Repackaging of parallel-imported drugs restricted

In Glaxo Group Limited v Dowelhurst Limited, the High Court has reinforced the limitations on the repackaging of parallel-imported pharmaceutical products. Basing its decision on the European Court of Justice's (ECJ) judgment in Boehringer Ingelheim v Swingward, the High Court ruled that when a trademark owner's parallel-imported pharmaceuticals are repackaged, there is a legal presumption that it has suffered harm as a result.

The case originally came before the High Court in 2000. Pharmaceutical giants Glaxo, SmithKline Beecham (which has since merged with Glaxo), Boehringer Ingelheim and Eli Lilly objected to the repackaging and re-labelling of their respective parallel-imported products by Dowelhurst and another company - Swingward Limited. They claimed that there was no justification for the repackaging and they took issue with the way in which it had been carried out. Glaxo and Boehringer also argued that Dowelhurst and Swingward had not followed the advance notice requirements for repackaging.

In its judgment of 2000 the High Court found that the repackaging appeared to be legitimate because the trademark owners had not been able to demonstrate actual and substantial damage to the marks at issue. However, the court held that the jurisprudence in this area is not clear and it therefore referred questions to the ECJ for further clarification. Guidance was sought, among other things, as to (i) whether a trademark owner can object to repackaging when neither the origin or quality functions of its mark have been significantly affected, and (ii) whether or not a parallel importer is always obliged to give prior notice of repackaging to a mark owner even when it would not be possible for the owner to object to such repackaging.

The ECJ answered these questions in the Boehringer Ingelheim Case. It held that repackaging creates a clear legal presumption of harm. Therefore, there is no need for a trademark owner to demonstrate actual harm before it can interfere with the free movement of goods it has put on the market. However, the trademark owner's ability to interfere in this way is limited by the requirement that it must be necessary to protect the specific subject matter of the mark. In contrast, there is no legal presumption of harm in the case of re-labelling and so a mark owner must demonstrate actual harm before it can interfere with parallel trade. The ECJ also held that a parallel importer must give advance notice of repackaging or re-labelling to the relevant mark owner even when the owner cannot legitimately object. The court reasoned that this requirement is to allow a mark owner to assess whether there will be actual harm to the mark because repackaging is inherently liable to be damaging.

Based on the ECJ's ruling, the High Court overturned some of its original findings. The High Court held that, although in this case the repackaging was necessary to achieve market access, the style of packaging did not respect the legitimate rights of the mark owners since it reduced the prominence of their marks while giving unfair emphasis to the parallel importers. The court did not reconsider the re-labelling issue as there was no evidence of actual damage. The High Court also held that advance notice is required for both re-labelling and repackaging whenever there is a prima facie risk of infringement.

John Williams, Bird & Bird, London