Glaxo Group Ltd v Dowelhurst Ltd & Anor

Summary judgment is available only where the defence has no real prospect of success and there is no compelling reason for trial. A possibility supported by admissible material is not fanciful merely because it appears weaker than the claimant’s case.

For trade mark exhaustion, goods are not put on the market in the European Economic Area merely because they physically pass through it. The question is whether the proprietor has marketed them there, including by transferring the right of disposal to a buyer in the EEA. A contractual restriction on onward sale may be relevant, but does not necessarily prevent marketing in the EEA. Consent to resale in the EEA must be unequivocally demonstrated.

An injunction is discretionary and may be qualified where an absolute order would impose disproportionate hardship on legitimate parallel traders.

Glaxo Group Limited sought summary judgment against Dowelhurst Limited and its managing director for infringement of registered trade marks on pharmaceuticals imported into the United Kingdom from Switzerland. The goods had been supplied by Glaxo to purchasers connected with intended destinations in Africa and were subsequently diverted to Europe.

The central issue was whether the goods had first been put on the market in the European Economic Area by Glaxo or with its consent, so that trade mark rights were exhausted under the Trade Marks Directive. The court also considered the personal liability of the managing director and the appropriate form of injunctive relief.

1. Summary judgment. The court applied CPR rule 24.2. A defence must have a real, rather than fanciful, prospect of success. Where evidence is incomplete, the court must consider realistic prospects of further evidence emerging through disclosure or trial. It should generally proceed on the defendant’s non-fanciful version of disputed facts. Difficult or potentially referable questions of European law may also make summary disposal inappropriate.
2. Exhaustion and marketing. The mere physical transit of goods through an EEA state does not put them on the market there. However, most consignments had been sold to independent purchasers whose agents took delivery in France. The purchasers arguably acquired the property or right of disposal while the goods remained in the EEA and could redirect them. It was therefore arguable that the goods had been marketed in the EEA, even if the purchasers were contractually expected to export them.
3. Consignment 12 was different. The goods were delivered by the claimant’s agent directly to Dakar under a contractual scheme restricting resale outside specified territories. The purchaser did not acquire the right of disposal in the EEA. The claimant’s conduct did not unequivocally demonstrate consent to re-importation. The defence therefore had no real prospect of success for that consignment, but did for the remaining consignments.
4. Liability and relief. The managing director was jointly liable for consignment 12 because he personally directed the sourcing and importation; liability did not arise merely from his office as director. An injunction was appropriate against the company, but not against him. The injunction was qualified to protect dealings in goods reasonably believed to have been marketed in the EEA, subject to an additional restriction where the supplier lacked a required distribution authorisation. This was proportionate and avoided making legitimate parallel traders liable for contempt where the claimant had failed to make legitimate and illegitimate goods distinguishable.
5. The application for summary judgment succeeded only in respect of consignment 12. The court granted the qualified injunction and reserved costs and ancillary matters.

First-instance decision. The judgment records that the parties were given permission to appeal, but no appeal decision is stated.