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Trade Mark infringement on parallel imports of medical devices

Date: 25 October 2019

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In a trade mark infringement action related to parallel imports of medical devices into the UK (Dansac A/S & Anor v Salts Healthcare Ltd & Ors [2019] EWHC 104 (Ch)), the High Court has held that importers do not need to provide notice to the original trade mark owner when parallel importing relabelled goods, provided that such relabelling does not obscure the guarantee of origin of the goods provided by the trade mark.

 

The claimants belonged to the major Hollister Group of companies, which manufacture and sell ostomy bags and related products worldwide under various UK and EU registered trade marks. There were a total of four defendants: Medik Ostomy Supplies (a parallel importer of Hollister goods from elsewhere in the EEA); Mr Badiani (a director of Medik) and Salts Heathcare Limited and Moorland Surgical Supplies Limited (both customers of Medik, and actually sold the goods at issue to the relevant healthcare services and other entities in the UK).

 

Some of the imported goods were so-called “relabelled goods”: products that Medik had parallel imported from elsewhere in the EEA and stuck labels on the outside but not opened the box. The other limb of the case concerned “unrelabelled goods”: goods which Medik supplied by simply buying from elsewhere in the EEA and putting them on the market in the UK without opening the box and without adding any new labels.

 

Hollister argued that Medik should have given notice to the trade mark owner before the repackaged product was placed on sale and, on demand, supply them with a specimen of the repackaging product (which was one of the BMS criteria established in Joined Cases C-427/93, C-429/93 and C-436/93 Bristol-Myers Squibb [1996] ECR I-3457. The defendants retorted that simply sticking a label on an unopened box, which did not obscure the originator’s label or branding, did not engage the BMS criteria at all (in other words, the fact that no notice had been given did not matter), and the trade mark owner was not allowed to use trade mark rights to prevent sale of those parallel imported goods. The defendants based their argument on the CJEU’s judgment Junek v Lohmann & Rauscher (C-642/16), which had been handed down after the present proceedings had commenced.

 

Hollister argued that the sale of the unrelabelled goods was unlawful because the labelling and product information did not contain an English language translation of the information required under the Medical Device Directive (93/42/EC) and the Medical Device Regulations 2002/618. Hollister claimed such an offence was necessarily damaging to the reputation of their marks and, therefore, the exception to exhaustion applied and they could allege trade mark infringement. The defendants contended that claim should be struck out for being improbable given that there were language-free cartoon instructions. The defendants also said that the claim was all the more improbable because the test to be applied to bring such a claim into this area of law was that serious damage had to be caused to the mark’s reputation.

 

Relabelled goods

Birss J found that Junek was not an authority for the proposition that (i) if the box had not been opened and (ii) if the new label did not cover an existing label, then necessarily (iii) any new label was free of the BMS criteria. The new label would still need to be considered, in order to determine whether or not the guarantee of origin was put at risk. For Hollister to succeed, they had to show that the relabelling at least risked harming the guarantee of origin provided by their trade mark. It was not enough to plead (as Hollister had originally) that because Medik’s product wasn’t in accordance with the notice, it necessarily infringed. That was because the BMS criteria might not apply. To rely on lack of notice alone in this particular case did not render the goods infringing under BMS. Accordingly, Birss J found that Hollister’s original pleading did not disclose an arguable case.

 

The re-amended particulars of the claim

The fact that the new label included one of Hollister’s own trade marks made the facts of the present case different from Junek. Hollister contended that even if the broad proposition – namely that a mere lack of notice meant that there was infringement – was not enough for their claim, they were still entitled to oppose further commercialisation under the exhaustion rules and proposed some amendments to their Particulars of Claim. Birss J gave permission for Hollister’s proposed amendments as follows:

 

  • the new label included one of their own trade marks;
  • the new labels contained inconsistent marks; or
  • the new labels contained a confusing statement that Hollister’s UK mark was the equivalent of the European mark.

 

Unrelabelled goods

Although Birss J remarked that “it is worth noting that, as one often sees today, the instructions for these goods are pictorial and do not use words at all”, he nevertheless held that the omission of English-language instructions from those goods arguably breached the Medical Device Directive and Regulations, which would constitute a criminal offence if proven. In his opinion, however, this strike out application was not the occasion to decide whether there was a test for the seriousness of any damage to the marks’ reputation; if the sale of unrelabelled goods amounted to a breach of consumer protection law, then it was a short step from that to say that the commission of a criminal offence could cause damage to the reputation of a mark, and that this might be a legitimate reason for the trade mark owner to oppose the marketing of the goods. Accordingly, Birss J found that Hollister’s plea was not fanciful and declined to strike out the Particulars of Claim relating to these goods.

 

Comment

The famous five BMS criteria to be applied when repackaging (in the broadest sense) parallel imported goods are as follows:

 

  1. reliance on trade mark rights by the owner in order to oppose the marketing of repackaged products under that trade mark would contribute to the artificial portioning of the market between Member States;
  2. the repackaging does not affect the original condition of the product;
  3. the new packaging clearly states who repackaged the product;
  4. the presentation of the repackaged product is not liable to damage the reputation of the trade mark; and
  5. the importer gives notice to the trade mark owner of the repackaged product.

 

This judgment brings some welcome clarity to the application of the BMS criteria in cases concerning overstickered medical devices imported into the UK; hopefully, such criteria will no longer be applied without specific consideration of the nature of the particular labels which have been put on the packaging.

 

 

Contact our MedTech and Medical Devices team for more information on our work in this key area.

 

 

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