Case C-297/15, Ferring Lægemidler – artificially segmenting the market in laxatives? [judgment 2016, ECLI:EU:C:2016:857]

Can multi-packs of trademarked medicine be repackaged in an exporting country where this is necessary to be able to sell single packs of those goods in an importing EU country? And if so, then what are the criteria for determining ‘necessity’ for the purposes of the EU’s trade mark Directive 2008/95/EC?

Background
Ferring Lægemidler is part of the Swiss-based bio-pharmaceutical giant, Ferring. Since 1959, it has been making and selling a laxative under the trademark ‘Klyx’. This medicinal product is sold in volumes of 120 ml and 240 ml; and either in individual packs or packs of ten. These are not only sold in the EU Member States of Finland and Sweden but also in the EEA Member State of Norway.

Orifarm is company which has been buying up 10-pack Klyx in Norway. It has then been repackaging them into individual packs of Klyx. In the course of doing this, it has been reapplying the trademarks which were on the 10-pack Klyx onto the single packs. These single doses have then been imported into Denmark and marketed for sale there.

The question here is whether Ferring can use EU trade mark law to stop Orifarm from parallel importing Klyx in this way.

The answer turns on the correct interpretation being given to the EU’s trade mark Directive 2008/95/EC to approximate the laws of the Member States relating to trade marks (Codified version) (Text with EEA relevance) OJ [2008] L 299/25.

The starting point is Article 5 of the Directive which provides:

Rights conferred by a trade mark
1.   The registered trade mark shall confer on the proprietor exclusive rights therein. The proprietor shall be entitled to prevent all third parties not having his consent from using in the course of trade:
(a) any sign which is identical with the trade mark in relation to goods or services which are identical with those for which the trade mark is registered;
(b) any sign where, because of its identity with, or similarity to, the trade mark and the identity or similarity of the goods or services covered by the trade mark and the sign, there exists a likelihood of confusion on the part of the public; the likelihood of confusion includes the likelihood of association between the sign and the trade mark.

2.   Any Member State may also provide that the proprietor shall be entitled to prevent all third parties not having his consent from using in the course of trade any sign which is identical with, or similar to, the trade mark in relation to goods or services which are not similar to those for which the trade mark is registered, where the latter has a reputation in the Member State and where use of that sign without due cause takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark.

3.   The following, inter alia, may be prohibited under paragraphs 1 and 2:
(a) affixing the sign to the goods or to the packaging thereof;
(b) offering the goods, or putting them on the market or stocking them for these purposes under that sign, or offering or supplying services thereunder;
(c) importing or exporting the goods under the sign;
(d) using the sign on business papers and in advertising.

4.   Where, under the law of the Member State, the use of a sign under the conditions referred to in paragraph 1(b) or paragraph 2 could not be prohibited before the date of entry into force of the provisions necessary to comply with Directive 89/104/EEC in the Member State concerned, the rights conferred by the trade mark may not be relied on to prevent the continued use of the sign.

5.   Paragraphs 1 to 4 shall not affect provisions in any Member State relating to the protection against the use of a sign other than for the purposes of distinguishing goods or services, where use of that sign without due cause takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark.

However, Article 5 needs to be read together with Article 7, and in particular, Article 7(2):

Exhaustion of the rights conferred by a trade mark
1.   The trade mark shall not entitle the proprietor to prohibit its use in relation to goods which have been put on the market in the Community under that trade mark by the proprietor or with his consent.

2.   Paragraph 1 shall not apply where there exist legitimate reasons for the proprietor to oppose further commercialisation of the goods, especially where the condition of the goods is changed or impaired after they have been put on the market.

Yet these provisions of EU legislation have also been subject to extensive interpretation by the ECJ (as it then was).

Thus, in the repackaging of trade-marked goods dispute in Case 102/77, Hoffmann-La Roche v Centrafarm the ECJ reasoned:

8 It is accordingly justified under the first sentence of article 36 to recognize that the proprietor of a trade-mark is entitled to prevent an importer of a trade-marked product , following repackaging of that product, from affixing the trade-mark to the new packaging without the authorization of the proprietor.

And

14 The first question must therefore be answered to the effect that :
(a) the proprietor of a trade-mark right which is protected in two member states at the same time is justified pursuant to the first sentence of article 36 of the EEC Treaty in preventing a product to which the trade-mark has lawfully been applied in one of those states from being marketed in the other member state after it has been repacked in new packaging to which the trade-mark has been affixed by a third party.
(b) however , such prevention of marketing constitutes a disguised restriction on trade between member states within the meaning of the second sentence of article 36 where :
– it is established that the use of the trade-mark right by the proprietor , having regard to the marketing system which he has adopted , will contribute to the artificial partitioning of the markets between member states ;
– it is shown that the repackaging cannot adversely affect the original condition of the product ;
– the proprietor of the mark receives prior notice of the marketing of the repackaged product ; and
– it is stated on the new packaging by whom the product has been repackaged.

This reasoning was subsequently elaborated upon in C-427/93 Bristol-Myers Squibb v Paranova, another case about the repackaging of trade-marked products. The ECJ reasoned:

46 Trade mark rights are not intended to allow their owners to partition national markets and thus promote the retention of price differences which may exist between Member States. Whilst, in the pharmaceutical market especially, such price differences may result from factors over which trade mark owners have no control, such as divergent rules between the Member States on the fixing of maximum prices, the profit margins of pharmaceutical wholesalers and pharmacies, or the maximum amount of medical expenses which may be reimbursed under sickness insurance schemes, distortions caused by divergent pricing rules in one Member State must be remedied by measures of the Community authorities and not by another Member State introducing measures which are incompatible with the rules on the free movement of goods (see, in particular, Winthrop, paragraphs 16 and 17).

47 In answering the question whether a trade mark owner’ s exclusive rights include the power to oppose the use of the trade mark by a third party after the product has been repackaged, account must be taken of the essential function of the trade mark, which is to guarantee to the consumer or end user the identity of the trade- marked product’ s origin by enabling him to distinguish it without any risk of confusion from products of different origin. That guarantee of origin means that the consumer or end user can be certain that a trade-marked product offered to him has not been subject at a previous stage of marketing to interference by a third person, without the authorization of the trade mark owner, in such a way as to affect the original condition of the product (Hoffmann-La Roche, paragraph 7; Pfizer, paragraph 8).

The ECJ went on to say:

Artificial partitioning of the markets between Member States

52 Reliance on trade mark rights by their owner in order to oppose marketing under that trade mark of products repackaged by a third party would contribute to the partitioning of markets between Member States in particular where the owner has placed an identical pharmaceutical product on the market in several Member States in various forms of packaging, and the product may not, in the condition in which it has been marketed by the trade mark owner in one Member State, be imported and put on the market in another Member State by a parallel importer.

53 The trade mark owner cannot therefore oppose the repackaging of the product in new external packaging when the size of packet used by the owner in the Member State where the importer purchased the product cannot be marketed in the Member State of importation by reason, in particular, of a rule authorizing packaging only of a certain size or a national practice to the same effect, sickness insurance rules making the reimbursement of medical expenses depend on the size of the packaging, or well-established medical prescription practices based, inter alia, on standard sizes recommended by professional groups and sickness insurance institutions.

54 Where, in accordance with the rules and practices in force in the Member State of importation, the trade mark owner uses many different sizes of packaging in that State, the finding that one of those sizes is also marketed in the Member State of exportation is not enough to justify the conclusion that repackaging is unnecessary. Partitioning of the markets would exist if the importer were able to sell the product in only part of his market.

55 The owner may, on the other hand, 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, or by replacing an additional article not capable of gaining approval in the Member State of importation with a similar article that has obtained such approval.

56 The power of the owner of trade mark rights protected in a Member State to oppose the marketing of repackaged products under the trade mark should be limited only in so far as the repackaging undertaken by the importer is necessary in order to market the product in the Member State of importation.

However, this reasoning of the ECJ has also been refined in Case C-348/04, Boehringer Ingelheim. In that judgment, the ECJ explained:

14. It must be borne in mind that the specific subject-matter of a mark is to guarantee the origin of the product bearing that mark and that repackaging of that product by a third party without the authorisation of the proprietor is likely to create real risks for that guarantee of origin (see Boehringer Ingelheim and Others , paragraph 29).

15. According to the case-law of the Court, it is the repackaging of the trade-marked pharmaceutical products in itself which is prejudicial to the specific subject-matter of the mark, and it is not necessary in that context to assess the actual effects of the repackaging by the parallel importer (see Boehringer Ingelheim and Others , paragraph 30).

Nevertheless, the ECJ also said:

18. A trade mark proprietor’s opposition to repackaging of pharmaceutical products contributes to artificial partitioning of the markets between Member States where the repackaging is necessary in order to enable the product imported in parallel to be marketed in the importing State ( Boehringer Ingelheim and Others , paragraph 33).
19. Thus it is clear from settled case-law that the change brought about by any repackaging of a trade-marked pharmaceutical 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 ( Bristol-Myers Squibb and Others , paragraph 57, and Boehringer Ingelheim and Others , paragraph 34).
…
36. That condition that repackaging be necessary is fulfilled if the rules or practices in the importing Member State prevent the product in question from being marketed in that State in the same packaging as that in which those products are marketed in the exporting Member State (see, to that effect, Upjohn , paragraphs 37 to 39 and 43).

37. Conversely, 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 (see Upjohn , paragraph 44).

While the ECJ has been building up this body of case law to regulate parallel imports, the German Supreme Court has also recently handed down a judgment on the same area concerning the importation of tablets into Germany from France. When discussing the notion of ‘necessity’ of the repackaging, the German Supreme Court reasoned:

Der maßgebliche Sachverhalt bei diesem Arzneimittel unterscheidet sich von dem zuvor behandelten Fall der Einfuhr von ʺMicardisPlus” allein dadurch, dass die in Deutschland weit überwiegend nachgefragte Packungsgröße mit 100 Tabletten auch in Frankreich verkehrsfähig und in für Zwecke des Parallel- imports ausreichenden Mengen zu beschaffen ist. Für die Frage der Erforderlichkeit des Umpackens ist aber nur auf das konkrete im Europäischen Wirtschaftsraum in Verkehr gebrachte Warenexemplar abzustellen (BGH, Urteil vom 12. Juli 2007 – I ZR 148/04, BGHZ 173, 230 Rn. 33 – CORDARONE unter Hinweis auf EuGH, Urteil vom 1. Juli 1999 – C-173/98, Slg. 1999, I-4103 = GRUR Int. 1999, 870 Rn. 19 f. – Sebago). Wie das Berufungsgericht zu Recht angenommen hat, ist ein Umpacken dann zulässig, wenn die konkret importierte Ware andernfalls vom Vertrieb auf einem Teilmarkt des Einfuhrmitgliedstaats ausgeschlossen wäre. Dementsprechend darf der Parallelimporteur nicht darauf verwiesen werden, die (auch) durch die Packungsgröße bestimmten Teilmärkte des Einfuhrmitgliedstaats durch den Ankauf passender Packungen in den Ausfuhrmitgliedstaaten zu bedienen.

Folglich steht der Klägerin auch kein Unterlassungsanspruch gegen das Umpacken aus Frankreich eingeführter “Sifrol”-Tabletten der Packungsgröße 30 Tabletten in die Packungsgröße 100 Tabletten für den deutschen Markt zu.

It is the German Supreme Court’s reasoning about necessity, and whether this complies with the CJEU’s case law, which is disputed by the parties in the present Danish case.

On the one hand, Ferring maintains that in light of the criteria mentioned in the ECJ’s judgments, Orifarm’s repackaging cannot be deemed to be necessary. Ferring’s drug is offered for sale in all the markets under the same name and in the same volume sizes and in the same pack-sizes. Consequently, Orifarm’s repackaging of Klyx in new exterior packaging is illegal. In so far as the German Supreme Court’s judgment is concerned, it is difficult to square with this with the existing requirements of EU law. The general rule in EU law is that the proprietor can oppose any repackaging of the goods. The exception to this rule is where the proprietor relies on a sales system that uses different pack-sizes and forbids repackaging with the result that the market is artificially segmented. But that is not the case here.

The force of Ferring’s submissions is denied by Orifarm, who point out that it is objectively necessary for them to repackage the goods for the company to have effective access to the Danish market. What they are doing complies with the EU courts’ case law. And since Ferring opposes Orifarm purchasing packs of 10 and repackaging them into single packs for sale on the Danish market, Ferring are artificially segmenting the market.

Orifarm adds that, in its view, the German Supreme Court’s judgment is in accordance with the CJEU’s case law. Namely, when the German court explained that repackaging was permitted where imported goods would otherwise be excluded from the segment of the market in the importing Member State. Concomitantly, the German court had also said that the parallel importer could not be required to buy packaging in the Member State of export that matched the use of package sizes that were specific to that segment of the importing Member State.

The different interpretations of the law in this area prompted the Sø- og Handelsretten to make a preliminary reference to the CJEU.

Questions Referred
According to the website of the UK’s Intellectual Property Office, the Sø- og Handelsretten has asked:

1. Must Article 7(2) of Directive 2008/95/EC […] and the related case-law be interpreted as meaning that a trade mark proprietor may lawfully object to the continued marketing of a medicinal product by a parallel importer, where the importer has repackaged the medicinal product in a new, outer packaging and reaffixed the trade mark in a situation where the trade mark proprietor has marketed the medicinal product in the same volume and packet sizes in all EEA countries where the medicinal product is sold?

2. Will the answer to the first question be different if the trade mark proprietor in both the country of export and the country of import has marketed the medicinal product in two different packet sizes (10-piece packets and 1-piece packets) and the importer has purchased 10-piece packets in the country of export and repackaged them in 1-piece packets, on which the trade mark has been reaffixed before the products are marketed in the country of import?