CJEU parallel imports ruling: When does relabelling constitute trademark infringement?

Novagraaf’s Florence Chapin examines the recent CJEU preliminary ruling on relabelling and exhaustion of trademark rights.

The Fifth Chamber of the Court of Justice of the European Union (CJEU) has issued a preliminary ruling on the interpretation of Article 13(2) of Regulation 207/2009 (Case C-642/16, May 17 2018).

According to the principle of exhaustion of rights under trademark law, and more generally under industrial property law, the proprietor of a trademark may not prohibit its use for goods which have been placed on the market in the Community or the European Economic Area under that trademark by itself or with its consent.

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

This theory was first based on case law (Deutsche Grammophon (June 8 1971)) on Articles 28 (formerly 30) and 30 (formerly 36) of the Treaty of Rome relating to the free movement of goods. This theory was then incorporated into legislation via Article 13 of Regulation 207/2009, entitled 'Exhaustion of the rights conferred by a trademark'.

Facts

Lohmann & Rauscher International is the proprietor of the EU trademark DEBRISOFT (No 8852279), registered on June 22 2010 for 'sanitary preparations for medical purposes', 'plasters, materials for dressings' and 'dressings, medical'. It manufactures and markets, among others, the product "DEBRISOFT for debridement, STERILE, 10 x 10 cm, 5 pieces".

Junek Europ-Vertrieb, a company established in Austria, markets in Germany, by way of parallel importation, sanitary preparations for medical purposes and medical dressings manufactured and exported to Austria by Lohmann & Rauscher.

On 25 May 2012, Lohmann & Rauscher purchased in a pharmacy in Düsseldorf a pack of 'Debrisoft for debridement, STERILE, 10 x 10 cm, 5 pieces' which Junek had previously imported from Austria. Before the sale to the pharmacy, that company had affixed on that box a label (‘the contested label’) featuring the following information: the company responsible for the importation, its address and telephone number, a barcode and a central pharmaceutical number. The label was applied neatly to an unprinted part of the box and did not conceal the mark of Lohmann & Rauscher.

The packaging of the product had been modified as illustrated below, with the contested label located on the bottom left (enlarged below):

Lohmann & Rauscher lodged an action before the Landgericht Düsseldorf (Regional Court, Düsseldorf, Germany), seeking, in particular, to:

• prohibit, under threat of a penalty, Junek from using in the course of trade, without its agreement, that mark for the purpose of designating dressings for debridement; and
• order that company to recall, withdraw from the market and destroy the products concerned.

The Landgericht Düsseldorf upheld the claim.

The Oberlandesgericht Düsseldorf (Higher Regional Court, Düsseldorf, Germany) dismissed the appeal lodged by Junek against the judgment. Junek then lodged an appeal before the Bundesgerichtshof (Federal Court of Justice, Germany).

The court held that the repackaging of a pharmaceutical product by a third party without the permission of the proprietor gives rise to real risks for the guarantee of origin, and that affixing a new label to the packaging also constitutes repackaging.

The court added that medical devices, just like pharmaceutical products, are products that have a direct connection with health. Since customers particularly pay attention to their own health, it was not necessary, according to the court, to call in question the appellate court’s finding that medical devices, as well as pharmaceuticals, are particularly sensitive products for which the guarantee of origin provided by the mark affixed to the product is of particular importance because of the high degree of responsibility of the manufacturer.

Request for a preliminary ruling

Considering the above, the Bundesgerichtshof decided to stay the proceedings before it and to refer the following question to the CJEU for a preliminary ruling:

"Must Article 13(2) of [Regulation 207/2009] be interpreted as meaning that the proprietor of the mark can oppose further commercialisation of a medical device imported from another member state in its original internal and external packaging, to which the importer has affixed an additional external label, unless

• it is established that reliance on trademark rights by the proprietor in order to oppose the marketing of the overstickered product under that trademark would contribute to an artificial partitioning of the markets between member states;
• it is shown that the new labelling cannot adversely affect the original condition of the product inside the packaging;
•  the packaging states clearly who overstickered the product and the name of the manufacturer;
• the presentation of the overstickered product is not such as to be liable to damage the reputation of the trademark and of its proprietor; thus, the label must not be defective, of poor quality, or untidy; and
• the importer gives notice to the trademark proprietor before the overstickered product is placed on the market, and, on demand, provides him with a specimen of that product?"

Reasoning and decision

The CJEU recalled that the specific purpose of a mark is to guarantee the origin of the product bearing that mark. A repackaging of that product carried out by a third party without the authorisation of the proprietor is likely to create real risks for that guarantee of origin. In this regard, the trademark proprietor’s opposition to repackaging, in that it constitutes a derogation from free movement of goods, cannot be accepted if the proprietor’s exercise of that right constitutes a disguised restriction on trade between member states.

As regards the concept of ‘repackaging’, the CJEU previously clarified that it includes the relabelling of pharmaceutical products bearing the mark. In this specific case, it observed, first, that the parallel importer had merely affixed an additional label to the unprinted part of the original packaging of the medical device in question, which, moreover, had not been opened. Second, the label was small in size and included, as the only information provided, the name, address and telephone number of the parallel importer, a barcode and a central pharmacological number which served to organise the movement of the products with pharmacies.

Therefore, the situation which gave rise to the case in the main proceedings constituted a case of exhaustion of the rights conferred by a trademark pursuant to Article 13(1) of Regulation 207/2009.

Having regard to the foregoing considerations, the CJEU held:

“Article 13(2) of [Regulation 207/2009] must be interpreted as meaning that the proprietor of a mark cannot oppose the further commercialisation, by a parallel importer, of a medical device in its original internal and external packaging where an additional label, such as that at issue in the case in the main proceedings, has been added by the importer, which, by its content, function, size, presentation and placement, does not give rise to a risk to the guarantee of origin of the medical device bearing the mark”.

Comment

This decision emphasises that, before starting an infringement action against an importer, the trademark owner must ensure that:

• the imports at issue are not lawful parallel imports;
• the additions and/or modifications are likely to be qualified as reconditioning; and
• there was no exhaustion of trademark rights.

Florence Chapin is a Trademark Attorney at Novagraaf in Bordeaux