Advocate General delivers opinion in Beecham Case

European Union

Advocate General Colomer has delivered his opinion on questions referred to the European Court of Justice (ECJ) by the Brussels Tribunal of Commerce in Beecham Group plc v Andacon NV (C-132/07, April 8 2008).

The case involved a dispute between Beecham Group plc, a well-known group of pharmaceutical companies, and Andacon NV, a Belgian corporation active in the wholesale of medicinal products. In 2003 and 2004 a Beecham subsidiary, GSK Export Ltd, sold significant quantities of pharmaceutical products to an Ethiopian company, which was to supply these products to the Ethiopian army.

Beecham had filed a Community-wide application for action by Customs (or 'border watch notice') under the Regulation on Counterfeiting (3295/94) based on a range of Community trademarks. As of July 1 2004 Regulation 3295/94 was repealed and replaced by the EU Customs Regulation (1383/2003), which was supplemented by Implementing Regulation 1891/2004. Like the Customs Regulation, the Implementing Regulation was supposed to enter force on July 1 2004, but was published in the EC Official Journal only on October 30 2004.

According to Article 9 of the Implementing Regulation, applications for customs action lodged before July 1 2004 remained valid until their legal expiry date, without having to be renewed. However, applications had to be accompanied by the declaration required under Article 6 of the Customs Regulation, whereby the rights owner accepts liability in the event that:

  • a procedure initiated by the rights owner is discontinued; or

  • the goods in question are ultimately found not to infringe an IP right.

Beecham had failed to submit an Article 6 declaration prior to the date of publication of the Implementing Regulation on October 30 2004.

In October 2004 Belgian Customs suspended the release for free circulation in the European Union of a shipment of Beecham pharmaceutical products from outside the European Union on suspicion that the goods were counterfeit within the meaning of the Customs Regulation. Beecham was allowed by the customs authorities to inspect samples of the goods in the port of Antwerp. Based on the bar codes, Beecham came to the conclusion that the goods were genuine and had originally been placed on the market in Ethiopia to be distributed to the Ethiopian army.

The customs authorities, advised that the goods were authentic, refused to provide additional information to Beecham on the grounds of professional secrecy. Since the Customs Regulation is not applicable to parallel imports (and thus could no longer be applied to block the shipment), Beecham sought (and obtained) an order from the Belgian courts to secure the seizure of the goods under national law. The courts also allowed a bailiff to collect all relevant information concerning the quantity, origin and destination of the goods.

Further investigations revealed that the products were initially destined for a company established in the United Kingdom. At a later stage, another company based in the United Arab Emirates (UAE) alleged to have acquired the goods. The UAE company challenged the seizure order issued by the Antwerp courts. In the context of these proceedings, the Antwerp Court of Appeal requested that Belgian Customs provide it with a copy of its files in order to assess the validity of the procedure. Customs abided by this request and the Antwerp Court of Appeal upheld the seizure order. Beecham then brought infringement proceedings against Andacon before the Brussels courts.

The Brussels Tribunal of Commerce subsequently referred questions to the ECJ for a preliminary ruling. The first question concerned Andacon's first defence argument - that is, Customs should not have allowed Beecham to inspect samples of the goods. Under the Customs Regulation, such possibility exists only pursuant to Article 9, which requires that an application for customs action be in place. Andacon was of the opinion that Beecham's application, which had originally been filed under Regulation 3295/94, was no longer effective on the date of the customs action in October 2004. No Article 6 declaration had been filed by Beecham at that time, contrary to the requirement of Article 9 of the Implementing Regulation.

Advocate General Colomer rejected this argument. According to Colomer, the requirement imposed by Article 9 of the Implementing Regulation is not a formal requirement. Therefore, failure to comply with it does not cause pending applications to become void or otherwise ineffective. In any instance, this requirement could not be invoked against rights holders that had failed to submit an Article 6 declaration before the date on which the Implementing Regulation was published in the Official Journal (ie, before October 30 2004).

The second question concerned Andacon's second defence. Andacon alleged that Beecham should not have been allowed to use the information inferred from the samples presented to it by Customs under the Customs Regulation as evidence in infringement proceedings relating to parallel imports. Article 12 of the regulation prevents rights owners from using information provided by Customs for purposes other than the procedures set out under the regulation, which applies to counterfeiting exclusively. For the same reasons, Andacon considered that Beecham could not rely on the information provided by Customs to the bailiff appointed by the Antwerp courts. Under Article 320 of the Belgian Customs and Excise Act, customs officials are bound by a duty of professional secrecy.

Colomer again disagreed. In his view, the Customs Regulation does not prevent the customs authorities from being heard by the courts or from presenting documents to them (if they so request) to serve as evidence in infringement proceedings. Although the customs authorities are bound by a duty of professional secrecy under Article 15 of the Community Customs Code, this provision stipulates that the communication of information by the customs authorities is permitted where the authorities are "obliged to do so pursuant to the provisions in force, particularly in connection with legal proceedings".

As to the use by rights owners of information obtained from Customs under the Customs Regulation to fight parallel imports, Colomer stressed that pursuant to Article 12(2) of the regulation, such use is prohibited only insofar as it is "not permitted by the national legislation of the member state where the situation arose". Since the ECJ's case law clearly entitles trademark holders to oppose parallel imports into the European Union of branded goods from outside the European Union, it would not be acceptable to prevent rights holders from using information provided by Customs under the regulation to fight illicit parallel imports. The Customs Regulation, although not applicable to parallel imports, aims to strengthen the fight against goods infringing IP rights, and not to hinder such fight. Hence, according to Colomer, the Customs Regulation cannot be interpreted as prohibiting the use by rights owners of information provided to them under the Customs Regulation (and more particularly, Articles 9(2) and 9(3) of the regulation) for the purpose of opposing parallel imports.

It remains to be seen whether the ECJ will follow the opinion of the advocate general. This would bring some relief to rights owners following the ECJ's controversial decisions in Class International and Montex.

Olivier Vrins, Altius, Brussels

Unlock unlimited access to all WTR content