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
Mr Justice Lewison
HC05C02314

		Royal Courts of Justice Strand, London, WC2A 2LL
		20th December 2006

Lord Justice Neuberger :

Introductory

1. This is an appeal from a decision of Lewison J, who, on 23 February 2006, gave summary judgment for the claimants, Roche Products Limited and Roche Diagnostics GmbH (together "Roche") in a trademark infringement action they had brought against the defendant, Kent Pharmaceuticals Limited ("Kent"). The action concerned the parallel import of products bearing the ACCU-CHECK mark and other trademarks of which Roche is the proprietor.
2. The products in question were Advantage II test strips, which are used for self-testing of glucose levels in blood. A batch of 18,000 test strips, manufactured and packaged by Roche Diagnostics Corporation in the USA, was ordered by, and delivered to, another Roche company known as PRISA, who are distributors of Roche products in the Caribbean and Central American region.
3. PRISA stored the products in Costa Rica, from where they were supplied to a organisation known as PROPAS, in the Dominican Republic, for the purpose of carrying out a clinical trial in that country. PRISA agreed to supply the test strips to PROPAS on beneficial financial terms, provided that they were used exclusively for clinical trials among vulnerable communities in the Dominican Republic, and were not resold or transferred to any other organisation.
4. Somehow, in breach of the agreement, most or all of the 18,000 test strips with which this case is concerned got to France, where they were bought in good faith by Kent, who then imported them into the UK.
5. The packaging of the products is important for present purposes. It was described by the Judge, in his admirable ex tempore judgment, in the following terms:

"There are four panels… The panels contain information and instructions in three languages, namely English, Spanish and Portuguese. The name of the manufacturer is given, and the distributor is identified as a Brazilian company forming part of the Roche Group. The packaging indicates that the product was made in the USA for export only. The three languages are spoken in the Caribbean and Central and South America. The most significant feature of the packaging is that it bears what is called a CE mark."

6. There is no dispute as to the purpose and effect of a CE mark (or at least its primary purpose and effect), both as a matter of fact and as publicised by various EU and UK regulatory and trading entities. It was described in paragraph 13 of the first witness statement of Mr Johnson, Kent's Purchasing Director, in these terms, "the CE marking shows that the product in question has been formally approved for sale in the EU under the relevant regulatory and approval regimes". Two points should be added to that. First, the regulatory regime applies to a few other countries in addition to all the member states of the EU: in other words, it applies to the EEA. Secondly, if a product is subject to the relevant regulatory regime, then, in order for it to be lawfully sold within the EU, it must not only comply with that regime: it must also bear the CE mark.
7. Roche contends that, by importing the products in question into the UK, bearing as they do the ACCU-CHECK mark and other trademarks of which Roche are the registered proprietor, Kent has infringed Roche's trademarks. Accordingly, Roche brought the present proceedings for trademark infringement seeking appropriate relief. Roche applied under CPR 24 for summary judgment. As mentioned, Lewison J granted the application, and Kent now appeals against that decision with the permission of Mummery LJ.

The basic issues

8. In this case, some of the marks are UK trademarks, for which the relevant law is in the Trademarks Act 1994 ("the 1994 Act"); others are Community trademarks ("CTM"s), for which the relevant law is in Regulation 40/94/EC and EU Directive 89/104/EEC of 21 December 1988 ("the Directive"); yet other marks are international trademarks, for which, by virtue of the Trade Marks (International Registration) Order 1996, the applicable law is the 1994 Act. As the 1994 Act is to be construed conformably with the Directive, it is necessary only to refer to that Directive. Two provisions of the Directive are of central relevance, namely Articles 5 and 7.
9. Article 5.1 of the Directive ("Article 5") provides as follows:

"The registered trade mark 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 trade mark in relation to goods or services which are identical with those for which the trade mark is registered….."

10. Article 7.1 of the Directive ("Article 7") is in these terms:

"The trade mark shall not entitle the proprietor to prohibit its use in relation to goods which have been put on the market in the Community under that trade mark by the proprietor or with his consent."

11. Kent accepts that, but for the defence which it contends it has under Article 7, Roche would be entitled to the relief they seek in these proceedings by virtue of Article 5. The question therefore is whether Kent has made out a sufficiently arguable case for contending that it can rely on Article 7 to defeat Roche's claim for summary judgment in these proceedings. In that connection, Kent's contention is that the test strips in question "have been put on the market in the Community under [the relevant] trademark[s]… with Roche's consent", and that that consent is manifested by the affixing of the CE mark by Roche, or its associated company in the United States, on the packaging of the test strips.
12. The rival contentions of the parties on this issue can be summarised relatively shortly. Roche contend that the CE mark merely records the fact that the goods so marked comply with the requirements of the EU regulatory authorities, and that it has nothing to do with the consent of a trademark proprietor to the placing of those goods on the market anywhere in the EU. Kent, on the other hand, contends it has made out a sufficiently arguable case, fit to go to trial, on the issue of whether the placing of the CE mark, by or with the approval of the trademark owner, on goods would, as it argues, be understood to operate as a consent by the trademark owner to the placing of those goods on the market in the EU.
13. In this connection, the European Court of Justice ("ECJ") has given authoritative guidance as to the effect of Article 7 in the conjoined cases of Zino Davidoff SA –v- A & G Imports Limited and Levi Strauss & Co –v- Tesco Stores Limited [2002] RPC 20. In their decision the ECJ said this:

"45 In view of its serious effect in extinguishing the exclusive rights of the proprietors of the trade marks in issue in the main proceedings …, consent must be so expressed that an intention to renounce those rights is unequivocally demonstrated.

46 Such intention will normally be gathered from an express statement of consent. Nevertheless, it is conceivable that consent may, in some cases, be inferred from facts and circumstances prior to, simultaneous with or subsequent to the placing of the goods on the market outside the EEA which, in the view of the national court, unequivocally demonstrate that the proprietor has renounced his rights."

14. In paragraphs 55 to 58 of their decision, the ECJ went on to emphasise that the absence of any objection to marketing within the EU, failure to include reservations excluding the right to place the goods concerned on the market within the EU, or any other form of silence on the part of the trademark proprietor, could not be held to amount to consent for the purpose of Article 7, whatever the national law on the issue of consent might be.

The witnesses

15. The contention that the affixing of the CE mark to the packaging of the products in the instant case operated as consent sufficient for the purposes of Article 7 is said on behalf of Kent to be supported by the evidence contained in five witness statements which were before the Judge.
16. The first is that of Mr Johnson, who was, as mentioned, Kent's Purchasing Director. After the observation I have already quoted, he said this in paragraphs 15 to 17:

"15. The CE marking is understood by traders, and increasingly by consumers, as evidence of compliance with EU standards. If a diagnostic device is not intended for sale in the EU, it does not need to carry the CE marking. I therefore regard the presence of the CE marking on any particular product as evidence of that that product is intended for sale in the EU. My colleagues at Kent share my understanding…

16. I also believe that other operators in the marketplace understand the CE marking as a sign confirming that the relevant product meets European quality and safety standards. For these reasons, the CE marking is generally treated by all parallel importers as evidence of importability into the EU and, indeed, of importability for any movement between EU member states. This is evidenced by the fact that, on a day to day basis, when Kent buys parallel imported stocks we will always ask whether they are CE marked and would also always expect to be asked the same question by our prospective wholesale customers – this is a standard and constantly asked buyer's question in the parallel import market in Europe.

17. Parallel importers and distributors will not generally buy products that do not bear the CE marking."

17. There is also evidence from three pharmacists. First, there is the statement of Mr Houston, a managing director and superintendent pharmacist of a company with three pharmacy shops in the UK. He said this in paragraph 4 of his witness statement:

"My understanding is that any product bearing the CE marking is intended for sale in the EU. Goods bearing the CE marking fulfil all regulatory and technical requirements for sale in the EU. Accordingly, when I see the CE marking on a box, I understand that marking to show that the product in question is effectively a "European product", that is to say, it is acceptable and intended for use in the EU. I am not aware of any reasons to put the CE marking on goods that are not intended for sale in the EU…".

18. Mr Eggleston, a general manager and superintendent pharmacist, said this in paragraph 3 of his witness statement:

"I have always understood that a product which bears the CE marking is intended for sale in the EU. To my mind, this follows logically from the fact that the CE marking is given under the European Regulations and shows that the product is approved for sale in Europe… I do not believe that there is any reason to put the CE marking on a product which is not intended for sale in the EU, as regulatory requirements will be different in countries outside the EU. Indeed, I struggle to think of any reason why a manufacturer might want to put the CE marking on a product for sale outside the EU, unless perhaps the manufacturer was selling in a country where there was no regulation at all and wanted to use some sign of quality to show that it was a responsible manufacturer".

19. Mr Doshi, a sole trader retail pharmacist, said in paragraph 3 of his witness statement that his "understanding [was] that a pack which features the CE marking is intended for sale in the EU".
20. The fifth witness relied on by Kent is that of the managing director of a medical supplies business, Mr Cochrane, who said this in paragraph 5 of his witness statement:

"The CE marking is an EU approval mark needed for medical and other devices. I understand from the presence of the CE marking on product packaging that the product in question is intended for sale in the EU. In my view, such a pack is designed for free circulation within the EU. I believe that the only reason for putting the CE marking on a particular product is if the proprietor intends to market them in the EU."

The nature of the consent alleged by Kent

21. At least on the face of it, Kent faces an uphill task in establishing that it can establish that the presence of the CE mark on the packaging in this case represented a consent sufficient for Article 7 purposes, especially in the light of the need for such a consent to be in clear and equivocal terms as indicated by the ECJ in the Zino Davidoff case. First, not only did Roche not otherwise consent to the placing of the products on the market in the EU, but it was made clear by Roche's associated company, PRISA, when supplying the products concerned, that they were only to be used in the Dominican Republic. Secondly, the purpose of affixing a CE mark to the packaging of products is merely to confirm to any consumer (whether importer, wholesaler, retailer or ultimate user) that the product so marked satisfies the requirements of the relevant EU regulatory authorities.
22. In relation to this last point, it is plain that the function of a CE mark, at least viewed by reference to its official purpose, is not directed in any way to the question of whether the proprietor of any trademark associated with the goods or packaging on which the CE mark is attached has consented to the placing of the goods anywhere on the market in the EEA or indeed anywhere else. It is there to record the consent of the EU regulatory authorities, not that of a trademark proprietor, to the products being placed on the market in the EU.
23. Mr Richard Hacon, who appears for Kent, as he did below, said that the CE mark is a device consisting of two letters which does not inherently mean anything. Accordingly, he argued, it is as capable of being interpreted as a general consent by the trademark proprietor to the placing of his goods on the market in the EU as it is of being interpreted as recording that the goods comply with the requirements of the EU regulatory authorities. Although I see the force of that contention in the abstract, I do not consider that it gets Kent's case anywhere.
24. If one assumes total ignorance of the meaning of the CE mark on the part of the notional reader, then the mark cannot possibly signify consent sufficient for the purpose of Article 7, at least to him or her. So, for Kent to succeed, one has to assume some understanding of the effect of the mark on the part of the notional reader. In the absence of clear evidence to the contrary, it seems to me that one must assume that the CE mark, originating as it does from EU regulatory authorities, conveys what those authorities intend, and make it known, that it is to convey. Thus, absent cogent evidence to the contrary, it should be assumed to signify that the goods so marked comply with the requirements of the regulatory authorities, and that, so far as those authorities (not trademark proprietors) are concerned, the products in question may be marketed in the EU.
25. In the absence of clear evidence to the contrary, it therefore appears to me that it would be wrong to conclude that the CE mark would convey the message that the proprietor of the relevant trademark has consented to the placing of the product in the packaging so marked on the market within the EU. That view is reinforced when one considers the principles laid down by the ECJ in the Zino Davidoff case. In order to be a valid consent for the purposes of Article 7, "an intention [on the part of the trademark owner] to renounce [its] rights [must be] unequivocally demonstrated", "in the view of the national court".
26. Having said that, I am prepared to accept, at least for present purposes, that it would, in principle, be possible for Kent to establish through evidence that a statement or a mark, which, according to its objective interpretation as a matter of pure linguistics or legal principle, would not constitute a sufficient consent for the purposes of Article 7, could have the effect of operating as such a consent as a result of general understanding in the relevant market.
27. At least in English law, it is well established that, in the context of commercial contracts, although an expression will normally be given its ordinary English meaning, it has to be construed in its verbal and commercial context. Further, where it is demonstrated by satisfactory evidence that an expression is understood to have a special meaning by virtue of what has been called the "custom of the trade", then effect will be given to the custom of the trade, unless it is inconsistent with the express terms of the contract - see for instance Smith Hogg Co. –v- Louis Bamberger & Sons [1929] 1 KB 150 and the cases cited therein. In Yangtze Insurance Association –v- Indemnity Mutual Marine Assurance Co [1908] 2 KB 504 at 509, Farwell LJ said this:

"The general rule of construction is that words used in documents must receive their primary signification, unless the context of the instrument read as a whole, or surrounding contemporaneous circumstances, shew that the secondary meaning expresses the real intention of the parties, or unless the words are used in connection with some place, trade or the like, in which they have acquired the secondary meaning as their customary meaning quoad hoc".

28. Thus, when interpreting a contract, an English court is prepared to recognise that a particular expression, which may have a different or more limited meaning to an ordinary speaker of English, can nonetheless come to have a different or wider meaning in a particular trade. By parallel reasoning, it seems to me that the court should, in principle, be prepared to recognise that a mark may have a different or wider meaning, in a particular trade, from that which would be derived from the reason (whether in law or otherwise) for the affixing of the mark. Despite the strict approach to the meaning of "consent" in the context of Article 7, I doubt that what the ECJ said in the Zino Davidoff case would rule out the possibility of such an argument on the part of Kent succeeding, at least in principle, in the present case.
29. As the decision in the Zino Davidoff case made clear, "consent" in Article 7 must be treated as an autonomous concept, in the sense of having the same meaning in all national courts of the EU States, which does not depend on the domestic law. Accordingly, particularly in the light of the heavy onus on a person alleging that consent has been given under Article 7 in circumstances where the trademark proprietor has not used words which ordinarily signify consent, the law applied in the Smith Hogg and Yangtze cases may conceivably not apply in a case such as this. However, it seems to me that, particularly as Kent is seeking to defeat a claim against it for summary judgment, it is only fair to proceed on the assumption that it can rely on this principle in the present case.

The evidence of the witnesses other than Mr Johnson

30. I turn to the evidence which Kent adduced in order to support its contention that the CE mark would be understood as having the meaning for which it contends. The evidence of Messrs Houston, Cochrane, Eggleston and Doshi can, in my judgment, be disposed of relatively easily. First, each of them simply expressed his own subjective understanding of the CE mark. That seems to me to be beside the point. The fact that some traders in a particular market may understand that a particular expression or mark has a specific effect gets nowhere near establishing that, when a manufacturer or trademark owner uses the expression or the mark, it should be interpreted as having that effect objectively. Indeed, as Moore-Bick LJ observed during the hearing of the appeal, it must be very doubtful whether the evidence of a few traders in the market in question, as to how they happen to understand a particular expression or mark, is even admissible in this context.
31. The value of this evidence is even further tainted by the fact that their stated explanation for their understanding does not bear analysis. Even on the face of it, the fact that the CE mark establishes that the product concerned fulfils all EU regulatory requirements cannot, as a matter of simple logic, justify the conclusion that, by affixing such a mark, the manufacturer and trademark owner has thereby consented to the goods concerned being placed on the market within the EU.
32. Consideration of unchallenged evidence put in on behalf of Roche serves to reinforce that argument. First, there are countries that are not within the EU, including Switzerland and Mexico and some countries in South America, where the regulatory authorities wish to have proof that certain products, including, as I understand it, test strips such as those in the present case, have met the standards required for sale in the EU, and they accept the CE mark as providing such proof. Secondly, the CE mark is seen by some consumers as a sign of quality, because they appreciate its effect; consequently, goods which bear the mark are thereby rendered more attractive to consumers in some countries outside the EU (such as Turkey, Romania and Bulgaria), and indeed to nationals of EU States travelling outside the EU. Indeed, such a possible justification for the mark was expressly mentioned by Mr Eggleston in his evidence.
33. For these reasons, I would reject the witness statements of Messrs Houston, Cochrane, Eggleston and Doshi as providing any assistance to Kent's case. I regard their evidence as wholly unhelpful, and arguably inadmissible.

The evidence of Mr Johnson

34. That leaves the evidence of Mr Johnson. With one exception, it seems to me that his evidence can be disposed of with equal ease for the same reasons. The exception is to be found in the fact that Mr Johnson does not merely purport to speak as to his own view of the effect of the CE mark. He also says that it is the view of his colleagues at Kent, which appears to take matters no further in reality; more importantly, there is his statement that the CE mark is "generally treated by all parallel importers as evidence of importability into the EU and, indeed, of importability for any movement between EU member states." Mr Hacon, quite rightly in my view, fastened on that sentence as the high water mark of his case on the evidence.
35. Having said that, I consider that Mr Johnson's evidence falls a very long way short of establishing Kent's case as to the understanding of the CE mark, even taken at face value. First, it is an ambiguous statement. The CE mark is required to be affixed to the packaging of products such as those in the present case, if they are lawfully to be marketed within the EU pursuant to the regulatory requirements. So the sentence just quoted appears to me entirely consistent with the idea that the CE mark is required in connection with the test strips in the present case for regulatory purposes. The sentence does not unequivocally state that the CE mark is generally regarded, even by all parallel importers, as clear and unequivocal evidence of consent, or renunciation of rights, as discussed in the Zino Davidoff case.
36. This point is reinforced when one reads the sentence in its context. It is preceded by a sentence which correctly identifies the purpose of the CE mark, namely as being concerned with EU regulatory approval, and it is followed by a sentence which explains that Kent requires goods it proposes to place on the market within the EU to bear the CE mark where it is required. Both those sentences therefore are concerned or consistent with the purpose of the CE mark as a regulatory feature, not having anything to do with the consent of the trademark proprietor.
37. Secondly, even if Mr Johnson is to be interpreted as saying that every parallel importer of goods would understand the CE mark to have the effect of operating as consent from the trademark proprietor under Article 7, it would not be enough for Kent's purposes. As Ward LJ said in argument, it is important to bear in mind in this context that what one is ultimately concerned with is the question of whether Roche had given its consent under Article 7 to the placing of the goods in question on the market in the EU. Consent is a two way process: it has to be given by the person consenting and received by the person to whom the consent is given. If, therefore, Kent is seeking to contend that the CE mark should be treated as having a special effect or wider meaning than it naturally would bear in the absence of evidence, then it would, in my view, plainly be necessary for it to be shown that it is generally understood to have this meaning not merely among parallel importers, but also among trademark proprietors, either generally, or in the market with which the present case is concerned. There is not even a hint of a suggestion in any of the evidence that there was such an understanding in any group of trademark proprietors, let alone a group that would include Roche.
38. I should add this. If the only evidence adduced on behalf of Kent had been an unequivocal statement by its marketing director, Mr Johnson, that the CE mark was understood, by all parallel importers and all trademark proprietors, either generally or in a field including the relevant products, to operate as a consent under Article 7, I am dubious whether that would have been sufficient to persuade me of that conclusion. It would have been a conclusion based on mere assertion, faulty logic, and an inconsistent approach to the purpose of the mark concerned. It is unnecessary to express a concluded view on the point, but, even at summary judgment stage, I would have thought that such evidence would normally have to be given by an independent expert, before the court would be likely to credit it.

Previous court of appeal authority

39. It was argued on behalf of Kent that this conclusion is inconsistent with the view reached by this court in Glaxo Group Limited –v- Dowelhurst Ltd [2005] ETMR 104, at paragraphs 30 to 36 in the judgment of Jacob LJ (with which Lord Phillips of Worth Maltravers MR and Tuckey LJ agreed). I acknowledge that, at least on the face of it, there is apparent force in that point. The argument which was held to be fit to go to trial on the part of the defendant in that case was that an EMEA licence number (which has to all intents and purposes the same effect as the CE mark in the present case) on the packaging of the products in question operated as a sufficient consent under Article 7 to the placing of those products on the market in the EU.
40. Lewison J had some difficulty with the reasoning in that case, and it must be admitted that I share his concerns. It is fair to say that, even if the point had gone the other way, the result of the appeal would have been exactly the same. More importantly, however, it seems to me that there are two points of distinction between that case and the present.
41. First, in the Glaxo case, as Jacob LJ put it in paragraph 31, at the "heart" of the defences he was there considering "lies the fact that for all the world the products looked like those on the French home market". In other words, unlike in the present case, the packaging between the product which was intended to be put on the market outside the EU was identical to the packaging of the product which was intended for marketing in the EU. In those circumstances, as pointed out by Moore-Bick LJ in argument, it appears that it was the EMEA mark, taken together with this identicality of packaging, which was sufficient to give rise to an arguable case that products with the former packaging had been the subject of an appropriate consent under Article 7.
42. Secondly, and quite separately from this, at least on the basis of what was said in Jacob LJ's judgment, it does not appear that the arguments advanced on behalf of the unsuccessful claimant in the Glaxo case, as to why the placing of the EMEA licence number on the packaging of the goods in question could not be treated as operating as a consent under Article 7, were the same as the arguments advanced by Mr Michael Tappin on behalf of Roche in the present case. Those are the arguments which were accepted by Lewison J, and with which I also agree, for the reasons set out above.
43. Accordingly, it seems to me that the Glaxo case can be distinguished both on the facts and on the law.

Micawberism

44. Having reached the conclusion that the evidence advanced on behalf of Kent falls far short of establishing the possibility of an argument that the CE mark in the present case could be treated as operating as a consent under Article 7 for the placing of the test strips on the market in the EU, it is necessary to consider the final argument raised by Mr Hacon as to why we should allow the appeal and permit this matter to go to trial. That argument is that, even if the evidence so far adduced by Kent in the form of the witness statements is or would be insufficient to establish its case, it would be wrong to give judgment in favour of Roche, thereby shutting out Kent from obtaining appropriate evidence to that effect.
45. Mr Hacon contended that, even if Kent's current evidence was insufficient, it did justify the view that there was reason to believe that it might or would be able to obtain evidence which, at least on its face, was sufficient to make out Kent's case on consent under Article 7. As indicated above, that would, I think, have to be expert evidence to the effect that the CE mark is generally understood by trademark proprietors and parallel importers, at least those trading in goods such as the products in this case, as having the effect for which Kent contends.
46. I do not accept that argument. In general, it seems to me that, where claimants have made out their case on the facts for the purpose of obtaining CPR 24 judgment, it is normally up to the defendant to put forward evidence which gets as far as establishing that, if that evidence were believed, the claim would be dismissed. Of course, where there is a real possibility of the defendant's case being assisted by evidence which he cannot reasonably be expected to obtain (and a fortiori where the evidence concerned may be in the possession of the claimants alone and may not have been produced), then it may be unreasonable or unfair to expect the defendant to produce the necessary evidence at an interlocutory stage.
47. However, in the absence of such circumstances, it would seem to me, at least in the general run of cases, substantially to undermine much of the purpose of CPR 24, if a defendant could successfully resist a claim for summary judgment on the basis that it might be able in the future to obtain evidence (whether factual or expert) to adduce at trial, which, as far as one can see at the time that the Part 24 judgment is sought, it could equally easily have obtained for the purpose of the Part 24 hearing.
48. This case appears to me to be squarely within that principle. If prima facie convincing expert evidence is available which supports Kent's case, then no reason has been put forward as to why such expert evidence has not been provided in the form of a witness statement for the purposes of this CPR 24 application.

Conclusion

49. The possibility of a reference to the ECJ was raised by Mr Hacon. That appears to me to be neither necessary nor appropriate. The only issue discussed above which even gets near being worthy of consideration for a reference is the approach to the question of consent under Article 7 discussed in paragraphs 26 to 29 above. However, there are two reasons why that is a plainly inappropriate issue for reference in this case. First, the approach I have adopted on that issue is that advanced by Mr Hacon on behalf of Kent, so a reference would be pointless, as it could not affect the outcome of this appeal. Secondly, Mr Tappin did not suggest that the approach proposed by Mr Hacon (and adopted by me) was inappropriate. It should be added that I am, in any event, a long way from suggesting that, even without these two reasons the issue would have been appropriate for a reference.
50. In all these circumstances, I would therefore dismiss the appeal.

Lord Justice Moore-Bick

51. I agree.

Lord Justice Ward

52. I also agree.