Opinion favours pharma brand owners over importers’ product repackaging

Out-Law News | 18 Jan 2022 | 2:12 pm | 3 min. read

The rights of brand owners to prevent parallel importers from repackaging products bearing their trade marks beyond what is necessary have been reinforced in a new opinion issued by a legal adviser to the EU’s highest court, an expert in brand protection has said.

Emily Swithenbank of Pinsent Masons said brand owners will be hoping the Court of Justice of the EU (CJEU) follows the opinion, which considered how laws aimed at preventing falsified medicines from being sold in the EU impact on trade mark holders’ rights in the pharmaceuticals market, when it comes to issue a formal judgment – expected in the months ahead.

In the pharmaceuticals market, trade mark holders often raise objections to the repackaging of their products by parallel importers – businesses that buy goods that have been placed on the market in one EU country and then sell them in another, typically to take advantage of the different market conditions, including in relation to the pricing of the goods. Parallel importers, however, often must repackage the products to conform with local requirements in the import market.

The tension between the rights of trade mark holders and parallel importers has been extensively considered by courts around Europe, including the CJEU. The case law that has been established has sought to find an appropriate balance in the competing rights and generally favours trade mark holders’ right to restrict repackaging unless it is necessary to enable those imported goods to be placed on the local market.

In his new opinion, which is not binding on the CJEU, advocate general Maciej Szpunar said the requirements parallel importers face under the EU’s Falsified Medicines Directive (FMD) do not alter this fundamental legal test, which was also examined in another case before the CJEU that Szpunar issued an opinion on last week.

One of the issues the CJEU has been asked to examine in the current case is whether parallel importers should be allowed to re-box imported medicines if re-labelling would be sufficient to meet the requirements for repackaging laid down by previous CJEU case law and of the FMD. The main argument raised against re-labelling being sufficient before the CJEU is that it would involve removing the anti-tamper devices placed on medicines packets and leave traces of damage.

According to Szpunar, however, parallel traders cannot generally rely on a presumption of widespread resistance to medicinal products whose anti-tamper devices have been replaced to justify re-boxing those products. The exception to this is where the visible traces of the opening of the packaging causes such a strong resistance to the medicinal products in the original packaging that it constitutes a real obstacle to effective access to the market of the member state of importation.

Szpunar said the extent of resistance and its effect on market access must be verified by evidence on a case-by-case basis, and further advised the CJEU to rule that EU law does not permit national regulators to generally require imported medicinal products to be repackaged into new packaging and to restrict mere re-labelling to exceptional cases.

“If the CJEU follows the opinion of advocate general Szpunar it will remain permissible for brand owners to consider if it is necessary for parallel traders to re-box as oppose to re-label,” said Swithenbank. “That is contrary to the view of the European Commission and undoubtedly many parallel traders across Europe that have largely adopted re-boxing as their default method of repackaging pharmaceuticals. While it is yet to be seen if the court will endorse the views of Szpunar, this opinion seeks to put the control back with brand owners to ensure that their trade mark rights are not interfered with any more than is strictly necessary.”

Marc Holtorf, a specialist in life sciences at Pinsent Masons in Munich, said: "From a wider perspective, the advocate general's opinion seems to be right. After all, marketing authorisation holders – who are often also trade mark owners – have an obligation to ensure appropriate and continued supplies of their medicinal products so that the needs of patients in the relevant EU member states are covered. Parallel traders, however, make use of different market conditions without such obligation and thereby make it more difficult to ensure appropriate supplies, at least in the exporting member states."

Swithenbank said the opinion also “opens the door” for brand owners to raise objections to re-boxing in certain jurisdictions, such as Denmark, where they had previously been unable to do so due to the rules there forcing parallel traders to re-box rather than re-label other than in exceptional circumstances.

In his opinion, Szpunar also considered the rights of trade mark holders to oppose de-branding or partial de-branding of medicinal products in the course of repackaging by parallel importers. This issue has also been considered by the courts previously, with conditions for opposition being set out in case law – including where repackaging damages the reputation of the trade mark.

Swithenbank said: “The advocate general’s opinion that rights holders may object to such repackaging on account of undermining the essential function of the trade mark to guarantee origin, without then needing to assess the repackaging conditions in case law, provides helpful clarification. His further opinion that it is never possible to totally de-brand pharmaceuticals will also be welcomed by rights holders as the use of their brands obliges parallel traders to give notice of the intended repackaging and gives manufacturers the opportunity to raise objections. Szpunar reconfirmed the view of the CJEU in previous decisions that even if there is total de-branding, and in particular if a new brand is applied, a trade mark owners’ rights may still be invoked.”