C-102/77

JUDGMENT OF 23. 5. 1978 — CASE 102/77

origin of the trade-marked product second sentence of Article 36 of the to the consumer or ultimate user, by Treaty where; enabling him without any possibility — It is established that the use of of confusion to distinguish that the trade-mark right by the product from products which have another origin. proprietor, having regard to the marketing system which he has This guarantee of origin means that adopted, will contribute to the the consumer or ultimate user can be artificial partitioning of the certain that a trade-marked product markets between Member States; which is sold to him has not been subject at a previous stage of — It is shown that repackaging marketing to interference by a third cannot adversely affect the person, without the authorization of original condition of the product; the proprietor of the trade-mark, — The proprietor of the mark such as to affect the original receives prior notice of the condition of the product. marketing of the repackaged The proprietor of a trade-mark right product; and which is protected in two Member — It is stated on the new packaging States at the same time is justified by whom the product has been pursuant to the first sentence of repackaged. Article 36 of the Treaty in preventing a product to which the trade-mark 3. To the extent to which the exercise has lawfully been applied in one of of a trade-mark right is lawful in those States from being marketed in accordance with the provisions of the other Member State after it has Article 36 of the Treaty, such been repacked in new packaging to exercise is not contrary to Article 86 which the trade-mark has been of the Treaty on the sole ground that affixed by a third party. it is the act of an undertaking However, such prevention of occupying a dominant position on marketing constitutes a disguised the market if the trade-mark right restriction on trade between Member has not been used as an instrument States within the meaning of the for the abuse of such a position.

HOFFMANN-LA ROCHE v CENTRAFARM

THE COURT

composed of: H. Kutscher, President, M. Sørensen and G. Bosco (Presidents of Chambers), J. Mertens de Wilmars, Lord Mackenzie Stuart, A. O'Keeffe and A. Touffait, Judges,

Advocate General: F. Capotorti Registrar: A. Van Houtte

gives the following

JUDGMENT

JUDGMENT OF 23. 5. 1978 — CASE 102/77

In its presentation of the original package) the names Valium and Roche, the judgment of 24 May 1977 in Case 107/76 ([1977] ECR 957), the Court in number of the entry on the register of answer to the first question put by the the Bundesgesundheitsamt, together with the name "Centrafarm" and the Oberlandesgericht ruled that that court was not required by the third paragraph words "Marketed by Centrafarm

Diazepam preparation. 6. On 20 June 1977 the Landgericht Freiburg in turn ordered that the 3. Roche-Germany regards the proceedings should be stayed and that conduct of Centrafarm as an the following questions should be infringement of the trade-mark rights of referred to the Court of Justice under the undertaking from which it has Article 177 of the EEC Treaty for a obtained a licence. On 31 December preliminary ruling: 1975 it obtained from the First Chamber 1. Is the person entitled to a trade-mark for Commercial Matters of the Land right protected for his benefit both in gericht Freiburg, an interim injunction Member State A and in Member prohibiting Centrafarm: State B empowered under Article 36 from using in the course of its business of the EEC Treaty, in reliance on dealings in medicinal preparations the this right, to prevent a parallel names Valium and/or Roche as a trade importer from buying from the mark, except where the user consists of proprietor of the mark or with his placing on the market or offering for consent in Member State A of the sale the product in the original pres Community medicinal preparations entation in which it was put onto the which have been put on the market market in a Member State of the with his trade-mark lawfully affixed Community by a third party with the thereto and packaged under this consent of Hoffmann-La Roche and trade-mark, from providing them

HOFFMANN-LA ROCHE v CENTRAFARM

packaging the proprietor's trade­ could, within the limits set out in the mark and importing the preparations interim order, require Centrafarm to distinguished in this manner into refrain from using the designations Member State B? Valium and Roche as trade-marks.

JUDGMENT OF 23. 5. 1978 — CASE 102/77

HOFFMANN-LA ROCHE v CENTRAFARM

The Landgericht Freiburg and the Ober­ European trade-mark law have dealt landesgericht Karlsruhe properly charac­ with the problem in the present case and terized the conduct of the defendant in they observe above all that when the pre­ the main action as clearly infringing a liminary draft of the regulation on the trade-mark under German law. Community trade-mark was discussed Writers and case-law of all Member by the Commission working party on States unanimously reach the same 'Trade-marks" from 18 to 20 July 1977 conclusion as that of German law. an exception to the principle of There is a clear line of cases in France exhaustion set out in Article 16 (1) of to the effect that re-affixing the the draft was adopted in the following protected mark to the genuine product terms as paragraph (2) of that article on is a clear infringement of the right to a proposal by British and French the trade-mark. Italian writers and experts:

JUDGMENT OF 23. 5. 1978 — CASE 102/77

certain products. Above all, it would be that it would be an infringement of the of no use to the consumer on unpacking provisions of that directive, and in at home the product which he has particular Articles 4 and 13 thereof, purchased to find the trade-mark which were an importer to unpack a has been affixed to it, for in the shop proprietary medicinal product, the where he makes his decision to purchase marketing of which had been auth he can judge only by the packing and orized in the country of export, and to by the trade-mark which has been repack it, even if he were to affix the affixed thereto. proprietor's trade-mark to the new

If, legitimate rights of consumers. Such however, the manufacturer is unable to additions lead to the danger that the consumer's recollection of the trade guarantee the identity of his product by means of his trade-mark, he risks being mark he knows will be impaired and thus its function as an identification will held liable for the defective products of diminish. The consumer will be others. deceived, since descriptions such as It is not possible to prohibit transfer Valium Roche Centrafarm will lead the into other containers only where there consumer to think that Centrafarm is a is a "concrete" (in contrast to an part of the sales organization of Roche. "abstract") danger of deterioration of The trade-mark Valium Roche could be the composition of the product. Neither converted into a generic concept the proprietor of the trade-mark, nor (Freizeichen) incapable of protection. the consumer nor the appropriate health Finally, the legitimate interests of the authority can continually check whether proprietor of the trade-mark are not the transfer into other containers is not satisfied because although retailers buy taking place in conditions which might the product they do not succeed in

disposing of it because consumers are B — Observations of the defendant in wary of products bearing a trade-mark the main action together with a notice stating that they Centrafarm observes that because of the have been repacked and this adversely affects prospects for the sale of trade­ oligopolistic structure of supply on the marked products which have not been market in medicinal products and repacked. because prices do not affect demand since the cost of a large part of The plaintiffs in the main action medicinal products is borne by consider, finally, that the marketing of a insurance companies, sellers are able to product under the trade-mark in develop different national strategies in question does not deprive the proprietor the various Member States. In no other of that trade-mark of his right to market do price levels differ so much as prevent the improper use of the trade­ in that for medicinal products. mark at subsequent stages of marketing. After setting out the provisions laid In this respect they refer to the down by law, regulation or judgments of the Court of 3 July 1974 administrative action applicable to in Case 192/73, Van Zuylen v Hag proprietary medicinal products either at [1974] ECR 731, and 31 October 1974 a Community level or in the Member in Case 16/74, Centrafarm v Winthrop States, the defendant in the main action [1974] ECR 1183. infers that if the importer were In the view of the plaintiffs in the main prohibited from repacking proprietary action there is no conflict between the medicinal products there would be no principle of the free movement of goods trade in this sphere. within the Community and national The differences existing between trade-mark rights. The scope of Article national laws, the diversity of 30 of the Treaty does not cover the commercial usage, the medical practices content, that is the specific subject­ and habits of consumers in the various matter of commercial property, and in Member States are all exploited by particular does not cover the national manufacturers of medicinal products law of trade-marks. At the very least, in purposely and systematically, in this respect this is a case justified by particular to partition off the markets of Article 36 of the Treaty, which protects Member States, without their being "the specific subject-matter" of constrained to do so by factors inherent industrial and commercial property in production techniques or market rights. conditions. The artificial differentiation

use of the trade-mark for the purposes Every attempt to associate with the of re-sale is lawful unless the product function of indicating origin some has been changed. The Italian case-law special and independent function as a requires that the product should have guarantee leads to results which are been so altered that the link of incompatible with Articles 30 and 36 of identification between the trade-mark the Treaty. This view is confirmed by and the product has been destroyed. the memorandum of the Commission of French case-law does not allow the 6 July 1976 (Bulletin of the European original trade-mark either to be left on Communities, Supplement 8/76) on the or to be re-affixed to the product where creation of a Community trade-mark the latter is transferred to another and by the latest German case-law, in

industrial and commercial property affixing of the original trade-mark rights might be a lawful or merely appro should be allowed so long as the priate way of guaranteeing the product had not been altered and that consistent quality of a proprietary the mere transfer into another container medicinal product. should not be considered an alteration. According to the judgment of the Court As regards the first sentence of Article in Case 119/75 Terranova, the basic 36 of the EEC Treaty Centrafarm function of the trade-mark is to observes that the "specific subject guarantee to consumers that the product matter" of a trade-mark right is simply has the same origin.

Such a definition of the "specific subject-matter" of the trade In the present case Centrafarm is guilty mark right does not a priori exclude of no deception as regards the origin of discussion of its function as a guarantee the goods. By reason of the indication at the level of national law. According of origin, as represented by the trade to the judgment of the Court of 20 mark, being re-affixed on repacking the February 1975 in Case 12/74 identity of the origin of the product is Commission v Germany [1975] ECR quite apparent to the consumer so that 181, any indication of origin serves to there is no "wrongful" or "false" protect the ultimate consumer against affixing of the trade-mark. The use of designations which may mislead him. the trade-mark in trade gives no cause Protection of the consumer against for confusion of the said product with deception to which he may be subject in those of other manufacturers. spite of a precise indication of origin

same way, protection against any other These questions, however, do not need deception as to quality and the risk of to be dealt with exhaustively in order to counterfeiting, which Roche stressed in decide the present case. The proposition the main action, is a primary objective that the proprietor of a trade-mark is not of trade-mark law but of the law on not entitled to prevent the resale under deception in relation to goods and the original trade-mark of products consumer protection. Thus none of lawfully placed on the market makes it these considerations is relevant for the impossible to prevent the re-affixing of purposes of the answer to be given to the trade-mark when the product is not the question put to the Court, which saleable without affixation of the trade­ relates to whether it is possible to mark, as is the position with Valium prevent all use of the trade-mark imported from Great Britain in its Valium Roche independently of the original packing. It is not denied that existence of any deception. That under the national provisions the trade­ question must be answered in the mark must be re-affixed after each negative. Even assuming that the trade­ alteration of the packing of medicinal mark has a function as a guarantee, the preparations. In such cases the concept interest which Roche is seeking to of the exhaustion of the trade-mark, protect is not part of the "specific which is to be found not only in the subject-matter" of the trade-mark. legal systems of the Member States but Finally, as regards the first sentence of also in Community law, limits the Article 36 of the Treaty, the defendant "specific subject-matter" of the trade­ in the main action considers that the mark right. common basis of the national rules lies As regards the second sentence of in the fact that the person who has Article 36 of the Treaty, the defendant marketed a product under a given in the main action observes that there is trade-mark cannot prevent the lawful a disguised restriction on trade between purchaser of that product in turn from Member States where, objectively, it is offering it for sale as an original not possible to show that the proprietor product. The lawful purchaser must be of trade-mark rights can give a allowed to carry out all the operations convincing reason which may be necessary for the resale of the product inferred from the function of the trade­ as an original product. Articles 30 and mark for exercising his rights in spite of 36 of the Treaty require this general the restriction on the freedom or trade principle to be applied also in trade which such exercise involves.

In the present case Roche has simply original packing. German law even alleged that the repacking from large allows the trade-mark to be removed packages into small packages could give before marketing. The question whether rise to manipulations or confusions such in certain cases this may adversely affect as to affect the reliability of the the reputation of the trade-mark is a indication of origin. matter for the law of competition and not for trade-mark law. The fact that Roche seeks to prevent not only the marketing of the repacked In principle, the proprietor of the trade products but also the alteration of the mark may not rely thereon to influence packing shows in itself that Roche has the subsequent form of marketing of the adduced no good and obvious reason product. justifying an obstacle to free trade. Finally, the German Government has Furthermore, there can be no good lost sight of the fact that the batches of reason, since the information which Valium marketed in Great Britain and Centrafarm has placed on the packing the Netherlands are in large packages and the guarantee which it gives are which cannot in any event reach the sufficient evidence of the true position. consumer in the packing as originally The fact that Valium is always repacked sealed with the trade-mark by the manu

Such rules involve a Federal Republic of Germany lost sight disguised restriction on trade between of the fact that the publicity rôle of the Member States and are incompatible trade-mark is merely ancillary to the with Articles 30 and 36 of the Treaty function of indicating the origin and is (Case 8/4 Procureur du Roi v not an essential part of the trade-mark. Dassonville [1974] ECR 837). The German Government used the same argument in a slightly different form to C — Observations of the United claim that from the consumer's point of Kingdom view it is vitally important that he should know when he buys medicinal After referring to certain aspects of the products that the package bearing the case-law of the Court the United proprietor's trade-mark has reached him Kingdom observes that the package,

HOFFMANN-LA ROCHE v CENTRAFARM

depends. Transferring the product into to prevent imports into Member State B containers of a different size, providing of a product deriving from Member them with new packaging, and affixing State A which has been so re-packaged to such packaging the proprietor's and re-marked in order that the trade-mark creates in effect a new subject-matter of the trade-mark may be product, to which the proprietor has duly safeguarded. The fact that special never applied his mark and to which his market features or consumer pref­ mark has been applied without his erences in Member State B may make permission. In those circumstances, the the products unattractive to market mark is no longer functioning to there cannot prejudice the rights of the distinguish the products of the proprietor of the trade-mark. proprietor from those of all other manu­ In the view of the United Kingdom, it is facturers or traders or to guarantee the also material that in addition to its origin, genuineness and immediate specific subject-matter, a trade-mark source of the product. has incidental functions, which include In the view of the United Kingdom, it is the protection of consumers. Such unrealistic to expect a trade-mark protection is assured because the owner to be able to show that the consumer is able to identify the products have been handled in such a proprietor of the mark who, by using it way as to be liable to impair them or to on or in connexion with the goods, has stand by and wait until it can be proved indicated that he will accept that the products in question have responsibility for their origin and actually been impaired. He would not genuineness. He cannot be expected to normally be in a position to produce do so if a third party has repackaged evidence as to how his product had and re-marked his goods without his been handled or to have any right to authorization or control. take possession of the products in order to submit them to examination, since The primary purpose of the rules laid down in Council Directive No 65/65 of they would be in the hands of the party doing the repackaging, or his customer. 26 January 1965 — to safeguard public For the vast mass of trade-marked health — is liable to be frustrated if

there will always be a real risk of im of an alteration in those characteristics pairment in the latter form of repack taking place contrary to the intention of aging. Unless the trade-mark owner is the defendant in the main action. The aware of and has details of the repack right under the trade-mark enjoys aging processes it will be difficult and in greater protection in the Federal many cases impossible for him to satisfy Republic of Germany than in the other himself that there will be "no serious Member States.

produits que le titulaire ou son licencie ceutical products is required to be a mis en circulation sous ladite marque, carried out under an authorization of a à moins que l'état des produits n'ait été competent authority does not in practice altéré." necessarily give the trade-mark owner The conception (which is not binding the assurance referred to above. Having and is not yet settled in all its details) of regard to the potential hazard involved the content of trade-mark law so far in any impairment of any pharma developed at the Community level does ceutical products by such repackaging, not provide such wide protection as that and the consequential damage to the offered by German law. By reason of

In other words, the mark rights. The objective of the steps objective of the trade-mark is to dis taken by the defendant in the main tinguish or identify the products of a action was to leave the characteristics of manufacturer or trader and to the product unaltered. The only risk in guarantee their origin, genuineness and the present case could therefore be that source.

The first entry into circulation does not product bearing a trade-mark is in exhaust the trade-mark right. The direct contact with the packaging. proprietor of the trade-mark still needs In these circumstances, having regard to to be protected against infringements the connexion, which alone is relevant, from a two-fold aspect, precisely as between the trade-mark and the regards the function of indicating product, the only function of the pack origin. On the one hand, the proprietor aging being to indicate that connexion must be able to take action against any without itself enjoying any protection unlawful manipulation of the trade given by the trade-mark, the question mark, the classic example of infringe arises in the present case whether the ment being the unlawful use of a "good fact of continuing to use the original trade-mark" on products of third trade-mark on a product which, without parties with the objective of "passing them off'.

affected. As regards pharmaceutical products, In the Commission's view, if the prin although alterations by third persons ciple is accepted that the trade-mark who have not been authorized by the must guarantee the genuineness and manufacturer must be subject to strict identity of a product but not of its criteria, nevertheless even here there are packaging, it is not possible to see how alterations which, since they in no way a change in the presentation necessarily affects the trade-mark's function of indi affect the function of indicating the origin, do no harm from the point of cating the origin. On the contrary, it is view of trade-mark law. quite conceivable that a trader may alter the packaging on which the trade-mark In the present state of national and has been placed and may then re-affix Community law applicable to pro the trade-mark without affecting its prietary medicinal products, any other function of indicating the origin. interpretation would render interna Further, the trader could duly inform tional trade in these proprietary consumers of the fact that he has products practically impossible.

product. The same is true when a tion relating to proprietary medicinal

products be mentioned on the pack Accordingly, where as a result of acts aging or on the leaflet enclosed with the undertaken by third persons without the packaging. If by relying on trade-mark authorization of the manufacturer an law it were possible to evade the obliga original medicinal product suffers such tions relating to the provision of infor defects, it must be concluded that the mation imposed by the Member States nature of the product has been ad in accordance with Community law, this versely affected from the point of view would undermine the principle of the of its origin. free movement of goods as recognized

The Court have similarly so little effect upon that presupposed this fundamental distinc function and which, without being di tion between the protection of industrial rectly provided for by legal provisions, and commercial property and the protec are necessarily called for, having regard tion of public health when it ruled that: to the indirect effect of national laws "The owner of a trade-mark relating to and the habits of consumers, so that a pharmaceutical product cannot avoid international trade may take place the incidence of Community rules under acceptable economic conditions.

product. In this respect it does not sity of protecting public health does not matter whether or not the acts are mean that the law on medicinal allowed by the health laws of the im products has no effect upon the exercise porting State. of trade-mark rights. The Landgericht In view of the high quality required in Freiburg was right in saying that, in the case of medicinal products the very reaching a decision based exclusively on danger of a deterioration of quality the "specific subject-matter" of the should be regarded as a defect, which trade-mark, the provisions of the law on should not be underestimated when the medicinal products defining certain acts products are marketed, especially from as being likely to endanger public health the point of view of the consumer. are important factors in determining

whether such acts may impair the mark is simply prevented from relying quality of the product in question and on the abstract risk that alterations may therefore affect the function of indica represent from the point of view of ting the origin. The market in medicinal public health law. The national court products is characterized by rules laid must therefore ascertain whether close down by the public authorities and this consideration of the objective interests is not without influence on the attitude of the manufacturer does not reveal and expectations of consumers. factors which have nothing to do with In the Commission's view it would be public health criteria but which show that there is an effect upon the function wrong to conclude that the function of of indicating the origin.

health. This means that the proprietor worthy of protection are taken into of the trade-mark cannot rely on con account. siderations of public health law to claim The Commission does not wish to deal that the function of indicating the origin has been adversely affected. further with the scope of the provisions on the free movement of goods since it In the present case no facts have been does not see in the facts submitted to alleged to show that there has been a the Court any grounds for considering wrongful impairment in relation to in detail the second sentence of public health law. In cases where rules Article 36. and inspections by public authorities guarantee that the transfer into other

the origin". The proprietor of a trade reason of the medicinal product

On the other hand, the Landgericht The French, British and German govern­ does not assume that Roche satisfies the ments and the Commission rightly insis­ ted in their written observations in Case conditions laid down in Article 86 of 107/76 that the exercise of a trade­ the Treaty, relating in particular to an abuse of a dominant position. mark right cannot be regarded as an abuse within the meaning of Article 86 The facts assumed by the Landgericht of the Treaty solely because that right is Freiburg do not exist or at least no exercised by an undertaking which occu­ longer exist: the dominant position of pies a dominant position on the market. the plaintiffs within the market, if it This view is confirmed by the judgments ever existed, has in the meantime been of 29 February 1968 in Case 24/67, whittled away since the share of the Parke, Davis and Co. [1968] ECR p. 55) market and frequency of prescriptions and 18 February 1971 in Case 40/70, for Valium Roche have diminished Sirena ([1971] ECR p. 69). because of the arrival of competing The position referred to in Article 86 of products. This question, moreover, will the Treaty can thus exist only where, be reconsidered in the proceedings apart from the exercise of the trade­ before the Kammergericht Berlin. mark right, the proprietor of a trade­ Further, the prohibition on importing mark substantially fetters competition repackaged products bearing the pro­ by reason of the position of power prietor's trade-mark cannot be an which it has acquired in fact or in law obstacle to the marketing of those (Case 6/72 Continental Can [1973] products since the defendant in the ECR p. 215). main action is not prohibited from importing into the Federal Republic of Such a degree of domination can never Germany or from selling there in their be achieved solely by means of the original packaging batches of 100 or trade-mark but requires the deployment 500 tablets of Valium Roche purchased of means of a factual or legal nature in Great Britain. It is, moreover, incon­ going beyond the acquisition and use of ceivable that batches of 1 000 tablets the trade-mark.

not assume any such position, but the main action merely speaks of a "dominant position The defendant in the main action within the market" and not of an abuse observes, first of all, that the national of that position. The exercise of rights court refers to the decision of the arising under the trade-mark cannot therefore "encourage" or "maintain" an Bundesgerichtshof of 16 December abuse of a dominant position. 1976 to justify the statement that Roche occupies a dominant position in the If the sole fact that the proprietor of a Federal Republic of Germany. trade-mark has acquired a dominant position on the market were sufficient The finding made by the Bundesge­ reason to impose on him restrictions in richtshof that the market in tranquil­ the exercise of the "specific subject-mat­ lizers represents a limited sector of the ter" of his trade-mark right, that would market appears to accord with the mean that the proprietor of a well- Treaty, even having regard to the rules known trade-mark would enjoy less laid down by the Court in Case 6/72 protection than the proprietor of less (Continental Can, paragraphs 32 et seq. of the Decision). important or unknown trade-marks. Very properly the French and British The remarks of the Bundesgerichtshof governments in their written observa­ regarding the position of Roche as a tions in Case 107/76 regarded such a market leader and the significance of result as absurd. Valium are sufficient grounds for assu­ The fact that for medicinal products the ming that Roche occupies a dominant usual units vary in size in the different position on the market within the countries of the Community is not due meaning of Article 86 of the EEC to trade-mark law but to the fact that Treaty, since for that purpose it is suffi­ the professional associations of pharma­ cient that an undertaking has the possi­ cists in the different Member States bility of determining prices for a substan­ have different rules: thus a pharmacist tial part of the relevant products (cf. the decision of the Commission of in the Federal Republic of Germany, 9 December 1971 in the case of Conti­ unlike a pharmacist in the Netherlands or in Great Britain, must sell proprietary nental Can, Journal Officiel of 8 medicinal products in the original pack­ January 1972, L 7, p. 25). That criterion aging put together by the manufacturer, was never contested in the judgment of the Court. and only hospitals are entitled to dispense medicines. The different In this respect the national court customs arising from this situation observes that a dominant position on cannot be interpreted as an abuse of the market of a Member State rep­ trade-mark law. resents at the same time a dominant pos-

ition within a substantial part of the would be allowed (cf. the aforemen market as a whole and in this it agrees tioned judgment of the Court in Case with the view expressed by the Court in 78/70). It is therefore quite feasible for its judgment of 27 March 1974 in Case Article 86 of the Treaty to have the 12/73 Sabam ([1974] ECR 313, para effect of reducing the scope of a right graph 5). to restrain others under a trade-mark which an undertaking in a dominant According to the findings of the national court the Roche group is position would have if it did not occupy such a position on the market. preventing undertakings from other Member States from entering into In order to find whether the prices of competition with its German subsidiary Roche might be "unfair" within the on the market in the Federal Republic meaning of subparagraph (a) of the

against the rules on competition regarded as prevalent in the Federal contained in the Treaty, since otherwise Republic of Germany and has also been an undertaking in a dominant position widely applied in Community law (cf. on the market would enjoy only less the judgment in Case 13/60, Geitling v extensive trade-mark rights, the defend High Authority, [1962] ECR at p. 102, ant in the main action states that accord paragraph 3). ing to Articles 85 and 86 of the EEC On the other hand if, as some writers Treaty acts may be prohibited which are maintain, the doctrine of "fictitious otherwise part of the "specific subject- competition" is not appropriate for matter" of the industrial and commer establishing an abuse of a dominant pos cial property within the meaning of ition, it is necessary to inquire whether

The conduct which the national court ition necessarily prohibits undertakings which are in a dominant position from imputes to Roche in reliance on the engaging in certain activities which are judgment of the Bundesgerichtshof must permitted to others. Such is in particular therefore be regarded as an abuse of its the case where the exercise of an absol dominant position, even if the doctrine ute right by an undertaking in a domi of "fictitious competition" is not nant position is prohibited.

HOFFMANN-LA ROCHE » CENTRAFARM

It simply requires that the undertaking should have acted (c) Recourse to the trade-mark right wrongly from an objective point of results in a consolidation of the view. As regards the application of market power which is being abused. Article 85 of the EEC Treaty that objec tive interpretation appears from the wording "have as their object or effect" In the Commission's view the objective and this, apart from applying expressly of the present procedure for a prelimi to Article 85, applies also to Article 86. nary ruling is not a thorough examin ation to determine whether Roche-Ger many does indeed occupy a dominant C — Observations of the United position on the market within the Kingdom meaning of Article 86 of the Treaty; such an examination would, moreover,

market. In the view of the United Treaty because prices have been main Kingdom there is no abuse of market tained at an excessively high level in the strength if an undertaking enjoying a Federal Republic of Germany. Such a dominant position within the market finding is open to criticism since the avails itself of a trade-mark right to Kammergericht Berlin, to whose de which it is entitled, in the same manner cision reference has been made, con as any other person entitled to such a sidered the question of the abuse of the right, for objectives unconnected with dominant position solely on the basis of the use of market power, and this is so the German law of competition. even where recourse to this right has the The exercise of a trade-mark right effect in practice inter alia of consolidat cannot be regarded as an abuse within ing market power which is abused in the meaning of Article 86 of the EEC another context. The practical effect of Treaty solely because it was the act of a contrary conclusion would be that an undertaking having a dominant pos trade-marks belonging to dominant ition within the market.

for example control of distribution 107/76 the Commission expressed the for the purpose of exercising view that when it appears that the exer­ influence. In the view of the cise of a trade-mark right objectively national court there were no enforces an already existing abuse of a grounds for making such an assump­ dominant position, the proprietor of the tion here; trade-mark is subject to greater restric­ tions than those imposed on him by (b) The exercise of restrictive rights reason of the principle of the free move­ based on the trade-mark is an abuse ment of goods. After thorough examin­ where objective consideration of all ation the Commission has come to the the circumstances leads to the conclusion that it is not possible to conclusion that such exercise apply that reasoning in the present case. enables the proprietor to continue It no longer maintains its previous view, to abuse his dominant position or to for the following reasons: As the extend such abuse. Landgericht has found, the exercise of the trade-mark right is neither in itself The Landgericht Freiburg found that nor directly an abuse of a dominant pos­ the recourse by Roche to its trade­ ition, but simply causes an indirect re­ mark right "has the effect in practice... inforcement of an abuse the existence of of consolidating market power which is which is independent of the recourse to abused in another context." The exer­ the trade-mark right. It does not seem cise of the restrictive right based on the right to restrain the proprietor from trade-mark would in fact prevent any exercising his right, which is lawful in economically worthwhile import of itself, when in the case in point there is cheap Valium and thus prevent effective no possibility of checking the effects of competition on the German market. such exercise. This observation neverthe­ This would adversely affect trade less does not prevent recourse to between Member States. In so far as the Community criteria to determine the conditions set out in (a) to (c) above are limits of the lawful exercise of a trade­ fulfilled there is, in principle, an abuse mark right, nor does it prevent examin­ of the trade-mark right. ation of whether the right to which This conclusion nevertheless does not recourse is had is part of the "specific mean that the proprietor of the trade­ subject-matter" of the industrial and mark must tolerate any arbitrary use of commercial property right. In this his trade-mark by third persons. Thus in respect the Commission refers to the observations which it has made in particular it would not be possible to justify the abuse of the trade-mark by respect of the first question in the order unauthorized persons and the conse­ requesting a preliminary ruling. quential deception of the consumer. It The general problem which arises in the follows, on the one hand, that it is present case is to determine what degree lawful to enforce the trade-mark right of interference by a third person with a whenever it is a question of preventing product to which a trade-mark has been the passing-off of non-genuine products affixed must be tolerated by the

proprietor of that trade-mark, by virtue such trade-mark has been improperly of the principle of the free movement of affixed. The prohibition on repackaging goods, because it adversely affects and on re-affixing the trade-mark is neither the identity nor the origin of the aimed at preventing such conduct. From product. In the circumstances of the the purchaser's point of view the signifi present case the limits to the exercise of cance and reputation of a trade-mark the trade-mark right by the proprietor, depends not only on the service as laid down by the Commission in its provided under the trade-mark but also observations on the scope of Articles 30 on the external appearance of the and 36 of the Treaty, may not be product to which the trade-mark is exceeded unless both the identity and affixed. Trade-mark law enables the origin of the product are at the same proprietor of the trade-mark to control time adversely affected. the noteworthy identity of the mark, appearance and content of the product as a whole, and not just to check the III — Oral procedure quality of the product. The right of the proprietor of the trade

the case in diverse sectors, especially as ment of the Federal Republic of such regulation normally relates to Germany, represented by M. Seidel, certain aspects of the "scientific" quality Ministerialrat at the Federal Ministry of the product. for Economic Affairs, and E. Bülow, Further, the Government of the Federal Ministerialdirigent at the Federal Min istry of Justice, and the Commission, Republic took the view that the represented by its Legal Adviser, question whether the prohibition on M. Beschel, acting as Agent, presented repackaging and on re-affixing the oral observations. trade-mark is compatible with the first sentence of Article 36 of the Treaty depends on consideration of the

JUDGMENT OF 23. 5. 1978 — CASE 102/77

thereunder, has as his objective an abuse Finally, the Government of the Federal of his trade-mark rights, which may Republic stated that determination of objectively be ascertained. Such a case the scope of trade-mark rights should also arises where the proprietor of the not vary merely on the grounds that the trade-mark exercises his trade-mark proprietor of the trade-mark faces powers to exploit disproportionate price competition or occupies a dominant differences between the Member States. position on the market. In considering such a case regard must be had to how far such price differences The Advocate General delivered his depend on the application of national opinion at the hearing on 14 March maximum price regulations. 1978.

Decision

1 By order dated 20 June 1977 received at the Court on 2 August 1977 the Landgericht Freiburg referred to the Court under Article 177 of the EEC Treaty two questions concerning the effect of certain provisions of the Treaty on the exercise of the rights appertaining to the proprietor of a trade-mark. Those questions have arisen in proceedings between two under­ takings in the pharmaceuticals sector, one of which, the plaintiff in the main action (hereinafter referred to as "Hoffmann-La Roche"), which is the proprietor of a certain trade-mark in several Member States, has taken issue over the fact that the other, the defendant in the main action (hereinafter referred to as "Centrafarm"), which had purchased a product covered by that trade-mark marketed in a Member State, distributes that product in another Member State after repackaging it and re-affixing the proprietor's trade-mark to the new packet.

"Is the person entitled to a trade-mark right protected for his benefit both in Member State A and in Member State B empowered under Article 36 of the EEC Treaty, in reliance on this right, to prevent a parallel importer from buying from the proprietor of the mark or with his consent in Member State A of the Community medicinal preparations which have been put on the market with his trade-mark lawfully affixed thereto and packaged under this trade-mark, from providing them with new packaging, affixing to such packaging the proprietor's trade-mark and importing the preparations dis­ tinguished in this manner into Member State B?"

7 In relation to trade-marks, the specific subject-matter is in particular to guarantee to the proprietor of the trade-mark that he has the exclusive right to use that trade-mark for the purpose of putting a product into circulation for the first time and therefore to protect him against competitors wishing to take advantage of the status and reputation of the trade-mark by selling products illegally bearing that trade-mark. In order to answer the question whether that exclusive right involves the right to prevent the trade-mark being affixed by a third person after the product has been repackaged, regard must be had to the essential function of the trade-mark, which is to guarantee the identity of the origin of the trade-marked product to the consumer or ultimate user, by enabling him without any possibility of con­ fusion to distinguish that product from products which have another origin. This guarantee of origin means that the consumer or ultimate user can be certain that a trade-marked product which is sold to him has not been subject at a previous stage of marketing to interference by a third person, without the authorization of the proprietor of the trade-mark, such as to affect the original condition of the product. The right attributed to the proprietor of preventing any use of the trade-mark which is likely to impair the guarantee of origin so understood is therefore part of the specific sub­ ject-matter of the trade-mark right.

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.

aging. Depending on the nature of the product repackaging in many cases inevitably affects its condition, while in others repackaging involves a more or less obvious risk that the product might be interfered with or its original condition otherwise affected. Nevertheless, it is possible to conceive of the repackaging being undertaken in such a way that the original condition of the product cannot be affected. This may be so where, for example, the proprietor of the trade-mark has marketed the product in a double pack­ aging and the repackaging affects only the external packaging, leaving the internal packaging intact, or where the repackaging is inspected by a public authority for the purpose of ensuring that the product is not adversely affec­ ted. Where the essential function of the trade-mark to guarantee the origin of the product is thus protected, the exercise of his rights by the proprietor of the trade-mark in order to fetter the free movement of goods between Member States may constitute a disguised restriction within the meaning of the second sentence of Article 36 of the Treaty if it is established that the use of the trade-mark right by the proprietor, having regard to the mar­ keting system which he has adopted, will contribute to the artificial partition­ ing of the markets between Member States.

11 Although this conclusion is unavoidable in the interests of freedom of trade, it amounts to giving the trader, who sells the imported product with the trade-mark affixed to the new packaging without the authorization of the proprietor, a certain licence which in normal circumstances is reserved to the proprietor himself. In the interests of the proprietor as trade-mark owner and to protect him against any abuse it is therefore right to allow such licence only where it is shown that the repackaging cannot adversely affect the original condition of the product.

— 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.

The second question

15 The second question is worded as follows:

On those grounds,

THE COURT,

in answer to the questions referred to it by the Landgericht Freiburg by order of 20 June 1977, hereby rules:

1. (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;

Mertens de Wilmars Mackenzie Stuart O'Keeffe Touffait

Delivered in open court in Luxembourg on 23 May 1978.

A. Van Houtte H. Kutscher

Registrar President

OPINION OF MR ADVOCATE GENERAL CAPOTORTI DELIVERED ON 14 MARCH 1978 1

Mr President, fore necessary to provide in Article 36 Members of the Court, of the EEC Treaty a provision protect­ ing such rights; but we know how deli­ 1. It is of the very essence of the indus­ cate and difficult the balance is that trial and commercial property rights Article 36 seeks to establish when it recognized by the legal systems of the states that prohibitions or restrictions on various Member States that their exclus­ imports, exports or goods in transit justi­ ive and territorial nature should impede fied on the grounds of the protection of the free movement of goods in the industrial and commercial property shall Community and the proper functioning not be precluded and then immediately of the rules of competition. It was there­ adds that "such prohibitions or restric-