Speciality European Pharma Ltd v Doncaster Pharmaceuticals Group Ltd & Anor

A trade mark owner cannot rely on its importing-state mark to block re-branding of genuine parallel imports where replacement is objectively necessary for effective access to the market, provided the importer satisfies the five conditions governing repackaging and re-affixing. Effective access does not mean access to only some sales. Exclusion from a substantial part of the market, or from a significant proportion of consumers, may suffice. The national court must assess national rules and practices, market resistance and realistic alternatives. A merely theoretical option of adopting an own brand is insufficient where the importer cannot reliably supply it. Commercial advantage alone does not establish necessity. Enforcement that creates an artificial partition is unlawful under the final sentence of Article 36 of the Treaty on the Functioning of the European Union.

Speciality European Pharma Ltd, the exclusive licensee of the REGURIN trade mark in the United Kingdom, sued Doncaster Pharmaceuticals Group Ltd under section 31 of the Trade Marks Act 1994. Doncaster parallel-imported genuine trospium chloride marketed in France as CÉRIS and in Germany as URIVESC, and re-branded it as REGURIN or REGURIN XL.

The High Court held that the re-branding infringed the trade mark: [2013] EWHC 3624 (Ch). The appeal concerned whether replacement of the export-state marks was objectively necessary to obtain effective access to the United Kingdom market, having regard to generic prescribing, branded prescriptions, market resistance and the feasibility of adopting and promoting an alternative brand.

Disposition. Lord Justice Floyd gave the leading judgment. Lord Justice Bean and Lady Justice Arden agreed. The appeal was allowed.

1. Article 34 of the Treaty on the Functioning of the European Union establishes the free-movement framework. Article 36 permits restrictions justified by protection of industrial and commercial property, but not restrictions which operate as arbitrary discrimination or disguised restrictions on trade. Article 7 of the Trade Marks Directive was informative only because the dispute concerned replacement of the export-state mark, not use of the mark under which the goods were originally marketed.
2. The court applied the objective approach developed in Bristol-Myers Squibb v Paranova [1997] FSR 102. Subject to all five BMS conditions, enforcement of the importing-state mark cannot prevent re-branding where replacement is objectively necessary to obtain effective market access. The inquiry does not depend on the proprietor’s subjective intention to partition markets.
3. Access to some of the market is not enough. A hindrance affecting a substantial part of the market or a significant proportion of consumers may establish objective necessity. The relevant assessment is directed principally to access by volume, rather than to the value or profitability of a particular segment.
4. The national court must consider realistic alternatives. It must assess whether an own brand, direct marketing or other measures could genuinely overcome the barrier, rather than treating a theoretical commercial possibility as sufficient. Pharmacia & Upjohn SA v Paranova A/S [2000] 1 CMLR 51 and Boehringer Ingelheim v Swingward [2002] FSR 61 supported a case-specific inquiry into effective access.
5. On the facts, branded prescriptions could not be substituted by pharmacists. Generic prescriptions were also frequently filled with REGURIN, indicating resistance to alternative brands. Doncaster’s unreliable parallel-import supply made it unrealistic to adopt and promote its own brand to doctors. FLOTROS did not demonstrate otherwise because its marketer controlled its own supply and was not a parallel importer.
6. Re-branding went no further than necessary to overcome the artificial barriers created by the national market practices. Enforcement of the REGURIN mark was therefore unlawful under the final sentence of Article 36.

• Court of Appeal (Civil Division): Appeal allowed on 6 February 2015.
• High Court of Justice, Chancery Division: Asplin J held that Doncaster’s re-branding infringed the REGURIN trade mark: [2013] EWHC 3624 (Ch).