Out-Law News 3 min. read

EU court rules on rights of trade mark holders to object to marketing of repackaged drugs bearing their brand


Drugs manufacturers cannot prohibit other companies from buying their branded drugs in Norway, Iceland or Liechtenstein and selling them in an EU country in new packaging that bears their trade mark if the drug importers can show that they would otherwise be restricted to selling the product in "a limited part" of that EU country only, the EU's highest court has ruled.

The Court of Justice of the EU (CJEU) issued the judgment in a case that concerns the right of trade mark holders to control the sale of goods bearing their brand.

In the EU, businesses that hold trade mark rights are able to exercise control over how their brand is exploited. However, to promote the free movement of goods in the market and market competition, the rules prevent trade mark holders from controlling the sale of goods they hold rights for after they are first sold in that market.

These rules are relevant to the parallel importing of drugs, which is where a business buys branded drugs that have already been placed on the market in one EU country and imports them into another to sell them there.

Despite the first-sale doctrine, however, trade mark holders can "oppose further commercialisation of the goods" if there are "legitimate reasons" to do so. According to EU trade mark law, this includes "where the condition of the goods is changed or impaired after they have been put on the market".

The trade mark rules also apply to trade across the wider European Economic Area (EEA), which is made up of EU countries and Norway, Iceland and Liechtenstein. The EEA Agreement permits prohibitions or restrictions on imports, exports or goods in transit justified on grounds of the protection of industrial and commercial property.

The CJEU was ruling on a case referred to it from Denmark where drugs manufacturer Ferring has claimed that it can rely on its trade mark rights to prevent rival company Orifarm from importing its product from Norway to sell it in the Danish market under repackaging that bears its trade mark.

In Denmark, Finland, Sweden and Norway, Ferring sells its drugs in containers of 120ml or 240ml, as well as in packets containing one or 10 such containers, according to the ruling. The drugs are sold in identical packaging.

Orifarm bought Ferring's drugs in Norway in packets of 10 and imported them into Denmark where they repackaged the drugs into packets of one. Orifarm "reaffixed" Ferring's trade mark onto the new packaging. Ferring objected to the activity, but Orifarm has said the repackaging is necessary because without it it would be restricted to marketing the drugs in packets of 10, which is just a part of the Danish market for those drugs.

In its ruling, the CJEU said that "the change brought about by any repackaging of a trade-marked medicinal product – creating by its very nature the risk of interference with the original condition of the product – may be prohibited by the trade mark proprietor unless the repackaging is necessary in order to enable the marketing of the products imported in parallel and the legitimate interests of the proprietor are also safeguarded".

The "circumstances prevailing at the time of marketing in the importing state" must be taken into account when determining if the repackaging is "objectively necessary", it said.

The CJEU gave examples of circumstances that would prohibit trade mark owners from opposing the repackaging of their product in new external packaging.

This includes where rules or practices exist in the importing country to prevent drugs being marketed in the same packet size as they were in the exporting country. The restrictions on trade mark owners also apply if "sickness insurance rules making the reimbursement of medical expenses depend on the size of the packaging" or where there are "well-established medical prescription practices based … on standard sizes recommended by professional groups and sickness insurance institutions", the CJEU said.

Just because a drugs manufacturer may market their products in several different sizes of packaging in the importing country in line with national rules and practices does not necessarily mean that the repackaging of drugs by a parallel importer is unnecessary, the CJEU said.  Partitioning of the market would still exist if the importer were able to sell the product in only a limited part of the importing country's market, it said. However, it said it is "for the parallel importer to prove the existence of the conditions preventing the trade mark proprietor from lawfully opposing further marketing of those medicinal products".

It is for the Danish court to apply the CJEU's ruling and determine whether Orifarm's repackaging of Ferring's drugs was necessary or whether Ferring could legitimately oppose the activity under trade mark law.

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