C-443/99

MERCK, SHARP & DOHME

OPINION OF ADVOCATE GENERAL JACOBS delivered on 12 July 2001 '

Table of contents

Introduction I - 3705 The facts in Boehringer Ingelheim I - 3706 The Community legal framework I - 3707 The relevant case-law I - 3709 The early cases I - 3709 Bristol-Myers Squibb and the related cases 1-3713 Loendersloot and Upjohn 1-3719 The requirement of necessity 1-3719 The order for reference and the questions referred in Boehringer Ingelheim 1-3721 The facts and the question referred in Merck, Sharp & Dohme I - 3724 Observations of the parties I - 3725 The relationship between the specific subject-matter of a trade mark and the necessity of repackaging I - 3730 The meaning of 'necessary' I - 3734 The requirement of notice I " 3739 Conclusion I - 3743

Introduction his b r a n d e d products by a parallel importer.

1. These cases raise a number of questions concerning the circumstances in which a trade mark owner may rely on his trade 2. The cases were heard together and it is mark rights to prevent the repackaging of convenient to consider them in one Opinion. Since Case C-143/00 Boehringer Ingelheim and Others raises broader issues 1 — Original language: English. and refers a series of questions, including in

5. It is apparent that the different products have been repackaged in various ways. In 3. The claimants in the main proceedings in some instances, the original package has Boehringer Ingelheim, Boehringer Ingel- had a sticker attached to it (without heim KG, Boehringer Ingelheim Pharma obscuring the trade mark) which includes KG (together, 'Boehringer Ingelheim'), the trade mark and sets out certain critical Glaxo Group Ltd, The Wellcome Foun- information, such as the name of the dation Ltd (together, 'Glaxo Wellcome'), parallel importer and its parallel import Eli Lilly and Company ('Eli Lilly') and licence number. On such packages, non- SmithKÍine Beecham plc, Beecham Group English wording remains visible. In other plc, SmithKÍine and French Laboratories instances, the product has been re-boxed in Limited (together, 'SmithKÍine Beecham'), boxes designed by the parallel importer on are well-known pharmaceutical companies which the original trade mark is repro- which manufacture and sell pharmaceutical duced. Finally, in some instances the prod- products. The defendants in the main uct has been re-boxed in a box designed by proceedings, Swingward Ltd and Dowel- the parallel importer which does not bear hurst Ltd ('Swingward'), are parallel the trade mark. Instead the generic name of importers of pharmaceutical products, the product is marked on the box. Inside including, under licence from the United that box, in the case of tablets the inner Kingdom authorities, products manufac- packaging (blister packs) bears the original tured by the claimants. trade mark but is over-stickered with a label which indicates the generic name of the product and the identity of the parallel import licence holder. In one such case, the label repeats the trade mark. In another such case, it repeats (in English) the names of the days of the week, each adjacent to a 4. In the order for reference, the referring blister containing a tablet. Where the court explains that various pharmaceutical product which has been repackaged under products (inhalers and tablets) have been its generic name is an inhaler, the canister, marketed by one of the claimants within originally labelled with the trade mark, has the Community under a trade mark, been over-stickered with the generic name. bought by one of the defendants and In all instances, the boxes contain a patient

7. I would note at this point that in this Opinion I use the term 'repackaging' in general to refer globally to all the above types of operation, namely over-stickering 10. Article 28 EC prohibits quantitative with the trade mark, reboxing with the restrictions on imports in trade between trade mark and reboxing without the trade Member States and measures equivalent in mark, except where the context makes it effect. According to the first sentence of clear that a more specific meaning is Article 30 EC, Article 28 does not preclude intended. prohibitions or restrictions which are justi- fied on grounds of the protection of indus- trial or commercial property. According to the second sentence of Article 30, such prohibitions or restrictions may not con- stitute a means of arbitrary discrimination or a disguised restriction on trade between Member States. 8. The reference has been prompted by the referring court's doubts as to the correct interpretation of the relevant Community 2 — Case 78/70 Deutsche Grammophon [1971] ECR 487, legislation and the Court's case-law in this paragraph 11 of the judgment.

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11. It is clear that if a trade mark owner is or with his consent. Those circumstances, allowed to use his trade mark to prevent in so far as relevant to the present case, will the importation and sale of goods that have be discussed in the following sections. That been placed on the market with his consent qualification to the principle of exhaustion in another Member State, that will amount of rights is reflected in Article 7(2) of the to a quantitative restriction or a measure Trade Marks Directive, which provides: having equivalent effect within the meaning of Article 28. At an early stage the Court held that the exercise by a trade mark owner of his trade mark rights to prevent such parallel trade could not be justified under Article 30. 3

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The relevant case-law mark into circulation for the first time, and is therefore intended to protect him against competitors wishing to take advantage of the status and reputation of the trade mark by selling products illegally bearing that 15. In its order for reference the national trade mark. Where a product had been put court is critical of the Court's case-law in onto the market in a legal manner in the this area and in effect asks the Court to Member State from which it had been reverse certain aspects of its previous imported, by the trade mark owner or with decisions. 7 The referring court's criticisms his consent, so that there could be no and the observations submitted to the question of abuse or infringement of the Court can best be evaluated after a mark, there was no justification for per- relatively detailed account of the develop- mitting the trade mark owner to prevent ment of that case-law. such trade. 9

9 — Paragraphs 7, 8 and 10 of the judgment. 7 — For further discussion see paragraphs 54 to 57 below. 10 — C a s e 102/77 [1978] ECR 1139. 8 — Cited in note 3. 11 — Paragraphs 6 and 7 of the judgment.

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subject-matter of the mark involves the restriction on trade between Member States right to prevent a third party from affixing within the meaning of the second sentence the trade mark after repackaging — and of Article 36. Such a restriction could arise hence whether such an action is justified if the proprietor of the trade mark mar- under Article 36 — regard must be had to keted in various Member States an identical the essential function of the trade mark. product in different packaging and invoked That essential function is to guarantee the the trade mark in order to prevent re- identity of origin of the trade-marked packaging even if that repackaging was product to the consumer or ultimate user, done in such a way that the identity of enabling him without risk of confusion to origin of the trade-marked product and its distinguish that product from products of original condition could not be affected. 14 another origin. The effect of that guarantee That may be so where for example the of origin is that the consumer or ultimate repackaging affected only the outer of user can be certain that without the auth- double packaging, leaving the inner pack- orisation of the proprietor of the mark aging intact. Where the essential function there has been no third-party involvement was so protected, the exercise by the trade in a trade-marked product such as to affect mark owner of his rights could constitute a its original condition. The proprietor's disguised restriction if, having regard to the right to prevent any use of the mark which marketing system which he has adopted, it is liable to impair the guarantee of origin so would contribute to the artificial partition- understood is therefore part of the specific ing of the markets between Member subject-matter of the trade mark right. 12 States. 15

23. After Hoffmann-La Roche, therefore, the legality of parallel imports of re- packaged pharmaceutical products to (b) However, such prevention of market- which the trade mark had been affixed ing constitutes a disguised restriction was to be assessed as follows, leaving aside on trade between Member States the conditions of advance notice, which I within the meaning of the second will discuss separately,17 and of infor- sentence of Article 36 where: mation on the new packaging, which is not at issue in the present cases.

— 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 24. First, since repackaging is liable to contribute to the artificial parti- impair the guarantee of origin and since tioning of the markets between the trade mark owner's right to prevent any Member States; use of the mark which is so liable is part of the specific subject-matter of the trade mark right, the trade mark owner is prima facie justified under the first sentence of Article 36 in preventing an importer from affixing the mark to new packaging. — It is shown that the repackaging cannot adversely affect the original condition of the product; 17 — See paragraphs 120 to 136 helow.

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25. The exercise of that right may however an order prohibiting such conduct; the in certain circumstances constitute a dis- Court was asked whether Articles 30 and guised restriction within the meaning of the 36 prevented the trade mark owner from second sentence of Article 36 and hence be asserting his rights under national law to unlawful. oppose such marketing.

27. Shortly after the reference was made in Hoffmann-La Roche, the Court was asked in American Home Products 18to rule in a The guarantee of origin would in fact be case where the importer sought not merely jeopardised if it were permissible for a third to repackage but also to affix a different party to affix the mark to the product, even trade mark. American Home Products was to an original product. the proprietor of the trade marks Seresta, registered in Benelux, and Serenid D, registered in the United Kingdom, both in respect of tranquillisers with identical therapeutic properties which it marketed in the Netherlands as Seresta and in the United Kingdom as Serenid D. Centrafarm purchased tranquillisers in the United King- dom and marketed them in the Netherlands in new packaging and under the mark Seresta. American Home Products sought The right granted to the proprietor to prohibit any unauthorised affixing of his 18 — Case 3/78 [1978] ECR 1823. mark to his product accordingly comes

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32. The Court, having referred to Hoff- 30. Bristol-Myers Squibb and the two mann-La Roche, restated the basic prin- related cases Eurim-Pharm and MPA ciple of the exhaustion of rights, 26 then Pharma 22 similarly concerned the circum- reiterated the principles laid down in that stances in which the owner of a trade mark case concerning the essential function and could prevent a parallel importer from the specific subject-matter of the trade repackaging its trade-marked pharmaceuti- mark, 27 concluding that Article 7(2) of cal products. The Court used its judgment the directive therefore meant that 'a trade in Hoffmann-La Roche as a starting point, mark owner may legitimately oppose the further refining the ruling in that case. 23 further marketing of a pharmaceutical product where the importer has repackaged it and reaffixed the trade mark, unless the 19 — Paragraphs 1.1, 14 and 17 of the judgment. 20 — Casc C-.179/97 [ 1999] HCR 1-6927. 21 — See paragraph 51 below. 24 — Paragraph .17 of the judgment. 22 — Cited in notes 5 and 6. 25 — Paragraph 41 of the judgment. 21 — Eootnote references are to paragraph nuinhcrs in the ludpment in Bnslul-Myers Sqmbb; the judgments in the 26 — Paragraphs 42 to 45 of the judgment. other two cases arc to the same substantive effect. 27 — Paragraphs 47 and 48 of the judgment.

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'Reliance on trade mark rights by their owner in order to oppose marketing under that trade mark of products repackaged by

The owner may... oppose the repackaging 28 — Paragraph 50 of the judgment. of the product in new external packaging

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where the importer is able to achieve which case the resultant partitioning could packaging which may be marketed in the not be regarded as artificial.' 29 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 impor- tation...

35. The Court thus clarified two aspects of the first condition for a disguised restriction on trade it had laid down in Hoffmann-La Roche, namely that the use of the trade mark by the owner will contribute to the The power of the owner of trade mark artificial partitioning of the markets. rights protected in a Member State to oppose the marketing of repackaged prod- ucts under the trade mark should be limited only in so far as the repackaging under- taken by the importer is necessary in order to market the product in the Member State of importation.

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37. Second, the Court confirmed that, as receive products manufactured under the implicitly suggested in Hoffmann-La sole supervision of the trade mark owner. Roche, use by the trade mark owner of The trade mark owner may not therefore his rights in order to safeguard the essential rely on his rights as owner in order to function of the mark will not be regarded oppose the marketing under his trade mark as contributing to the artificial partitioning of products repackaged by an importer. of the markets between Member States. That conclusion however confers on the importer certain rights which, in normal circumstances, are reserved for the trade mark owner himself. In the interests of the owner as proprietor of the trade mark, and to protect him against any misuse, those rights must therefore, as the Court held in 38. With regard to the condition that the Hoffmann-La Roche, be recognised only in repackaging must not be able adversely to so far as the importer complies with a affect the original condition of the product, number of other requirements. 31 the Court emphasised first that it was the condition of the product inside the packag- ing which was at issue. The trade mark owner may therefore oppose any repackag- ing involving a risk of the product inside the package being exposed to tampering or to influences affecting its original con- dition. That is not the case where the 40. First, the Court confirmed that, since it repackaging affects only the external of is in the trade mark owner's interest that two layers, leaving the inner packaging the consumer or end user should not be led intact. The mere removal of blister packs, to believe that the owner is responsible for flasks, phials, ampoules or inhalers from the repackaging, the new packaging must their original external packaging and their clearly state who repackaged the product replacement in new external packaging and the name of the manufacturer. 32 cannot therefore affect the original con- dition of the product inside the packag- ing. 30

liable to damage the reputation of the trade 43. In all three decisions the Court went on mark, account must be taken of the nature to rule that the effect of Article 7(2) of the of the product and the market for which it Trade Marks Directive or Article 36 of the is intended. In the case of pharmaceutical Treaty was that the trade mark owner may products, the requirements to be met by legitimately oppose the further marketing presentation when repackaged vary accord- of a pharmaceutical product where the ing to whether the product is sold to importer has repackaged the product and hospitals or, through pharmacies, to con- reaffixed the trade mark unless: sumers. In the former case, the products are administered to patients by professionals, for whom the presentation of the product is of little importance. In the latter case, the presentation of the product is of greater importance for the consumer, even if the fact that the products in question are subject to prescription by a doctor may in itself give consumers some degree of con- '— it is established that reliance on trade fidence in the quality of the product. 33 mark rights by the owner in order to oppose the marketing of repackaged products under that trade mark would contribute to the artificial partitioning of the markets between Member States; such is the case, in particular, where the owner has put an identical phar- maceutical product on the market in several Member States in various forms of packaging, and the repackaging carried out by the importer is necessary in order to market the product in the Member State of importation, and also carried out in such conditions that the 42. Finally, the Court confirmed that the original condition of the product can- importer must give notice to the trade mark not be affected by it; that condition owner before the repackaged product is put does not, however, imply that it must on sale, and, on demand, supply him with a be established that the trade mark specimen of the repackaged product. That owner deliberately sought to partition would enable the owner to check that the the markets between Member States; repackaging is not carried out in such a way as directly or indirectly to affect the original condition of the product and that the presentation after repackaging is not likely to damage the reputation of the trade mark; it also affords the trade mark owner a better possibility of protecting himself against counterfeiting. 34 — it is shown that the repackaging cannot affect the original condition of the 33 — Paragraphs 75 to 77 or the judgment. product inside the packaging; such is 34 — Paragraph 78 of the judgment. the case, in particular, where the

44. The Court in Bristol-Myers Squibb thus further clarified the circumstances in which the proprietor of a trade mark may rely on his trade mark rights to oppose repackag- ing by a parallel importer: such reliance is •— the new packaging clearly states who not permitted where it contributes to the repackaged the product and the name artificial partitioning of the markets — for of the manufacturer in print such that a example where the repackaging is necess- person with normal eyesight, exercising ary for marketing —• and where the rep- a normal degree of attentiveness, ackaging takes place in such a way that the would be in a position to understand; legitimate interests of the trade mark owner similarly, the origin of an extra article are observed. Protection of those legitimate from a source other than the trade interests means in particular that the orig- mark owner must be indicated in such a way as to dispel any impression that the trade mark owner is responsible for 35 — Paragraph 79 and operative part of the judgment.

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36 — See Loendersloot, cued in note 6. paragraphs 28 to 30 of the judgment, and Upjulm, cited in note 20, paragraph 17. 39 — Paragraphs 26 and 27 of the judgment. 37 — Cited in note 6. 40 — Paragraph .Ï1 of the iiidgment. 3 8 — Cited in note 20. 41 — Paragraph 21 of the judgment.

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mark owner had marketed an identical instructions or information in the language product in different packaging in different of the Member State of importation...' 45 Member States, the Court in Bristol-Myers Squibb stated that the power of the trade mark owner to oppose the marketing of repackaged products should be limited only in so far as the repackaging was necessary in order to market the product in the State of importation. 42 The Court reiterated that 50. Further guidance as to the meaning of notion in Loendersloot, 43 where it stated Objectively necessary' has since been given that in cases involving the repackaging of by the Court in Upjohn 46 and Loender- pharmaceutical products the national sloot. 47 courts must consider whether circum- stances in the markets of their own States made repackaging objectively necessary.

45 — Paragraph 55 of the judgment. 42 — Paragraph 56 of the judgment. 46 — Cited in note 20, paragraphs 43 and 44 of the judgment. 43 — Cited in note 6, paragraph 38 of the judgment. 47 — Cited in note 6. 44 — Paragraph 53 of the judgment. 48 — See paragraphs 37 to 39 of the judgment.

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mark [repackaging] hindered effective The order for reference and the questions access to the markets of the importing referred in Boehringer Ingelheim Member State; that would be the case if the rules or practices in the importing Member State prevented the product in question from being marketed in that State under its trade mark in the exporting Member State [in the packaging used in the exporting Member State]. In contrast, the condition of necessity would not be satisfied if 54. It is apparent from the extremely long replacement of the trade mark [repackag- and detailed order for reference that the ing] was explicable solely by the parallel High Court is not convinced that the importer's attempt to secure a commercial case-law summarised above has in all advantage. 49 respects been correctly decided. There are two specific issues with regard to which it considers that case-law incoherent or incor- rect or both.

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56. If however —• contrary to its view as motion when the importation, market- to what the law should be — the criterion ing or promotion causes no, or no of necessity is a factor, the referring court substantial, harm to the specific sub- considers that there is insufficient guidance ject-matter of his rights? in the case-law of the Court as to the meaning of that concept. In particular, can it be said to be 'necessary' to rebox phar- maceutical products when over-stickering would achieve the same ends but would make the products significantly less com- petitive in a given market? 2. Is the answer to the previous question different if the ground relied on by the proprietor is that the importer or sub- sequent dealer is using his mark in a way which, although not prejudicial to its specific subject-matter, is not necessary? 57. Second, the referring court does not consider that the requirement of advance notice of repackaging, developed by the Court in its case-law, is intellectually sound. It invites the Court to reconsider that requirement. If however the require- ment of notice survives, the referring court seeks guidance as to the form and length of 3. If an importer of the proprietor's goods such notice and the consequences of failure or a dealer in such imported goods to give it. needs to show that his use of the proprietor's mark is "necessary", is that requirement met if it is shown that the use of the mark is reasonably required to enable him to access (a) part only of the market in the goods, or (b) the whole of the market in the goods; or does it require that the use of 58. It has accordingly referred the follow- the mark was essential to enabling the ing questions to the Court: goods to be placed on the market and if none of these, what does "necessary" mean?

6. If the answer to the previous question is in the affirmative, does that mean that (c) how much notice must be given? failure of the importer or dealer to give such notice has the effect of entitling the proprietor to restrain or hinder the importation or further commercial- isation of those goods even though such importation or further commer- cialisation will not prejudice the spe- cific subject-matter of the mark? 8. Is a national court of a Member State entitled, at the suit of the proprietor of trade mark rights, to order injunctions, damages, delivery up and other relief in respect of imported goods or the pack- aging or advertisements therefor where the making of such an order (a) stops 7. If an importer or someone dealing in or impedes the free movement of goods imported goods must give prior notice placed upon the market within the EC

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by the proprietor or with his consent repackaging (and thus the reaffixing of the but (b) is not for the purpose of trade mark) by Paranova constituted preventing harm to the specific subject- unlawful interference with its trade mark matter of the rights and does not help rights, the first instance court 51 observing to prevent such harm?' that replacing the original packaging with new packaging would be permissible only if the pharmaceutical product could not be adapted to the requirements of Austrian legislation by means of self-adhesive labels.

The facts and the question referred in Merck, Sharp Sc Dohme 61. On appeal, the Oberlandesgericht Wien (Higher Regional Court, Vienna) referred the following question to the Court for a preliminary ruling:

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significant proportion of the consumers of markets. It therefore needs to be decided pharmaceutical products in the State of whether such products may be repackaged importation is suspicious of pharmaceutical only if that is the only way of complying products which have clearly been produced with the legislation of the State of import- for the market of another State (in which a ation or also where the use of self-adhesive different language is spoken) and are inside labels would, while satisfying legal require- packagings which have been adapted ments, in fact adversely affect sales of the merely by means of self-stick labels to the product in comparison with the Original domestic provisions governing the sale of product'. In other words, what precisely is pharmaceutical products?' meant by the requirement that repackaging must be 'necessary' in order to market the imported product? That question is essen- tially the same as the issue raised by the High Court and summarised in paragraph 56 above. 62. It is clear from the order for reference that the Oberlandesgericht Wien has doubts as to the correct interpretation of the case-law of the Court of Justice set out above, and in particular the judgment in Bristol-Myers Sqtiibb, similar to those which prompted the High Court of Justice of England and Wales to refer the questions Observations of the parties in Boehringer Ingelheim.

67. In so far as they deal with relevant 69. Boehringer Ingelheim submits that the general principles, the gist of the observa- prohibition against the use of a trade mark tions may be summarised as follows. The by a party other than the trade mark owner observations of the parties on the questions does not constitute an impediment to free relating to the requirement of advance trade between Member States for the pur- notice are referred to below, in the context poses of Article 28 EC if the parallel trader of the discussion of that requirement. can have effective access to the markets of the State of importation without interfering with the trade mark owner's rights. In the alternative, Community law does not pre- vent the trade mark owner from opposing interference with his trade mark rights unless that interference is necessary for access to the market of the importing State 68. Merck submits that the question and causes as little prejudice as possible to referred by the Oberlandesgericht, Vienna, the specific subject-matter of the trade has already been answered by the Court's mark and other legitimate interests of the case-law, most recently Upjohn: a commer- trade mark owner are assured. Interference cial advantage — such as overcoming con- with the trade mark owner's rights will be sumer resistance to over-stickering — can- necessary only if the legal rules in force in not authorise a parallel importer to rep- the importing State and practices having a ackage an imported product. If the Court similar effect would prevent the importer, does not accept that submission, Merck without such interference, from marketing submits that a prohibition on re-boxing is the product in the State of importation. The not a restriction on trade if the importer trade mark proprietor may therefore legit- can adapt the original packaging, even if imately oppose interference prompted by consumers prefer reboxed products. In a local consumer preferences for a certain market economy it is for the parallel packaging where the rules and practices in importer to overcome that resistance. The force in that State allow the parallel importer's commercial interests are subjec- importer to market the product without it.

70. Glaxo submits that the repackaging of reputation of the mark may be a consider- a trade mark owner's goods and the reaf- ation relevant to the second sentence of fixing of the trade mark without the Article 30 EC, but that it is not a precon- owner's consent is an interference with dition for the application of the first the specific subject-matter of the trade sentence of that article. Harm and necessity mark. The fact of that interference in itself are two different things. If it is necessary to justifies an action for infringement of the permit repackaging, in any given form, in trade mark, subject only to the four con- order to avoid a disguised restriction, the ditions laid down in Hoffmann-La Roche. fact that such repackaging causes harm to In particular, there is no further require- the proprietor remains a relevant consider- ment of proof that the repackaging is ation. The fact that the repackaging would damaging, or harmful or prejudicial to the cause no harm cannot of itself render the specific subject-matter of the trade mark. repackaging necessary. 'Necessary' means essential in order to market the product, in the sense that without the repackaging the product could not be put on the market. Overcoming the reluctance of customers to accept an over-stickered product is not a legitimate reason for repackaging. 71. With regard to the condition of necess- ity, Glaxo submits that the Court intended to draw a distinction between changes to packaging which are required to enable the goods to be placed on the market and changes which are 'necessary' to maximise the commercial acceptability of those goods to the market, such as changes whose purpose is to enable parallel traders to charge higher prices for their goods or otherwise make them more attractive to their customers, or increase sales. If it is not 73. Paranova submits that a requirement to shown that the repackaging was necessary over-sticker rather than rebox PROSCAR in order to market the product in the would be an obstacle to its sale and would importing Member State, then there is no lead to an undesirable partitioning of the artificial partitioning of the market by the markets. Reboxing of pharmaceutical trade mark proprietor. Provided that the products coming from other Member States importer can repackage if necessary for is in principle permissible provided that the marketing, then the principle of free move- importer respects the requirements imposed ment is satisfied. by the Court in its case-law. The Court in Bristol-Myers Squibb stressed that phar- maceutical products were a sensitive area where presentation of the product could inspire (and hence destroy) public con- fidence. Regard must be had to the par- ticular situation of the market in such 72. SmithKline Beecham submits that it is products without giving weight to the clear from the case-law of the Court that commercial or non-commercial character the issue of proof of damage to the of the different aspects of presentation. In

77. The Norwegian Government submits in Boehringer Ingelheim that the wording 75. Swingward submits that it is clear from of Article 30 EC presupposes that restric- the case-law of the Court that a trademark tions on imports are justified only if the can be invoked only where there is specific industrial or commercial property would and material harm to the specific subject- otherwise be jeopardised; a condition of matter of the mark. The only circumstances necessity would moreover be a breach of in which conduct in respect of a trade mark Article 30 EC, since it would constitute an is not necessary is where it is explicable undue restriction on imports. Passages in solely by the parallel importer's attempts to the Court's case-law relied on in support of secure a commercial advantage. A com- the contrary argument do not support the mercial advantage in the sense of Upjohn is conclusion that a trade mark owner can an unfair or abusive commercial advantage. oppose the importation of repackaged

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78. The Norwegian Government adds in Merck, Sharp Sc Dohme that the condition of necessity will be satisfied where a large part of the public is not inclined to purchase the products without reboxing because a significant proportion of cus- tomers and users are suspicious of phar- maceutical products which have clearly been produced for the market of another State where another language is spoken. 80. The Commission submits in Boehringer Ingelheim that the essential question is whether the requirement of necessity has to be combined with the conditions relating to protection of the specific subject-matter of a trade mark. Although Bristol-Myers 79. The Commission submits in Merck, Squibb is not entirely without ambiguity in Sharp Sc Dohme that the 'necessity' objec- that regard, if the Court had wished to alter tively justifying repackaging by a parallel the nature of the list of conditions laid importer may be legal (as in Loendersloot) down in Hoffmann-La Roche by making or factual (as in Bristol-Myers Squibb). some of them alternatives, it could perfectly Since recognition of objective necessity well have done so in that judgment. The derogates from the principle that a trade Commission thus considers the require- mark may not be infringed, enshrined by ment of 'necessity' to be additional to the Community law, it must be interpreted criteria concerning protection of the spe- restrictively. The parallel importer must cific subject-matter of a trade mark. Over- cause as little prejudice as possible to the stickering is easier to justify in terms of

83. As mentioned above, it is clear from the order for reference that the national court considers that the Court has not been 81. It may be noted that the Commission consistent in imposing the separate require- submits in its written observations in ments relating to the specific subject-matter Boehringer Ingelheim that the High Court's of a trade mark and the necessity of first, fifth, seventh and eighth questions are repackaging. inadmissible in so far as they relate to the use of a trade mark by way of advertising, since nothing in the order for reference indicates that the disputes between the various parties to the national proceedings concern advertising. That submission was not disputed at the hearing. The conclusion therefore seems unavoidable that the 84. In my view however there is no incon- national court does not require clarification sistency or incoherence in the imposition of of Community law as it relates to that issue the different requirements since those in order to dispose of the cases before it. I requirements are relevant at different stages accordingly do not propose to deal with the in the analysis of the question whether a questions referred in so far as they refer to trade mark owner may use his trade mark advertising or promotion by parallel rights to prevent a parallel importer from importers. repackaging trade marked goods.

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85. First, it is clear from the case-law that a whether the exercise by the trade mark trade mark owner is prima facie justified owner of his trade mark rights constitutes a under the first sentence of Article 30 EC or disguised restriction on trade within the under Article 7(2) of the Directive in meaning of the second sentence of opposing the unauthorised reaffixing of Article 30. 53 his trade mark after repackaging.

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OPINION OF MR JACOBS — CASE C-143/00

92. The referring court and the defendants above-quoted statement of the Court and in Boehringer Ingelheim, however, are of on the other the proposition that the the view that, if the above is a correct claimants may in principle (hence subject account of the case-law of the Court, that to the second sentence of Article 30) assert case-law should be revised. their trade mark rights even in the absence of actual harm or risk of harm. The statement of the Court was made in the context of a line of reasoning on the interpretation of Article 7(2) of the Trade Marks Directive. The following paragraphs 93. The referring court notes that the Court of the judgment show that the Court was in Bristol-Myers Squibb stated: endorsing the view it had expressed in Hoffmann-La Roche to the effect that, since repackaging was liable to impair the guarantee of origin, the trade mark owner may in principle rely on his rights to 'The Court's case-law shows that prevent the marketing of repackaged prod- Article 36 allows derogations from the ucts. 58 fundamental principle of the free move- ment of goods within the common market only in so far as such derogations are justified in order to safeguard the rights which constitute the specific subject-matter of the industrial and commercial property in question.' 57 96. Such an interpretation means of course that there may be cases where the trade mark owner can so rely on his rights even if it might appear in a particular case that there is no actual harm to the specific 94. Since the referring court finds as a fact subject-matter or essential function of his that the repackaging operations at issue in mark. I do not share the apparent view of the main proceedings do not harm or even the referring court however that that is put at risk the specific subject-matter of the necessarily an unpalatable or illogical con- claimants' trade marks, it considers that no sequence. derogation from the principle of the free movement of goods should be justified. The concept of necessity is extraneous to the above-stated fundamental principle.

such as a parallel importer, with intellec- expressed concern at what they regard as tual property rights, such as the rights of a one inevitable consequence of endorsement trade mark owner, will be capable of of the necessity criterion coupled with a justification by virtue of Community law strict interpretation of the notion of necess- only where the unfettered exercise of those ity: namely that trade mark owners will be rights would have an adverse effect on the able to enforce trade marks even though free movement of goods. By importing the their corporate strategy is designed to criterion of necessity, and hence justifying partition markets. But that consequence all such interference which is necessary for does not follow. It must be borne in mind effective access to the market in the impor- that the criterion of necessity was intro- ting State, the Court has developed a duced by the Court solely in the context of formula which precisely reflects that bal- an example of conduct which would con- ance. tribute to the artificial partitioning of the markets and which would hence constitute a disguised restriction on trade between Member States within the meaning of the second sentence of Article 30 of the Treaty. It is not to my mind the only example. As I stated in my Opinion in Upjohn, if it can be 98. It must be borne in mind that repackag- shown that the trade mark owner's practice ing a product which bears a trade mark, of using different marks in different whether or not the trade mark is reaffixed Member States was intended to partition to the new external packaging or simply markets, that will in itself be sufficient to removed and not replaced, is a particularly preclude reliance by him on his trade mark intrusive form of trade mark infringement. rights to oppose affixing of a different mark by the importer;60 the same applies where reaffixing a mark after repackaging is at issue rather than rebranding.61

ated evidence that the subject-matter of the 103. I accordingly conclude that a trade mark has been harmed. SABEL however mark owner may use his trade mark rights concerned Article 4(1)(b) of the Directive to prevent the parallel importer of a phar- which provides that a mark shall not be maceutical product from repackaging that registered or, if registered, shall be liable to product provided that such use of his rights be declared invalid 'if because of its identity does not contribute to the artificial parti- with, or similarity to, the earlier trade mark tioning of the markets between Member and the identity or similarity of the goods States or otherwise constitute a disguised or services covered by the trade marks, restriction on trade between Member there exists a likelihood of confusion on the States. A trade mark owner who uses his part of the public...'. Thus that provision trade mark rights to prevent a parallel explicitly requires that a likelihood of importer from necessary repackaging con- confusion be established. The main pro- tributes to such artificial partitioning. That ceedings in Boehringer Ingelheim however is the inescapable conclusion of the case- do not concern similar marks or similar law considered above and I see no reason to goods: they concern (at least in part) the depart from that case-law. That conclusion use of an identical mark on identical goods. however raises the question how 'necess- Infringement in that case is under ary' is to be interpreted, to which I now Article 5(1)(a), which does not require turn. proof of any risk of confusion (or other harm).

105. Various interpretations of the concept ment if the proprietor is to be precluded have been advanced. The referring court in from opposing it. Boehringer Ingelheim suggests in its third question that it may mean either 'reason- ably required to enable [the importer] to access' the market (I will consider below the question which market is relevant, also raised in the third question) or 'essential' It follows that it is for the national courts to therefor. The claimants understandably examine whether the circumstances pre- argue that 'necessary' means nothing less vailing at the time of marketing made it than 'essential', while the defendants, objectively necessary to replace the original equally understandably, argue that (on the trade mark by that of the importing assumption that the criterion is relevant at Member State in order that the product in all) it must be defined by reference to question could be placed on the market in effective access to the market understood in that State by the parallel importer. This the broadest sense. condition of necessity is satisfied if, in a specific case, the prohibition imposed on the importer against replacing the trade mark hinders effective access to the mar- kets of the importing Member State. That would be the case if the rules or practices in the importing Member State prevent the product in question from being marketed in that State under its trade mark in the 106. It is clear from the observations sub- exporting Member State. This is so where mitted to the Court that the parties' a rule for the protection of consumers differences concerning the correct interpre- prohibits the use, in the importing Member tation of the concept of necessity are largely State, of the trade mark used in the attributable to statements made by the exporting Member State on the ground Court in its judgment in Upjohn,64 and in that it is liable to mislead consumers. particular the following paragraphs:

107. Merck seeks to deduce from the 109. It has been suggested by Paranova above, and in particular from the second that in certain Member States — it men- paragraph set out above, 66 that the Court tions Austria, Denmark and Finland (and has stated that 'to hinder' means 'to also Norway, in the European Economic prevent', which in turn means to make Area) — pharmaceutical products in over- impossible; thus repackaging is permissible stickered packaging will not receive mar- only where marketing would otherwise be keting authorisation or approval. If correct, impossible. That statement is in my view that is clearly an example of a situation too narrow. It is of course correct that a where repackaging would be objectively rule or practice which prevents market necessary for market access. access, or makes it impossible, must be regarded as 'hindering' such access. That does not however mean that only such rules or practices may properly be regarded as 'hindering' access. The Court in that para- graph of its judgment in Upjohn was simply giving an example of circumstances 110. In my view however repackaging may where repackaging would be regarded as correctly be regarded as objectively necess- necessary: it was not purporting to be ary in other, less black and white situ- exhaustive. ations. If the national court finds as a fact — as did the referring court in Boehr- inger Ingelheim — that there is 'wide- spread and substantial resistance' to over- stickered boxes by the relevant consumers, and if the effect of such resistance is that the parallel importer would be effectively excluded from the market unless permitted to repackage, repackaging would to my 108. It is clear from the Court's dicta that mind certainly be regarded as objectively repackaging must be 'objectively' necess- necessary for effective market access in the ary. It cannot thus be for the parallel sense that it is reasonably required for such importer to determine what is necessary, access. Although it is clear that 'rules [and] as the Norwegian Government submits. practices' 67 cannot embrace mere patterns The statement by the referring court in of consumer preference, none the less if

111. It is also to my mind clear from the case-law of the Court reviewed above that a particular method of repackaging cannot be regarded as necessary if another method which interferes less with the trade mark owner's rights will suffice to give the parallel importer effective access to the market in the importing State. 68 If there- 113. Those features of the market perhaps fore the national court finds on the facts underlie the Court's apparent reluctance that over-stickered packages have effective unduly to limit the trade mark owner's access to that market, then it cannot be entitlement to oppose repackaging. Thus necessary for the parallel importer to for example the limited effect of normal undertake more intrusive types of re- market forces in a highly regulated market packaging such as reboxing. means that different prices in different national markets are not necessarily attributable to the owner's taking advan- tage of divided national markets; equally it may mean that parallel importers cannot, like importers of most other products, use 112. It may furthermore be noted that all lower prices to overcome any consumer the cases referred to above, with the resistance to their imported products. exception of Loetidersloot which is men- Again it seems to me that the Court's tioned only in so far as it confirms those case-law accommodates the conflicting earlier decisions, involved pharmaceutical condiderations: on the one hand for products. The market in pharmaceutical example the trade mark owner's right to products has a number of features which invoke the first sentence of Article 30 EC to distinguish it in important respects from the oppose any repackaging should prevent the markets in many other products. In par- marketing of imported pharmaceutical ticular, prices are as a general rule set or products which have suffered in the re- affected by national regulators and do not packaging process; on the other hand the importer is in general entitled carefully to repackage to the extent necessary to obtain 68 — Sec paragraph 55 of the judgment in Bristol-Myers Squibb, effective access to the market, and may set out in paragraph 34 above, and paragraph '16 or the therefore use suitable repackaging as a tool judgment in Loemlersluot, summarised i n paragraph 53 above. for overcoming consumer resistance.

'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 115. It is clear however from the context of State, the finding that one of those sizes is its statement in Upjohn that the contrast also marketed in the Member State of which the Court was seeking to draw was exportation is not enough to justify the between on the one hand factors beyond conclusion that repackaging is unnecessary. the parallel importer's control, such as Partitioning of the markets would exist if national rules and practices, and on the the importer were able to sell the product in other hand the importer's desire to maxi- only part of [the market for that prod- mise sales. Interference by the importer uct].' 71 which is not necessary to overcome objec- tive factors but which the importer con- siders would enhance sales is not 'necess- ary' within the meaning of Upjohn. There is no suggestion in the judgment that the Court intended that interference seen as conferring a 'fair' (in contrast to 'unfair' or 117. The referring court states that, on the 'abusive') commercial advantage should be evidence before it, there is no doubt that regarded as necessary. 69 some pharmacists will not purchase over- stickered products because of a perception, frequently based on experience, that some of their customers will not accept them, which means that there is a part of the market from which an over -stickered product is excluded completely. I would accept that, if the product is thereby 116. With regard to the second aspect of excluded from the market, reboxing is the third question referred in Boehringer necessary in order for the defendants to Ingelheim, namely whether use of the mark have effective access to the relevant market. by the parallel importer must be necessary 70 — Cited in note 5, paragraph 54 of the judgment. 71 — The words in square brackets are mistranslated in the 69 — See also paragraph 54 of my Opinion in Upjohn. judgment as 'his market'.

119. That conclusion, like my conclusion on the first issue,72 to my mind correctly interprets the case-law so as fairly to 121. Boehringer Ingelheim submits that balance the competing interests of on the there is no good reason to reconsider the one hand the parallel importer in benefiting requirement of advance notice developed from the free movement of goods and on by the Court. That requirement does not the other hand the trade mark owner in impose an unreasonable burden on the safeguarding his intellectual property parallel importer, impede the free move- rights. I would note however that that ment of goods, delay the marketing of the balance will be upset, to the detriment of imported products or render their commer- the fundamental principle of the free cialisation appreciably more difficult. Since movement of goods, if national procedural the requirement does not depend on the use rules or practices on the burden of proof of the trade mark causing prejudice to the effectively prevent the parallel importer specific subject -matter of the trade mark, the owner of the mark may oppose any use of his mark by a parallel importer unless 72 — See paragraph 103 above. the importer has given him advance notice.

I - 3739

OPINION OF MR JACOBS — CASE C-143/00

125. The Commission submits that the notice requirement, combined with the possibility for the trade mark owner to require the parallel importer to supply him with a specimen of the repackaged or relabelled product before it goes on sale, 123. Swingward submits that it follows enables the trade mark proprietor to ensure from the case-law of the Court that the that the specific subject-matter of his right requirement that an importer give notice to is protected. The requirement is therefore a trade mark owner is a procedural require- an instrument for the protection of the ment designed to place the owner in a specific subject-matter of the trade mark position whereby its legitimate rights can rights. The case-law shows that the Court be supervised; it is a means to an end, but intended each of the conditions laid down not an end in its own right. In Community to be fulfilled before a trade mark propri- parlance it is a secondary, procedural right. etor could be deprived of his right to As such, the principle of proportionality oppose the further marketing of a rep- applies. Where there is no harm to the ackaged pharmaceutical product. It follows specific subject-matter of the trade mark, a from that case-law that a trade mark failure to provide notice will not have been proprietor may oppose such further mar- at all prejudicial to the trade mark owner. keting where he has not been given notice Accordingly, it would be disproportionate of the intended use of his mark. The notice to the object of the requirement that a period must be calculated only by reference failure should transform an innocuous use to the rights of the trade mark proprietor, of the trade mark into an infringing use of and will therefore normally be rather short. the trade mark. As to the two-day period It will be longer if the parallel importer suggested by the referring court, Swing- chooses to notify without simultaneously ward considers it reasonable. Finally, sending a sample. In this case, extra time Swingward argues that the requirement of will be needed for the trade mark propri- notice is met where the proprietor receives etor to decide to ask for a sample and to notice, whether or not from the importer. receive it.

128. The requirement that the parallel importer gives the trade mark owner advance notice before the repackaged prod- uct is put on sale thus has a solid pedigree 131. Nor do I see any ground for departing and is based on cogent reasons. from the Court's clear indications that the notice should be given by the parallel importer. It has been argued by Swingward 73 — Cited in note 10, paragraph 12 of the judgment. that, since the Medicines Control Agency 74 — Cited i n note 5, paragraph 78 of the ludgment, summa- (MCA) in the United Kingdom notifies the rised in paragraph 42 above, and paragraph 79 and operative part of the judgment, ser out i n paragraph 43 trade mark owner when it grants a product above. 75 — Cited in note 6. licence (parallel import), the trade mark 76 — Paragraphs 30, 47, 48 and 49 of tile judgment. owner thereby receives sufficient notice of

I - 3741

OPINION OF MR JACOBS — CASE C-143/00

proposed parallel imports. I do not accept posed three weeks. There may perhaps be that argument on two grounds. exceptional circumstances justifying a shorter or a longer period in a particular case; whether that is so is a matter for the national court.

136. The conclusion however seems ines- capable that, if a parallel importer fails to give the trade mark owner reasonable 134. With regard to the period of notice advance notice of the repackaging, that required, it is axiomatic that it must be repackaging constitutes infringement. The reasonable. In particular, the period must formulation adopted by the Court in Hoff- be sufficient to enable the trade mark mann-La Roche and Bristol-Myers Squibb owner — which in the case of phar- shows that it intended each of the con- maceutical products will normally be a ditions laid down in those cases, including large company with several departments, the requirement of advance notice, to be possibly in more than one country, legit- fulfilled before a trade mark owner loses imately concerned with the issue — to his right to oppose repackaging. There is in assess the acceptability of the proposed addition the pragmatic argument that lia- packaging. I would consider that in general bility for infringement is the only realistic a period of three to four weeks would be sanction for failure by a parallel importer reasonable. I would mention that, accord- to give advance notice and no purpose ing to Boehringer Ingelheim, the British would be served by the Court's imposing a Association of Parallel Importers has pro- requirement without a sanction.

I - 3742

MERCK, SHARP & DOHME

Conclusion

137. I am accordingly of the opinion that the questions referred to the Court in the present cases should be answered as follows:

In Case C-443/99 Merck, Sharp & Dohme:

In Case C-143/00 Boehringer Ingelheim and Others:

(1) Neither Articles 28 and 30 EC nor Article 7(2) of the First Council Directive of 21 December 1988 to approximate the laws of the Member States relating to trade marks (89/104/EEC) precludes a trade mark owner from using his trade mark rights to prevent the parallel importer of a pharmaceutical product from repackaging that product provided that such use of his rights does not contribute to the artificial partitioning of the markets between Member States or otherwise constitute a disguised restriction on trade between Member States. A trade mark owner who uses his trade mark rights to prevent a parallel importer from necessary repackaging contributes to such artifical partitioning.

(2) Repackaging is necessary if it is reasonably required to enable the importer to obtain effective access to the market of the importing Member State (or to a significant part of it) and in so far as other, less intrusive, methods of repackaging will not enable him to obtain effective access to that market (or to a significant part of it); for that purpose account must be taken not only of obstacles which exist in law — such as the regulatory requirements of the importing Member State — but also of obstacles which exist in fact, including resistance of consumers, for example to over-stickered boxes, which is such as to affect prescription or dispensing practice.

(3) A parallel importer intending to market repackaged goods bearing a trade mark must in all circumstances give the owner of the trade mark reasonable advance notice. Three to four weeks' notice will normally be regarded as reasonable. A parallel importer who has failed to give the trade mark owner reasonable advance notice cannot rely on Article 30 EC or on Article 7(2) of the Directive in proceedings brought against him for infringement.