CE mark does not imply consent to sale in European Union, court rules

United Kingdom

In Roche Products Ltd v Kent Pharmaceuticals Ltd, the Court of Appeal for England and Wales has upheld a decision which held that Roche Products Ltd was entitled to summary judgment in its trademark infringement action against Kent Pharmaceuticals Ltd.

The case involved the parallel import of products bearing the ACCU-CHECK mark and other trademarks owned by Roche. The products in question were test strips used for self-testing glucose levels in blood. A batch of 18,000 test strips, manufactured and packaged by Roche in the United States, was ordered by and delivered to PRISA, a Roche company which distributes Roche's products in the Caribbean and Central American region. PRISA stored the products in Costa Rica, from where it supplied them to PROPAS in the Dominican Republic on the understanding that they were (i) to be used exclusively for clinical trials among vulnerable communities in that country, and (ii) not to be resold or transferred to any other organization. However, the test strips turned up in France where they were bought in good faith by Kent, which then imported them into the United Kingdom. Roche sued Kent for trademark infringement. At first instance, Roche was granted summary judgment and Kent appealed.

Kent's contention was that the test strips had been put on the market in the European Union under the trademark with Roche's consent, which was manifested by the affixing of a CE mark by Roche or its associated company in the United States on the packaging of the strips.

Roche's response to that was that the CE mark merely recorded the fact that the goods complied with EU regulatory requirements and that it had nothing to do with the consent of a trademark proprietor to the placing of those goods on the market anywhere in the European Union. The question at this point was whether Kent had a sufficiently arguable case that should go to trial. In that sense, it had to overcome a formidable obstacle, namely the European Court of Justice's ruling in Zino Davidoff that while consent may be inferred, it must be unequivocally demonstrated.

The Court of Appeal quickly recognized that Kent faced an uphill task. Not only did Roche not consent to the placing of the products on the market in the European Union, but it was made clear by PRISA that the products were to be used in the Dominican Republic only. Furthermore, the court held, the purpose of affixing a CE mark to the packaging of products is merely to confirm that the products satisfy the requirements of the relevant EU regulatory authorities. In other words, it is there to record the consent of those authorities, not that of the trademark proprietor, to the products being placed on the market in the European Union. Thus, absent clear evidence to the contrary, the court considered that it would be wrong to conclude that the CE mark would convey the message that Roche had consented to the placing of the product in the packaging so marked on the market within the European Economic Area.

However, the court was prepared to accept, at least for the present purposes, that it would, in principle, be possible for Kent to establish through evidence that a statement or mark, which, according to its objective interpretation as a matter of pure linguistics or legal principle, would not constitute a sufficient consent for the purposes of Article 7 of the First Trademarks Directive, could have the effect of operating as such a consent as a result of general understanding in the relevant market.

In this respect, the court acknowledged that in the context of commercial contracts, effect would be given to the custom of the trade where satisfactory evidence demonstrates that an expression is understood to have a special meaning by virtue of the custom of the trade, unless it was inconsistent with the express terms of the contract. By parallel reasoning, the court considered that the courts should, in principle, be prepared to recognize that a mark may have a different or wider meaning, in a particular trade, from that which would be derived from the reason (whether in law or otherwise) for the affixing of the mark. The court nevertheless acknowledged that the law applied in Smith Hogg Co v Louis Bamberger [1929] 1 KB 150 "may conceivably not apply in a case such as this", in the light of the heavy onus on a person alleging that consent has been given under Article 7 in circumstances where the trademark proprietor has not used words which ordinarily signify consent.

In the event, the court dismissed the appeal on the evidence. It rejected most of Kent's evidence on the basis that the fact that some traders in a particular market might understand that a particular expression or mark had a specific effect did not establish that, when a manufacturer or trademark owner used the expression or the mark, it should be interpreted as having that effect objectively. The court considered it very doubtful whether the evidence of a few traders in the market in question as to how they happen to understand a particular expression or mark was even admissible in this context.

Moreover, the court dismissed as irrelevant Kent's assertion that the CE mark was "generally treated by all parallel importers as evidence of importability into the [European Union] and, indeed, of importability for any movement between EU member states". Consent is a two-way process, the court held: it has to be given by the person consenting and received by the person to whom the consent was given. Therefore, if Kent was seeking to contend that the CE mark should be treated as having a special effect or wider meaning than it naturally would bear, then it would, in the court's view, plainly be necessary for it to be shown that it was generally understood to have this meaning not merely among parallel importers, but also among trademark proprietors, either generally, or in a specific market. Kent had provided no evidence that there was such an understanding in any group of trademark proprietors, let alone a group that would include Roche. In any event, such evidence would normally have to be given by an independent expert before the court would be likely to credit it.

The court acknowledged that there was some force in the argument that a decision in Roche's favour was inconsistent with Glaxo v Dowelhurst [2005] ETMR 104. However, the court considered that that case could be distinguished. The argument which was held to be fit to go to trial on the part of the defendant in Glaxo was that a Europe Middle East and Africa licence number on the packaging of the products in question operated as a sufficient consent under Article 7 to the placing of those goods on the market in the European Union. However, unlike in the present case, it was the identical packaging and mark which formed the basis of an arguable case that consent had been given.

Finally and not surprisingly, the court also rejected Kent's argument that, even if its evidence so far had been insufficient, it would be wrong to give judgment in favour of Roche and so preclude Kent from obtaining appropriate evidence. In the court's view, it would substantially undermine much of the purpose of Part 24 of the Civil Procedure Rules if a defendant could successfully resist a claim for summary judgment on the basis that it might be able in the future to obtain evidence to adduce at trial which could have been obtained for the purpose of the Part 24 hearing.

How much do we read into the court's willingness to entertain the possibility that a CE mark could, where it is accepted as such in the custom of the trade, unequivocally demonstrate implied consent for the purposes of Article 7? Perhaps the court has led us down a blind alley by drawing a parallel with points of construction in Smith Hogg, reliance upon which may not be open to parallel importers. However, the temptation is there to ponder whether markings might exist in some market somewhere that regardless of any primary purpose would serve unequivocally to indicate that the trademark proprietor intends a batch of products bearing its marks to be marketed freely in the European Union.

Chris McLeod, Hammonds, London

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