These appeals and cross appeals are from two judgments of Laddie J of 28^th February 2000 and 6^th February 2003. Having heard the evidence prior to the first judgment, Laddie J made findings of fact. On the basis of these he referred some questions to the ECJ. The ECJ gave its answers on 23^rd April 2002. The parties could not agree its effect, hence the need for further argument and a second judgment.

The claimants in the various actions are well-known pharmaceutical manufacturers. The two defendants are parallel importers of trade-marked and dealers in generic pharmaceuticals. This case is about the defendants’ parallel imports of trade-marked pharmaceuticals bought in other member states of the EU. Before us Mr Simon Thorley QC and Mr Geoffrey Pritchard appeared for Eli Lilly, Mr Michael Silverleaf QC and Mr Richard Hacon appeared for Glaxo (who have merged with SmithKlineBeecham) and Boehringer Ingelheim. Mr Nicholas Green QC and Mr Richard Arnold QC represented the defendants.

The actions were principally for infringement of registered trade marks. In addition Mr Silverleaf advanced a case of passing off on behalf of Boehringer Ingelheim. Laddie J rejected that in his first judgment. In his second judgment, he held that all the trade mark actions about reboxing succeeded but those about relabelling failed. Hence it is that the main appeals are by the parallel importers. Boehringer cross-appeals the rejection of its passing off claim. Glaxo and Boehringer cross-appeal the rejection of their objections to certain manners of relabelling. All the claimants submit that the 2^nd judgment should be upheld on the further ground that it was not proved that reboxing of parallel imported goods was necessary to achieve effective access to the UK market. Certain minor matters are also raised by way of cross-appeal.

I begin by describing the various things the defendants are doing. In each case they purchase in a Member State other than the UK the original pharmaceutical, packed in cardboard boxes appropriate for that Member State containing an appropriate instruction leaflet for that Member State. Some of the goods are pills packed in blister packs. Others are inhalers (commonly called “puffers”) on which is stuck a label. There is no dispute that under the free-circulation rules (and particularly Art. 28) of the EC Treaty they are entitled, so far as trade mark law is concerned, to import and sell these goods in the packaging in which they were purchased.

The actual pharmaceuticals are the genuine goods, identical to those on the UK market. They may indeed come off the same production line since pharmaceutical production does not involve giant factories and distribution is cheap – you can get a lot of pills in a lorry. But the boxing, labelling and information leaflets as they stand are not suitable for this country. Information leaflets for this country must be in English and comply with our regulatory requirements which may differ from those in the country of origin. Moreover the boxes have instructions and details in foreign languages.

The parallel importers therefore, for regulatory and market acceptability reasons, make changes. What they mainly do so far as this case is concerned is called “reboxing”. They take the contents of the foreign boxes out, and put them in fresh boxes designed for the UK market along with fresh information leaflets in English which comply with UK regulatory approval. In the case of inhalers, not only do the importers rebox, they also stick appropriate English language labels on the inhalers themselves, labels which completely overcover the foreign language label.

Reboxing generally involves re-affixing the original trade mark on the information leaflets and boxes. But in some instances the importer has instead only used the generic name of the drug on the box – not its trade mark. This was called “de-branding”. In such a case the original trade mark is not removed from every aspect of the product – in particular blister packs and often the pills themselves bear it. For obvious reasons the mark cannot be removed from the pills or the blister packs without the risk of affecting the quality of the drugs themselves. So “de-branding” in the context of this case really means partial de-branding. The only affixing of the trade mark by the parallel importers is on the new information leaflet prepared for UK use.

In other cases the defendants’ new boxes not only bear the trade mark of the drug, but also have a get-up which may serve as being distinctive of the importer. This is called “co-branding.” Such co-branding has always had on the side of the box in clearly legible, but less prominent, small print, the information mentioned below.

An alternative operation is called “stickering”. This involves sticking an appropriate label to an original foreign language box, having replaced the internal foreign information leaflet with an appropriate UK leaflet. Complaint is made of the form of some stickered products.

Whether there is reboxing or stickering, for the purposes of this case it is agreed that we should proceed on the basis that the importer has indicated clearly on the new box or sticker that the goods were procured in the EU and repackaged by the importer. An example of the sort of thing involved reads:

This dispute is mainly about whether the defendants can rebox at all, and if so whether the way they have done it is lawful. Can the defendants co-brand or de-brand? It is the object of the claimants (a) to prevent re-boxing at all, and if that fails (b) to require that the parallel importer’s box both carries the original trade mark and is otherwise as plain as possible.

Arts. 28 (formerly 30) and 30 (formerly 36) of the Treaty provide:

Art. 5(1) of the Trade Mark Directive provides that:

Art. 5.3 of the Directive provides:

Affixing the sign to the goods or to the packaging thereof;

Offering the goods, or putting them on the market or stocking them for those purposes under that sign, or offering or supplying services thereunder;

Importing or exporting the goods under the sign.”

Art. 7 of the Trade Marks Directive provides as follows:

The UK Trade Marks Act 1994 implemented Art. 5(1)(a) of the Directive in s.10(1), Art 5.3 in s.10(4) and Art. 7 in s.12. Nothing turns on this. I shall use the numbering of the Directive.

It is common ground that Art. 7 embodies the existing case law of the Court, neither adding to it nor subtracting from it. So cases decided before as well as after the coming into force of the Directive are equally in point.

Running through all the cases about reboxing or relabeling parallel imports, including this case, is the assumption that the reaffixing of the trademark to the goods would, unless it is permitted by the free circulation rules, infringe the registration. No one has questioned the assumption in this case – or in any of the many ECJ cases. Nonetheless it is a little odd. Most people would think that there could be no infringement by simply applying the owner’s trade mark to his original goods or by using his trade mark when marketing them. It happens every day, for instance where a shop-keeper or internet seller writes onto packaging of his own the trade mark of the goods contained in the packet or a shopkeeper puts up a sign to say he has the trade-marked goods in stock, or second-hand goods are sold by reference to the trade mark. However the language of Art.5.3 of the Directive is wide – it covers, for instance, what retailers do all the time, offering the goods for sale under the mark. And it draws no distinction between doing the prohibited act in relation to the genuine goods of the trade mark owner or spurious goods.

Most everyday cases of affixing or marketing by reference to the mark in relation to genuine goods are indeed lawful. This is probably because there is an implied consent to do that which is reasonably necessary to market the goods. There are obviously further problems to be explored here – for instance suppose the manufacturer imposed a sell-by date. Would it be an infringement to sell after that date – even if the trader pointed out the goods were past it? And one can imagine cases where implied consent must be ruled out by an express prohibition on further use of the mark – for instance in an attempt to prevent a second-hand market in the goods. In the present case there is no question of implied consent.

Personally I still have some doubts as to whether the law of registered trade marks needs to be stretched to cover conduct readily caught by more general unfair competition rules. Thus out-of-date goods have been dealt with easily by passing off e.g. Spalding v Gamage (1915) 32 RPC 273 (outmoded footballs sold as the new and improved ones), Wilts UD v Robinson[1958] RPC 94 (outdated condensed milk sold as current). Sometimes I wonder whether courts concerned with just an isolated question about registered trade mark law overlook the fact that unfair competition rules can and do deal with the problem. There is more than one way to skin a cat.

All that is by-the-by: it is common ground here that in all cases where the trademark has been reapplied by the importer, there would be infringement unless the importer can come within the free circulation rules.

Since the goods were put on the market in the Community under their respective trade marks by the proprietors, Art. 28 EC and Art.7(1) of the Directive prima facie apply.

By way of response the trademark owners say, as regards Art. 30 EC, that their trademark rights are justified on the grounds of the protection of industrial property (Art. 30 first sentence). As regards Art. 7.2 of the Directive, they say they have “legitimate reasons to oppose further commercialisation (Art.30, 2^nd sentence).

In riposte the parallel importers say that enforcement of the trademark rights in this case would constitute a “disguised restriction on trade between member states” (Art. 30 second sentence) and they deny the existence of any “legitimate reasons” (Art.7.2).

It is common ground that there is no distinction between these last two points. If there are no “legitimate reasons” there is a “disguised restriction” and vice versa.

Over the years the ECJ has been faced with many repackaging cases. Most have concerned pharmaceuticals, but not all. It is not necessary to refer to them all here. At this stage I refer to just four, the key cases prior to the reference in this case. These cases are: Hoffmann-La Roche v Centrafarm,Case 102/77[1978] ECR 1139; Bristol-Myers Squibb v Paranova, Joined Cases C-427/93, C-429/93 and C-436/93, [1996] ECR I-3457 (“BMS”); Loendersloot v Ballantine, Case C-349/95 (“Ballantine”) and Upjohn v Paranova, Case C-379/97, [1999] ECR I-6927.

The upshot of these cases is contained in the Court’s answers to the questions in BMS. It said (I have added my own numbering):

So the importer who repackages and re-applies the mark will infringe unless he satisfies all five of the BMS conditions. I summarise these:

The Court’s judgment in Upjohn explains to some extent what is meant by “necessary.” The context was that the importer wanted to apply the version of the trade mark used by the manufacturer in the country of intended sales instead of the version used in the country of purchase (“Dalacin” for “Dalacine”). The Court said:

Quite what the Court had in mind by a “commercial advantage” I am afraid I do not understand. The Advocate-General discussed the point at paragraph 54 but he did not think it helpful to “postulate a category of ‘purely commercial reasons.’” He was clearly of the view that necessity to replace the trade mark was the overriding test, which had to be determined on a case-by-case basis by the national court. And it seems clear that a “commercial advantage” could not consist of merely access to the market for the parallel imported goods, though out of context most people would call such access “a commercial advantage”.

When these cases came before Laddie J for the first time the major dispute was over the “necessary” condition – what did it mean and was it “necessary” to rebox at all? On the facts he dealt with the “need to rebox” at paragraphs 176-189. He held that: “there is widespread resistance to over-stickered boxes” (para. 178); “this case is awash with indications that the resistance to [overstickered] products not only exists but is significant (para 186); and “there is widespread and substantial resistance to parallel-imported pharmaceuticals supplied in over-stickered boxes” (para. 188).”

It was not clear that such resistance could satisfy the “necessary” test – after all, the stickered boxes could be sold lawfully, if not in such quantities as reboxed product. There was no legal necessity in the same way as it is legally necessary to produce an English language information leaflet.

Laddie J also held that the defendants’ activities did not harm the “specific subject-matter” of the proprietors’ trade mark rights.

These two findings lay at the heart of his first four questions to the ECJ. These were:

The ECJ answered those questions. As to the specific subject-matter questions the Court held that:

So repackaging inherently threatened the specific subject-matter and could only be justified if the BMS conditions were satisfied. It was not necessary to ask separately whether the specific subject-matter was damaged.

As to the necessity questions the court held:

This is important – “a strong resistance from a significant proportion of consumers” is enough to count as a “hindrance.” The parallel importers are entitled to do more than just render the packaging lawful for UK marketing – they are entitled to replace the packaging if that is what is necessary to overcome a strong resistance in the market to relabelled boxes.

The claimants attack Laddie J’s conclusions quoted at paragraph 30 above. They say the evidence does not warrant them. Moreover, they say, each product should be considered on a case-by-case basis – that one should look at the individual product to see whether it can be stickered properly and neatly and if that were done it is not shown that there would be any “strong resistance.”

The Judge’s conclusions are hardly surprising. Over the years – from at least Hoffmann-La Rochev DDSA[1969] FSR 410 - the law reports abound with cases about the appearance of pharmaceuticals. Clearly appearance matters to a significant proportion of patients, concerned that all is well with their medication.

Nor are the reasons for those conclusions found by Laddie J surprising. They were that some patients have a concern about foreign writing (not necessarily xenophobia – an anxiety that they are missing some important information is enough) and others are concerned by the unprofessional look of a stickered packet.

These concerns are in respect of stickered packets as a generality. Mr Thorley, for Lilly, invited us to look at a neatly stickered pack of Lilly’s Prozac. He suggested that such a pack would, or ought to be, perfectly acceptable to patients – there was no need to re-box. But the pack displays partially covered Spanish writing and, neat though the stickering is, does not convey the same impression as a “proper” box.

Laddie J’s conclusions were based on a number of types of evidence:

an independent research report by Taylor Nelson commissioned by the Association of the British Pharmaceutical Industry, whose members include all the claimants in this case;

the oral evidence of some executives from the claimants;

an internal document of 1998 of SmithKline Beecham;

an opinion poll amongst 300 pharmacists conducted for the purposes of this case by the defendants’ solicitors;

oral evidence from private practice and hospital pharmacists.

We were taken to the first of these. Laddie J quotes the key passages in his paragraphs 179-80 He drew his conclusions at paragraph 181:

I would draw the same conclusions. This is a very powerful indication that Laddie J’s overall conclusions on the necessity to rebox were right. For the Taylor Nelson report was not done to prove a point in litigation – it was done for the ABPI to identify a strategy for “reducing the impact” of parallel imports. It tells us why this case is happening.

Mr Silverleaf submitted that only lesser conclusions were warranted – that there was in relation to some relabelled packs of unknown quality resistance of an unknown extent by an unknown proportion of customers. I reject that. This was not a survey about particular packs: it was a serious exercise designed to get a proper picture of the position generally – and the picture painted is of substantial resistance to relabelled packs generally, whether the labelling was done neatly or not.

Mr Silverleaf had very little to say about the SmithKline Beecham report – merely saying that reboxing was done to remove potential customer animosity with respect to foreign languages on relabelled packs. He failed to suggest any reason why anyone would go to the expense of repackaging, unless that animosity was significant.

As to the evidence of the two executives, Laddie J deals with them in paragraphs 181-183. He accepted the evidence of Ms Edwards of Glaxo “I do not think there is any doubt that there is, or may be, resistance from some patients to foreign writing.”

These materials alone would justify Laddie J’s conclusions. But there is more. Mr Silverleaf directed his main attack at the further material. I turn to the questionnaire sent out to between 3,500 and 4,000 of the nearly 10,000 independent pharmacies in the UK. Mr Silverleaf attacked its form and pointed out that question 1 seems to have varied between two alternatives. Question 1 in either form was indeed inept. But the pharmacists who responded were invited to give their reasons for a preference as between a relabelled and a reboxed product. Without any prompting a clear preference for reboxing and a clear indication of the problem with foreign language appearing emerges.

Mr Silverleaf suggested that none of this mattered – that pharmacists could overcome the patient hostility by more explanation to patients. This is not the real world – poorly people want their pills, not explanations (adapting Lord Macnaghten’s aphorism “thirsty folk want beer not explanations” in Montgomery v Thompson[1891] AC 217). Moreover pharmacists have better things to do than to explain things to concerned patients. They have to ask themselves whether the cost in time of explaining a stickered box is worth the extra profit to be made by buying parallel imports.

Most significant to my mind was the overwhelming response to the last question: “if all pharmaceutical products of European origin were reboxed rather than over-labelled would you (a) buy more (b) buy less (c) buy the same. That seems to me to be a fair question and the answers were overwhelmingly in favour of (a).

Finally there were the pharmacists who came to give oral evidence. Mr Silverleaf took us through some of their evidence. He did not shift the overall impression that new boxes were easier to deal with than relabelled, that labelling was a hindrance.

I turn to the suggestion that the matter should be approached on a case-by-case basis. First I note that the ABPI and Taylor Nelson did not think so – they thought it sensible to look at the overall position. If that is the sensible approach for the industry I do not see why it is not the sensible approach for the court. Next the suggestion overlooks that problems with stickering are bound to be generalised – some significant bad stickering will give all stickering a bad name. Thirdly Mr Silverleaf invited us to look at the evidence of individual pharmacists about the individual boxes in suit. This goes some way to showing that relabelled boxes could be sold – but that is not enough – the question is whether an inability to rebox is a hindrance to sale.

I conclude that the attack on Laddie J’s findings of fact wholly fails. If parallel importers cannot rebox they face a substantial hindrance to sale. I pass from this point by observing that if this were not so I cannot imagine why the claimants are spending so much effort on this case or why the defendants are bothering to defend.

The complaint here is in relation to “de-branding”. It is made only by Boehringer, though if the claim were good it would hold for other claimants too. It is said that Dowelhurst’s reboxed products, which use only the generic name of the drug on the box, make a false representation leading to damage. The misrepresentation is said to be that the drug inside was sourced from a generic manufacturer – and one chosen by Dowelhurst. It is said that when the drugs come off patent, Dowelhurst will simply cease buying parallel imports and substitute a “true generic” in virtually the same packets (the only difference being that the BMS condition 3 statement will be dropped).

The case is likened to that of Gloag v Welsh Distillers[1998] FSR 718. In that case the defendant put Scotch whisky in bottles labelled Welsh whisky. His idea was to build up a reputation for his Welsh whisky that way – and in due course to use Welsh whisky instead. Laddie J refused to strike out a passing off claim as unarguable. Reliance is also placed on the so-called “reverse passing off” type of case – where the defendant seeks to get sales for his goods by falsely representing that work actually done by the claimant was done by him, Bristol Conservatories v Conservatories Custom Built[1989] RPC 455.

In those cases the defendants were plainly telling lies. The only question was whether the law of passing off gave the plaintiff a remedy – was he damaged? Here things are different. The generic name on the box is true – for instance the box saying “Meloxicam Tablets 15mg” contains just that. If one opens the box one finds, to be sure, that the there is also use of Boehringer’s trade mark Mobic. But that does not mean there is any false representation on the box.

To my mind the alleged misrepresentation is no more than a lawyer’s ingenious construct. There is no evidence that any pharmacist or patient has ever been deceived, notwithstanding significant sales of the products. The best that Mr Silverleaf could muster were a few answers from some pharmacists that there might be some slight, quickly passing, confusion or queries. Nothing substantial was shown. Yet, if there had really been significant confusion, given the effort put into this case, Boehringer would have found it.

So Laddie J was right to dismiss the passing off claim.

In his second judgment Laddie J applied what he understood the ECJ’s answers to mean. He quoted paragraphs 28-30 of the judgment:

Then he said:

A little later he said:

On this basis Laddie J went on to hold that both de-branding and co-branding were objectionable. In relation to partial de-branding he referred to paragraph 98 of the Advocate-General’s opinion:

As to co-branding he said:

On the basis of this reasoning he held that both the “de-branded” boxes (those with just the generic name of the product and the BMS condition 3 notice) and the boxes which had a get-up which suggested a trade source infringed.

Mr Green attacks this reasoning. His primary case was that Laddie J simply misunderstood the ECJ’s ruling. He began by attacking Laddie J’s notion that the ECJ had created an “irrebuttable presumption that repackaging is prejudicial to the specific subject-matter”. He said the Court decided no such thing. All it was saying is that if it were shown that reboxing was “necessary” the parallel importer could do so provided he satisfied the 5 BMS conditions. That, he submitted, his clients did. Laddie J’s fundamental error, submitted Mr Green, was to hold that the “necessity” test applied not only to repackaging as such but also to the details of the manner of repackaging.

Furthermore, he submitted, as regards de-branding, that paragraph 98 of the Advocate-General’s opinion is wrong, even if understood as only applying to partial de-branding. To remove a trade mark wholly from a product and sell it on under no or a different mark is perfectly permissible – it is not an act restricted by the infringement provisions of the Trade Marks Directive. Any trader who breaks bulk and puts his own name on the goods rather than that of a supplier would otherwise infringe. It follows that if a trade mark owner cannot insist on his trade mark remaining on the goods altogether, he cannot complain of the lesser act of partial removal. He submitted further that the Advocate-General had overlooked Pfizer v Eurim-Pharm[1981] ECR 2913 where a trade mark owner could not enforce his trade mark against re-packaged goods placed in transparent packaging which carried a BMS condition 3 notice. This was because:

As regards co-branding, Mr Green’s first submission was that since this is not mentioned in any of the BMS conditions, once repackaging was “necessary” there was nothing wrong in it. The only condition which might be relevant is condition 4 (not to damage the reputation of the trade mark) but this was limited to poor packaging. In the course of argument he rather accepted a fallback position: that co-branding was lawful provided there was no damage of any sort to the reputation of the trade mark. There was debate as to whether co-branding could somehow reduce the distinctiveness of the trade mark in the market by giving the impression that the co-brand was connected with the trade mark or its owner – what was called in argument “muddying the mark” (a phrase borrowed from GE TM[1969] RPC 418 at 459, where a form of co-branding was held to be non-deceptive). This was also called “blurring” by the EFTA Court of Appeal (see below).

Mr Green submitted in relation to the fallback position that, even if co-branding might in some cases cause damage to the reputation of a mark, that was simply not proved here. It was, he submitted, actually wholly improbable. Pharmacists were not confused. And any patient who cared – who had normal eyesight and was reasonably circumspect - would clearly read the BMS Condition 3 compliant notice on the box. He would not get the notion that there was some sort of commercial association between the parallel importer or his “co-brand” (be it a trade name or just a get-up) and the trade mark or its owner.

Mr Green further submitted that the Court was concerned to lay down clear rules. If the necessity test pervaded all the BMS conditions parallel importers and courts would be placed in an impossible position – how in particular was one to judge when a get-up was unnecessary? He illustrated his point by reference to Laddie J’s 3^rd judgment in this case on 11^th July 2003. Laddie J had instituted a regime whereby the court could vet proposed packaging. Two proposed packs were held to be permissible but they are (and I agree) not significantly different from packs held impermissible under the 2^nd judgment. Laddie J held that a house style of the parallel importer was impermissible (as not being “necessary”) but where does house style begin and mere decoration end? What is “the minimum collateral damage to the claimant’s mark?” or “no significant trade mark impact?” This is particularly unanswerable given that the fresh package must comply with BMS condition 3 requiring the importer to put his name on the goods as repackager. Putting his name on the goods in that way is trade mark use: trade marks are not limited to those of manufacturers – dealers can have trade marks too.

Finally Mr Green submitted that the “necessary” test – if added to all the BMS conditions, imposed an impossible burden on the parallel importer – to prove he had done no more than was necessary – that his box does not unnecessarily intrude on the reputation of the trade mark This was a probatio diabolica (diabolical burden) which risks thwarting free movement of goods.

There is this further point. If one examines the cases where the court has used the “specific subject-matter” concept, one finds that it is expressed in essentially negative terms – as a right to exclude others, see Hoffmann-La Roche, para 7, Centrafarm v American Home Products [1978] ECR 1827 para.11, Pfizer v Eurim-Pharm, para. 7, HAG II [1990] ECR I-3711, para. 13, IHT v Ideal Standard [1994] ECR I 2789, BMS para. 44, Pharmacia v Upjohn, para. 15 and this case, para. 28. Essentially the purpose of a trade mark is a guarantee of origin. This requires a legal right to keep others out where that guarantee is jeopardised – it is that legal right which is the specific subject-matter. Now that substantive European trade mark law has been harmonised one can say that the harmonised specific subject-matter really consists of the bundle of rights set out in the Directive in paras. 5.1 and 5.2.

Specific subject-matter in other words is the legal right. The legal right is conceptually different from its purpose. The latter is protection of the reputation in the trade mark including not only its function as a guarantee of origin directly (as for instance in counterfeiting cases) but also indirectly (particularly its distinctiveness which, if eroded, may affect that guarantee).

If one looks at the BMS conditions one can see that they are all about protecting the reputation of the mark. A fair summary of the position may be that (1) re-affixing creates a risk of jeopardising the reputation (2) but if the conditions are satisfied that risk is removed.

The judge’s “irrebuttable presumption” was not supported as such by Mr Thorley or Mr Silverleaf. Their point was simpler, that reboxing creates a risk of damage, that the importer must overcome that risk but if he does so, his box should also comply with the requirement of necessity. He can only do that which is necessary and no more. Necessity runs through everything, whether he can re-affix the trade mark at all, whether he should sticker rather than rebox and, so far as this case is concerned, as to the form and positioning of any sticker or what is written on the new box.

Reliance was particularly placed on paragraph 56 of BMS and paragraph 46 of the Ballantine case. Paragraph 56 of BMS reads:

It was on that basis that Glaxo and Boehringer not only said Laddie J was right in his 2^nd judgment but that he was wrong to hold lawful some overstickered products imported by Dowelhurst and Swingward. I take by way of typical example the Atrovent Inhaler, whose packaging is shown at Annex C1 to Laddie J’s first judgment. Objection is taken that the claimant’s trade marks or marks are obscured by the label, unnecessary prominence is given to the importer’s name (printed in capitals on the BMS condition 3 notice), no indication is given that the claimant’s trade mark is that of the claimant or that it is a trade mark at all.

The Judge rejected these complaints, holding that they do no harm to the specific subject-matter of the claimant’s marks. I would agree – but I would put it that they do no harm to the reputation of the claimants or their marks.

It may be noted that Lilly do not make a similar complaint in respect of the relabelled Prozac. The logic of their argument about reboxing suggests they could have done. If it is right, although trade owners have to put up with parallel imports in principle, in reality they will not have to put up with much. This is because the owners will have a stranglehold on the parallel imports by way of policing and restricting their appearance - Arts. 20 and Art.7(1) giveth but Art. 30 and Art. 7(2) taketh away. Sometimes I think the law may be losing a sense of reality in this area – we are, after all, only considering the use of the owner’s trade mark for his goods in perfect condition. The pickle the law has got into would, I think, astonish the average consumer.

Were the matter free from doubt, I would hold that Mr Green was right, subject to rejecting his initial submission about condition 4. That condition, I think, is not limited to damaging the reputation of the mark by poor packaging – any damage to the reputation of the mark means non-compliance with the condition. So any act which would infringe (particularly re-affixing) is not permitted by Art. 28 of the Treaty or Art. 7(1) if it would damage the reputation of the mark, whether by affecting or potentially affecting the goods themselves, by poor packaging or otherwise.

So far as co-branding is concerned, in some circumstances this might indeed cause damage to the reputation of the mark. This would be the case, for instance, if it were shown that the co-brand created a perception that it was a brand of the actual manufacturer, or that the importer and manufacturer were in some sort of joint venture. But that is not so on the facts of this case. It is true that one or two pharmacists indicated that there might be some confusion caused by the co-brand, but overall it is simply not proved that there is any such conception. Whether clear BMS condition 3 notices prevented any but the careless or the indifferent patients from taking the “co-brand” as emanating from the original manufacturer or whether they are just not confused anyway does not matter. If there had been significant confusion caused by the co-branding complained of here (essentially the Swingward “get-up” and the fancy “C” on Dowelhurst’s boxes) it would have been proved. Nor is this the sort of case where damage to reputation is self-evident – given the condition 3 notices. It is worth noting that the Taylor Nelson report shows no concern about damage to reputation caused by co-branding. Laddie J in his first judgment at paragraph 164 specifically found on the facts that there was no damage to the claimants’ reputation and exclusivity.

As regards de-branding again I can see no damage to the reputations of the claimants or their trade marks. Both Mr Thorley and Mr Silverleaf contended that there was damage. They submitted that by reason of the reduced prominence of their clients’ trade marks the reputation of these would be less than if the trade mark clearly appeared on the box. Deprivation of incremental exposure of the trade marks was, they submitted, damage. I would not accept that. I do not think that a trade mark owner has any right that requires subsequent dealers in his product to keep his trade mark on the product. We were told that French trade mark legislation expressly confers such a right. That does not help. There is nothing in the Trade Marks Directive about any such right.

Looking at it another way, the only act which would be an infringement, unless saved by Art.30 last sentence and Art.7(2), is the act of affixing. The only such acts in the case of a “de-brands” are in relation to the leaflets (as to which no objection can be taken) and of the use of the manufacturer’s name in the BMS condition 3 notice (which again is unarguably legitimate).

Indeed the Judge, as I have said, in his 1st judgment, rejected claims to damage to the claimants’ trade marks or their reputation either by co-branding or de-branding. He started in his 2nd judgment from a quite different position, with his notion of an “irrebuttable presumption” of damage and went on to hold that the “necessary” requirement ran through everything. As I have said I do not agree with that analysis which pervades the whole judgment. It was because of that analysis that he appeared to change his mind about whether the defendants’ activities were damaging in the second judgment. To the extent he held that they were (and it is clear that he did not really think that) it was because of the “irrebuttable presumption.”

It follows from what I have said that if it were left to me I would allow the appeals (which relate to reboxed products) and dismiss the cross-appeals concerning restickered boxes. But this I would only do if the law were free from doubt – acte clair. But I have no doubt there is doubt. Despite years of repackaging cases in the ECJ, I am afraid it is necessary to refer the matter yet again. Both sides initially submitted that the position was clear (in their respective favours) but said if it was not, with great reluctance, that there should be a reference. That is the position.

I say that because there is a substantial disparity of views across the EU. On the claimants’ side it is pointed out that a number of national courts of Member States at the highest level have adopted the “necessity” test espoused by them and accepted by Laddie J. The cases are: Orifarm v AstraZeneca Danish Supreme Court, 4^th January 2002; Eurim-Pharm v Boehringer Ingelheim Federal Supreme Court of Germany 11^th July 2002 and Schuber Verpacking II, Austrian Supreme Court, 30^th January 2001. In addition the Swedish Court of Appeal has taken a similar view in a brief interlocutory decision, Beecham v Netpharma, 16^th April 2000.

In Orifarm the Danish Supreme Court was concerned with reboxed products imported by Orifarm, which bore Orifarm’s logo. This was held to infringe, the Court saying:

In Eurim-Pharm the German Supreme Court prevented a parallel importer from re-packaging into a package size called N3 (the size sold by the trade mark owner in German) a number of smaller packages. It was held to be unnecessary. The court said:

In Schuber Verpackung II the Austrian Supreme Court was concerned with a special stickered label used by a parallel importer. It held that it went beyond what was necessary:

In Beecham new outer packages used by a parallel importer had “such a colour scheme that they thereby must be considered to serve as a distinctive mark of [the parallel importer].” The packages were restrained.

This shows four courts reading the BMS conditions one way – in the case of two of them admittedly before the first ECJ ruling in this case. On the other hand the EFTA Court of Appeal, concerned with exactly the same problem, has come to the opposite conclusion in a judgment of 8^th July 2003, Paranova v Merck. The defendants, having previously actually used their trade mark on the goods, removed it following an adverse court ruling, but continued to use a coloured striping system in accordance with a house style. It said:

This is precisely Mr Green’s fallback position in relation BMS condition 4. The court went to say:

Messrs Thorley and Silverleaf suggested that the case was not really one of co-branding at all – that one could not regard the striping system of the defendants there as co-branding. But that simply is not so. The EFTA Court plainly did not consider the get-up as merely decorative – it had a trade mark function, of “generating a Paranova product range,” just as do the get-ups complained of in this case generate a Dowelhurst or Swingward product range.

Moreover it is important to observe what the position of the Commission was in this case. The EFTA court sets it out at para. 28:

The Commission’s view accords with that of the EFTA court. It is diametrically opposed to that of the views of the national courts I have mentioned. A reference is necessary.

This is all the more a pity in view of the fact that the claimants proposed some questions specifically directed at co-branding and de-branding following Laddie J’s first judgment. Evidently they did not appeal to the Judge for they were not included in the questions ultimately determined by him. He perhaps thought that his question 3 covered these points, ending as it did with the general question “what does necessary mean.” The Court did not answer that question specifically – hence the current dispute.

Further, I think the questions to be posed should include a question about the form of stickering as well as that of reboxing. The defendants dispute this, saying the law is already clear as laid down by the ECJ – namely that if stickering is necessary that is all – there is no further requirement going to the form of restickering. I am not so sure – the logic of the necessity argument on reboxing must, I think, at least arguably also apply to the form of stickering. In particular it may be that a form of stickering which unnecessarily obscures the trade mark is not permitted. I would not so hold, but I cannot be sure whether the ECJ would do so: it has never specifically addressed the question of the necessity of a form of restickering.

It was pointed out that Boehringer were not consistent in their objections – complaining about some forms of stickering but not objecting to others which appear much the same. I agree that appears to be so on the facts, but the legal point does not depend on whether the trade mark owner objects or not. The disparities do, however, further demonstrate the uncertainty of the law and the need for clear rules.

It was also said that there should be no reference as regards the form of stickering because the claim had been abandoned. It was not suggested there was any express abandonment of the point, merely that there was an implied abandonment. It is said that the Judge mistakenly thought the point was still live and ruled on the matter. I do not accept that there was any implied abandonment: the fact that attention focused on the most important matter, reboxing, does not connote abandonment. Nor can I see any prejudice even if the point is being “revived”. The plain fact is that clear rules for stickering and reboxing are needed for the purpose of this case and generally and guidance is accordingly necessary.

BMS condition 5 requires that the parallel importer must give notice to the trade mark owner of his intention to sell parallel imported goods whose original packaging has been altered or discarded. This requirement goes back to at least Hoffmann-La Roche in 1978. I freely confess that I do not understand the basis in the Treaty for this. Why should exactly the same acts amount to an infringement if no notice is given but not if it is? Why should a parallel importer have to disclose his commercial plans to his competitor? (The point does not matter in this case, but one can well imagine cases where the trade mark owner could respond to the notice by flooding the market to frustrate the parallel imports). Does the parallel importer have to pay damages in one case but not the other? My doubts on the basic rule do not matter: I, like any other national judge, must accept and apply the requirement as though it were a piece of legislation. And if we are unsure of its details we must ask the ECJ. Perhaps one day there will be a Directive or Regulation dealing with the point.

In some instances in the present cases, no notice was given by the parallel importers and in others only very short notices. At least in some cases, despite the absence of notice direct from the parallel importer, the trade mark owners had knowledge of the proposed packaging from other sources. The ECJ has now held that only direct notice from the parallel importer will comply with condition 5. This again I do not really understand, but must accept. What I am not sure about is whether, if notice is not given, the parallel imports made until it is given, must be regarded as infringements with the particular consequence that the importer must pay damages or render an account of the profits he has made. The question of financial remedies has not been fully resolved in the present cases: it makes sense to ask a specific question on the point, as indeed the parties agreed.

The one thing that can be said about the condition is that it is clear and can be applied more or less mechanically. It may be that this is an indication that the other BMS conditions are also intended to be of that character. Certainly it would be helpful to national courts and traders if the rules were clear and precise.

Turning back to this case, in his first judgment Laddie J said this:

The ECJ held that it was “for the national court to assess, in the light of all the relevant circumstances whether the proprietor had a reasonable time to react to the intended packaging.” But in its reasoning it added:

Mr Silverleaf contends that that observation applies equally to both stickered and reboxed products. So the period should be 15 working days in all cases. Laddie J held that there was a difference holding that the case of a stickered product 7 working days is enough because all the proprietor has to do is to compare his own unstickered product with the stickered version.

Although this sort of evaluation is one with which a Court of Appeal will be slow to interfere, I think Laddie J was in error here. I cannot see any difference in the time needed to consider a stickered product from that needed for a reboxed product. In relation to both there is not just the question of appearance involved but a possible, preliminary at least, factual assessment of whether there is likely to be involved any damage to reputation. And in any event the difference between 15 working days and 7 working days is slight.

Given the guidance of the ECJ, I would hold that the appropriate period in all instances with which this appeal is concerned is 15 working days.

Boehringer sought an injunction against Dowelhurst to prevent a future failure to give notice in respect of other products it may wish to parallel import in the future. Laddie J refused it, saying that there was no reason to believe that Dowelhurst or Swingward would fail to give notice in the future, their obligation to do so directly to the trade mark owner now having been confirmed by the ECJ – that there is no extant threat to fail to give notice.

Before the Judge some evidence was provided late which was supposed to show that there was indeed an extant threat in that Dowelhurst had failed to give notice on one occasion. No application was then made to have the evidence admitted and the judge declined to read it.

It is now submitted that we should admit the evidence. I do not see why. If evidence is available for consideration by the judge, then be should invited to read it by a proper application. If he declines then, in appropriate (likely to be unusual) circumstances his decision so to do so may be appealable. But that is not what is sought here – we are asked to admit fresh evidence without any application for its admittance having been made to the Judge. There is no explanation for this. It would seem that the evidence was available for some time before it was sent to the Judge so it is not really even fresh evidence.

I can see no reason for interfering with the Judge’s decision on this point.

I hate to think how much the over-documentation has cost the parties but I would like to know when the question of costs comes to be debated. I would wish to hear Counsel on all aspects of the matters I have mentioned and as to whether or not there should be a special order for costs, including perhaps an order protecting the parties from their own lawyers’ bills.

In the result I would dismiss the cross-appeals about passing off and an injunction requiring notice. I would reject the cross-appeal on the factual necessity to rebox. I would defer judgment on the form of the reboxing and on the form of the re-labelled products complained of until after the ECJ has ruled on the questions referred. As to the form of these, I would hope that the parties could agree them. They need to be as short and precise as possible. If they are agreed then I expect they will be referred as agreed, although it would be necessary for the court to approve them. If there is disagreement then a short hearing may be necessary. It can doubtless be combined with the question of costs.