Grounds for opposing new package designs on parallel imports clarified

In Paranova AS v Merck & Co, the European Free Trade Association (EFTA) Court has issued an advisory opinion on the use by Paranova of vertical coloured stripes on repackaged boxes of pharmaceutical products.

Paranova buys pharmaceutical products in other EFTA countries and repackages them in Denmark before exporting them to other Scandinavian countries. When it first started marketing in Norway in 1995, Paranova also affixed to the repackaged boxes its own trademark, logo, and vertical or horizontal coloured stripes. Following a ruling by a Norwegian county court, Paranova ceased to use its logo and trademark but carried on using its parallel stripes on the packaging, using a colour very close to that of Merck's registered Community colour mark. Merck filed a new suit to enjoin Paranova from using the stripes on its repackaged products.

The Court of Appeal issued a judgment in 2002 in favour of Merck, prohibiting Paranova from using vertical coloured stripes on the repackaged boxes. The court based its decision on the criterion of necessity, in this case finding that the use of the stripes was not necessary to enter the Norwegian market.

Paranova appealed to the Norwegian Supreme Court, which referred the question to the EFTA Court.

The EFTA Court stated that the criterion of necessity was not automatically applicable when considering the presentation and design of repackaged boxes. When considering this matter, the interests of the trademark owner and the parallel importer must be carefully balanced: the national court has to consider whether the use of the parallel importer's own design is likely to tarnish the reputation of the trademark. If this is the case, the trademark owner has "legitimate reasons", pursuant to Article 7(2) of the Community Trademark Directive (Articles 11 and 13 of the European Economic Area Agreement) to oppose the parallel importer's use of coloured stripes. The court gave the following examples of legitimate reasons:

• if the repackaging is presented inappropriately, which includes circumstances where the packaging is defective, of poor quality or untidy, as well as circumstances unrelated to the actual package design (eg, published advertisements);
  
  
• if the packaging design gives the impression of a commercial connection between the producer and the parallel importer; and
  
  
• if the marketing of the products by various parallel importers with different package designs will create a risk of dilution of the trademark.

The final outcome of this case remains to be seen as the Norwegian Supreme Court has yet to decide on the matter.

Felix Reimers, Advokatfirmaet Grette DA, Oslo