Ricardo Costa Macedo and Rafael Cunha Jóia of Caiado Guerreiro review a recent case that called into question possible trademark infringement on the rebranding of parallel imported pharmaceuticals.
Picture this: company A, a multinational pharmaceutical, owns a registered trademark in territory X. In this territory, one of the divisions of company A markets a pharmaceutical product under the registered sign. In territory Y, another division commercializes an unbranded version of this product at a significantly lower price. Company B smells an opportunity. They purchase the unbranded version of the product in territory X, import it into territory Y, repackage it, rebrand it under the registered sign, and sell it for a price lower than the one charged by company A, but still with a comfortable profit margin. Does this constitute trademark infringement?
The situation above can be described as parallel importing: importation of a product from an EU Member State to another, with its subsequent distribution occurring outside the distribution networks set up by the manufacturer or its authorized distributors.
In November 2022, the European Court of Justice (ECJ) issued four different important decisions relating to parallel imports of branded products within the internal market of the European Union (EU). Two of those decisions concern the parallel imports and rebranding/ repackaging of generic medicinal products. In its decision of November 17, 2022, the ECJ has decided that the trademark proprietors of reference and generic medicines may in principle oppose the rebranding of the parallel imported generic version of the reference medicine.
In this decision a pharmaceutical company commercialized branded reference medicines on both the Dutch and Belgian markets. At the same time, the generic´s division of that pharm aceutical company marketed in Netherlands a generic version of the reference medicine, containing the same active pharmaceutical ingredient under the International Nonproprietary Name (INN). This generic version of the medicine was marketed with the name of the generic´s division company.
Given the different price range practice in Netherlands, a Belgium company started to import the generic product from the Netherlands, repackaging and rebranding the generic version of the medicine. Afterwards, the Dutch generic version would be sold as a reference medicine in Belgium.
The parallel importers thought their actions complied with applicable case law. However, the company selling the branded reference medicines disagreed and sought injunctions before the Brussels Commercial Court. Said pharmaceutical company won both cases in first instance. The case was then appealed, with the Court of Appeal of Brussels referring, under the preliminary reference procedure, several questions to the ECJ.
The ECJ addressed the question of knowing if it is admissible for a third party to sell medicines, imported from another EU Member State, under the original trademark. In solving the question, the court weighed different interests, with the aim of finding out which factors prevail over others in order to find the best solution.
In these types of cases the question always lies in the appropriate balance of interests between the rights of the trademark owner and the principle of unrestricted distribution of pharmaceuticals within the EU.
In this specific case and as a starting point the court remembered that it should be borne in mind that, the registration of a trademark confers on its proprietor exclusive rights which entitle that proprietor to prevent any third party without its consent from using in the course of trade any sign which is identical with that trademark in relation to goods or services which are identical with those for which the trademark was registered. However, EU law does not confer an absolute right on this matter to the trademark proprietor.
It should be considered that a trademark does not entitle the proprietor to prohibit its use in relation to goods that have been put on the market in the European Union under that trademark by the proprietor or if those goods were put on the market with its consent. Certain trademark provisions aim to reconcile the fundamental interest in protecting trademark rights, on the one hand, with the fundamental interest of the free movement of goods within the internal market, on the other hand.
According to settled ECJ case law the "proprietor of a trademark may legitimately oppose further commercialization in one Member State of a pharmaceutical product bearing its trademark and imported from another Member State, where the importer of that product has repackaged it and reaffixed that trademark to it, unless:" (i) It is established that the use of the trademark rights by the proprietor thereof to oppose the marketing of the relabeled products under that trademark would contribute to the artificial partitioning of the markets between Member States; (ii) It is shown that the repackaging cannot affect the original condition of the product inside the packaging; (iii) The new packaging states clearly who repackaged the product and the name of the manufacturer; (iv) The presentation of the repackaged product is not such as to be liable to damage the reputation of the trademark and of its proprietor; and (v) The importer gives notice to the trademark proprietor before the repackaged product is put on sale, and, on demand, supplies it with a specimen of the repackaged product.
Originally published in Life Sciences Lawyer Maganize, Issue 8.
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