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High Court ruling clarifies the legal position of parallel imports of medical devices

Posted on 26 March 2019

High Court ruling clarifies the legal position of parallel imports of medical devices

A recent High Court ruling (Dansac and ors v Salts Healthcare Limited and ors) has clarified the law relating to relabelled imported pharmaceutical and medical products following the 2018 ruling of the Court of Justice of the European Union (CJEU) in Junek v Rauscher (discussed in our July 2018 edition). In particular, the Court's decision provides guidance on when a parallel importer will be obliged to give prior written notice of its importation to the trade mark owner (under the criteria known as the 'Bristol-Myers Squibb (BMS) conditions' developed in that case by the CJEU).  Where the goods are over-stickered, but there is no repackaging, it will only be necessary to notify the trade mark owner where the over-stickered label jeopardises the product's guarantee of origin. As the judge said, Junek, and now this decision, have the potential to represent a "major chink in the BMS regime".

Background

This judgment follows a strike out application to a trade mark infringement claim brought by Hollister in a long-running series of disputes against Medik relating to parallel imports of ostomy bags and related products. In an earlier dispute between the parties, the Court had found that Medik's failure to give notice to Hollister under the fifth BMS condition meant that the relevant goods were infringing.

Article 15 of the EU Trade Mark Regulation provides that the owner of a trade mark cannot prohibit use of their mark in relation to goods which have been put on the market in the EU by the proprietor or with his consent (those trade mark rights are said to be 'exhausted'), except where there are legitimate reasons to oppose further commercialisation of the goods, for instance where the condition of the goods is changed or impaired after they have entered the market.

The defendants imported the claimants' products from Spain and Italy into the UK market. Before the products entered the UK market, they affixed labels to the outside of the boxes, but did not otherwise open or interfere with the packaging. The claimants' case turned on whether over-stickered goods which had not been otherwise interfered with would be subject to the BMS conditions. They argued that Junek should be confined to the specific facts in that case – namely the affixing of a small, unobjectionable label showing only the name of the parallel importer to a blank part of the packaging. Here, the defendants had applied a large label containing product information.

Decision

Birss J determined that it was highly relevant to the decision in Junek that the packaging had not been opened or interfered with. He concluded that, if a box has not been opened and, provided an over-stickered label does not risk the guarantee of a product's origin, the BMS conditions will not apply (and so notice will not be required to the trade mark owner).  Accordingly, in over-stickering cases, a trade mark owner will need to show that some risk is posed to the essential function of their mark. These findings will benefit parallel importers although there is the risk, of course, that a court could later decide that the relevant over-stickering was objectionable, and so there may be trade mark infringement if the BMS conditions, including providing notice, have not been met.

In particular, the Court stressed that this does not mean that the BMS conditions should not be applied in all cases where a product's packaging is left unopened, and where over-stickering does not cover the original label. The carve-out is for circumstances where the product's guarantee of origin is not adversely affected by the relabelling. For this reason, the case will continue to trial based on the separate infringement claim (alongside certain other issues) relating to the defendant's use of one of Hollister's marks on their stickers, rather than the mark used in the country of origin which appears on the claimants' sticker. This will consider whether this instance of relabelling poses a risk to the product's guarantee of origin.

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