England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION – PATENTS COURT
The Hon Mr Justice Laddie
HC 1999 No 0017/HC 1999 No 1894/
HC 1999 No 2053/HC 1999 No 2051/
HC 1999 No 2054/HC 1999 No 2094/
HC 1999 No 3040

		0681/0682/0689/ 0690/0691/0692/ 0693/0694 Royal Courts of Justice Strand, London, WC2A 2LL
		05/03/2004

Jacob LJ :

Introduction

1. These appeals and cross appeals are from two judgments of Laddie J of 28^th February 2000 and 6^th February 2003. Having heard the evidence prior to the first judgment, Laddie J made findings of fact. On the basis of these he referred some questions to the ECJ. The ECJ gave its answers on 23^rd April 2002. The parties could not agree its effect, hence the need for further argument and a second judgment.
2. The claimants in the various actions are well-known pharmaceutical manufacturers. The two defendants are parallel importers of trade-marked and dealers in generic pharmaceuticals. This case is about the defendants' parallel imports of trade-marked pharmaceuticals bought in other member states of the EU. Before us Mr Simon Thorley QC and Mr Geoffrey Pritchard appeared for Eli Lilly, Mr Michael Silverleaf QC and Mr Richard Hacon appeared for Glaxo (who have merged with SmithKlineBeecham) and Boehringer Ingelheim. Mr Nicholas Green QC and Mr Richard Arnold QC represented the defendants.
3. The actions were principally for infringement of registered trade marks. In addition Mr Silverleaf advanced a case of passing off on behalf of Boehringer Ingelheim. Laddie J rejected that in his first judgment. In his second judgment, he held that all the trade mark actions about reboxing succeeded but those about relabelling failed. Hence it is that the main appeals are by the parallel importers. Boehringer cross-appeals the rejection of its passing off claim. Glaxo and Boehringer cross-appeal the rejection of their objections to certain manners of relabelling. All the claimants submit that the 2^nd judgment should be upheld on the further ground that it was not proved that reboxing of parallel imported goods was necessary to achieve effective access to the UK market. Certain minor matters are also raised by way of cross-appeal.
4. I begin by describing the various things the defendants are doing. In each case they purchase in a Member State other than the UK the original pharmaceutical, packed in cardboard boxes appropriate for that Member State containing an appropriate instruction leaflet for that Member State. Some of the goods are pills packed in blister packs. Others are inhalers (commonly called "puffers") on which is stuck a label. There is no dispute that under the free-circulation rules (and particularly Art. 28) of the EC Treaty they are entitled, so far as trade mark law is concerned, to import and sell these goods in the packaging in which they were purchased.
5. The actual pharmaceuticals are the genuine goods, identical to those on the UK market. They may indeed come off the same production line since pharmaceutical production does not involve giant factories and distribution is cheap – you can get a lot of pills in a lorry. But the boxing, labelling and information leaflets as they stand are not suitable for this country. Information leaflets for this country must be in English and comply with our regulatory requirements which may differ from those in the country of origin. Moreover the boxes have instructions and details in foreign languages.
6. The parallel importers therefore, for regulatory and market acceptability reasons, make changes. What they mainly do so far as this case is concerned is called "reboxing". They take the contents of the foreign boxes out, and put them in fresh boxes designed for the UK market along with fresh information leaflets in English which comply with UK regulatory approval. In the case of inhalers, not only do the importers rebox, they also stick appropriate English language labels on the inhalers themselves, labels which completely overcover the foreign language label.
7. Reboxing generally involves re-affixing the original trade mark on the information leaflets and boxes. But in some instances the importer has instead only used the generic name of the drug on the box – not its trade mark. This was called "de-branding". In such a case the original trade mark is not removed from every aspect of the product – in particular blister packs and often the pills themselves bear it. For obvious reasons the mark cannot be removed from the pills or the blister packs without the risk of affecting the quality of the drugs themselves. So "de-branding" in the context of this case really means partial de-branding. The only affixing of the trade mark by the parallel importers is on the new information leaflet prepared for UK use.
8. In other cases the defendants' new boxes not only bear the trade mark of the drug, but also have a get-up which may serve as being distinctive of the importer. This is called "co-branding." Such co-branding has always had on the side of the box in clearly legible, but less prominent, small print, the information mentioned below.
9. An alternative operation is called "stickering". This involves sticking an appropriate label to an original foreign language box, having replaced the internal foreign information leaflet with an appropriate UK leaflet. Complaint is made of the form of some stickered products.
10. Whether there is reboxing or stickering, for the purposes of this case it is agreed that we should proceed on the basis that the importer has indicated clearly on the new box or sticker that the goods were procured in the EU and repackaged by the importer. An example of the sort of thing involved reads:

"Manufactured by Lilly SA, Spain. Procured within the EC and repackaged by the licence holder who is:

DOWELHURST LTD"

Actually some of the boxes with which we were concerned did not say all these things, but no point is taken about that.

11. This dispute is mainly about whether the defendants can rebox at all, and if so whether the way they have done it is lawful. Can the defendants co-brand or de-brand? It is the object of the claimants (a) to prevent re-boxing at all, and if that fails (b) to require that the parallel importer's box both carries the original trade mark and is otherwise as plain as possible.

The Provisions of the Treaty and Trade Mark Directive

12. Arts. 28 (formerly 30) and 30 (formerly 36) of the Treaty provide:

"Article 28 [EEC 30]

Quantitative restrictions on imports and all measures having equivalent effect shall be prohibited between Member States.

Article 30 [EEC 36]

The provision of Articles 28 and 29 shall not preclude prohibitions or restrictions on imports, exports or goods in transit justified on grounds of public morality, public policy or public security; the protection of health and life of humans, animals or plants; the protection of national treasures possessing artistic, historic or archaeological value; or the protection of industrial and commercial property. Such prohibitions or restrictions shall not, however, constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States."

13. Art. 5(1) of the Trade Mark Directive provides that:

"The registered trademark shall confer on the proprietor exclusive rights therein. The proprietor shall be entitled to prevent all third parties not having his consent from using in the course of trade:

(a) Any sign which is identical with the trademark in relation to goods or services which are identical with those for which the trademark is registered."

14. Art. 5.3 of the Directive provides:

"The following, inter alia, may be prohibited under paragraphs 1 and 2:

a. Affixing the sign to the goods or to the packaging thereof;

b. Offering the goods, or putting them on the market or stocking them for those purposes under that sign, or offering or supplying services thereunder;

c. Importing or exporting the goods under the sign."

15. Art. 7 of the Trade Marks Directive provides as follows:

"Exhaustion of the Rights Conferred by a Trademark.

1. The trademark shall not entitle the proprietor to inhibit its use in relation to goods which have been put on the market in the Community under that trademark by the proprietor or with his consent.

2. Paragraph 1 shall not apply where there exist legitimate reasons for a 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."

16. The UK Trade Marks Act 1994 implemented Art. 5(1)(a) of the Directive in s.10(1), Art 5.3 in s.10(4) and Art. 7 in s.12. Nothing turns on this. I shall use the numbering of the Directive.
17. It is common ground that Art. 7 embodies the existing case law of the Court, neither adding to it nor subtracting from it. So cases decided before as well as after the coming into force of the Directive are equally in point.

A Basic Unstated Assumption

18. Running through all the cases about reboxing or relabeling parallel imports, including this case, is the assumption that the reaffixing of the trademark to the goods would, unless it is permitted by the free circulation rules, infringe the registration. No one has questioned the assumption in this case – or in any of the many ECJ cases. Nonetheless it is a little odd. Most people would think that there could be no infringement by simply applying the owner's trade mark to his original goods or by using his trade mark when marketing them. It happens every day, for instance where a shop-keeper or internet seller writes onto packaging of his own the trade mark of the goods contained in the packet or a shopkeeper puts up a sign to say he has the trade-marked goods in stock, or second-hand goods are sold by reference to the trade mark. However the language of Art.5.3 of the Directive is wide – it covers, for instance, what retailers do all the time, offering the goods for sale under the mark. And it draws no distinction between doing the prohibited act in relation to the genuine goods of the trade mark owner or spurious goods.
19. Most everyday cases of affixing or marketing by reference to the mark in relation to genuine goods are indeed lawful. This is probably because there is an implied consent to do that which is reasonably necessary to market the goods. There are obviously further problems to be explored here – for instance suppose the manufacturer imposed a sell-by date. Would it be an infringement to sell after that date – even if the trader pointed out the goods were past it? And one can imagine cases where implied consent must be ruled out by an express prohibition on further use of the mark – for instance in an attempt to prevent a second-hand market in the goods. In the present case there is no question of implied consent.
20. Personally I still have some doubts as to whether the law of registered trade marks needs to be stretched to cover conduct readily caught by more general unfair competition rules. Thus out-of-date goods have been dealt with easily by passing off e.g. Spalding v Gamage (1915) 32 RPC 273 (outmoded footballs sold as the new and improved ones), Wilts UD v Robinson [1958] RPC 94 (outdated condensed milk sold as current). Sometimes I wonder whether courts concerned with just an isolated question about registered trade mark law overlook the fact that unfair competition rules can and do deal with the problem. There is more than one way to skin a cat.
21. All that is by-the-by: it is common ground here that in all cases where the trademark has been reapplied by the importer, there would be infringement unless the importer can come within the free circulation rules.

The framework of the free circulation rules

22. Since the goods were put on the market in the Community under their respective trade marks by the proprietors, Art. 28 EC and Art.7(1) of the Directive prima facie apply.
23. By way of response the trademark owners say, as regards Art. 30 EC, that their trademark rights are justified on the grounds of the protection of industrial property (Art. 30 first sentence). As regards Art. 7.2 of the Directive, they say they have "legitimate reasons to oppose further commercialisation (Art.30, 2^nd sentence).
24. In riposte the parallel importers say that enforcement of the trademark rights in this case would constitute a "disguised restriction on trade between member states" (Art. 30 second sentence) and they deny the existence of any "legitimate reasons" (Art.7.2).
25. It is common ground that there is no distinction between these last two points. If there are no "legitimate reasons" there is a "disguised restriction" and vice versa.

The case law of the ECJ prior to this case

26. Over the years the ECJ has been faced with many repackaging cases. Most have concerned pharmaceuticals, but not all. It is not necessary to refer to them all here. At this stage I refer to just four, the key cases prior to the reference in this case. These cases are: Hoffmann-La Roche v Centrafarm, Case 102/77 [1978] ECR 1139; Bristol-Myers Squibb v Paranova, Joined Cases C-427/93, C-429/93 and C-436/93, [1996] ECR I-3457 ("BMS"); Loendersloot v Ballantine, Case C-349/95 ("Ballantine") and Upjohn v Paranova, Case C-379/97, [1999] ECR I-6927.
27. The upshot of these cases is contained in the Court's answers to the questions in BMS. It said (I have added my own numbering):

"Article 7(2) of Directive 89/104 must be interpreted as meaning that the trade mark owner may legitimately oppose the further marketing of a pharmaceutical product where the importer has repackaged the product and reaffixed the trade mark unless:

(1) it is established that reliance on trade mark rights by the owner in order to oppose the marketing of repackaged products under that trade mark would contribute to the artificial partitioning of the markets between Member States; such is the case, in particular, where the owner has put an identical pharmaceutical product on the market in several Member States in various forms of packaging, and the repackaging carried out by the importer is necessary in order to market the product in the Member State of importation, and is carried out in such conditions that the original condition of the product cannot be affected by it; that condition does not, however, imply that it must be established that the trade mark owner deliberately sought to partition the markets between Member States;

(2) it is shown that the repackaging cannot affect the original condition of the product inside the packaging; such is the case, in particular, where the importer has merely carried out operations involving no risk of the product being affected, such as, for example, the removal of blister packs, flasks, phials, ampoules or inhalers from their original external packaging and their replacement in new external packaging, the fixing of self-stick labels on the inner packaging of the product, the addition to the packaging of new user instructions or information, or the insertion of an extra article; it is for the national court to verify that the original condition of the product inside the packaging is not indirectly affected, for example, by the fact that the external or inner packaging of the repackaged product or new user instructions or information omits certain important information or gives inaccurate information, or the fact that an extra article inserted in the packaging by the importer and designed for the ingestion and dosage of the product doesn't comply with the method of use and the doses envisaged by the manufacturer;

(3) the new packaging clearly states who repackaged the product and the name of the manufacturer in print such that a person with normal eyesight, exercising a normal degree of attentiveness, would be in a position to understand; similarly, the origin of an extra article from a source other than the trade mark owner must be indicated in such a way as to dispel any impression that the trade mark owner is responsible for it; however, it is not necessary to indicate that the repackaging was carried out without the authorization of the trade mark owner;

(4) the presentation of the repackaged product is not such as to be liable to damage the reputation of the trade mark and of its owner; thus, the packaging must not be defective, of poor quality, or untidy; and

(5) the importer gives notice to the trade mark owner before the repackaged product is put on sale and, on demand, supplies him with a specimen of the repackaged product."

28. So the importer who repackages and re-applies the mark will infringe unless he satisfies all five of the BMS conditions. I summarise these:

(1) Necessary to repackage to market the product;

(2) No effect on original condition and proper instructions;

(3) Clear identification of manufacturer and importer;

(4) Non-damaging presentation;

(5) Notice.

29. The Court's judgment in Upjohn explains to some extent what is meant by "necessary." The context was that the importer wanted to apply the version of the trade mark used by the manufacturer in the country of intended sales instead of the version used in the country of purchase ("Dalacin" for "Dalacine"). The Court said:

"[43] It follows that it is for the national courts to examine whether the circumstances prevailing at the time of marketing made it objectively necessary to replace the original trade mark by that of the importing Member State in order that the product in question could be placed on the market in that State by the parallel importer. This condition of necessity is satisfied if, in a specific case, the prohibition imposed on the importer against replacing the trade mark hinders effective access to the markets of the importing Member States. That would be the case if the rules or practices in the importing Member States prevent the product in question from being marketed in that State under its trade mark in the exporting Member State. This is so where a rule for the protection of consumers prohibits the use, in the importing Member State, of that trade mark used in the exporting Member State on the ground that it is liable to mislead consumers.

[44] In contrast, the condition of necessity will not be satisfied if replacement of the trade mark is explicable solely by the parallel importer's attempt to secure a commercial advantage."

30. Quite what the Court had in mind by a "commercial advantage" I am afraid I do not understand. The Advocate-General discussed the point at paragraph 54 but he did not think it helpful to "postulate a category of 'purely commercial reasons.'" He was clearly of the view that necessity to replace the trade mark was the overriding test, which had to be determined on a case-by-case basis by the national court. And it seems clear that a "commercial advantage" could not consist of merely access to the market for the parallel imported goods, though out of context most people would call such access "a commercial advantage".

The First Judgment of Laddie J on necessity and specific subject-matter

31. When these cases came before Laddie J for the first time the major dispute was over the "necessary" condition – what did it mean and was it "necessary" to rebox at all? On the facts he dealt with the "need to rebox" at paragraphs 176-189. He held that: "there is widespread resistance to over-stickered boxes" (para. 178); "this case is awash with indications that the resistance to [overstickered] products not only exists but is significant (para 186); and "there is widespread and substantial resistance to parallel-imported pharmaceuticals supplied in over-stickered boxes" (para. 188)."
32. It was not clear that such resistance could satisfy the "necessary" test – after all, the stickered boxes could be sold lawfully, if not in such quantities as reboxed product. There was no legal necessity in the same way as it is legally necessary to produce an English language information leaflet.
33. Laddie J also held that the defendants' activities did not harm the "specific subject-matter" of the proprietors' trade mark rights.
34. These two findings lay at the heart of his first four questions to the ECJ. These were:

"'1. Can a proprietor of a trade mark use his trade mark rights to stop or hinder the import of his own goods from one Member State into another or to hinder their subsequent marketing or promotion when the importation, marketing or promotion causes no, or no substantial, harm to the specific subject-matter of his rights?

2. Is the answer to the previous question different if the ground relied on by the proprietor is that the importer or subsequent dealer is using his mark in a way which, although not prejudicial to its specific subject-matter, is not necessary?

3. If an importer of the proprietor's goods or a dealer in such imported goods needs to show that his use of the proprietor's mark is necessary, is that requirement met if it is shown that the use of the mark is reasonably required to enable him to access (a) part only of the market in the goods, or (b) the whole of the market in the goods; or does it require that the use of the mark was essential to enabling the goods to be placed on the market and if none of these, what does necessary mean?

4. If the proprietor of a mark is, prima facie, entitled to enforce his national trade mark rights against any use of his mark on, or in relation to, goods which is not necessary, is it abusive conduct and a disguised restriction on trade, in accordance with the second sentence of Article 30 [EC], to use that entitlement in order to hinder or exclude parallel imports of his own goods which do not threaten the specific subject-matter or essential function of the trade mark?"

The ECJ's answers on necessity and specific subject-matter

35. The ECJ answered those questions. As to the specific subject-matter questions the Court held that:

"Thus it is clear from settled case-law that the change brought about by any repackaging of a trade-marked pharmaceutical product - creating by its very nature the risk of interference with the original condition of the product - may be prohibited by the trade mark proprietor unless the repackaging is necessary in order to enable the marketing of the products imported in parallel and the legitimate interests of the proprietor are also safeguarded (see, to that effect, BMS, para 57). "

36. So repackaging inherently threatened the specific subject-matter and could only be justified if the BMS conditions were satisfied. It was not necessary to ask separately whether the specific subject-matter was damaged.
37. As to the necessity questions the court held:

"2. Replacement packaging of pharmaceutical products is objectively necessary within the meaning of the Court's case-law if, without such repackaging, effective access to the market concerned, or to a substantial part of that market, must be considered to be hindered as the result of strong resistance from a significant proportion of consumers to relabelled pharmaceutical products".

38. This is important – "a strong resistance from a significant proportion of consumers" is enough to count as a "hindrance." The parallel importers are entitled to do more than just render the packaging lawful for UK marketing – they are entitled to replace the packaging if that is what is necessary to overcome a strong resistance in the market to relabelled boxes.

The cross-appeals on the necessity to re-box

39. The claimants attack Laddie J's conclusions quoted at paragraph 30 above. They say the evidence does not warrant them. Moreover, they say, each product should be considered on a case-by-case basis – that one should look at the individual product to see whether it can be stickered properly and neatly and if that were done it is not shown that there would be any "strong resistance."
40. The Judge's conclusions are hardly surprising. Over the years – from at least Hoffmann-La Roche v DDSA [1969] FSR 410 - the law reports abound with cases about the appearance of pharmaceuticals. Clearly appearance matters to a significant proportion of patients, concerned that all is well with their medication.
41. Nor are the reasons for those conclusions found by Laddie J surprising. They were that some patients have a concern about foreign writing (not necessarily xenophobia – an anxiety that they are missing some important information is enough) and others are concerned by the unprofessional look of a stickered packet.
42. These concerns are in respect of stickered packets as a generality. Mr Thorley, for Lilly, invited us to look at a neatly stickered pack of Lilly's Prozac. He suggested that such a pack would, or ought to be, perfectly acceptable to patients – there was no need to re-box. But the pack displays partially covered Spanish writing and, neat though the stickering is, does not convey the same impression as a "proper" box.
43. Laddie J's conclusions were based on a number of types of evidence:

i) an independent research report by Taylor Nelson commissioned by the Association of the British Pharmaceutical Industry, whose members include all the claimants in this case;

ii) the oral evidence of some executives from the claimants;

iii) an internal document of 1998 of SmithKline Beecham;

iv) an opinion poll amongst 300 pharmacists conducted for the purposes of this case by the defendants' solicitors;

v) oral evidence from private practice and hospital pharmacists.

44. We were taken to the first of these. Laddie J quotes the key passages in his paragraphs 179-80 He drew his conclusions at paragraph 181:

"There is little doubt what this means. First foreign language is a deterrent to the sale of parallel imported drugs. Second it is to the advantage of companies like Glaxo Wellcome to ensure that their packaging has a higher quality appearance than that used by parallel importers. Forcing the latter to use over-stickered boxes would hinder their ability to access the market for both reasons."

45. I would draw the same conclusions. This is a very powerful indication that Laddie J's overall conclusions on the necessity to rebox were right. For the Taylor Nelson report was not done to prove a point in litigation – it was done for the ABPI to identify a strategy for "reducing the impact" of parallel imports. It tells us why this case is happening.
46. Mr Silverleaf submitted that only lesser conclusions were warranted – that there was in relation to some relabelled packs of unknown quality resistance of an unknown extent by an unknown proportion of customers. I reject that. This was not a survey about particular packs: it was a serious exercise designed to get a proper picture of the position generally – and the picture painted is of substantial resistance to relabelled packs generally, whether the labelling was done neatly or not.
47. Mr Silverleaf had very little to say about the SmithKline Beecham report – merely saying that reboxing was done to remove potential customer animosity with respect to foreign languages on relabelled packs. He failed to suggest any reason why anyone would go to the expense of repackaging, unless that animosity was significant.
48. As to the evidence of the two executives, Laddie J deals with them in paragraphs 181-183. He accepted the evidence of Ms Edwards of Glaxo "I do not think there is any doubt that there is, or may be, resistance from some patients to foreign writing."
49. These materials alone would justify Laddie J's conclusions. But there is more. Mr Silverleaf directed his main attack at the further material. I turn to the questionnaire sent out to between 3,500 and 4,000 of the nearly 10,000 independent pharmacies in the UK. Mr Silverleaf attacked its form and pointed out that question 1 seems to have varied between two alternatives. Question 1 in either form was indeed inept. But the pharmacists who responded were invited to give their reasons for a preference as between a relabelled and a reboxed product. Without any prompting a clear preference for reboxing and a clear indication of the problem with foreign language appearing emerges.
50. Mr Silverleaf suggested that none of this mattered – that pharmacists could overcome the patient hostility by more explanation to patients. This is not the real world – poorly people want their pills, not explanations (adapting Lord Macnaghten's aphorism "thirsty folk want beer not explanations" in Montgomery v Thompson [1891] AC 217). Moreover pharmacists have better things to do than to explain things to concerned patients. They have to ask themselves whether the cost in time of explaining a stickered box is worth the extra profit to be made by buying parallel imports.
51. Most significant to my mind was the overwhelming response to the last question: "if all pharmaceutical products of European origin were reboxed rather than over-labelled would you (a) buy more (b) buy less (c) buy the same. That seems to me to be a fair question and the answers were overwhelmingly in favour of (a).
52. Finally there were the pharmacists who came to give oral evidence. Mr Silverleaf took us through some of their evidence. He did not shift the overall impression that new boxes were easier to deal with than relabelled, that labelling was a hindrance.
53. I turn to the suggestion that the matter should be approached on a case-by-case basis. First I note that the ABPI and Taylor Nelson did not think so – they thought it sensible to look at the overall position. If that is the sensible approach for the industry I do not see why it is not the sensible approach for the court. Next the suggestion overlooks that problems with stickering are bound to be generalised – some significant bad stickering will give all stickering a bad name. Thirdly Mr Silverleaf invited us to look at the evidence of individual pharmacists about the individual boxes in suit. This goes some way to showing that relabelled boxes could be sold – but that is not enough – the question is whether an inability to rebox is a hindrance to sale.
54. I conclude that the attack on Laddie J's findings of fact wholly fails. If parallel importers cannot rebox they face a substantial hindrance to sale. I pass from this point by observing that if this were not so I cannot imagine why the claimants are spending so much effort on this case or why the defendants are bothering to defend.

The Cross-appeal on Passing Off

55. The complaint here is in relation to "de-branding". It is made only by Boehringer, though if the claim were good it would hold for other claimants too. It is said that Dowelhurst's reboxed products, which use only the generic name of the drug on the box, make a false representation leading to damage. The misrepresentation is said to be that the drug inside was sourced from a generic manufacturer – and one chosen by Dowelhurst. It is said that when the drugs come off patent, Dowelhurst will simply cease buying parallel imports and substitute a "true generic" in virtually the same packets (the only difference being that the BMS condition 3 statement will be dropped).
56. The case is likened to that of Gloag v Welsh Distillers [1998] FSR 718. In that case the defendant put Scotch whisky in bottles labelled Welsh whisky. His idea was to build up a reputation for his Welsh whisky that way – and in due course to use Welsh whisky instead. Laddie J refused to strike out a passing off claim as unarguable. Reliance is also placed on the so-called "reverse passing off" type of case – where the defendant seeks to get sales for his goods by falsely representing that work actually done by the claimant was done by him, Bristol Conservatories v Conservatories Custom Built [1989] RPC 455.
57. In those cases the defendants were plainly telling lies. The only question was whether the law of passing off gave the plaintiff a remedy – was he damaged? Here things are different. The generic name on the box is true – for instance the box saying "Meloxicam Tablets 15mg" contains just that. If one opens the box one finds, to be sure, that the there is also use of Boehringer's trade mark Mobic. But that does not mean there is any false representation on the box.
58. To my mind the alleged misrepresentation is no more than a lawyer's ingenious construct. There is no evidence that any pharmacist or patient has ever been deceived, notwithstanding significant sales of the products. The best that Mr Silverleaf could muster were a few answers from some pharmacists that there might be some slight, quickly passing, confusion or queries. Nothing substantial was shown. Yet, if there had really been significant confusion, given the effort put into this case, Boehringer would have found it.
59. So Laddie J was right to dismiss the passing off claim.

Laddie J's Second Judgment on co and de-branding

60. In his second judgment Laddie J applied what he understood the ECJ's answers to mean. He quoted paragraphs 28-30 of the judgment:

"28. Although it is possible to derogate from the fundamental principle of free movement of goods where the proprietor of a mark relies on the mark to oppose the repackaging of pharmaceutical products imported in parallel, that is only to the extent necessary to enable the proprietor to safeguard rights which formed part of the specific subject-matter of the mark, as understood in the light of its essential function.

29. It is not in dispute that the specific subject-matter of a mark is to guarantee the origin of the product bearing that mark and the repackaging of that product by a third party without the authorisation of the proprietor is likely to create real risks for that guarantee of origin.

30. Thus, in paragraphs 7 and 8 of Hoffmann-La Roche, the Court considered that the proprietor's right to oppose the repackaging of pharmaceutical products bearing its mark is, having regard to that risk to the guarantee of origin, related to the specific subject-matter of the mark. According to that case-law, it is the repackaging of the trade-marked pharmaceutical products in itself which is prejudicial to the specific subject-matter of the mark, and it is not necessary in that context to assess the actual effects of the repackaging by the parallel importer."

61. Then he said:

"In the light of these passages it continues to be the law that a trade mark proprietor can only interfere with parallel importation of his own goods where it is necessary to do so in order to protect the specific subject-matter of those rights. However, Mr Thorley QC, who appears for SmithKline Beecham and Eli Lilly, is correct to summarise the effect of paragraph 30 of the judgment to mean that repackaging is deemed to be prejudicial to the specific subject-matter. It follows that even if, as here, it was not and could not be asserted that the repackaging adversely affected the quality of the goods and there was no real adverse impact on the mark's function as an indication of origin, damage or prejudice to the specific subject-matter must be assumed. This creates an irrebuttable legal fiction unconnected with the facts."

62. A little later he said:

"19. That [i.e. a finding that reboxing was necessary], however, is not an end of the matter. Although an importer may be allowed to repackage, this does not give him a free hand to use whatever type or style of packaging he likes. At paragraph 32 of its judgment the ECJ states that repackaging must be

'done in such a way that the legitimate interests of the proprietor are respected. This means, in particular, that the repackaging must not adversely affect the original condition of the product and must not be such as to harm the reputation of the mark.'

20. This statement must be read in conjunction with the irrebuttable presumption that repackaging is prejudicial to the specific subject-matter of the mark. It seems to me that the result of this is that all repackaging must be treated as harmful and only to be tolerated to the extent that it can be shown to inflict the minimum collateral damage on the claimant's mark. In my view Mr Thorley is correct when he argues that, as a matter of principle, the repackaging should be as unobtrusive from a trade mark point of view as possible. Two forms of packaging, at least, can be said to meet this requirement. The first consists of packaging which imitates the original packaging save in respect of features which have no trademark significance whatsoever. For example, a parallel importer could repackage in boxes which bear exact copies of the claimant's get up and trade marks, save for changes in language (say German to English). The second consists of completely plain boxes which depict nothing but the claimant's trademark. In each case, of course, the trade mark owner cannot object to the inclusion of material on the packaging required, for example, by national legislation or jurisprudence of the ECJ. For that reason, placing on the boxes a notice identifying who the repackager is, as required by BMS, would not, of itself, allow the proprietor to complain of the repackaging. However, even in such a case, it would be necessary to show that the importer had applied the additional marking in a way which did not unnecessarily interfere with the proprietor's interests in his trade mark. Mr Thorley said that plain boxes could include the original brand name so as to be consistent with the brand name appearing on the internal packaging and the product itself. They could also contain some appropriate reference to the generic name of the active ingredient. The name and address of the manufacturer and of the Marketing Authorisation Holder should be included as should the name and address of the importer which should be no more prominent, in terms of script or location, than that of the manufacturer. I agree."

63. On this basis Laddie J went on to hold that both de-branding and co-branding were objectionable. In relation to partial de-branding he referred to paragraph 98 of the Advocate-General's opinion:

"98. It must be borne in mind that repackaging a product which bears a trademark, whether or not the trademark is reaffixed to the new external packaging or simply removed and not replaced, is a particularly intrusive form of trademark infringement."

He went on to say:

"Partial de-branding by removal of the mark from the outer packaging or significant diminution of its prominence may reduce the extent to which the proprietor can build up public awareness of and reputation in his mark. If such de-branding is not necessary to enable the importer to access the market, the proprietor can use his registered rights to prevent it."

64. As to co-branding he said:

"The second class consists of those cases where the importer reboxes in a livery which serves to build up his own reputation in his own mark or get-up on the back of the claimant's product. The use by an importer of his own mark or get-up alongside the proprietor's mark on the new boxes, was referred to as co-branding during the trial. The effect of this is likely to be to diminish to some extent the build up of the proprietor's exclusive reputation. To some extent, the goodwill generated by the use of the proprietor's mark will benefit the importer, not the proprietor. Once again, that adversely affects the proprietor's interest in his mark and, if it is not necessary to do this to enable the importer to access the market, it can be restrained."

65. On the basis of this reasoning he held that both the "de-branded" boxes (those with just the generic name of the product and the BMS condition 3 notice) and the boxes which had a get-up which suggested a trade source infringed.

The criticisms of the second judgment

66. Mr Green attacks this reasoning. His primary case was that Laddie J simply misunderstood the ECJ's ruling. He began by attacking Laddie J's notion that the ECJ had created an "irrebuttable presumption that repackaging is prejudicial to the specific subject-matter". He said the Court decided no such thing. All it was saying is that if it were shown that reboxing was "necessary" the parallel importer could do so provided he satisfied the 5 BMS conditions. That, he submitted, his clients did. Laddie J's fundamental error, submitted Mr Green, was to hold that the "necessity" test applied not only to repackaging as such but also to the details of the manner of repackaging.
67. Furthermore, he submitted, as regards de-branding, that paragraph 98 of the Advocate-General's opinion is wrong, even if understood as only applying to partial de-branding. To remove a trade mark wholly from a product and sell it on under no or a different mark is perfectly permissible – it is not an act restricted by the infringement provisions of the Trade Marks Directive. Any trader who breaks bulk and puts his own name on the goods rather than that of a supplier would otherwise infringe. It follows that if a trade mark owner cannot insist on his trade mark remaining on the goods altogether, he cannot complain of the lesser act of partial removal. He submitted further that the Advocate-General had overlooked Pfizer v Eurim-Pharm [1981] ECR 2913 where a trade mark owner could not enforce his trade mark against re-packaged goods placed in transparent packaging which carried a BMS condition 3 notice. This was because:

" …. the consumer or final user of the product is not liable to be misled as to the origin of the product, above all where, as in this case, the parallel importer has [a BMS condition 3 notice]."

Here, if one looks at the packs (photos are at [1982] EIPR 34) one can see that there was some de-branding.

68. As regards co-branding, Mr Green's first submission was that since this is not mentioned in any of the BMS conditions, once repackaging was "necessary" there was nothing wrong in it. The only condition which might be relevant is condition 4 (not to damage the reputation of the trade mark) but this was limited to poor packaging. In the course of argument he rather accepted a fallback position: that co-branding was lawful provided there was no damage of any sort to the reputation of the trade mark. There was debate as to whether co-branding could somehow reduce the distinctiveness of the trade mark in the market by giving the impression that the co-brand was connected with the trade mark or its owner – what was called in argument "muddying the mark" (a phrase borrowed from GE TM [1969] RPC 418 at 459, where a form of co-branding was held to be non-deceptive). This was also called "blurring" by the EFTA Court of Appeal (see below).
69. Mr Green submitted in relation to the fallback position that, even if co-branding might in some cases cause damage to the reputation of a mark, that was simply not proved here. It was, he submitted, actually wholly improbable. Pharmacists were not confused. And any patient who cared – who had normal eyesight and was reasonably circumspect - would clearly read the BMS Condition 3 compliant notice on the box. He would not get the notion that there was some sort of commercial association between the parallel importer or his "co-brand" (be it a trade name or just a get-up) and the trade mark or its owner.
70. Mr Green further submitted that the Court was concerned to lay down clear rules. If the necessity test pervaded all the BMS conditions parallel importers and courts would be placed in an impossible position – how in particular was one to judge when a get-up was unnecessary? He illustrated his point by reference to Laddie J's 3^rd judgment in this case on 11^th July 2003. Laddie J had instituted a regime whereby the court could vet proposed packaging. Two proposed packs were held to be permissible but they are (and I agree) not significantly different from packs held impermissible under the 2^nd judgment. Laddie J held that a house style of the parallel importer was impermissible (as not being "necessary") but where does house style begin and mere decoration end? What is "the minimum collateral damage to the claimant's mark?" or "no significant trade mark impact?" This is particularly unanswerable given that the fresh package must comply with BMS condition 3 requiring the importer to put his name on the goods as repackager. Putting his name on the goods in that way is trade mark use: trade marks are not limited to those of manufacturers – dealers can have trade marks too.
71. Finally Mr Green submitted that the "necessary" test – if added to all the BMS conditions, imposed an impossible burden on the parallel importer – to prove he had done no more than was necessary – that his box does not unnecessarily intrude on the reputation of the trade mark This was a probatio diabolica (diabolical burden) which risks thwarting free movement of goods.
72. There is this further point. If one examines the cases where the court has used the "specific subject-matter" concept, one finds that it is expressed in essentially negative terms – as a right to exclude others, see Hoffmann-La Roche, para 7, Centrafarm v American Home Products [1978] ECR 1827 para.11, Pfizer v Eurim-Pharm, para. 7, HAG II [1990] ECR I-3711, para. 13, IHT v Ideal Standard [1994] ECR I 2789, BMS para. 44, Pharmacia v Upjohn, para. 15 and this case, para. 28. Essentially the purpose of a trade mark is a guarantee of origin. This requires a legal right to keep others out where that guarantee is jeopardised – it is that legal right which is the specific subject-matter. Now that substantive European trade mark law has been harmonised one can say that the harmonised specific subject-matter really consists of the bundle of rights set out in the Directive in paras. 5.1 and 5.2.
73. Specific subject-matter in other words is the legal right. The legal right is conceptually different from its purpose. The latter is protection of the reputation in the trade mark including not only its function as a guarantee of origin directly (as for instance in counterfeiting cases) but also indirectly (particularly its distinctiveness which, if eroded, may affect that guarantee).
74. If one looks at the BMS conditions one can see that they are all about protecting the reputation of the mark. A fair summary of the position may be that (1) re-affixing creates a risk of jeopardising the reputation (2) but if the conditions are satisfied that risk is removed.

The claimants' contentions concerning co and re-branding and the overstickering cross- appeal

75. The judge's "irrebuttable presumption" was not supported as such by Mr Thorley or Mr Silverleaf. Their point was simpler, that reboxing creates a risk of damage, that the importer must overcome that risk but if he does so, his box should also comply with the requirement of necessity. He can only do that which is necessary and no more. Necessity runs through everything, whether he can re-affix the trade mark at all, whether he should sticker rather than rebox and, so far as this case is concerned, as to the form and positioning of any sticker or what is written on the new box.
76. Reliance was particularly placed on paragraph 56 of BMS and paragraph 46 of the Ballantine case. Paragraph 56 of BMS reads:

"The power of the owner of trade mark rights protected in a Member State to oppose the marketing of repackaged products under the trade mark should be limited only in so far as the repackaging undertaken by the importer is necessary in order to market the product in the Member State of importation."

Paragraph 46 of Ballantine:

"The person carrying out the relabelling must, however, use means which make parallel trade feasible while causing as little prejudice as possible to the specific subject-matter of the trade mark right. Thus if the statements on the original labels comply with the rules on labelling in force in the member state of destination, but those rules require additional information to be given, it is not necessary to remove and reaffix or replace the additional labels, since the mere application to the bottles in question of a sticker with the additional information may suffice."

77. It was on that basis that Glaxo and Boehringer not only said Laddie J was right in his 2^nd judgment but that he was wrong to hold lawful some overstickered products imported by Dowelhurst and Swingward. I take by way of typical example the Atrovent Inhaler, whose packaging is shown at Annex C1 to Laddie J's first judgment. Objection is taken that the claimant's trade marks or marks are obscured by the label, unnecessary prominence is given to the importer's name (printed in capitals on the BMS condition 3 notice), no indication is given that the claimant's trade mark is that of the claimant or that it is a trade mark at all.
78. The Judge rejected these complaints, holding that they do no harm to the specific subject-matter of the claimant's marks. I would agree – but I would put it that they do no harm to the reputation of the claimants or their marks.
79. It may be noted that Lilly do not make a similar complaint in respect of the relabelled Prozac. The logic of their argument about reboxing suggests they could have done. If it is right, although trade owners have to put up with parallel imports in principle, in reality they will not have to put up with much. This is because the owners will have a stranglehold on the parallel imports by way of policing and restricting their appearance - Arts. 20 and Art.7(1) giveth but Art. 30 and Art. 7(2) taketh away. Sometimes I think the law may be losing a sense of reality in this area – we are, after all, only considering the use of the owner's trade mark for his goods in perfect condition. The pickle the law has got into would, I think, astonish the average consumer.

My views

80. Were the matter free from doubt, I would hold that Mr Green was right, subject to rejecting his initial submission about condition 4. That condition, I think, is not limited to damaging the reputation of the mark by poor packaging – any damage to the reputation of the mark means non-compliance with the condition. So any act which would infringe (particularly re-affixing) is not permitted by Art. 28 of the Treaty or Art. 7(1) if it would damage the reputation of the mark, whether by affecting or potentially affecting the goods themselves, by poor packaging or otherwise.
81. So far as co-branding is concerned, in some circumstances this might indeed cause damage to the reputation of the mark. This would be the case, for instance, if it were shown that the co-brand created a perception that it was a brand of the actual manufacturer, or that the importer and manufacturer were in some sort of joint venture. But that is not so on the facts of this case. It is true that one or two pharmacists indicated that there might be some confusion caused by the co-brand, but overall it is simply not proved that there is any such conception. Whether clear BMS condition 3 notices prevented any but the careless or the indifferent patients from taking the "co-brand" as emanating from the original manufacturer or whether they are just not confused anyway does not matter. If there had been significant confusion caused by the co-branding complained of here (essentially the Swingward "get-up" and the fancy "C" on Dowelhurst's boxes) it would have been proved. Nor is this the sort of case where damage to reputation is self-evident – given the condition 3 notices. It is worth noting that the Taylor Nelson report shows no concern about damage to reputation caused by co-branding. Laddie J in his first judgment at paragraph 164 specifically found on the facts that there was no damage to the claimants' reputation and exclusivity.
82. As regards de-branding again I can see no damage to the reputations of the claimants or their trade marks. Both Mr Thorley and Mr Silverleaf contended that there was damage. They submitted that by reason of the reduced prominence of their clients' trade marks the reputation of these would be less than if the trade mark clearly appeared on the box. Deprivation of incremental exposure of the trade marks was, they submitted, damage. I would not accept that. I do not think that a trade mark owner has any right that requires subsequent dealers in his product to keep his trade mark on the product. We were told that French trade mark legislation expressly confers such a right. That does not help. There is nothing in the Trade Marks Directive about any such right.
83. Looking at it another way, the only act which would be an infringement, unless saved by Art.30 last sentence and Art.7(2), is the act of affixing. The only such acts in the case of a "de-brands" are in relation to the leaflets (as to which no objection can be taken) and of the use of the manufacturer's name in the BMS condition 3 notice (which again is unarguably legitimate).
84. Indeed the Judge, as I have said, in his 1st judgment, rejected claims to damage to the claimants' trade marks or their reputation either by co-branding or de-branding. He started in his 2nd judgment from a quite different position, with his notion of an "irrebuttable presumption" of damage and went on to hold that the "necessary" requirement ran through everything. As I have said I do not agree with that analysis which pervades the whole judgment. It was because of that analysis that he appeared to change his mind about whether the defendants' activities were damaging in the second judgment. To the extent he held that they were (and it is clear that he did not really think that) it was because of the "irrebuttable presumption."

Conflicting Opinions – the need for a second reference

85. It follows from what I have said that if it were left to me I would allow the appeals (which relate to reboxed products) and dismiss the cross-appeals concerning restickered boxes. But this I would only do if the law were free from doubt – acte clair. But I have no doubt there is doubt. Despite years of repackaging cases in the ECJ, I am afraid it is necessary to refer the matter yet again. Both sides initially submitted that the position was clear (in their respective favours) but said if it was not, with great reluctance, that there should be a reference. That is the position.
86. I say that because there is a substantial disparity of views across the EU. On the claimants' side it is pointed out that a number of national courts of Member States at the highest level have adopted the "necessity" test espoused by them and accepted by Laddie J. The cases are: Orifarm v AstraZeneca Danish Supreme Court, 4^th January 2002; Eurim-Pharm v Boehringer Ingelheim Federal Supreme Court of Germany 11^th July 2002 and Schuber Verpacking II, Austrian Supreme Court, 30^th January 2001. In addition the Swedish Court of Appeal has taken a similar view in a brief interlocutory decision, Beecham v Netpharma, 16^th April 2000.
87. In Orifarm the Danish Supreme Court was concerned with reboxed products imported by Orifarm, which bore Orifarm's logo. This was held to infringe, the Court saying:

"Orifarm has introduced its own line for the imported and repackaged product when it designed the package and used the triangle logo and has this performed an actual co-branding with the commercial advantages involved. The repacked product appears – also without the defendant's name on the front – just as much as an Orifarm product as an Astra product. No matter if the defendant's design of the package will ease the pharmacies' identification of the parallel importer's product line the affixation of the defendant's triangle is not necessary to give the defendant effective access to market the product. Accordingly, and since a possible commercial reason for Orifarm's repacking procedure cannot cause a different result, the court finds Orifarm's repacking unwarranted."

88. In Eurim-Pharm the German Supreme Court prevented a parallel importer from re-packaging into a package size called N3 (the size sold by the trade mark owner in German) a number of smaller packages. It was held to be unnecessary. The court said:

"The parallel importer is obligated to interfere as little as possible in the trade mark holder's right to identify the product."

And:

"A newly produced package might be more attractive in a certain respect. The substantial economic interest of the Defendant in the possibility to present itself better as a distribution company with such a package does not take priority over the interest of the trademark holder; the free movement of goods to warranted to the defendant is not affected as such."

89. In Schuber Verpackung II the Austrian Supreme Court was concerned with a special stickered label used by a parallel importer. It held that it went beyond what was necessary:

"The first requirement [BMS 1] reveals that the modifications of the product imported in parallel must be objectively necessary to market the product in the Member State of importation."

And

"Whoever uses new self-stick labels must procure, in using means enabling parallel trade, the least possible impairment of the specific subject-matter of the trademark right."

90. In Beecham new outer packages used by a parallel importer had "such a colour scheme that they thereby must be considered to serve as a distinctive mark of [the parallel importer]." The packages were restrained.
91. This shows four courts reading the BMS conditions one way – in the case of two of them admittedly before the first ECJ ruling in this case. On the other hand the EFTA Court of Appeal, concerned with exactly the same problem, has come to the opposite conclusion in a judgment of 8^th July 2003, Paranova v Merck. The defendants, having previously actually used their trade mark on the goods, removed it following an adverse court ruling, but continued to use a coloured striping system in accordance with a house style. It said:

"The protection of the trade mark as a guarantee of origin also requires that the repackaging must not be done in such a way that it is liable to damage the reputation of the trade mark and thus of its owner …. Impairment of the reputation of the trade mark and thus of its owner may therefore in principle constitute "legitimate reasons" within the meaning of Art. 7(2)"

92. This is precisely Mr Green's fallback position in relation BMS condition 4. The court went to say:

"50. Moreover, the protection of the trade mark as a guarantee of origin also requires that the repackaging must not be done in such a way that it is liable to damage the reputation of the trade mark, and thus of its owner, (see, for comparison, BMS, at paragraph 75; and Dior, at paragraph 43). Impairment of the reputation of the trade mark, and thus of its owner, may therefore, in principle, constitute "legitimate reasons" within the meaning of Article 7(2)."

"52. In order to establish whether there is a risk of damage to the reputation of the trade mark, the national court will have to take account of whether there is an inappropriate presentation of the repackaged product. In such a case, the trade mark proprietor has a legitimate interest, related to the specific subject-matter of the trade mark right, in being able to oppose the marketing of the product. Apart from instances of defective, poor quality or untidy packaging the national court may also take account of circumstances outside the actual package design such as advertisements published by the Appellant. The Court is not aware of anything that would indicate that affixing coloured stripes along the edges of the product packaging could damage the reputation of the trade mark, and thus that of the Respondents."

"54, With regard to the suggestion that the Applicant is pursuing the goal of generating a "Paranova product range", the EFTA Surveillance Authority has rightly observed that the mere fact that a parallel importer gains additional advantage from a particular type of graphic design is, in itself, immaterial."

"55. The Respondents have observed that products under the same trade mark owned by them may be marketed by various parallel importers with various package designs. They have argued that this would evoke the risk of degeneration of the trade mark. The Court holds that such a risk may, in principle, constitute "legitimate reasons" within the meaning of Article 7(2) of the Directive. It is for the national court to make the necessary factual assessments. In its examination, the national court will have to take into account that the products in question are prescription drugs, and that decisions to use them are made by members of the medical profession on the basis of specialist knowledge and professional responsibility. Only if the coloured stripes constitute the main factor in creating the risk of degeneration, may that risk form a "legitimate reason" to oppose the use of those coloured stripes. This must be distinguished from other causes of degeneration, such as the trade mark owner's own conduct, or developments in the market. Furthermore, the common use of one trade mark by more than one undertaking is an inevitable consequence of the privilege conferred on parallel importers in recognition of their contribution to free trade."

"56. If coloured stripes affixed along the edges of the product repackaging could create a risk of confusion as to the identity of the manufacturer, that might in theory cause damage to the reputation of the trade mark. However, the repackager's duty to clearly state the name of the manufacturer as well as its own name is intended to counteract any blurring of the distinction between the manufacturer and the parallel importer. Therefore, the use of coloured stripes could not alone constitute a "legitimate reason" within the meaning of Article 7(2) of the Directive, as long as the names of the manufacturer and the parallel importer are adequately stated, i.e. whether the names in question are printed in such a way as to be understood by a person with normal eyesight, exercising a normal degree of attentiveness (see, for comparison, BMS, at paragraph 71)."

93. Messrs Thorley and Silverleaf suggested that the case was not really one of co-branding at all – that one could not regard the striping system of the defendants there as co-branding. But that simply is not so. The EFTA Court plainly did not consider the get-up as merely decorative – it had a trade mark function, of "generating a Paranova product range," just as do the get-ups complained of in this case generate a Dowelhurst or Swingward product range.
94. Moreover it is important to observe what the position of the Commission was in this case. The EFTA court sets it out at para. 28:

"The Commission of the European Communities submits that the necessity test applies to the act of repackaging, not to the presentation of the repackaged product. Under the trade mark's function of origin, however, the proprietor may oppose the presentation of the products if the presentation is liable to damage the distinctive character of the trade mark or if the presentation of the repackaged goods is liable to damage the reputation of the trade mark and its owner. In circumstances where it is established that the marketing of the repackaged goods is customary in the reseller's sector of trade, the recognition of "legitimate reasons" depends upon whether the use of the trade mark seriously damages its reputation."

95. The Commission's view accords with that of the EFTA court. It is diametrically opposed to that of the views of the national courts I have mentioned. A reference is necessary.
96. This is all the more a pity in view of the fact that the claimants proposed some questions specifically directed at co-branding and de-branding following Laddie J's first judgment. Evidently they did not appeal to the Judge for they were not included in the questions ultimately determined by him. He perhaps thought that his question 3 covered these points, ending as it did with the general question "what does necessary mean." The Court did not answer that question specifically – hence the current dispute.
97. Further, I think the questions to be posed should include a question about the form of stickering as well as that of reboxing. The defendants dispute this, saying the law is already clear as laid down by the ECJ – namely that if stickering is necessary that is all – there is no further requirement going to the form of restickering. I am not so sure – the logic of the necessity argument on reboxing must, I think, at least arguably also apply to the form of stickering. In particular it may be that a form of stickering which unnecessarily obscures the trade mark is not permitted. I would not so hold, but I cannot be sure whether the ECJ would do so: it has never specifically addressed the question of the necessity of a form of restickering.
98. It was pointed out that Boehringer were not consistent in their objections – complaining about some forms of stickering but not objecting to others which appear much the same. I agree that appears to be so on the facts, but the legal point does not depend on whether the trade mark owner objects or not. The disparities do, however, further demonstrate the uncertainty of the law and the need for clear rules.
99. It was also said that there should be no reference as regards the form of stickering because the claim had been abandoned. It was not suggested there was any express abandonment of the point, merely that there was an implied abandonment. It is said that the Judge mistakenly thought the point was still live and ruled on the matter. I do not accept that there was any implied abandonment: the fact that attention focused on the most important matter, reboxing, does not connote abandonment. Nor can I see any prejudice even if the point is being "revived". The plain fact is that clear rules for stickering and reboxing are needed for the purpose of this case and generally and guidance is accordingly necessary.

The Period of Notice

100. BMS condition 5 requires that the parallel importer must give notice to the trade mark owner of his intention to sell parallel imported goods whose original packaging has been altered or discarded. This requirement goes back to at least Hoffmann-La Roche in 1978. I freely confess that I do not understand the basis in the Treaty for this. Why should exactly the same acts amount to an infringement if no notice is given but not if it is? Why should a parallel importer have to disclose his commercial plans to his competitor? (The point does not matter in this case, but one can well imagine cases where the trade mark owner could respond to the notice by flooding the market to frustrate the parallel imports). Does the parallel importer have to pay damages in one case but not the other? My doubts on the basic rule do not matter: I, like any other national judge, must accept and apply the requirement as though it were a piece of legislation. And if we are unsure of its details we must ask the ECJ. Perhaps one day there will be a Directive or Regulation dealing with the point.
101. In some instances in the present cases, no notice was given by the parallel importers and in others only very short notices. At least in some cases, despite the absence of notice direct from the parallel importer, the trade mark owners had knowledge of the proposed packaging from other sources. The ECJ has now held that only direct notice from the parallel importer will comply with condition 5. This again I do not really understand, but must accept. What I am not sure about is whether, if notice is not given, the parallel imports made until it is given, must be regarded as infringements with the particular consequence that the importer must pay damages or render an account of the profits he has made. The question of financial remedies has not been fully resolved in the present cases: it makes sense to ask a specific question on the point, as indeed the parties agreed.
102. The one thing that can be said about the condition is that it is clear and can be applied more or less mechanically. It may be that this is an indication that the other BMS conditions are also intended to be of that character. Certainly it would be helpful to national courts and traders if the rules were clear and precise.
103. Turning back to this case, in his first judgment Laddie J said this:

"148. In the absence of guidance from the ECJ, it appears to me that the approach to notice, if it is a pre-condition, should be as follows. The purpose is to give the proprietor sufficient time to come to a fair decision as to whether to object or not. If no objection is to be made, that is a matter which should be conveyed to the importer as soon as possible so that any dislocation of inter-State trade is kept to a minimum. How long is needed for that exercise is something which is primarily within the knowledge of the proprietor. Therefore, if anything other than a very short time is needed, it is for the proprietor to demonstrate how long is necessary. In this case no attempt was made by Mr Silverleaf's clients to show that they needed anything more than a few minutes to make up their minds. Where, as here, the importers are well known to the claimants and readily accessible by phone, only a day or two at most would be reasonable. Of course if that sort of notice is all that is given and the response from the proprietor is a legitimate "no", this may cause dislocation and loss to the importer. However that is a problem he will have to shoulder if he decides to give such short notice. It has no impact on how long the notice should be for the purpose of allowing the proprietor to come to a fair decision."

104. The ECJ held that it was "for the national court to assess, in the light of all the relevant circumstances whether the proprietor had a reasonable time to react to the intended packaging." But in its reasoning it added:

"On the basis of the evidence before the Court, a period of 15 working days seems likely to constitute such a reasonable time where the parallel importer has chosen to give notice to the trade mark proprietor by supplying it simultaneously with a sample of the repackaged pharmaceutical product. That period being purely indicative, it remains open to the parallel importer to allow a shorter time and to the proprietor to ask for a longer time to react than that allowed by the parallel importer."

105. Mr Silverleaf contends that that observation applies equally to both stickered and reboxed products. So the period should be 15 working days in all cases. Laddie J held that there was a difference holding that the case of a stickered product 7 working days is enough because all the proprietor has to do is to compare his own unstickered product with the stickered version.
106. Although this sort of evaluation is one with which a Court of Appeal will be slow to interfere, I think Laddie J was in error here. I cannot see any difference in the time needed to consider a stickered product from that needed for a reboxed product. In relation to both there is not just the question of appearance involved but a possible, preliminary at least, factual assessment of whether there is likely to be involved any damage to reputation. And in any event the difference between 15 working days and 7 working days is slight.
107. Given the guidance of the ECJ, I would hold that the appropriate period in all instances with which this appeal is concerned is 15 working days.

An injunction about notice in respect of other trade marks?

108. Boehringer sought an injunction against Dowelhurst to prevent a future failure to give notice in respect of other products it may wish to parallel import in the future. Laddie J refused it, saying that there was no reason to believe that Dowelhurst or Swingward would fail to give notice in the future, their obligation to do so directly to the trade mark owner now having been confirmed by the ECJ – that there is no extant threat to fail to give notice.
109. Before the Judge some evidence was provided late which was supposed to show that there was indeed an extant threat in that Dowelhurst had failed to give notice on one occasion. No application was then made to have the evidence admitted and the judge declined to read it.
110. It is now submitted that we should admit the evidence. I do not see why. If evidence is available for consideration by the judge, then be should invited to read it by a proper application. If he declines then, in appropriate (likely to be unusual) circumstances his decision so to do so may be appealable. But that is not what is sought here – we are asked to admit fresh evidence without any application for its admittance having been made to the Judge. There is no explanation for this. It would seem that the evidence was available for some time before it was sent to the Judge so it is not really even fresh evidence.
111. I can see no reason for interfering with the Judge's decision on this point.

Documents for this appeal

Finally, I do not wish to part with this case without entering a strong protest about the bundles. We were originally sent nearly fifty bundles of documents. Most of these were fat ring binders. After the court made inquiries as to what they were all for, many of them were taken away before the case started. We were nonetheless left with about half. Of these, by my calculation, ten were never opened. In the case of others only a page or two were looked at. No attempt was made to comply with the Practice Direction to Part 52 15.11(A) which requires a core bundle of essential documents. On the contrary, no document was considered too unimportant to be included in the mass of files that confronted us. Nor were the files particularly logical. For instance the two judgments of Laddie J and the judgment of the ECJ were buried at the back of files with transcripts of evidence and argument, procedural orders of no consequence and other matter. Further, no file contained an inside label as has become good practice in all substantial litigation for a number of years. Consequently when a file was opened you could not see what its number was. Indexing was of a particularly uninformative kind – for example exhibit numbers were simply given rather than what the exhibit actually was. Whether or not the parties' lawyers ever co-operated in the documentation or if they did they ever considered what was really needed and how best it should be organised I do not know. It seems unlikely. The consequence of all this undoubtedly made the hearing more cumbersome and the writing of the judgment more difficult.

112. I hate to think how much the over-documentation has cost the parties but I would like to know when the question of costs comes to be debated. I would wish to hear Counsel on all aspects of the matters I have mentioned and as to whether or not there should be a special order for costs, including perhaps an order protecting the parties from their own lawyers' bills.

Conclusion

113. In the result I would dismiss the cross-appeals about passing off and an injunction requiring notice. I would reject the cross-appeal on the factual necessity to rebox. I would defer judgment on the form of the reboxing and on the form of the re-labelled products complained of until after the ECJ has ruled on the questions referred. As to the form of these, I would hope that the parties could agree them. They need to be as short and precise as possible. If they are agreed then I expect they will be referred as agreed, although it would be necessary for the court to approve them. If there is disagreement then a short hearing may be necessary. It can doubtless be combined with the question of costs.