Novartis Case: Is Rebranding Generic Medicine To The Originator Brand Name Allowed?

• Published date: 12 November 2020
• Subject Matter: Intellectual Property, Trademark
• Law Firm: Schoenherr Attorneys at Law
• Author: Ms Lea Avsenik and Eva 'kufca

Background

Due to considerable variations in the prices of medicine within the EU, parallel trade - cross-border resale of trademark-protected pharmaceutical products by a third party without the authorisation of the IP rights holder - is common in the pharmaceuticals market.

Although any restrictions on free movement of goods are generally prohibited, certain activities by parallel traders (such as repackaging, relabelling, co-branding, etc.) may sometimes conflict with the rights of trademark owners and prompt opposition to further commercialisation of the product.

So what activities by parallel traders are considered permissible from the point of view of trademark protection and when can a trademark owner rightfully assert their rights?

BMS conditions and repackaging of pharmaceutical products

Parallel trade is closely connected to the exhaustion principle, according to which the trademark owner is no longer able to oppose or control the further commercialisation of its trademark-protected goods once they have been put on the market in the EEA, unless it has legitimate reasons for doing so.¹

In the context of parallel trade, the repackaging of pharmaceutical products can be seen as such a legitimate reason. To avoid potential opposition to the further commercialisation of the repackaged product, a parallel importer must be able to prove the existence of the following five conditions (the so-called BMS conditions²):

• the repackaging is necessary to market the product in the state of importation;
• the original condition of the product is not affected by repackaging;
• the new packaging clearly identifies the manufacturer and the importer;
• the presentation of the repackaged product is not damaging to the reputation of the trademark or its owner; and
• the importer gives notice to the trademark owner before the repackaged product is put on sale and supplies a sample of the repackaged product, if requested.

Since the ECJ favours a broad interpretation as to when a presentation of the product could damage the reputation of the trademark, parallel traders must also be cautious when using methods such as "de-branding" or "co-branding", although this is a question of fact and ultimately for the national courts to decide on a case-by-case basis (C‑348/04).

Rebranding of pharmaceutical products and effective access to the market

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