EU Court Rules on Pharmaceutical Repackaging Case
In the pharmaceutical repackaging case of Ferring Laegemidler A/S v Orifarm A/S, the Court of Justice of the European Union (the CJEU) has given its decision
In the pharmaceutical repackaging case of Ferring Laegemidler A/S v Orifarm A/S, the Court of Justice of the European Union (the CJEU) has given its decision, thereby providing guidance on the circumstances in which a brand owner can object to the repackaging of its products.
Background
The case concerns a pharmaceutical product, marketed by Ferring under the brand name, Klyx in Denmark, Finland, Sweden and Norway. In all of those countries, each a Member State of the European Economic Area (the EEA), Ferring sells Klyx in identical packaging - i.e. 120ml and 240ml containers, and in packets containing one or ten such containers. Orifarm, in the course of its parallel trade business, (1) purchases packets of ten containers in Norway and (2) repackages and sells those products in new packets of one container in Denmark.
In such cases, EU Law attempts to balance the competing interests of (1) the trade mark owner to exercise control over its brand with (2) the principle of free movement of goods. The general rule is that the owner cannot prevent further trade in products, which it or a related entity has put onto the market in the EEA, or where the owner has consented to that marketing. This rule does not apply where there are legitimate reasons for the brand owner to oppose further commercialisation. A parallel trader will fall foul of that exception unless it complies with the five BMS Conditions (laid down by the CJEU in the earlier case of Bristol-Myers Squibb v. Paranova AS). The BMS Conditions include the requirement that the repackaging is necessary to gain effective market access.
The Parties' Arguments
The brand owner, Ferring, argued that it could legitimately oppose Orifarm's repackaging on the grounds that (1) the repackaging is unnecessary for the imported product to be marketed in Denmark - Orifarm could sell the product in its original ten container form, and (2) the sole rationale for the repackaging is to secure a commercial advantage for Orifarm - insufficient to constitute necessity.
Orifarm argued that the repackaging is necessary for it to secure effective market access to the part of the Danish market for packets of one container Klyx.
The CJEU's Decision
The CJEU ruled that, the fact that Klyx is sold in packets of ten containers in the countries of export (Norway) and import (Denmark), was not enough of itself to justify the conclusion that the repackaging is unnecessary - illegitimate partitioning of the markets would exist if the trader were able to sell into only part of its home market.
However, here there was insufficient evidence before the CJEU for it to conclude that the market for packets of ten containers of Klyx represented only a limited part of the market in Denmark. In any event, this is a question of fact to be decided by the national court in the country of import.