On 17 November 2022, the Court of Justice of the European Union (“CJEU”), in delivering three rulings in a series of cases in the names of Bayer Intellectual Property GmbH v. Kohlpharma, Novartis v. Abacus Medicine A/S, and MSD, Novartis, Ferring and Lundbeck v. Abacus Medicine, Paranova and 2CARE4 ApS (C-204/20, C-147/20 and C-224/20, (the “Three Cases”)) clarified that Member States have no discretion to impose that parallel imported medicinal products must, as a general rule, be repackaged instead of relabelled and it provided for two exceptions to this principle of relabelling rather than repackaging where there is a strong resistance from a significant proportion of consumers in the import market to acquiring (i) relabelled medicinal products or (ii) medicinal products with outer packaging which has visible traces of tampering.
Overview of Applicable EU Laws and the ‘BMS Conditions’
The preliminary ruling requests made through the Three Cases concerned the interpretation of particular provisions of Regulation 2017/1001 on the European Union trademark (the “EU Trademark Regulation”) and of Directive 2001/83/EC on the Community code relating to medicinal products for human use, also known as the “Falsified Medicines Directive.”
According to the EU Trademark Regulation, the proprietor of an EU trade mark cannot be entitled to prohibit its use by a third party in relation to goods which have been put into circulation in the EEA, under the trademark, by him or with his consent, save where there exist legitimate reasons for the proprietor to oppose further commercialisation of the goods, especially where the condition of the goods is changed or impaired after they have been put on the market.
The Falsified Medicines Directive provides for certain safety features to be added to medicinal products (such as a unique identifier and an anti-tampering device), which should not be removed or covered, either fully or partially unless certain conditions are met. Such features help ensure that the product concerned is authentic and that it has not been tampered with. This Directive also lists the information which must be included in the package leaflet accompanying the medicinal product and on the outer packaging or immediate packaging if there is no outer packaging. Where persons authorised or entitled to supply medicinal products to the public have reason to believe that the packaging of the medicinal product has been tampered with, or the verification of the safety features of the product indicates that the product may not be authentic, they should not supply the product and must immediately inform the relevant competent authorities.
When a trademark owner may oppose the repackaging of parallel imported medicines is a point of contention which has led to a series of CJEU cases. The resulting set of rules from such cases is commonly referred to as the ‘BMS Conditions.’
The BMS Conditions, which are effectively the CJEU developed rules which must be followed by a parallel importer of repackaged goods to avoid infringing the trademark owner’s rights do not allow a trademark holder to oppose the parallel import of medicines resold within the EEA (vide CJEU, C-16-74). This changes when the parallel trader repackages the goods (vide CJEU, C-85/76) as the trademark holder is allowed to oppose the parallel import unless the following five conditions are met (vide C-427/93 and C-143/00):
(1) Repackaging is necessary for commercialising the goods in the import market e.g. for national legislation or national practice or because of a strong resistance by a significant part of the public against relabelled medicines instead of repackaged;
(2) The product is in its unaltered original state;
(3) The parallel trader has given prior notice to the trademark holder of the repackaging;
(4) The new packaging contains an indication of the entity responsible for the repackaging; and
(5) The new presentation does not cause damage to the reputation of the trademark (e.g. because of a defect or bad quality packaging).
CJEU Latest Judgements – CJEU Rulings
In practice, parallel traders of medicinal products may be compelled to open the packaging to comply with local regulations in the import market. These manipulations with the medicinal product may cause damage to the safety seal and/or barcode on the packaging. The parallel traders in the cases Abacus Medicine, Kohlpharma, Paranova and 2CARE4 argued that a replacement of the outer packaging of the medicines is necessary since the visible and irreversible traces of opening of the original packaging cast a doubt on the integrity of the medicinal products. They found support for this position in guidelines from national authorities.
The pharmaceutical companies, Novartis, Bayer, MSD, Ferring and Lundbeck, argued that Commission Delegated Regulation 2016/161 issued under the Falsified Medicines Directive, is complied with when the parallel traders attach a barcode with the unique identifier to the original outer packaging and add a new anti-tampering device covering the traces of the opening of the original packaging with some indication that this new safety seal was affixed during a lawful repackaging. They argued that such measures are sufficient to guarantee access to the market.
The CJEU considers that the mere presence of traces on the outer packaging of a medicinal product of it having been opened by a parallel trader is not, in itself, sufficient to justify a replacement of this outer packaging. Hence, parallel traders cannot merely rely on the fact that their manipulations to comply with local regulations in the import market have left traces on the outer packaging of a medicinal product, to completely repackage it. The repackaging must be objectively necessary.
The EU legislator, through Article 47a of the Falsified Medicines Directive, expressly provided for the possibility of replacing the two safety features. The CJEU, therefore, deduces from this wording that the legislator did not intend to prevent the reuse of the original outer packaging by any means. Yet, the CJEU makes it conditional on the possibility that the original safety features can be replaced by equally effective features for enabling identification of the authenticity and verification of the integrity of the medicinal products.
The CJEU also points out that wholesalers and pharmacists should have no doubt that the traces of opening are attributable to a lawful action by a parallel importer. This means that the packaging of the medicinal product should clearly mention the re-packager, providing information on the possible origin of those traces.
The CJEU also gives some practical guidance on the replacement of the barcode. It can be attached to the outer packaging using an adhesive label (so the importer does not necessarily have to print it on the outer packaging) as long as this label cannot be removed without being damaged and that the barcode remains perfectly readable at all relevant times.
The CJEU then provided for two exceptions to this principle of relabelling rather than repackaging where there is strong resistance from a significant proportion of consumers in the import market to acquiring relabelled medicinal products, to the extent that it would constitute a hindrance to effective market access or medicinal products for which the outer packaging bears visible traces of being opened, caused by the replacement of the original safety features.
However, the CJEU qualifies the application of the two exceptions by saying that parallel importers cannot rely on a general presumption of consumer resistance to such medicinal products. They must show that those exceptions exist taking into account the circumstances of the import market and whether traces are visible or, on the contrary, can be detected only after a thorough verification by wholesalers or pharmacists.
Ramifications of the CJEU Three Cases on National Legislations & National Courts
In the Three Cases, the CJEU ruled that Member States have no discretion to impose that parallel imported medicinal products must be repackaged instead of relabelled. This was the situation for the German and Danish guidelines in these cases, which were declared invalid. The CJEU rulings in the Three Cases follow largely previous case law on the subject and are welcome confirmations for pharmaceutical companies. Despite these efforts at EU level to harmonise as much as possible the safety features for medicinal products, the matter whether traces left by the original safety seal provoke a strong reaction from consumers towards the medicines that constitutes an obstacle to market access still needs to be dealt with by the national courts, thus leaving a certain degree of uncertainty for parallel traders.
Ria Micallef is an Associate within the Investment Services and Funds team at Ganado Advocates.