Eli Lilly & Company & Anor v 8pm Chemist Ltd

For registered trade mark infringement, the relevant question is whether the sign is used in the course of trade in the European Union, including whether goods are imported for marketing there. Genuine non-Community goods brought into the EU under a suspensive customs procedure remain under customs control and are not released for free circulation. Their physical presence, permitted handling and onward export therefore do not, without more, amount to importing or use in the course of trade. The touchstone is interference with the proprietor’s control of the goods’ initial marketing in the EU. Alleged deception of consumers or customs authorities outside the EU cannot make an otherwise non-infringing operation arguable. Where the legal position is clear, factual disputes about such matters do not require a trial.

Eli Lilly claimed infringement of its UK and Community trade marks by 8PM’s handling of genuine Lilly medicines supplied from Turkey to United States patients. The goods were brought to the United Kingdom under Inward Processing Relief Suspension, handled and posted onward without being released for free circulation or opened in Europe.

Mann J held that Lilly had an arguable infringement case and granted an interim injunction: [2007] EWHC 2829 (Ch). 8PM appealed after seeking summary judgment. The central issue was whether the goods were imported, exported or otherwise used in the course of trade in the EU despite remaining non-Community goods, including in light of the alleged UK appearance of the packages.

The appeal was allowed. Lord Justice Jacob gave the reasons. Sir William Aldous and Lord Justice Rix agreed. The interim injunction was discharged, subject to minor matters capable of being addressed by 8PM’s undertakings.

1. Article 5 of the Trade Marks Directive (89/104/EEC), reproduced for UK marks in section 10 of the UK Act and for Community marks in Article 9 of the Community Trade Mark Regulation (40/94), protects the proprietor’s functions, particularly the guarantee of origin. The exercise of the exclusive right must involve use affecting, or liable to affect, those functions.
2. The decisive principle in Class International v Colgate Palmolive, C-405/03, was that importing requires introduction into the Community for the purpose of putting goods on the market there. Mere physical introduction under a customs procedure other than release for free circulation is not importing and does not constitute use in the course of trade.
3. Inward processing under suspension made no material difference from external transit or customs warehousing. Under Articles 4(7) and 4(8) of the Customs Code (Reg. 2913/92), the goods remained non-Community goods. Articles 84 and 114(1)(a) confirmed that the procedure was for non-Community goods intended for re-export. The permitted packing and unpacking operations did not change that status.
4. The proposed focus on export, UK postage, alleged deception of United States patients or customs authorities, and possible temperature degradation could not affect the proprietor’s control of initial marketing in the EU. Those factual disputes were legally irrelevant. The point was acte clair, so neither a reference nor a trial was required. Rioglass, C-115/02, and Montex v Diesel, C-281/05, were consistent with that conclusion.

Further questions concerning the final order and costs were adjourned for written submissions if agreement could not be reached.

• Court of Appeal (Civil Division) — Allowed 8PM’s appeal and discharged the interim injunction.
• High Court, Chancery Division (Intellectual Property) — Mann J held that Lilly had an arguable trade mark infringement case and granted an interim injunction: [2007] EWHC 2829 (Ch).