Glaxo Group Ltd v Dowelhurst Ltd & Anor

Summary judgment is inappropriate where the evidence leaves a real prospect that goods bearing a trade mark were first put on the market within the EEA, so that the proprietor’s rights may be exhausted. Whether goods entered the market cannot necessarily be resolved by the seller’s intention alone; contractual terms, transfer of control, passing of property or risk, and the parties’ knowledge may require a trial. Genuine goods, European packaging or a licence number do not by themselves establish consent, although they may support an arguable case of unequivocal consent. A director’s personal liability is fact-sensitive and requires more than office-holding. The form of any injunction remains discretionary.

Glaxo claimed infringement of registered trade marks in relation to 16 consignments of genuine pharmaceuticals bought by Dowelhurst from an intermediary and imported into the United Kingdom. Glaxo alleged that the goods were intended for Africa and had been diverted to the EEA. It sought summary judgment under Civil Procedure Rules 1998 Part 24, an injunction and an account of profits, including against Richard Taylor personally.

The Deputy Judge held that 15 consignments had real prospects of a defence but found liability for the 16th consignment and for Mr Taylor. The defendants cross-appealed. The central issues were whether the goods had been put on the EEA market, whether Glaxo had consented to their circulation, and whether the evidence justified summary disposal.

Disposition. The Court of Appeal held that all 16 consignments should proceed to trial. The formal order recorded that case no 2003/1975 was allowed, appeals in case nos 2003/1978 and 2003/2727 were dismissed, and the defendants’ cross-appeal was allowed.

1. The relevant Civil Procedure Rules 1998 Part 24.2 principles were not disputed. Summary judgment could not be granted where the defendants had real prospects of successfully defending the claims. The evidence concerning the 15 consignments left unresolved questions about the contractual restrictions, the buyers’ power of disposal, the passing of property and the place where control was obtained. The seller’s intention could not by itself determine whether goods had been put on the EEA market. The German decision in Glaxo v Kohlpharma and the Swedish reference in Peak Holding v Axolin-Elinor reinforced the conclusion that the issue was arguable. No reference to the ECJ was appropriate before the facts had been fully established.
2. The fact that the goods were genuine and bore French packaging and an EMEA licence number did not itself establish exhaustion or consent. Applying Davidoff, consent was decisive, and implied consent required factors unequivocally demonstrating renunciation of the proprietor’s exclusive rights. The evidence about packaging, licence information and Dowelhurst’s knowledge of the African destination was sufficient to require a trial.
3. For the 16th consignment, delivery to the seller’s own carrier for carriage outside the EEA would not alone put the goods on the EEA market. However, the CIP Dakar contract arguably transferred risk, and perhaps property, when the goods were delivered to the carrier and may have left the buyer free to redirect them. That issue also required trial.
4. The observations on injunctions were obiter. The form of an injunction was discretionary, as shown by Microsoft v Technology. An absolute injunction might impede inter-State trade where the defendant could not readily identify goods in free circulation.
5. Mr Taylor’s personal liability was also fact-sensitive. It did not follow merely from his directorship or from causing the company to contract for apparently lawful goods. Personal knowledge of, or participation in, unlawful dealing could produce a different result. The issue was unsuitable for summary determination, consistently with the approach described in MCA v Charly Records.

1. Court of Appeal (Civil Division) — In [2004] EWCA Civ 290, directed that all 16 consignments proceed to trial, made the orders recorded above, and allowed the defendants’ cross-appeal.
2. Chancery Division — Peter Prescott QC, sitting as a Deputy High Court Judge, decided judgments dated 31 July and 8 December 2003 on Glaxo’s Part 24 application. He found real prospects of defence for 15 consignments but liability for the 16th consignment and Mr Taylor, and granted consequential relief.