ZOVIRAX decision further facilitates parallel imports

In The Wellcome Foundation Ltd v Paranova Pharmazeutika Handels GmbH (Case C-276/05, December 22 2008), the European Court of Justice (ECJ) has further clarified the conditions for the repackaging of trademarked goods in a reference for a preliminary ruling from the Supreme Court of Austria.

In the absence of specific provisions in the legislation, the issue of whether and under which conditions third parties may repackage pharmaceutical products for the purpose of parallel imports within the European Union has been dealt with in a long series of cases. Article 7(1) of the First Trademarks Directive (89/104/EEC) (now the EU Trademarks Directive (2008/95/EC)) contains the principle of the exhaustion of trademark rights. Article 7(2) provides legitimate reasons for the trademark owner to oppose parallel imports (in particular, where the condition of the goods is changed or impaired). Repackaging as such is not considered to change or impair the condition of the goods.

The main principles applying to the repackaging of goods were laid down in Bristol-Myers Squibb (Joined Cases C-427/93, C-429/93 and C-436/93). In this case, the ECJ held that a trademark owner is allowed to oppose parallel imports where the importer has repackaged the goods and reaffixed the trademark, unless the following cumulative conditions are met:

the opposition to the marketing of the repackaged products would contribute to the artificial partitioning of the market;
the repackaging does not affect the original condition of the product;
the new packaging clearly states who repackaged the product and the name of the manufacturer;
the presentation of the product does not impair the reputation of the trademark and its owner; and
the importer has notified the trademark owner prior to repackaging the product and supplied a specimen of the repackaged product upon request.

The present case involved the trademark ZOVIRAX, which is owned by The Wellcome Foundation Ltd. The Austrian Supreme Court originally asked two questions to the ECJ, the first one being divided into two points. However, in view of its decision in Boehringer II (Case C-348/04), the ECJ maintained only questions 1(b) and 2. The ECJ found that question 1(a) had been sufficiently answered in Boehringer II, in which it was held that the burden of proving that reliance on the trademark would contribute to the artificial partitioning of the market always lies on the parallel importer and can be based only on the repackaging itself.

Questions 1(b) and 2 read as follows:

"1. (b) Is the presentation of the new packaging to be measured against the principle of minimum intervention or (only) against whether it is such as to damage the reputation of the trademark and its proprietor?

2. Are Article 7 of the [First Trademarks Directive] and the case law of the court […] which has been pronounced on it to be interpreted as meaning that the parallel importer fulfils his duty of notification only if he informs the proprietor of the trademark also of the state of export and the precise reasoning for the repackaging?"

The Supreme Court of Austria referred to the possible application of the 'minimum intervention' principle set forth in Loendersloot (Case C-349/95), in which the ECJ had explained that “the person carrying out the relabelling must use means which make parallel trade feasible while causing as little prejudice as possible to the specific subject-matter of the trademark right”.

In the present case, the ECJ followed the opinion of the advocate general (for further details please see "Advocate general delivers opinion in Zovirax repackaging case") and concluded that “the presentation of the packaging should be assessed only against the condition that it should not be such as to be liable to damage the reputation of the trademark or that of its proprietor”. This finding was of importance in this case because the repackaged product prominently showed a blue band which the defendant, Paranova Pharmazeutika Handels GmbH, regularly used for its pharmaceutical products.

Although Paranova was obliged to repackage the ZOVIRAX-branded products in order to import them into Austria, the presentation of the repackaged product clearly created a link between the goods and Paranova (even though the package also referred to Wellcome on the sides and on the back). The packaging thus reflected the corporate image of Paranova, rather than that of Wellcome. Therefore, the decision of the ECJ implies that by allowing parallel imports, the trademark owner loses its influence over the presentation of the products bearing its trademark.

Unfortunately, the ECJ did not clearly answer the second question of the Supreme Court of Austria - namely, whether the parallel importer must disclose to the trademark owner the source of the products. It simply stated that:

the kind of information to be furnished to the trademark owner will vary from case to case; and
the parallel importer can be forced to disclose the member state of export only in exceptional cases - namely, in those cases where this information will be necessary for the trademark owner to evaluate whether the repackaging is necessary or not.

The decision thus further facilitates parallel imports and substantially restricts the rights of trademark owners to control the presentation of their trademarked goods.

Hans Georg Zeiner, Zeiner & Zeiner, Vienna

ZOVIRAX decision further facilitates parallel imports

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