Court of Appeal: parallel importer's use of mark necessary to enable effective access to market

In Speciality European Pharma Ltd v Doncaster Pharmaceuticals Group Ltd ([2015] EWCA Civ 54, February 6 2015), the Court of Appeal has found that if Doncaster Pharmaceuticals Group Ltd could not use Madaus GmbH's REGURIN trademark to oversticker its parallel-imported pharmaceutical products, Doncaster's access to the portion of the market represented by prescriptions where the brand name was specified would be hindered. As such, Doncaster was not liable for infringement of the REGURIN trademark in the United Kingdom.

This case illustrates the power of the so-called 'Euro defences' in the Treaty on the Functioning of the European Union to protect parallel importers from trademark infringement allegations where use of a trademark is necessary to enable effective access to the market.

Madaus manufactures trospium chloride for the treatment of over-active bladder symptoms. Its products are sold in a number of EU countries under various trademarks owned by Madaus, including REGURIN in the United Kingdom, CÉRIS in France and URIVESC in Germany. Speciality European Pharma Ltd is the exclusive UK licensee of the REGURIN trademark and distributes the product in the United Kingdom. Doncaster is a parallel importer of pharmaceutical products and sells Madaus product in the United Kingdom which it imports from France and Germany. Prior to 2009, Doncaster had been overstickering the trademarks on the Madaus product it imported into the United Kingdom with the name of the active ingredient. In 2009 the patent for trospium chloride expired and Doncaster began to oversticker its imports with the REGURIN trademark. As a result of this rebranding, Speciality sued Doncaster for trademark infringement.

The issue in the proceeding was whether Doncaster's overstickering of imported product with the REGURIN trademark was necessary for Doncaster to have effective access to the UK market. If it was necessary, it would engage the free movement provisions of the Treaty on the Functioning of the European Union - the so-called 'Euro defences' to trademark infringement. At first instance, the High Court held that there was no objective necessity to use the REGURIN trademark, rather Doncaster was using REGURIN in an attempt to 'piggy back' on Speciality's marketing efforts and investment.

The Court of Appeal reversed the trial judge's finding, holding that Doncaster's use of REGURIN went no further than what was necessary to overcome artificial barriers to effective market access. There was a substantial part of the market, namely the portion of the market represented by prescriptions where the brand name REGURIN was specified, to which Doncaster did not have effective access without using the trademark, particularly given that UK practice prevents pharmacists from dispensing generic products where the prescription specifies the brand name. Further, the Court of Appeal accepted the evidence of Doncaster that it was not realistic for Doncaster to invest in an own brand because of the supply issues which affect parallel importers. The Court of Appeal noted that, given the instability of Doncaster's supply line, it “would be verging on the irresponsible to encourage a doctor to prescribe a Doncaster brand”.

Sebastian Moore and Jack Rayson-Grant, Herbert Smith Freehills LLP, London