Case C-642/16, Junek Europ-Vertrieb – can its sticky label stop the artificial partitioning of the internal market?

A German company sells a trademark medical dressing. Having exported some of its stock to Austria, it was surprised to see this subsequently turn up in a German pharmacy. Unsurprisingly, the German company wants to stop its German prices from being undercut. Consequently, it has invoked the EU’s ‘trade mark’ Regulation 207/2009. This is because Article 13(2) allows it to prohibit the further commercialisation of its goods ‘in particular’ where these have been changed or their quality impaired. In that context, the German company is objecting to the Austrian importer-exporter having applied a sticky label to the packaging. However, the legal question is: does Article 13(2) bite at all because the sticky label was only on an otherwise blank part of the outer-packaging so there has been no change to the goods or impairment of their quality.

Debridement is a process to remove infected or dead tissue. Depending on the nature and scope of the treatment, a person might need surgical dressings or pads. In Germany, there is a company which makes and sells a debridement pad under the trade mark, ‘Debrisoft’.

The German company had exported some of its stock to Austria. It was then rather surprised when some of that export turned up in a German pharmacy. Its product had undergone a change though. There was now a sticky label on the packaging indicating that the product had been imported into Germany by the Austrian company, ‘Junek Europ-Vertrieb’.

Now the Austrians had not informed the German company beforehand that it was going to do this, nor had it sent them a sample of the altered packaging. Consequently, the German company concluded that its trade mark was being infringed.

Seeking to stop that parallel trade, the German company went to court seeking an injunction based on trade mark law, and compensation. One aspect of the case was escalated up to the German Supreme Court.

At the German Supreme Court
The quirk of the case arose from the fact that the Austrian company’s sticky label was put on the packaging but in such a way that it did not interfere with any of the German company’s packaging, nor did it did not cover the German company’s trademark. That is to say, the label was placed discretely and clearly on an otherwise blank part of the box.

This gave rise to a novel legal situation. Under the EU’s ‘trade mark’ Regulation 207/2009 (OJ 2009 L78/1), a trade mark holder can object to the further commercialisation of his goods if, for example, the condition of the goods has been changed or impaired after he has put them on the market.

The rule is in Article 13 which governs the ‘Exhaustion of the rights conferred by a Community trade mark’, and provides:

1. A Community 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.

2. Paragraph 1 shall not apply where there exist legitimate reasons for the proprietor to oppose further commercialisation of the goods, especially where the condition of the goods is changed or impaired after they have been put on the market.

Since there was no clear answer in EU law whether Article 13(2) applied in the present case, Judge Büscher and four others decided to make a preliminary reference to the CJEU.

Questions Referred
My unofficial translation of the questions asked by the German Supreme Court reads:

Is Article 13(2) of Regulation 207/2009 […] to be interpreted as meaning that a trade mark holder can oppose the further commercialisation of medical products imported from another Member State [still] in their original inner and outer packaging [but] with the importer’s sticky label on the outside, where:

– it is established that a right holder asserting his mark with the intention of preventing the commercialisation of the product under the mark with a new label contributes to an artificial partitioning of markets between Member States;

– the re-labelling cannot affect the original condition of the goods contained in the packaging;

– the packaging clearly states who has affixed the new label to the goods and who their manufacturer is;

– the reputation of the trade mark and its holder is not tarnished by the product with the new label, the label is not of poor quality or scruffy; and,

– the importer shall inform the trade mark owner before placing the new product on the market and shall provide him with a sample of that product on request.

The issue of repackaging pharmaceuticals and the potential to use trade mark law to produce an artificial partitioning of the market was at stake in Ferring; see further Case C-297/15, Ferring Lægemidler – artificially segmenting the market in laxatives?

The issue of artificially partitioning the pharmaceutical market was also recently discussed in Case C-277/15, Servoprax – challenging language obstacles to parallel imported medical products.

The Servoprax case involved Roche, which is also now implicated in another case of alleged market partitioning in Case C-179/16, Hoffmann-La Roche – is off-label medicine use, off-limits to EU cartel law?

The CJEU also has another ‘market partitioning’ case in its In-Tray. The case involves a company that sells trademark-protected luxury goods but who has been banning its commercial customers from reselling those goods via third party websites like Amazon. The legal question is whether such a condition constitutes a hardcore restriction on competition contrary to EU cartel law; see further, Case C-230/16, Coty Germany – trade mark selective distributorship agreements and hardcore restrictions on competition.

Update – 16 February 2017
There is another preliminary reference about parallel importers; see further, Case C-681/16, Pfizer Ireland – Specific Mechanism suppresses drug circulation.