Parallel importation of Leo Pharma brands illegal, rules court

In Løvens Kemiske Fabrik v Orifarm A/S (Case 214/2001), the Danish Supreme Court has ruled that the defendant's parallel importation and repackaging of the plaintiff's pharmaceutical products was illegal. The decision further limits the extent to which parties can repackage or re-brand parallel-imported goods for resale in Denmark.

Løvens Kemiske Fabrik, a Danish pharmaceutical company trading under the name 'Leo Pharma' in Denmark, manufactures a dermatological preparation sold under its DAIVONEX trademark. It also produces a pharmaceutical product sold under the mark ONE-ALPHA in Denmark and ETALPHA in a number of other countries. Orifarm parallel-imported and repackaged Løvens's DAIVONEX marked pharmaceuticals. Although Orifarm reaffixed the DAIVONEX mark, it added a triangular logo and some additional markings to the new packaging. Orifarm also parallel-imported and repackaged ETALPHA branded products and sold them under that name in Denmark. Løvens brought an action, claiming that Orifarm's parallel-importation and resale of its products in Denmark was illegal. The case eventually went to the Supreme Court

The Supreme Court agreed with Løvens and ordered that Orifarm pay Dkr200,000 in damages. The court noted that during the period of Orifarm's parallel importation, the Danish pharmaceutical authorities changed the rules regarding the substitution of generic products for branded products. Under the new rules, pharmacists must substitute branded pharmaceuticals for cheaper generics of the same type and quality unless the prescribing doctor expressly forbids such substitution. However, the court held that, pursuant to the European Court of Justice's decision in Pharmacia & Upjohn SA v Paranova A/S, the commercial advantages for Orifarm in renaming the ONE-ALPHA products as ETALPHA (ie, so that they appeared to be generics on the Danish market) did not justify the repackaging. It added that the old rules on the substitution of pharmaceutical products, whereby pharmacists had discretion to substitute generics for original brands, did not, as Orifarm claimed, hinder access to the Danish market.

The court further held that DAIVONEX products are sold under the same trademark and in the same size packages in Denmark as the country from which they had been parallel-imported by Orifarm. It reasoned that Orifarm's repackaging was unnecessary, since it could have marketed the original products with the simple addition of a label in Danish. Also, the court ruled that Orifarm's use of the triangular logo and additional markings was illegal co-branding.

Peter-Ulrik Plesner and Peter Gustav Olson, Plesner Svane Grønborg, Copenhagen