OPINION OF ADVOCATE GENERAL

BOT

delivered on 12 May 2011 ( )

Joined Cases C‑400/09 and C‑207/10

Orifarm A/S,

Orifarm Supply A/S,

Handelsselskabet af 5. januar 2002 A/S, in liquidation,

Ompakningsselskabet af 1. november 2005 A/S (C‑400/09)

v

Merck & Co. Inc.,

Merck Sharp & Dohme BV,

Merck Sharp & Dohme

and

Paranova Danmark A/S,

Paranova Pack A/S (C‑207/10)

v

Merck Sharp & Dohme Corp.,

Merck Sharp & Dohme,

Merck Sharp & Dohme BV

(Reference for a preliminary ruling from the Højesteret (Denmark))

(Trade marks – Directive 89/104/EEC – Article 7(2) – Repackaging of a pharmaceutical product imported in parallel – Relevant criteria for assessing damage to trade mark rights)





1. In these cases the Court has received references for preliminary rulings on the interpretation of Article 7(2) of First Council Directive 89/104/EEC of 21 December 1988 to approximate the laws of the Member States relating to trade marks ( ) and on the case-law relating thereto, particularly the judgments in Hoffmann-La Roche, ( )Pfizer, ( )MPA Pharma, ( ) and Bristol-Myers Squibb and Others. ( )

2. In those judgments, the Court clarified the conditions under which a parallel importer may market repackaged medicinal products under a trade mark, without the trade mark proprietor being able to oppose its doing so. The questions that the Højesteret (Supreme Court, Denmark) submits to the Court relate to one of those conditions, namely that the new packaging must identify the repackager. These questions essentially seek to ascertain whether that condition requires the name of the company which actually carried out the repackaging to be indicated, or whether it is sufficient to state the name of the holder of the marketing authorisation for the medicinal product imported in parallel who instructs the actual repackager to purchase and repackage.

3. In this Opinion I shall opt for the latter alternative. I shall therefore be proposing that the Court should declare that Article 7(2) of Directive 89/104 must be interpreted as meaning that the fact that the packaging of a repackaged product does not state the name of the undertaking which actually carried out the repackaging does not entitle a trade mark proprietor to oppose the marketing of that product where the name of the undertaking in charge of the repackaging and taking responsibility for it appears alongside the name of the manufacturer.

I – Legal background

4. Article 5 of Directive 89/104, entitled ‘Rights conferred by a trade mark’, provides as follows:

‘1. The registered trade mark shall confer on the proprietor exclusive rights therein. The proprietor shall be entitled to prevent all third parties not having his consent from using in the course of trade:

(a) any sign which is identical with the trade mark in relation to goods or services which are identical with those for which the trade mark is registered;

(b) any sign where, because of its identity with, or similarity to, the trade mark and the identity or similarity of the goods or services covered by the trade mark and the sign, there exists a likelihood of confusion on the part of the public, which includes the likelihood of association between the sign and the trade mark.

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

3. The following, inter alia, may be prohibited under paragraphs 1 and 2:

(a) affixing the sign to the goods or to the packaging thereof;

(b) offering the goods, or putting them on the market or stocking them for these purposes under that sign, or offering or supplying services thereunder;

(c) importing or exporting the goods under the sign;

(d) using the sign on business papers and in advertising.

…’

5. Under Article 7 of the directive, ‘Exhaustion of the rights conferred by a trade mark’:

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

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

6. Directive 89/104 was repealed by Directive 2008/95/EC of the European Parliament and of the Council of 22 October 2008 to approximate the laws of the Member States relating to trade marks (OJ 2008 L 299, p. 25), ( ) which came into force on 28 November 2008. However, given the time when the facts occurred, the disputes in the main proceedings are governed by Directive 89/104.

7. Articles 5 and 7 of Directive 89/104 were transposed into Danish law by Articles 4 and 6 respectively of the Law on trade marks (Varemærkeloven). ( )

II – Main proceedings and questions referred

A – Case C-400/09

8. Orifarm A/S (‘Orifarm’), Orifarm Supply A/S (‘Orifarm Supply’), Handelsselskabet af 5. januar 2002 A/S, in liquidation, (‘Handelsselskabet’) and Ompakningsselskabet af 1. november 2005 A/S (‘Ompakningsselskabet’) are part of the Orifarm group, which is the largest parallel importer of medicinal products in the Nordic countries, and was, in 2008, the largest supplier of medicinal products to Danish pharmacies. The group has its head office in Odense (Denmark).

9. Orifarm and Handelsselskabet are or were holders of authorisations for the marketing and sale of the relevant medicinal products, while Orifarm Supply and Ompakningsselskabet, known as Medipack A/S (‘Medipack’) at the time of the repackaging and sale of the products at issue, actually carried out the repackaging and are or were holders of the repackaging authorisation.

10. All questions regarding procurement, presentation, handling and sale are dealt with by Orifarm, while Ompakningsselskabet purchases and repackages the products and is responsible for complying with the requirements for repackagers laid down by the Lægemiddelstyrelsen (Danish agency for medicinal products). Ompakningsselskabet (Medipack) has a staff of 210 dealing with logistics, storage, and repackaging, while Orifarm employs 15 to 20 people, in particular for the marketing of medicinal products.

11. Merck & Co. Inc., Merck Sharp & Dohme BV and Merck Sharp & Dohme (together referred to as ‘Merck’) all form part of the Merck group. The Merck group is one of the world’s largest manufacturers of original medicinal products.

12. The Merck group is the manufacturer of the medicinal products at issue, which the Orifarm group imported in parallel into Denmark. The Merck group is also the proprietor of the trade mark rights relating to those products, or is entitled to bring legal proceedings under licensing agreements entered into with trade mark proprietors.

13. From the time when the medicinal products began to be imported in parallel and marketed, Orifarm and Handelsselskabet presented themselves as the repackagers on the packaging of the medicinal products for which they held marketing authorisations, although the physical repackaging was carried out on a case-by-case basis on instructions from Orifarm and/or Handelsselskabet, by Ompakningsselskabet (Medipack), Orifarm Supply or external repackagers. However, external repackagers were not involved in the present cases.

14. Although, from 2006, the Orifarm group started to display the words ‘repackaged by Medipack A/S for Orifarm A/S’ on Merck group products, the dispute in the main proceedings concerns medicinal products which did not state the actual repackager on the packaging, only the marketing authorisation holder and the manufacturer, in the following terms:

‘Imported and repackaged by Orifarm A/S …

Manufacturer: Merck Sharp & Dohme’.

15. Merck brought two actions before the Sø- og Handelsret (Maritime and Commercial Court) (Denmark), one against Orifarm and Orifarm Supply and one against Handelsselskabet and Ompakningsselskabet, challenging the fact that the actual repackager was not mentioned on the packaging of the medicinal products at issue. In judgments delivered on 21 February 2008 and 20 June 2008 respectively, the Sø- og Handelsret found that the defendants had infringed Merck’s trade mark rights by failing to state the actual repackager, and ordered them to pay pecuniary compensation to Merck.

16. Since appeals on a point of law had been brought before it by Orifarm, Orifarm Supply, Handelsselskabet and Ompakningsselskabet against these judgments of the Sø- og Handelsret, the Højesteret decided to stay the proceedings and to submit the following questions to the Court:

‘(1) [Are the judgments in] … MPA Pharma … and … Bristol-Myers Squibb and Others … to be interpreted as meaning that a parallel importer which is the holder of the marketing authorisation for, and possesses information on, a medicinal product imported in parallel, and which issues instructions to a separate undertaking for the purchase and repackaging of a medicinal product, for the detailed design of the product’s packaging and for arrangements in relation to the product, infringes the rights of the trade mark proprietor by indicating itself as the repackager on the outer packaging of the imported medicinal product, instead of indicating the name of the independent undertaking which is the holder of the repackaging authorisation, and imported the product and carried out the actual repackaging, including (re)affixing the trade mark concerned?

(2) [Is it] of significance in answering Question 1 that an assumption might be made that, where the marketing authorisation holder indicates itself as the repackager instead of the undertaking which physically carried out the repackaging to order, there is no risk that the consumer/end user might be misled into assuming that the trade mark proprietor is responsible for the repackaging?

(3) [Is it] of significance in answering Question 1 that an assumption might be made that the risk of misleading the consumer/end user into assuming that the trade mark proprietor is responsible for the repackaging is excluded if the undertaking which physically carried out the repackaging is indicated as being the repackager?

(4) [Is it] only the risk that the consumer/end user might be misled into assuming that the trade mark proprietor is responsible for the repackaging which is of significance in answering Question 1, or are other considerations regarding the trade mark proprietor also relevant, for example (a) that the entity which undertakes the importation and physical repackaging and (re)affixes the trade mark proprietor’s trade mark on the product’s outer packaging potentially on its own account infringes the trade mark proprietor’s trade mark by so doing, and (b) that it may be due to factors for which the entity that physically carried out the repackaging is responsible that the repackaging affects the original condition of the product or that the presentation of the repackaging is of such a kind that it must be assumed to harm the trade mark proprietor’s reputation (see, inter alia, … Bristol-Myers Squibb and Others …)?

(5) [Is it] of significance in answering Question 1 that the holder of the marketing authorisation, which has indicated itself as being the repackager, at the time of the notification of the trade mark proprietor prior to the intended sale of the parallel imported medicinal product once repackaged, belongs to the same group as the actual repackager (sister company)?’

B – Case C-207/10

17. Paranova Danmark A/S (‘Paranova Danmark’) and Paranova Pack A/S (‘Paranova Pack’) are subsidiaries of Paranova Group A/S which carries on business as a parallel importer of medicinal products to Denmark, Finland and Sweden. The group has its head office in Ballerup (Denmark), where the two subsidiaries are also established.

18. Paranova Danmark is the holder of a marketing authorisation for the medicinal products at issue.

19. Paranova Pack carries out repackaging for the entire group and therefore physically repackaged the medicinal products at issue. It is the holder of the authorisation for the repackaging of the medicinal products.

20. All questions concerning the selection of products for sale and purchase and applications for marketing authorisations, including types of packaging, are decided by Paranova Danmark. Paranova Pack makes the actual purchases and physically packages the medicinal products in compliance with the conditions imposed on repackagers by the Lægemiddelstyrelsen and resells them in accordance with pharmaceutical legislation, assuming responsibility therefor. The specialist who took charge of the final release of the batch was originally employed by Paranova, Denmark but was later transferred to Paranova Pack. In 2003, Paranova Denmark employed 11 staff and Paranova Pack 164. This proportion also applied during the other years relevant to the present case.

21. Paranova Denmark presented itself as the repackager on the packaging of the medicinal products at issue for which it held marketing authorisations, although the physical repackaging was carried out variously by Paranova Pack or repackagers outside the Paranova group. However, repackagers outside the group were not involved in this case.

22. Merck manufactured the medicinal products at issue, which the Paranova group imported in parallel into Denmark. Merck is also the proprietor of the trade mark rights relating to the products at issue which were imported in parallel, or is entitled to bring legal proceedings under licensing agreements with trade mark proprietors.

23. Merck brought two actions against Paranova Denmark and Paranova Pack, challenging the fact that the actual repackager was not stated on the packaging of the medicinal products at issue. As a result of these actions, Paranova Denmark and Paranova Pack were prohibited, the former by order of 26 October 2004 made by the Fogedret (Bailiff’s Court) i Ballerup, confirmed on appeal on 15 August 2007 by the Sø- og Handelsret, and the latter by judgment of the Sø- og Handelsret of 31 March 2008, from selling those medicinal products, on the ground that the packaging did not indicate the real repackager.

24. Since appeals on a point of law had been brought before it by Paranova Denmark and Paranova Pack against those judgments of the Sø- og Handelsret, the Højesteret decided to stay the proceedings and to submit the following questions to the Court:

‘(1) Are Article 7(2) of [Directive 89/104] and the associated case‑law, in particular the judgments of the Court of Justice in … Hoffmann-La Roche …, Pfizer … and … Bristol-Myers Squibb and Others … to be interpreted as meaning that a trade mark proprietor may rely on these provisions in order to prevent a parallel importer’s marketing company, which is the holder of a marketing authorisation for a medicinal product in a Member State, from selling that product with an indication that the product is repackaged by the marketing company, although the marketing company has the physical repackaging carried out by another company, the repackaging company, to which the marketing company gives instructions for the purchasing and repackaging of the product, for the detailed design of the product’s packaging and for other arrangements in relation to the product, and which holds the repackaging authorisation and reaffixes the trade mark on the new package in the course of repackaging?

(2) Is it of significance in answering Question 1 that an assumption might be made that the consumer or end-user is not misled with regard to the origin of the product and will not be led to believe that the trade mark proprietor is responsible for the repackaging through the indication by the parallel importer of the manufacturer’s name on the packaging along with the indication as described of the undertaking responsible for the repackaging?

(3) Is it only the risk that the consumer or end-user might be misled into assuming that the trade mark proprietor is responsible for the repackaging which is of significance in answering Question 1, or are other considerations regarding the trade mark proprietor also relevant, for example (a) that the entity which in fact undertakes the purchasing and repackaging and reaffixes the trade mark proprietor’s trade mark on the product’s packaging thereby potentially infringes independently the trade mark proprietor’s trade mark rights, and that that may be due to factors for which the entity that physically carried out the repackaging is responsible, (b) that the repackaging affects the original condition of the product, or (c) that the presentation of the repackaged product is of such a kind that it may be assumed to harm the trade mark or its proprietor’s reputation?

(4) If, in answering Question 3, the Court finds that it is also relevant to take account of the fact that the repackaging company potentially infringes independently the trade mark rights of the trade mark proprietor, the Court is asked to indicate whether it is of significance to this answer that the marketing company and repackaging company of the parallel importer are jointly and severally liable under national law for the infringement of the trade mark proprietor’s trade mark rights.

(5) Is it of significance in answering Question 1 that the parallel importer which holds the marketing authorisation and has indicated itself as being responsible for repackaging, at the time of the notification of the trade mark proprietor prior to the intended sale of the repackaged medicinal product, belongs to the same group as the company which undertook the repackaging (sister company)?

(6) Is it of significance in answering Question 1 that the repackaging company is indicated as the manufacturer in the package leaflet?

III – Analysis

25. The questions submitted to the Court by the Højesteret, which must be considered together, ( ) seek essentially to ascertain whether Article 7(2) of Directive 89/104 must be interpreted as meaning that where the packaging of a repackaged product does not state the name of the company which actually carried out the repackaging, the trade mark proprietor is entitled to oppose the marketing of that product if the name of the company in charge of the repackaging operation and taking responsibility for it appears alongside the name of the manufacturer.

26. The case-law of the Court relating to the repackaging of trade-marked medicinal products by parallel importers without the trade mark proprietor’s consent originated in Hoffmann-La Roche, which laid down the guiding principles on the subject. In that judgment, the Court addressed the issue from the standpoint of the prohibition on measures restricting imports laid down in Article 30 of the EEC Treaty, and the justification of such measures on grounds of the protection of industrial and commercial property laid down in Article 36 of the EEC Treaty.

27. The Court held in that judgment that Article 36 of the EEC Treaty allows derogations from the fundamental principle of the free movement of goods only to the extent to which such derogations are justified in order to safeguard the rights which constitute the specific subject-matter of the industrial and commercial property concerned. In that context, account must be taken of the essential function of the trade mark, which is to guarantee to the consumer or end user the identity of the trade-marked product’s origin by enabling him to distinguish it without any risk of confusion from products of different origin. That guarantee of origin means that the consumer or end user can be certain that a trade-marked product offered to him has not been subject at a previous stage of marketing to interference by a third party, without the authorisation of the trade mark proprietor, in such a way as to affect the original condition of the product.

28. Therefore, according to the Court, the right conferred on the trade mark owner to oppose any use of the mark that could distort the guarantee of origin comes within the specific subject-matter of the trade mark rights; it is accordingly justifiable under the first sentence of Article 36 of the EEC Treaty to recognise that the proprietor of a trade mark is entitled to prevent an importer of a trade‑marked product, following repackaging of that product, from affixing the trade mark to the new packaging without the authorisation of the proprietor. ( )

29. It is clear from paragraph 14 of Hoffmann-La Roche that the proprietor of a trade mark right which is protected in two Member States at the same time is justified, pursuant to the first sentence of Article 36 of the EEC Treaty, in preventing a product to which the trade mark has lawfully been applied in one of those States from being marketed in the other Member State after it has been repacked in new packaging to which the trade mark has been affixed by a third party. Likewise it is clear from that paragraph that such prevention constitutes a disguised restriction on trade between the Member States within the meaning of the second sentence of Article 36 of the EEC Treaty where the following conditions are satisfied:

– it is established that the use of the trade-mark right by the proprietor, having regard to the marketing system which he has adopted, will contribute to the artificial partitioning of the markets between Member States;

– it is shown that the repackaging cannot adversely affect the original condition of the product;

– the proprietor of the mark receives prior notice of the marketing of the repackaged product; and

– it is stated on the new packaging by whom the product has been repackaged. ( )

30. It is the interpretation of this latter condition which is central to the present cases. At paragraph 12 of Hoffmann-La Roche, the Court justified the existence of the condition, as well as that of prior notification of the proprietor of the mark, by reference to his interest in ensuring that consumers are not misled as to the origin of the product.

31. In its subsequent case-law, the Court elaborated on and clarified the requirements which the parallel importer must meet in order to be able to repackage trade-marked medicinal products. It did so in the light of Article 7 of Directive 89/104, which was adopted to regulate comprehensively the issue of exhaustion of trade-mark rights as regards products put into circulation within the European Union. The Court stated in this connection that Article 7 of the directive, like Article 36 of the EC Treaty, is intended to reconcile the fundamental interest in protecting trade mark rights with the fundamental interest in the free movement of goods within the common market, so that those two provisions, which pursue the same objective, must be interpreted in the same way. ( )

32. In refining the principles laid down in its judgment in Hoffmann-La Roche, the Court thus ruled in Bristol-Myers Squibb and Others that Article 7(2) of Directive 89/104 must be interpreted as meaning that the trade mark proprietor may legitimately oppose the subsequent marketing of a pharmaceutical product when the importer has repackaged the product and re-affixed the trade mark to it, unless several conditions are met, including, as regards the issues in the present cases, the condition that ‘the new packaging clearly states who repackaged the product and the name of the manufacturer [( )] in print such that a person with normal eyesight, exercising a normal degree of attentiveness, would be in a position to understand; similarly, the origin of an extra article from a source other than the trade mark owner must be indicated in such a way as to dispel any impression that the trade mark owner is responsible for it; however, it is not necessary to indicate that the repackaging was carried out without the authorisation of the trade mark owner’. ( )

33. The justification for this condition appears clearly in paragraph 70 of Bristol-Myers Squibb and Others. It is in the trade mark owner’s interest that the consumer or end user should not be led to believe that the owner is responsible for the repackaging.

34. However, I am of the opinion that this interest is safeguarded where the name of the undertaking responsible for the repackaging ( ) as well as that of the manufacturer appear clearly on the packaging of the medicinal product. This differentiation is likely to dispel any doubt in the consumer’s mind as to the respective roles of these two entities in the manufacture and repackaging of the product. What is important is, on the one hand, that the consumer knows who is responsible for the repackaging and to whom any product defects caused by this operation may be imputed and, on the other hand, that he is aware that the repackaging has not been carried out under the trade mark proprietor’s control.

35. It is sufficient, in this regard, for mention to be made of the name of the undertaking in charge of the repackaging which instructs the company engaged and assumes responsibility for the operation. If this is the parallel importer, then an indication that the product has been repackaged by the latter is enough to avoid any confusion in consumers’ minds and to make clear to them, as well as to the trade mark owner, who was in charge of the repackaging operation. On the other hand, if it appears that this operation was carried out entirely independently by a repackaging undertaking which assumes responsibility for it, it is that undertaking’s name which should appear on the packaging alongside that of the manufacturer.

36. Since the ‘person who carried out the repackaging’, as defined in Bristol‑Myers Squibb and Others, means the company which controls the repackaging operation and takes responsibility for it, it is for that company to ensure that the repackaging does not affect the original condition of the product contained in the packaging and to ensure that the repackaged product is not presented in such a way as to damage the reputation of the trade mark.

37. The question whether, in the main proceedings, the undertaking indicated on the packaging of the medicinal products as the repackager had control of the repackaging operation and carries responsibility for it is a question of fact which it is for the referring court to determine. In order to determine the relations between the parallel importer and the repackaging company, it is important to ascertain who determines the specific repackaging arrangements. The fact that the two companies belong to the same group does not seem to me, in this regard, decisive, but can have only evidential value in regard to the nature of relations between these companies.

38. To require that, when the company that controls the repackaging operation and assumes responsibility for it and the undertaking actually carrying out the repackaging are two separate entities, the latter’s name must be stated would, in my view, exceed what is necessary to prevent the consumer from being led to believe that the proprietor of the trade mark is responsible for the repackaging.

39. Conversely, Merck maintains that consumer information should be as comprehensive as possible and that, consequently, consumer protection demands that the packaging of a medicinal product should mention the name of the actual repackager.

40. In the face of this attempt to establish an additional reason for a trade mark proprietor to oppose parallel imports of medicinal products, it must be pointed out, as Advocates General Jacobs ( ) and Sharpston ( ) have done before me, that, in the context of the law of trade marks, any exception to the principle of free movement of goods must be interpreted strictly and can only be relied on to justify restrictions required to safeguard the specific subject-matter of an industrial property right. As an exception to the principle of free movement of goods, Article 7(2) of Directive 89/104 must, therefore, be interpreted strictly.

41. As the Court clearly stated in Boehringer Ingelheim and Others, ( ) ‘although it is possible to derogate from the fundamental principle of free movement of goods where the proprietor of a mark relies on the mark to oppose the repackaging of pharmaceutical products imported in parallel, that is only to the extent necessary to enable the proprietor to safeguard rights which form part of the specific subject-matter of the mark, as understood in the light of its essential function’. ( ) Where a trade mark proprietor, in opposing the repackaging of medicinal products imported in parallel, cites reasons that are no longer strictly to do with protection of the specific subject-matter and essential function of the trade mark, such reasons may not be used to justify a derogation from the fundamental principle of the free movement of goods.

42. Therefore, as neither the specific subject-matter of the trade mark nor its essential function as a guarantee of origin is compromised by stating the names of the undertaking responsible for repackaging and the manufacturer in conjunction, I believe that a trade mark proprietor may not rely on Article 7(2) of Directive 89/104 to claim compensation from a parallel importer on the ground of the omission to state on the repackaged product the name of the actual repackager, where the importer controls and assumes responsibility for the repackaging operation.

43. This solution, it seems to me, maintains a balance between the protection of trade mark rights and the free movement of goods, while allowing adequate information for consumers. The trade mark proprietor sees the trade mark’s essential function as a guarantee of origin safeguarded and the reputation of the mark cannot be damaged by defective repackaging. At the same time, the trade mark proprietor and consumers know who may be held responsible for the repackaging if it is defective.

44. In light of all of these elements, I believe that Article 7(2) of Directive 89/104 should be interpreted as meaning that the fact that the packaging of a repackaged product does not state the name of the undertaking which actually carried out the repackaging does not entitle a trade mark proprietor to oppose the marketing of that product where the name of the undertaking in charge of the repackaging operation and taking responsibility for it appears alongside the name of the manufacturer.

IV – Conclusion

45. In the light of the foregoing I propose that the Court should reply as follows to the questions raised by the Højesteret:

Article 7(2) of First Council Directive 89/104/EEC of 21 December 1988 to approximate the laws of the Member States relating to trade marks must be interpreted as meaning that the fact that the packaging of a repackaged product does not state the name of the undertaking which actually carried out the repackaging does not entitle a trade mark proprietor to oppose the marketing of that product where the name of the undertaking in charge of the repackaging operation and taking responsibility for it appears alongside the name of the manufacturer.