be fulfilled in all types of repackaging since potentially any type of repackaging is potentially capable of detracting from the image of a product. Thus, the ECJ affirmed that parallel importers who meddle with branded products by overstickering them must give advance notice to the trademark holder prior to putting the overstickered product on sale.
The court confirmed that in all cases the repackaged product must not damage the reputation of the mark. Damage can take various forms: inappropriate presentation of the trademark, including defective, poor quality or untidy packaging as well as incorrect or misleading suggestions of a commercial link with the trademark holder are capable of damaging the reputation of the trademark holder's reputation.
A repackaged product could also damage the reputation of the trademark where the new packaging is such as to affect the trademark's value by detracting from the image of reliability and quality and the confidence it is capable of inspiring in the public concerned.
The court further held that that all methods of repackaging such as cobranding, which involves the addition of the importer's brand to the package, and debranding, which involves the removal of the trademark holder's brand as well as overstickering, albeit the least harmful, are in principle liable to damage the reputation of the mark.
The ECJ's ruling is more favourable to trademark holders than previous judgments by giving trademark holders complete control over the marketing of repackaged pharmaceuticals.
• Dr Grech is an associate with Guido de Marco & Associates and heads its European Law Division.