61978C0003
OPINION OF MR ADVOCATE GENERAL CAPOTORTI
DELIVERED ON 11 JULY 1978 (
1
)
Mr President,
Members of the Court,
1.
In Case 102/77 Hoffmann-La Roche v Centrafarm (judgment of 23 May 1978) the Court had to deal with a case in which the Netherlands importer of a proprietary medicinal product, manuactured and sold in a number of Member States, re-packed the product, which had been imported from the United Kingdom, in new packages but subsequently affixed to the new packing the same trade-mark which the manufacturer had registered in the various Member States.
This time, on the other hand, we have a case in which the importer (who is once again Centrafarm, Rotterdam), put a different trade-mark — although one belonging to the same manufacturer — on a medicament which is produced in various Member States by manufacturers of the same group and marketed in each of those States under different names, all protected by trade-marks of which the parent company is the proprietor.
The medicament in question is a tranquillizer, the general name for which is ‘oxazepamum’. It is manufactured and marketed in the United Kingdom by John Wyeth & Brothers Ltd., under the trade-mark Serenid, under licence from the proprietor of that trade-mark in the United Kingdom, namely American Home Products Corporation, New York, the parent company to whose group the John Wveth undertaking belongs. Another company in the same group, Wyeth Laboratoria B.V., Amsterdam, markets in Benelux, again under licence from American Home Products, a similar medicinal product with an oxazepamum base under the trade-mark Seresta, which is registered in the Benelux trade-marks register in the name of the same American parent company.
Centrafarm has marketed in the Netherlands packages containing tablets of oxazepamum which it sutes that it imported from the United Kingdom (so it must be Serenid) after affixing to the packages the trade-mark Seresta, the words ‘Centrafarm B.V. Rotterdam’ and its own telephone number.
The President of the Rotterdam court, to which American Home Products applied for the adoption of an interim measure, ordered Centrafarm to discontinue the sale of the product under the trade-mark Seresta, inasmuch as it was held to be an infringement of the exclusive right to that trade-mark which was vested, in the Netherlands, in American Home Products. In the course of the main action which followed the Rotterdam court has referred two questions to the Court of justice for a preliminary ruling, as follows:
‘I.
Assuming that:
1.
For a certain prod un in various States belonging to the EEC one undertaking or various undertakings belonging to the same group is/are entitled to use trade-marks on the understanding that in Member Sute A only trade-mark X is registered and in Member Sute B only trade-mark Y;
2.
Goods bearing the mark X, after being put into circulation in Member Sute A by the undertaking entitled to the trade-mark, are exported by third parties which acquire them and imported into Member Sute B;
3.
The person importing the goods into the last-mentioned Sute removes from them the mark X, affixes the mark Y and subsequently puts the goods into circulation in that Sute;
4.
The legislation relating to trademarks in the last-mentioned Sute gives the person entitled to the trade-mark the right to oppose by legal measures the putting into circulation in that country by others of goods bearing the mark Y;
do the rules contained in the EEC Treaty concerning the free movement of goods, notwithstanding the provisions of Article 36, prevent the person entitled to the trade-mark from making use of the right referred to under 4 supra ?
II.
For the answer to be given to Quesuon I is it relevant whether legislative or administrative provisions are in force in Member Sute B which accord with the directive of 26 January adopted by the Council of the European Communities in this respect (65/65/EEC) on the understanding that those provisions — possibly in that respect in derogation from that directive — are based on the assumption that the import of a medicinal product from another Member State into Member Sute B is possible under a mark other than that under which it is registered in the other Member State'’
It is not clear whether, in the present case, in contrast to the Hoffmann-La Rocht case, to which I have referred above, the steps taken by the importer were limited to affixing a different label or whether further changes were made in the packaging of the product. In any event that is a matter which hes outside the ambit of the questions put by the national court.
2.
First of all I should like to stress that the problems raised by the questions in this case must be examined from the point of view that the two products concerned are in essence the same. In the order making the reference the Rotterdam court suted that ‘the therapeutic effect of the “Seresta” tablets is similar to that of the “Serenid” tablets. The composition is not exactly the same; there is inter alia a difference in the taste’. However, in putting the questions to which the Court is asked to reply, the Netherlands court referred to a single article, a single product.
In fact the different taste of the pills to which the different marks are applied and the slight difference in composition are not sufficient reasons to conclude that there are two separate products. From an objective point of view what is essential to distinguish a medicinal product is its active constituents and its therapeutic properties. According to the judgment of the Court of 20 May 1976 (Case 104/75 De Peijper [1976] ECR 613) any variants of a medicinal preparation may be considered as different medicaments only when there are difference which have a therapeutic effect. It seems clear that from this point of view Serenid and Seresta are identical products
From the subjective point of view, that of the consumer of the product (which may be important from the commercial point of view), it must next be noted that the secondary differences which have been referred to have no influence on choice where we are dealing with a product which is available only on medical prescription. It may be assumed in fact that such a prescription owes its ongin to more important considerations than those of taste. Finally, where the product is a pill which is intended to be swallowed whole, taste is in the last resort irrelevant for the consumer as well.
3.
The key to the problem raised by the national court in its first question lies in Anide 36 of the Treaty of Rome. It is acknowledged — and it was recently confirmed by the Court in its judgment in Case 102/77 to which I have already referred — that that provision, which lays down an exception to the principle of the free movement of goods (and in particular to Article 30), allows inter alia prohibitions or restrictions on imports which are justified on grounds of the protection of industrial and commercial property; however, the exception extends no further than safeguarding the rights which constitute the specific subject-matter of that property. It is equally jus receptum that the specific subject-matter of a trade-mark consists in guaranteeing to its proprietor the exclusive right to use it with regard to a given product, to be the first to put it on the market and thus to protect it against competitors who may wish to take advantage of the status and reputation of the trade-mark by selling products illegally bearing that mark (paragraph 7 of the decision in the above-mentioned judgment). Finally, an essential function of a trade-mark is acknowledged to be to guarantee to the consumer the identity of origin of the prod un in such a way that it should not be confused with others of different ongin (see the above-mentioned judgment).
Centrafarm, invoking that same essential function of a trade-mark, states that the substitution of the mark Seresta for the mark Serenid cannot bring about any confusion with regard to the ongin of the prod un since it is manufactured under either one name or the other by undertakings belonging to the group run by the sole proprietor of both trade-marks. Accordingly the prohibition which American Home Products has imposed on Centrafarm as regards the use in the Netherlands of the trade-mark of which the firstmentioned undertaking is the proprietor in that country for the designation of oxazepamum produced by the British licensee of American Home Products cannot be justified from the point of view of the protection of the essential function of the trade-mark. Such a prohibition serves solely to defend the goodwill of the trade-mark on the Netherlands market, that is to protect the commercial and publicity function of the trade-mark itself to the exclusive benefit of American Home Products. However, having regard to the case-law of the Court of Justice, that would transgress the bounds of the protection of a trade-mark allowed by Article 36.
First, and irrespective of the question of the protection of the goodwill, or rather of the reputation of the product as distinct from that of the trade-mark, it seems to me in reality that we must deal with the question of the relationship between the guarantee of origin and hence of the authenticity of the product on the one hand and the anual identificatory function of the trademark on the other. In my view these are two inseparable aspects of the same function; this moreover is the way in which the Court considered it when it referred to a guarantee of the identity of the origin of the goods to which the mark was applied. When we say that a manufacturer's trade-mark guarantees the origin of the produn we place the accent on the connexion between the product and the manufacturer which the trade-mark, owing to its exclusive nature, makes it possible to determine; when we sute that the trade-mark identifies the product we are emphasizing the connexion between the trade-mark and the produrt: that specific product the identity of which springs not so much from the material or the appearance (which may be common to other products of the same kind) as from the fan above all that the proprietor of the trade-mark has ‘baptized’ it by means of the mark.
Conferring this identity on the product is of course intended as a guarantee of its origin. It is beyond doubt that whoever ‘baptizes’ the product and then becomes the proprietor of the relevant trade-mark acquires an exclusive industrial or commercial property right: this prevents third parties from giving a different name to the same product, even if such a name corresponds (as in this case) to another trade-mark belonging to the same proprietor. Hence third parties cannot sell under the latter trade-mark a product which, whilst originating with the proprietor in question (or having been manufactured with his consent by an undertaking controlled by him) has not been thus affixed by him. If a manufacturer decides to put into circulation pan of his production without any trade-mark it is certainly not lawful for a third party to apply to it the mark with which the same manufacturer normally marks his products. The same must apply in a case in which the producer marks with two separate trade-marks in the same Sute two products which are substantially identical.
It may be said that in a case like that under consideration here each of the trade-marks of the same proprietor, apart from guaranteeing to the consumer the origin of the product, serves also to distinguish on the commercial plane each of the products separately marked by their manufacturer. In my view this function too, which the Court has not hitherto had the opportunity to consider, deserves protection as it is closely linked with the logic of the right to the trade-mark. The substitution, at the hands of an unauthorized third party, of one trademark by another trade-mark belonging to the same manufacturer represents an interference with the option to which the proprietor of the two marks is entitled to use either of them to distinguish his products in the eyes of his customers. Hence, even at Community level, it must be regarded in principle as an unlawful use of the trade-mark ‘intended to take advantage of the status’ of the undertaking and the ‘reputation of the trade-mark’ (to use the words employed by the Court in the judgment of 31 October 1974 in Case 16/74 Centrafarm v Winthrop [1974] ECR 1183).
It seems unnecessary to linger at this point over the further question whether or not the protection of the reputation acquired by the product is one of the essential functions of a trade-mark. Certainly the Commission is right when it observes that the protection of reputation may be invoked to stop parallel imports, which would be contrary to the case-law of the Court; in fan it may be said that any parallel importer is taking advantage of the reputation of somebody else's trade-mark. How should we explain then that taking advantage of the reputation was taken into consideration by the Court in the passage referred to above in the Winthrop judgment (as in paragraph 7 of the above-mentioned judgment in Case 102/77 Hoffmann-La Roche v Centrafarm)} I think the reply may be that the Court did not in fan include the protection of reputation in the essential function of a trade-mark; it simply stated that the unlawful use of a trade-mark by third parties (or the fan of affixing it improperly) may be regarded as a means of taking advantage of the reputation of the trade-mark itself. This does not prejudice the problem of deciding in what the unlawful use of the trade-mark consists, and it is not necessary to repeat that in the present case such an abuse consists in having usurped that power to identify the product which belongs exclusively to the proprietor of the trade-mark.
4.
However, Centrafarm has cast doubt on the lawfulness, from the point of view of Community law, of the original situation created by American Home Products through haring registered two different trade-marks in two different Member States for a single product. More precisely Centrafarm asserts that to allow one or more connected undertakings which have registered in different Member States dinerent trade-marks for a single product to take advantage of tne difference between those trade-marks to prevent third-party importers from competing with the proprietor of the trade-mark in conditions of complete equality is contrary to the provisions of Community law regarding the free movement of goods. In this respect reference is made to the principle laid down by the Court according to which Article 36 will not permit a right to a trade-mark registered in various Member States in the name of undertakings belonging to the same group to be asserted so as to prevent a parallel importer from selling in the importing State, under that trade-mark, a product which is also marked and lawfully put into circulation in another country in the Community (see the aforementioned judgment of 31 October 1974 in Case 16/74 Centrafarm v Winthrop).
However, that principle does not apply in the case which we are now discussing. In fact no obstacle is being placed here in the name of the right to the trade-mark by the manufacturer on the imponer to prevent it from marketing the product in question in the country of importation under the original trade-mark. Nor, on the other hand, does the importer claim that the original packing of the product creates difficulties in marketing in the country of importation as on the other hand did appear in Case 102/77 Hoffmann-La Roche v Centrafarm, by reason of the original packing which was said to be unsuitable, because of the dosages of medicament contained in it, to the requirements of doctors and pharmacists in the State of importation.
In the present case the marketing difficulty alleged by Centrafarm results from other circumstances: namely from the fact that the product, originally designated as Serenid and sold as such in the United Kingdom, is being placed, after importation into the Netherlands, on a market in which a product made by the same manufacturer and having identical therapeutic properties has already established itself under another name (Seresta).
It must be recognized that the fan that two medicaments originate with the same producer creates a more serious situation than that which would confront any trader who wishes to introduce a new product on to the market in competition with others already known and established. In fact, to encourage the marketing of the imported product does not correspond in a case such as the present either to the immediate interests or to the commercial strategy of the manufacturer; and although it is true that the third-party imponer may well undertake on his own the necessary advertising to compete effectively with the local product, it is also true that such an investment presents serious risks for an undertaking which is not free to dispose of the original mark and has no control over the wholesale marketing of the product in the country from which supplies must be obtained. The fan remains, however, that such commercial difficulties do not suffice to prove that it is not permissible for a manufacturer to use different trade-marks in the different Member States to designate products which are substantially identical; nor therefore can they justify an infringement of the right to the trade-mark on the pan of the importer.
It is clear that, as regards national laws on trade-marks — which are based on the principle of the territoriality of industrial and commercial property rights — it is as a rule a matter of indifference whether an undertaking which is the proprietor in one Sute of a trade-mark relating to a given product is at the same time the proprietor of another mark in another State for the same product (or for a similar product). Moreover it does sometimes happen that even within one and the same Sute a producer may give different names, for commercial reasons, to products which are substantially identical: for example, so as to supply an apparent justification for a price differentiation made necessary by other market requirements, to meet the wishes of customers who like to distinguish themselves by purchasing a product which is differently packed and perhaps considered as a de luxe article, to give the customer the impression of being able to make a choice in a large field of products made by the same manufacturer and so on — purposes which, whilst they may often be a source of inconvenience for consumers, are nevertheless generally regarded to be lawful by the legal systems of our States. If thus it is permissible for one and the same undertaking, within a single Sute, to use different trademarks to differentiate between products which are distinguished only by secondary characteristics, (colour, packing and so on), it is logical in accordance with the accepted conception of the protection of a trademark to recognize the possibility that one and the same product may be differentiated by different trade-marks belonging to the same proprietor in different States. At the Community level it does not seem to me that we can regard that as being excluded in principle by Article 36 of the Treaty of Rome, subject to what I am about to say regarding the risk that a commercial strategy of this nature might become an instrument for the partitioning of national markets.
Finally we must ask whether the point of view which I have put forward up to now applies also in the field of medicinal products. Such doubts are justified because in this field much more than in other sectors practices and market strategies based on an artificial multiplication of the commercial names of products may be considered as a phenomenon which is socially injurious inasmuch as there is a risk that unjustified increases in costs and useless complications for insurance institutions may result to the prejudice of consumers and above all of the users of the services of such institutions. However, Council Directives Nos 65/65 and 75/319 on the approximation of national provisions relating to proprietary medicinal products did not deal with the phenomenon of artificial multiplication of the names for such products. Consequently this phenomenon remains subject to national legislation and cannot acquire any importance here.
5.
We still have to examine the problem in the light of the last sentence of Article 36: the one according to which prohibitions or restrictions on imports exceptionally allowed by that article (and amongst others therefore protection of trade-marks) ‘shall not … constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States’. In the judgment of 23 May 1978, Hoffmann-La Roche v Centrafarm, to which I have already referred several times, the Court has already held that behaviour on the part of the proprietor of a trade-mark, which would in principle be justified by the first sentence of Article 36, constitutes a disguised restriction on trade between Member States within the meaning of the above-mentioned provision ‘where it is established that the use of the trade-mark right by the proprietor, having regard to the marketing system which he has adopted, will contribute to the artificial partitioning of the markets between Member States’ (it is to be noted however that, in that judgment, the condition referred to is included with other conditions).
It cannot be denied that the use on the part of a single undertaking, or of different undertakings legally or economically connected one with another, of different trade-marks from one Member State to another in order to designate products which are substantially identical makes it in practice more dificult to establish a product imported from one Member State on to the market of another Member Sute in which the similar product has already established itself and whose properties are the same although the name is different. This can easily lead to a policy of partitioning of the Common Market and to other improper practices intended to take maximum advantage of the individual national markets (for example with prices artificially differentiated in the various States).
With regard to medicaments which may be purchased only on medical prescription, importance may be attached to the possible existence of a practice according to which the prescription shows not the generic name of the medicine but only the commercial name by which a manufacturer designates his proprietary medicinal products. This removes from the consumer the liberty to choose and from the chemist the opportunity to sell a medicament which, whilst having curative properties and a dosage identical to the ones prescribed and whilst originating with the same manufacturer, has a different trade name.
In such a situation the local producer will generally be in a strong situation as compared with the importer of a product with a name which is unknown or scarcely known. The position will be even more marked if the imported product is produced by the same proprietor of the local mark with which it must compete.
The practice of providing many names for a single product, one for each Member Sute, therefore involves as far as proprietary medicinal products are concerned and for reasons which are peculiar to this sector, serious risks for the freedom of movement of goods within the Community. Hence, even if we are not dealing with a prohibited practice, it seems to me to be necessary or the purpose of protecting the proper functioning of the Common Market, to subject it to conditions which will reduce the potential risk to a minimum. In my opinion the most important of such conditions should be a requirement that an undertaking (or group of connected undertakings operating in various States) which produces under different trade-marks, one per Member Sute, a proprietary medicinal product having identical therapeutic properties shall provide an appropriate objective justification.
It is for the national court which has jurisdiction to decide on matters of fan to establish case by case whether it may be possible to trace a disguised restriction on trade between Member States within the meaning of Article 36. A finding of this nature depends in fan on the circumstances characterizing each individual case: the task cannot therefore be performed in the abstract without regard to the particular context of a given situation. It is, however, certainly desirable that a national court should be guided, in carrying out such a delicate task, by criteria of a general nature; the condition which I have outlined above might serve for this purpose.
6.
Having said this, and without wishing to interfere in the freedom of assessment of the national court, I think it is appropriate to add a few observations with regard to the difficult question of the objective justification for a plurality of differentiated trade-marks for one and the same product.
I have already said that the practice of making use of several names protected by different trade-marks for products which are substantially identical may be justified by reasons of trade and competition when it tends to increase the range of products offered by an undertaking to its customers. However, when this differentiation of trade-marks is effected by the sole proprietor not within one State but in different Sattes and when the proprietor (or other undertakings within his group) does not himself undertake the marketing of his products in other Member States it may be regarded as impossible that such differentiation should be intended to increase the range of the products offered to customers. American Home Products, in the course of the present proceedings, has not claimed that it had any such object but instead has referred in a general manner to the difficulties which it states have flowed from previous registrations in certain Member States of trade-marks which might lead to confusion with the one or the ones used by it for the product in question in other Member States.
In this respect it must be recognized that when in a Sute, in connexion with products of the type under consideration (in this case medicinal products), a third party is already the proprietor of a trade-mark similar to that with which an undertaking designates a given product in other countries, there would be a valid justification for the possible use on the part of such an undertaking in that Sute of a different denomination for the same product. But even in a situation of that kind it is not possible to exclude altogether the possibility of abuse. Let us suppose for example that in the choice of the first trade-mark for Sute A the undertaking concerned has had recourse to a name already in use or at least already registered in the name of third parties in Sute B simply for the purpose of providing himself with a justification for giving the same product a different name in the latter Sute. In addition a case of this kind would present the inconvenient feature that it would make a proof of improper intent very difficult, but for that very reason it would be necessary to check it, I believe, in the light of the general pattern of behaviour of the undertaking or group of undertakings in the whole of the Common Market.
In the observations submitted in this case Centrafarm, referring to a range of six proprietary medicinal products preduced by American Home Products, as emphasized the fan that in the field of domestic trade-mark legislation considered for this purpose (that of the United Kingdom, Italy, Germany, France and Benelux), the American undertaking uses three or four different names for each of the products concerned. The designations given in the United Kingdom and in Italy, apart from being different one from another, are also different from those used in every other Member Sate (with a single exception for the product Tavor which is so called both in Italy and in Germany).
In view of this practice on the part of American Home Products there is no doubt that a careful examination should be made by the court making the reference whether the undertaking has made an improper use of its trade-mark to bring into being a disguised restriction on trade between Member States. The existence of such an abuse would appear all the more probable if it were true that, as Centrafarm states, the pharmaceutical industry in the United Kingdom and Italy, having regard to the level of production costs, has better opportunities of competing successfully with the production of other Member States. The fan that in these two countries there is a constant differentiation of trade-marks for the proprietary products manufactured by American Home Products, or at least under its control, might be a revealing factor as regards an intention on the pan of that undertaking to partition national markets by raising barriers to the marketing in the rest of the Community of its products manufactured in those States.
If therefore the court before which the main action is being heard comes to the conclusion on the basis of an examination of all the relevant facts (and possibly, if the position on the market and the behaviour of the undertakings concerned justify it, on the basis also of conjecture) that the exercise of the trade-mark right is used for an artificial partitioning of the markets this will be a confirmation of the existence of a ‘disguised restriction’ on intra-Community trade within the meaning of Article 36. The consequence must be that the exercise of this right, in the form of opposition to the substitution of the trade-mark carried out by the importer, must be declared incompatible with Community law.
7.
It is much easier to reply to the second question on which a preliminary ruling is requested. Council Directive No 65/65 of 26 January 1965 regulates essentially the conditions and detailed rules for the issue, suspension and revocation of authorization to place proprietary medicinal products on the market. It does not seem to me therefore that it can have any effect on the application of Article 36 of the Treaty in relation to trade-mark rights. Hence the conformity or otherwise of national rules to that directive cannot have any influence on the answer given to the first question. The observations submitted in this respect also make it clear that in a matter of the kind under consideration here the fact that a third-party importer may sell the product in the Sute of importation under a name different from the original one (but which must not be that used by the group of producer undertakings in that State), would not alter the terms of the problem or accordingly of the answer to be given to the court which has sought guidance.
8.
Finally, for all the above reasons I recommend that the Court, in reply to the questions submitted by the Arrondissementsrechtbank, Rotterdam, for a preliminary ruling by order of 19 December 1977 should rule as follows:
1.
If an undertaking which produces a medicament has given it different names in spite of the identity of the active constituents and of its therapeutic properties and has registered each of the relevant trade-marks in a different Member Sute, Anide 36 of the EEC Treaty in principle allows it to oppose a third-pany importer's substituting for the original mark, duly affixed to the product in the Sute of exportation, the mark owned by the same producer undertaking in the Sute of importation.
However, such behaviour represents a disguised restriction on trade between Member States within the meaning of the aforesaid Article 36 and is accordingly unlawful when it appears that it is contributing to the partitioning of national markets; in particular when the proprietor of the mark does not provide a sufficient objective justification of the use of different marks, registered each in a different Member Sute, for one and the same product.
2.
The existence in the Sute of importation of rules in conformity with Council Directive No 65/65 of 26 January 1965 and the possibility that such rules may permit the importer to place the imported product on sale under a trade-mark different from the original one (and from the one used by the producer of the relevant proprietary product in the Sute of importation) do not change the general terms of the problem.
(
1
)	Translated Iron, the Italian