Trans-European Parallel Imports Trigger Trade Mark Test Case

The trans-European market in branded goods came under the spotlight as the Court of Appeal placed the emphasis on free trade and opened the way for a parallel importer of pharmaceuticals to buy up stocks of a leading drug in Germany and France before re-labelling the product and importing it into the UK.

The drug was sold in France, Germany and Britain under trade marks which bore no resemblance to each other. A company (the licensee) which held an exclusive licence to market the drug in this country objected when the parallel importer began importing large quantities of the French and German-branded product into the UK and re-labelling bottles with the UK trade mark. A judge upheld the licensee’s claim and banned the practice on trade mark infringement grounds.

In allowing the parallel importer’s appeal, however, the Court found that it would be ‘hindered from reaching a substantial part’ of the UK market if forbidden from re-labelling the product. The way in which the UK pharmaceuticals market operated in practice meant that adopting its own brand was ‘not a real world alternative’.

A prohibition on re-labelling the imported drugs would mean that a significant portion of the market, at both prescribing doctor and pharmacist level, would remain inaccessible to the parallel importer. In those circumstances, the re-labelling went no further than was necessary to overcome artificial barriers to the parallel importer obtaining effective access to the UK market.