Jonathan DC Turner

Barrister 

GLAXO v DOWELHURST - PLUS ROYALISTE QUE LE ROI
 

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This is a copy of an article published in the European Intellectual Property Review, September 2000 and in abridged form in the CIPA Journal, July 2000. It is not guaranteed to be up-to-date when downloaded. Copyright is reserved by the author and moral rights have been asserted. The article may be copied and distributed provided this done free of charge and in relation in the whole article, including details of authorship and this notice, without any amendments.

There was a time when European law defences to intellectual property actions seemed to be regarded as anathema by English courts[1]. However, recent decisions of the English High Court, and more particularly of Laddie J, have shown an enthusiasm to curtail trade mark rights under European law exceeding that of the European Court of Justice (ECJ).

In Silhouette v Hartlauer[2] the ECJ held that the EC Trade Marks Directive[3] obliges member states to prohibit parallel imports into the EC of goods bearing a registered trade mark unless the owner of the mark has consented to the marketing of those goods in the EC. In Zino Davidoff v A&G Imports[4] Laddie J avoided following this decision on the ground that the owner of the trade mark could be taken to have consented to the goods being marketed in the EC by selling them to a distributor in Singapore under Singapore law - even though the contract between the manufacturer and the distributor expressly provided that the distributor undertook not to sell the products outside the distributor’s territory and to oblige its customers to refrain from such sales. Laddie J’s reasoning in that case appears to overlook the conclusion of the ECJ in IHT International Heiztechnik v Ideal Standard[5] that implicit consent to potential consequences of a transaction does not constitute consent of the kind required for exhaustion of rights.

In Hoffmann-La Roche v Centrafarm[6], Bristol-Myers Squibb v Paranova[7], Loendersloot v Ballantine[8]  and Pharmacia & Upjohn v Paranova[9] the ECJ held that in intra-EC trade[10] a parallel importer is entitled to provide new or additional packaging bearing the same mark as used by the manufacturer when placing the product on the market in the EC, but only if certain conditions are met. These conditions include:

bullet

that the repackaging is necessary for the goods to be marketed in the state of importation and

bullet

that the trade mark owner was given advance notice of the sale of the goods in the new packaging.

In Glaxo-Wellcome v Dowelhurst[11] Laddie J declined to enforce trade marks against parallel importers even though these two conditions were not met. He considered that the first did not, and the second should not, apply where there was no damage to the reputation protected by the trade mark.

In each of these cases Laddie J referred a series of pointed questions to the ECJ.. Laddie J’s decision in Zino Davidoff was loyally followed by Pumfrey J in another case in the English High Court, but rejected by Lord Kingarth in a parallel case brought by Zino Davidoff in Scotland[12]. It remains to be seen how the judgment in Glaxo-Wellcome will fare in other courts, but it is respectfully submitted that the reasoning, if not the result, is wrong.

The development of the ECJ’s case-law on repackaging

In order to understand why Laddie J’s judgment in Glaxo-Wellcome is wrong, it is necessary to recall the development of the case-law of the ECJ in this area.

1.      Article 28 (previously article 30[13]) of the Treaty of Rome prohibits quantitative restrictions on trade between member states and all measures having equivalent effect. All trading rules which are capable of hindering directly or indirectly, actually or potentially, intra-Community trade are regarded as measures of equivalent effect on imports within the meaning of article 28 (30)[14], including provisions of trade mark legislation which restrict parallel imports[15]

2.      Article 30 (36) of the Treaty of Rome specifies that article 28 (30) does not preclude prohibitions or restrictions on trade between member states which are justified on grounds of (amongst other things) the protection of industrial or commercial property; but that such prohibitions or restrictions must not constitute a means of arbitrary discrimination or a disguised restriction on trade between member states.

Article 30 (36) is an exception to a fundamental principle of the common market, that there should be no barriers to trade between member states, and should therefore be interpreted strictly. It only allows restrictions of the free movement of goods on grounds of protection of intellectual property where they are justified for the purpose of safeguarding rights which constitute the “specific subject-matter” of the intellectual property[16]. 

3.      In order to determine the precise scope of the specific subject-matter of a trade mark, it is necessary to have regard to its essential function, which is to guarantee the origin of the trade-marked product. This guarantee includes the assurance that the product has not been subject to interference by a third party without the consent of the trade mark owner such as to affect the original condition of the product. Accordingly, the right to prevent the trade mark being affixed after repackaging forms part of the specific subject-matter of the trade mark right, whether the mark is the same as the mark originally applied (Hoffmann-LaRoche v Centrafarm[17]) or a different mark of the same proprietor (Centrafarm v American Home Products[18]). 

On the other hand, the specific subject-matter of a trade mark does not include the right to object to the addition of new external packaging which does not bear the registered trade mark, as where the parallel importer replaced the outer packaging with its own packaging which included a transparent window through which the manufacturer’s mark on the internal packaging was visible: Pfizer v Eurim-Pharm[19]

4.      Even where a parallel importer’s activities fall within the scope of the specific subject-matter of a trade mark, the use of the trade mark right against them may be prohibited by the proviso in the second sentence of article 30 (36) of the Treaty of Rome. In Hoffmann-La Roche v Centrafarm[20], the ECJ ruled:

“(a) The proprietor of a trade-mark right which is protected in two Member States at the same time is justified pursuant to the first sentence of article 36 of the EEC Treaty in preventing a product to which the trade-mark has lawfully been applied in one of those states from being marketed in the other Member State after it has been repackaged in new packaging to which the trade-mark has been affixed by a third party. 

“(b) However, such prevention of marketing constitutes a disguised restriction on trade between Member States within the meaning of the second sentence of article 36 where: 

·        It is established that the use of the trade-mark right by the proprietor, having regard to the marketing system which he has adopted, will contribute to artificial partitioning of the markets between Member States;  

·        It is shown that the repackaging cannot adversely affect the original condition of the product;  

·        The proprietor of the mark receives prior notice of the marketing of the repackaged product; and  

·        It is stated on the new packaging by whom the product has been repackaged.”

Applying this ruling, the German Appeal Court and Supreme Court held that the first of these four conditions was not met and that accordingly Centrafarm infringed. They considered that Hoffmann-LaRoche’s use of the trade mark right did not contribute to “artificial partitioning” of the common market since the different pack sizes which made repackaging necessary were introduced at the requests of different national social security institutions and other customers, not in order to partition the market; and price differences were the consequence of exchange rate movements and different government price controls, not Hoffmann-LaRoche’s marketing policy[21].

In subsequent cases (Bristol-Myers Squibb v Paranova[22], Loendersloot v Ballantine[23] and Pharmacia & Upjohn v Paranova[24]) the ECJ attempted to clarify the meaning of the condition that the use of the trade mark will “contribute to artifical partitioning of the markets”. The ECJ specified that the use of a trade-mark right to object to the importation of repackaged goods contributes to artificial partitioning if and to the extent that repackaging is necessary for the goods to be marketed in the state of importation. 

5.      EC Directive 89/104 provides for the harmonisation of certain aspects of the trade mark laws of the member states. Article 7 of the Directive is subtitled “Exhaustion of the rights conferred by a trade mark” and provides:

“1. The trade mark shall not entitle the proprietor to prohibit its use in relation to goods which have been put on the market in the Community under that trade mark by the proprietor or with his consent.

“2. Paragraph 1 shall not apply where there exist legitimate reasons for the proprietor to oppose further commercialisation of the goods, especially where the condition of the goods is changed or impaired after they have been put on the market.”

Where an EC Directive provides for the harmonization of measures for the protection of interests referred to in article 30 (36) of the Treaty of Rome, the compatibility with EC law of any national law relating to such protection must be assessed under the applicable provisions of the Directive. However, a Directive must be interpreted consistently with articles 28-30 (30-36) of the Treaty, and article 7 of the Trade Marks Directive has the same object as article 30 (36) of the Treaty, namely to reconcile the rights of a trade mark owner with the free movement of goods within the EC. Accordingly, the ECJ has stated that its case-law under article 30 (36) of the Treaty must be taken as the basis for determining the rights of the trade mark owner under article 7 of the Directive[25].

The use of a trade mark right or copyright to object to the advertising of parallel imports was raised under both article 7 of the Directive and article 30 (36) of the Treaty in Parfums Christian Dior v Evora[26]. Approaching the issue from the perspective of article 7 of the Directive, the ECJ held that a trade mark owner does not have legitimate reasons to object to advertising in a way which is customary in the reseller’s sector of the trade unless it seriously damages the reputation of the mark. 

Why Laddie J is wrong

Laddie J’s judgment is founded on the proposition that:

“if the importer’s activities do not harm the specific subject-matter of the trade marks, those activities cannot be restrained”[27]

He then applies this proposition on the footing that the “specific subject-matter” means the reputation protected by the trade marks. Since, in his view, the repackaging in issue would not adversely affect the manufacturers’ reputation, they were not entitled to object to it.

Applied in this way, the above proposition proves too much. If it were correct, a trade mark owner would not be entitled to object to the sale on a street market of obvious fakes originating from another member state of the EC, if consumers would not in fact be misled. On a similar basis, a patentee would not be able to prevent imports of infringing goods from other member states if they did not affect its sales.

The fallacy lies in part in a translation from the general to the particular. It is true that the ECJ has repeatedly stated that restrictions on the free movement of goods under national intellectual property laws are only justified in order to safeguard the rights which constitute the specific subject-matter of the intellectual property in question. However, this means that the type of restriction must be appropriate to safeguard the specific subject-matter. It does not mean that the restriction can only be enforced in a case where there is actual damage.

This fallacy is compounded by an incorrect equation of the “specific subject-matter” of trade marks with the reputation protected by them. This does not accord with the concept of “specific subject-matter” adopted by the ECJ. In the case-law of the ECJ, the term “specific subject-matter” is used to refer to exclusive rights of the owner which are integral parts of the intellectual property in question[28]. To determine which rights are comprised in the “specific subject-matter”, it may be necessary to have regard to the essential function of the trade mark as a guarantee of origin enabling the owner to protect its reputation. However, the specific subject-matter is the rights which enable the reputation to be protected, not the reputation itself.

A guarantee that X is responsible for doing something is broken if it is done by Y, even if Y does it just as well, so that no particular damage is done. Thus the guarantee of origin (including absence of interference) provided by a trade mark is impaired if the product is sold in new packaging bearing the mark provided by a third party, even if no specific damage is done to the product or the reputation of the trade mark owner. Furthermore, the use of the mark on repackaging without the consent or knowledge of the trade mark owner may undermine the function of trade marks in general, for example by increasing the difficulty of combating counterfeiting[29], or reducing the reliability of the assumption that there has been no interference which could affect the goods or their use. It is on the basis of these considerations that the ECJ has held that a right to object to the use of a mark on repackaging is in principle justified and comprised in the specific subject-matter of a trade mark right.

In accordance with article 30 (36) of the Treaty of Rome, the ECJ has applied a two stage test to determine whether a restriction on imports is permitted.  The first question is whether the restriction is justified in principle. If so, the second question is whether in the particular case the restriction would constitute a means of arbitrary discrimination or a disguised restriction on trade between member states. Laddie J restated the first question as being whether substantial damage is caused to the specific subject matter in the particular case[30]. This reformulation is inconsistent with decisions of the ECJ.

In Hoffmann-LaRoche v Centrafarm[31] the ECJ considered whether repackaging such as that undertaken by Centrafarm was capable of affecting the original condition of the product as part of the second question. If Laddie J’s analysis were correct, this would have been determined under the first question. The ECJ went on to say that even if the original condition of the product could not be affected, sale of the repackaged product was only permitted if the parallel importer gave notice to the manufacturer[32]. Again, Laddie J’s approach is inconsistent with this.

In Bristol-Myers Squibb v Paranova[33] the ECJ reiterated:

“a trade mark owner may rely on his rights as owner to prevent an importer from marketing a product put on the market in another Member State by the owner or with his consent, where that importer has repackaged the product in new packaging to which the trade mark has been reaffixed, unless:

·        it is established that the use of the trade-mark right by the owner, having regard to the marketing system which he has adopted, will contribute to the artificial partitioning of the markets between Member States; 

·        it is shown that the repackaging cannot adversely affect the original condition of the product; 

·        the owner of the mark receives prior notice before the repackaged product is put on sale; and 

·        it is stated on the new packaging by whom the product has been repackaged.” [emphasis added] 

These conditions are clearly cumulative. Therefore even if the repackaging cannot adversely affect the original condition of the product, the parallel importer is not entitled to market the repackaged product unless the other conditions are satisfied. Laddie J comments[34] that subsequent passages of the judgment in the Bristol-Myers case refer to a “subtle but vital assumption, namely that, absent necessary repackaging, the proprietor has a power to oppose marketing of his own goods.” As the quoted passage shows, the assumption was more explicit than subtle, but in terms which Laddie J preferred to ignore.

These propositions were repeated by the ECJ in Loendersloot v Ballantine[35]. In this case the referring national court specifically stated that the original condition of the product was unaffected by the relabelling. Nevertheless Laddie J concluded that the ECJ assumed that damage of some kind was caused, because the ECJ stated that the person carrying out the relabelling must use means which cause as little prejudice as possible to the specific subject-matter[36]. Laddie J’s conclusion here is based on his misconception that “specific subject-matter” means the reputation protected by the mark, rather than the exclusive right which enables the reputation to be protected.

Laddie J also cited the formal ruling of the ECJ in Loendersloot that a trade mark owner was entitled to object to the relabelling of goods with labels bearing its mark unless four conditions were met. He rightly noted that these included a requirement of prior notice and that he could “not see any way out of this”[37]. He wrongly supposed that they did not include a requirement that the relabelling is necessary[38]. In so supposing he ignored the condition specified in the ruling that the use of the trade mark rights would contribute to artificial partitioning of the market between member states. The requirement that the relabelling is necessary derives from this condition.

As the ECJ explained in Bristol-Myers Squibb v Paranova[39] and reiterated in the main part of its Judgment in Loendersloot, the “artificial partitioning” condition is only satisfied if and to the extent that the trade mark right is invoked against repackaging or relabelling which is necessary to market the product in the state of importation. The ECJ went on to consider the key issues in the Loendersloot case, namely whether relabelling to remove batch data and the word “pure” was necessary in this sense, concluding that it was in respect of the second but not in respect of the first. Although the ECJ did not repeat its detailed findings in the formal ruling, it obviously intended them to be taken into account in applying the criterion of “artificial partitioning”. Laddie J ignored the main issues in the case and the major part of the ECJ’s judgment.

The propositions established in Hoffmann-LaRoche v Centrafarm[40] and clarified in Bristol-Myers Squibb v Paranova[41] were again repeated by the ECJ in Pharmacia & Upjohn v Paranova[42] and applied to the situation where a different trade mark of the manufacturer was substituted. The ECJ confirmed that 

“The view that the condition of market partitioning defined in Bristol-Myers Squibb applies to the case where a trade mark is replaced also implies, contrary to what Paranova argues, that this replacement of the trade mark must be objectively necessary within the meaning of that judgment if the proprietor is to be precluded from opposing it.”

Laddie J suggests that the reference to Bristol-Myers Squibb might be taken as incorporating his revisionist interpretation of that case[43]. However, this interpretation is further contradicted by the ECJ’s confirmation in Pharmacia that

“according to the Court’s case law on the repackaging of products with reaffixing of the original trade mark or replacement of that trade mark by the trade mark used by the proprietor of both in the importing member state, the capacity of the trade mark proprietor to oppose such acts under national law is regarded as justified in the light of article 36 of the Treaty, unless it is established, in particular, that such opposition contributes to the artificial partitioning of the markets between Member States.” [emphasis added]

The only judgment of the ECJ which might be said to accord with Laddie J’s approach is Parfums Christian Dior v Evora[44]. In this case the ECJ held that a trade mark owner is not entitled to object to the use of a mark in advertising in relation to goods which the owner has put them on the market under that mark, unless the owner has legitimate reasons to object; and that the owner does not have legitimate reasons to object to advertising in a way which is customary in the reseller’s sector of the trade unless it seriously damages the reputation of the mark.

Laddie J argues that there is no real or satisfactory distinction between advertising and information on packaging. If this premise were correct, the Dior case would indeed indicate that the trade mark owner could only object to repackaging bearing the mark if this use of the mark seriously damaged its reputation.

However, there is a significant difference between packaging and advertising. It is normal and assumed by consumers that packaging is provided by the manufacturer as part of the product. By contrast, it is common for advertising to be carried out by distributors and retailers; and the manufacturer is not taken to be necessarily responsible for it. Accordingly, use of a mark by a distributor in advertising does not undermine the mark as a guarantee of origin as it does in the case of repackaging.

It is true that there are some borderline cases of items which might or might not be regarded as packaging in this connection[45]. However, the existence of some borderline cases does not negate the significance of the basic distinction[46].

The Right Answer

The passages of the evidence in Glaxo v Dowelhurst quoted in Laddie J’s judgment suggest that the manufacturers were using their trade mark rights to create as many arbitrary obstacles as possible to parallel imports, and that the combined effect of each manufacturer’s objections was to constitute a substantial restriction on such imports even though each individual objection might have been avoided by the parallel importers. If so, it might well be right to conclude that in the circumstances the use of the trade mark rights constituted a “means of arbitrary discrimination or a disguised restriction on trade between member states”.

It is difficult to believe that the ECJ intended its observations in the cases discussed above to constitute an exhaustive statement of all circumstances which might fall within the second sentence of article 30 (36) of the Treaty. Unfortunately the ECJ’s detailed exegesis in these cases has distracted attention from the source of the principle.

Part of the difficulty is that the system of cooperation instituted by article 234 (177) of the Treaty of Rome has not functioned as it should. In accordance with this provision, it is for national courts to determine the facts and rule on the substance of the case, but they may (and, in the case of a court from which there is no appeal, must) refer questions of interpretation of the Treaty of Rome and EC legislation to the ECJ.

In theory, the ECJ should lay down principles of law which are applied by national judges to the facts of particular cases. In practice, in this area, the ECJ has been drawn into making pronouncements on the facts of particular cases, perhaps because national courts have asked the ECJ to determine particular issues of fact, and perhaps because national courts seem to have had difficulty in interpreting and applying the principles laid down by the ECJ. However, pronouncements on the facts of particular cases ought not to be treated as necessarily applicable to different factual situations.

In this context, it is not helpful for national courts to add to the confusion by further misinterpretation of the judgments of the ECJ. Laddie J should have made findings of fact as to whether each manufacturer’s objections to the repackaging were arbitrary and whether in combination they amounted to a substantial restriction on trade between member states[47]. If so, he should then have asked the ECJ to clarify whether its Judgment in Bristol-Myers Squibb v Paranova[48] provided an exhaustive statement of the matters which might constitute “a means of arbitrary discrimination or a disguised restriction on trade between member states” within the meaning of article 30 (36) of the Treaty; or whether it is open to national courts to conclude that this condition is satisfied in other circumstances, such as those found in Glaxo v Dowelhurst.

An alternative approach

There is, however, an alternative and more radical basis on which the ECJ should be asked to revisit its case-law on repackaging. Properly interpreted, article 7 of the Trade Marks Directive goes further than articles 28-30 (30-36) of the Treaty of Rome in restricting the rights of a trade mark owner in relation to parallel imports between member states. In this connection, it is unfortunate that the Judgment (and, it would appear, the parties’ arguments) in Glaxo v Dowelhurst focussed on the application of article 30 (36) of the Treaty, treating article 7 of the Directive as an afterthought of no consequence[49].

Although article 7 of the Trade Marks Directive and article 30 (36) of the Treaty have the same object, they differ in both terms and context. In the first place, Article 7 of the Directive forms part of Community harmonising legislation which comprehensively regulates the protection of trade mark rights by the member states[50]. By contrast, Article 30 (36) merely permits member states to adopt and maintain national laws protecting various overriding interests, even though they constitute barriers to trade between member states, unless and until the matter in question is regulated by Community legislation as contemplated in articles 94-97 (100-102) of the Treaty[51].

The second sentence of article 30 (36) indicates that the powers thus retained by member states must not be abused. However, this proviso does not amount to legislation defining the relationship between the respective overriding interests and the principle of free trade. Unless and until Community legislation is adopted, member states retain an area of discretion in the protection of these interests[52].

The ECJ is not entitled to usurp the functions of the national and Community legislatures under the guise of interpretation of the proviso to article 30 (36). Indeed, it may fairly be argued that it has already gone too far in its detailed rulings in the trade mark cases discussed above. It should not go any further. A ruling that a national law for the protection of one of the overriding interests identified in article 30 (36) may only be enforced in a case where there is actual damage to the interest concerned (as suggested by Laddie J) would have substantial repercussions in other areas such as public health.

Moreover, in article 7(2) of the Trade Marks Directive the Community legislature adopted terms which differ from those of article 30 (36) of the Treaty and the ruling of the ECJ in Hoffmann-LaRoche v Centrafarm[53]. This suggests that the Community legislature did not intend to follow the two-stage approach indicated by article 30 (36) of the Treaty and applied by the ECJ in the Hoffmann-LaRoche case.

The terms of article 7 of the Directive indicate that a trade mark right may not be invoked against the use of the mark on repackaging parallel imports between member states unless the proprietor has good reasons to object in the particular case. By contrast, under article 30 (36) of the Treaty, as interpreted by the ECJ, the invocation of a trade mark right against such use is in principle justified unless the conduct of the proprietor is such that the proviso applies.

Cases such as Glaxo v Dowelhurst may lie in the middle ground: on the one hand the trade mark owner may not have good trade mark reasons to invoke the trade mark right against parallel imports; on the other hand, the circumstances may not meet the unlawful partitioning and other criteria identified in Hoffmann-La Roche v Centrafarm[54] and clarified in Bristol-Myers Squibb v Paranova[55] and other cases. The formulation of article 7 of the Directive indicates that the Community legislature intended to go further than the ECJ in determining that cases in the middle ground should be decided in favour of the parallel importer.

In Parfums Christian Dior v Evora[56] the ECJ’s reasoning followed the approach indicated by article 7 of the Directive, untrammelled by any earlier case-law under article 30 (36) of the Treaty relating to the use of trade marks in advertising. The ECJ did not consider in this case whether the right invoked was within the specific subject-matter of the trade mark right, and (if so) whether its use resulted in artificial partitioning of the market. The ECJ simply considered whether the trade mark owner had legitimate reasons to object to the use of the mark in advertising of the type in question.

As discussed above, the ECJ’s decision in this case is not inconsistent with the case-law on repackaging and relabelling, since there is an important distinction between advertising and repackaging. However, the ECJ’s reasoning in this case differs significantly from that in the cases on repackaging. This is not because the ECJ’s interpretation of article 30 (36) of the Treaty was wrong in all these cases, nor because these cases can be interpreted as Laddie J suggests. It is because article 7 of the Directive differs from article 30 (36) of the Treaty.

If the above analysis is correct, articles 28-30 (30-36) of the Treaty will continue to govern issues relating to parallel imports which currently fall outside the Trade Marks Directive, such as the application by a parallel importer of a different mark of the same manufacturer[57] or infringement of copyright where a logo, artwork on packaging, or instructions are copied in connection with parallel imports[58].

Member states must not enact or maintain laws which would undermine the provisions of a Directive[59], and in cases between private individuals national legislation must be interpreted so far as possible to comply with the requirements of Community law[60]. Furthermore, where the protection of an interest is regulated by comprehensive Community legislation, national legislation which does not accord with the Community legislation ceases to be justified under article 30 (36) of the Treaty[61]. It could be argued that these principles would, for example, restrict the use of copyright in a trade mark, even if, apart from the Trade Marks Directive, the use in question would be permitted under article 30 (36) of the Treaty.

On the other hand the preamble to the Trade Marks Directive expressly states that it “does not exclude the application to trade marks of provisions of law of the Member States other than trade mark law”. Therefore, the better view appears to be that the Trade Marks Directive does not affect the enforcement of copyright or other intellectual property rights in trade marks.

While the existence of different governing rules and the possibility of different consequences relating to concurrent rights is not ideal, it is a reflection of the fact that the protection of intellectual property has not been completely and uniformly harmonised in the EC. It does not justify imposing rules specified by harmonising legislation in situations outside its scope.

So far, the ECJ has held that article 7 of the Directive should be interpreted in the same way as article 30 (36) of the Treaty[62]. It should be asked to reconsider this point.

Another point

The judgment in Glaxo v Dowelhurst raises a further point of interest: whether in the UK parallel importers (or anyone else) can rely on section 10(6) of the Trade Marks Act 1994. This provides that it is not an infringement to use a trade mark for the purpose of identifying goods or services as those of the proprietor, unless the use is otherwise than in accordance with honest practices and takes unfair advantage of, or is detrimental to, the distinctive character or repute of the trade mark.

There is no directly equivalent provision of the Trade Marks Directive. Article 6(1)(b) of the Directive (translated as section 11(2)(b) of the Act) allows indications concerning the quality or other characteristics of goods or services in accordance with honest practices. As discussed above, Article 7 of the Directive (translated as section 12 of the Act) allows the use of a mark in relation to goods which have been placed on the market in the Community. It may be appropriate to interpret and apply these provisions so far as possible to accord with the subsequent EC Directive on Comparative Advertising[63], which requires comparative advertising to be permitted subject to certain conditions, including no discrediting, denigration or taking unfair advantage of the reputation of trade marks[64].

It is not clear whether section 10(6) of the Act extends beyond these provisions when properly interpreted. If it does not, it is redundant. If it does, it is contrary to EC law. Since articles 5-7 of the Trade Marks Directive constitute a complete harmonisation of the rules relating to the rights conferred by trade marks, member states are not entitled to create additional exceptions to such rights which are not permitted by these provisions[65].

The provisions of the Trade Marks Directive do not have direct effect as against private individuals, but national courts must interpret the applicable national legislation so far as possible to comply with the requirements of the Directive[66]. Accordingly, the narrowest possible interpretation should be given to section 10(6) of the Act. Although this issue has been raised in one case[67], it has not been determined and will no doubt have to be argued some other time. There is also the possibility of damages claims against the state[68]. Section 10(6) of the Act should be repealed.

© Jonathan DC Turner 2000


[1] See e.g. the decision of the Court of Appeal in British Leyland v Armstrong [1984] FSR 591 (reversed by HL on other grounds [1986] RPC 279), discussed by Jonathan DC Turner, “BL v Armstrong – Euro-Defences misunderstood” [1984] EIPR 320; Allen & Hanbury’s v Generics [1985] FSR 229, [1986] RPC 203, discussed by Jonathan DC Turner, “Allen & Hanbury’s v Generics - Acte Clair and Wrong” [1988] EIPR 186

[2] Case C-355/96 [1998] ETMR 539

[3] Directive 89/104 (First Council Directive to approximate the laws of the Member States relating to trade marks)

[4] [1999] ETMR 700

[5] Case C-9/93 [1994] ECR I-2789

[6] Case 102/77 [1978] ECR 1139

[7] Cases C-427, 429, 436/93 [1996] ECR I-3457

[8] Case 349/95 [1997] ECR I-6227

[9] Case C-379/97 [1999] ETMR 937

[10] These principles now apply also to trade within the EEA but to avoid unnecessary complication the discussion in this article is limited to the position within the EC

[11] 28th February 2000

[12] In Levi-Strauss v Tesco (22/7/99) Pumfrey J declined to enforce trade marks to prevent parallel imports from the US and referred a more neutral series of questions to the ECJ on the meaning of “consent” in art 7 of the Trade Marks Directive. In Zino Davidoff v M & S Toiletries and Jupe v M & S Toiletries (Outer House, Court of Session, 4/4/00) defences of implied consent to marketing in the EEA within the meaning of article 7 of the Trade Marks Directive were struck out.

[13] i.e. before the renumbering effected by the Treaty of Amsterdam

[14] Case 8/74 Dassonville [1974] ECR 837, 852 at para 5; cases C-267, 268/91 Keck and Mithouard [1993] ECR I-6097

[15] Case 16/74 Centrafarm v Winthrop [1974] ECR 1185, 1194 para 9; Case 8/74 Dassonville [1974] ECR 837, 852 at para 5

[16] Case 78/70 Deutsche Grammophon v Metro [1971] ECR 487. The phrase “specific subject matter” does not appear to have been used in the procedure and probably originated in the deliberation of the judges conducted in French as “objet spécifique”, which is correctly translated as “specific subject”.

[17] Case 102/77 [1978] ECR 1139, 1164 at paras 7-8

[18] Case 3/78 [1978] ECR 1823, 1840-1 at paras 12-17

[19] Case 1/81 [1981] ECR 2913

[20] Case 102/77 [1978] ECR 1139, 1167

[21] [1984] 2 CMLR 561

[22] Cases C-427, 429, 436/93 [1996] ECR I-3457, 3534-3536 at paras 52-57

[23] Case 349/95 [1997] ECR I-6227

[24] Case C-379/97 [1999] ETMR 937

[25] Cases C-427, 429, 436/93 Bristol-Myers Squibb v Paranova [1996] ECR I-3457, 3527-3531 at paras 25-41; Case 349/95 Loendersloot v Ballantine [1997] ECR I-6227, 6251 at para 18; Case C-379/97 Pharmacia & Upjohn v Paranova [1999] ETMR 937

[26] Case C-337/95 [1998] ETMR 26

[27] Para 32

[28] The formula repeatedly used is “Article 36 in fact admits of derogations from the free movement of goods only to the extent to which such exceptions are justified for the purpose of safeguarding the rights which constitute the specific subject-matter of that property.” (see e.g. Case 102/77 Hoffmann-LaRoche v Centrafarm [1978] ECR 1139, 1163 para 6).

[29] In relation to the requirement of prior notice Laddie J considered (para 136) that “With respect, it is a little difficult to see why a legitimate importer of unadulterated goods should be subject to restrictions, unrelated to the condition of his goods, so that the proprietor can more easily catch counterfeiters”. With respect to Laddie J, it is a little difficult to see why not. The judge also considered that this concern is divorced from reality, since it is normally possible to distinguish repackaged goods from genuine unrepackaged ones. However, the problem is distinguishing counterfeit goods from repackaged genuine ones.

[30] Glaxo Group v Dowelhurst paras 64-65, 92

[31] Case 102/77 [1978] ECR 1139 at 1164 paras 9-11

[32] Paras 11-12

[33] Cases C-427, 429, 436/93 [1996] ECR I-3457, 3533 para 49

[34] Glaxo Group v Dowelhurst at para 64

[35] Case 349/95 [1997] ECR I-6227

[36] Glaxo Group v Dowelhurst at para 72

[37] Glaxo Group v Dowelhurst at paras 139-140

[38] Glaxo Group v Dowelhurst at para 73

[39] Cases C-427, 429, 436/93 [1996] ECR I-3457, 3534-3536 at paras 52-57

[40] Case 102/77 [1978] ECR 1139 at 1164 paras 9-11

[41] Cases C-427, 429, 436/93 [1996] ECR I-3457, 3533 para 49

[42] Case C-379/97 [1999] ETMR 937

[43] Glaxo Group v Dowelhurst at para 79

[44] Case C-337/95 [1998] ETMR 26

[45] See Glaxo Group v Dowelhurst at para 52

[46] A similar, basic distinction is drawn between packaging and advertising in cases C-267, 268/91 Keck and Mithouard [1993] ECR I-6097

[47] Case C-234/89 Delimitis v Henniger Brau [1991] ECR I-935 (a ruling under article 81 (85) of the Treaty of Rome) would support the view that it is appropriate to consider the cumulative effect of each manufacturer’s objections, but not that of all the manufacturers’ objections taken together, unless they were concerted. Allegations that the manufacturers’ objections were concerted contrary to article 81 (85) have in fact been made by the defendants in Glaxo v Dowelhurst but were not determined in this Judgment of Laddie J.

[48] Cases C-427, 429, 436/93 [1996] ECR I-3457, 3534-3536 at paras 52-57

[49] See paras 162-3

[50] Case C-355/96 Silhouette v Hartlauer [1998] ETMR 539 at para 25; Case C-337/95 Parfums Christian Dior v Evora [1998] ETMR 26 at 38, para 42. Cf. however, Case C-379/97 Upjohn v Paranova [1999] ETMR 937 where the ECJ recognised article 7 of the Trade Marks Directive does not apply where the parallel importer substitutes a different mark of the manufacturer used in the state of importation and that this situation has to be evaluated directly under article 30 (36) of the Treaty

[51] Case 35/76 Simmenthal v Minister for Finance [1976] ECR 1871

[52] See e.g. Case 104/75 Adriaan de Peijper [1976] ECR 613, 635 at para 15

[53] Case 102/77 [1978] ECR 1139 at 1164 paras 9-11

[54] Case 102/77 [1978] ECR 1139, 1164 at paras 7-8

[55] Cases C-427, 429, 436/93 [1996] ECR I-3457, 3533 para 49

[56] Case C-337/95 Parfums Christian Dior v Evora [1998] ETMR 26

[57] Case C-379/97 Pharmacia & Upjohn v Paranova [1999] ETMR 937

[58] Cf. Case C-337/95 Parfums Christian Dior v Evora [1998] ETMR 26

[59] e.g. Case 130/85 Wulro [1986] ECR 2035, Case C-249/92 Commission v Italy [1994] ECR I-4311

[60] Case 106/89 Marleasing [1990] ECR I-4135, Case C-355/96 Silhouette v Hartlauer [1998] ETMR 539, 548 at para 36

[61] Case 35/76 Simmenthal v Minister for Finance [1976] ECR 1871

[62] Cases C-427, 429, 436/93 Bristol-Myers Squibb v Paranova [1996] ECR I-3457 at 3531, para 40; Case 349/95 Loendersloot v Ballantine [1997] ECR I-6227, 6251 at para 18; Case C-379/97 Pharmacia & Upjohn v Paranova [1999] ETMR 937 at 946, para 30; Case C-337/95 Parfums Christian Dior v Evora [1998] ETMR 26, 41 at para 53

[63] EC Directive 97/55 (OJ (1997) L290/18), amending EC Directive 84/450; see Corgi Trade Mark [1999] RPC 549

[64] EC Directive 97/55, Art 1(4)

[65] Case C-355/96 Silhouette v Hartlauer [1998] ETMR 539, 546, paras 25-26; but see note 47 above

[66] Case C-355/96 Silhouette v Hartlauer [1998] ETMR 539, 548, para 36

[67] SimplexEnterprises v Visor Marketing (Judge Hegarty, 29/3/00, unreported, transcript available from Cater Walsh & Co)

[68] Cases C-6,9/90 Francovitch v Italy [1991] ECR I-5357

 

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