Belgium: Supreme Court Acknowledges Objective Justification For Parallel Importation Of Pharmaceuticals

The Supreme Court (Hof van Cassatie/Cour de Cassation) recently handed down two judgments on the repackaging of parallel imported pharmaceuticals. The judgments, both issued on 7 November 2016, clarify the requirement for an "objective justification" under the so-called "BMS"-criteria.

The BMS-criteria were developed by the Court of Justice of the European Union ("ECJ") in an attempt to balance the principle of free movement of goods with the protection of trade mark rights and public health considerations in the case of parallel importation of pharmaceuticals from one Member State into another. The ECJ held in Bristol-Myers Squibb (Case C-427/93) that parallel imported products could be repackaged (i) if repackaging is objectively necessary to market the product in the country of importation; (ii) if the repackaging does not affect the original condition of the product inside the packaging; (iii) if the new packaging clearly states who repackaged the product and indicates the name of the manufacturer; (iv) if the presentation of the repackaged product is not liable to damage the reputation of the trade mark or of its owner; and (v) if 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. In other words, if these five conditions are satisfied, the trade mark owner cannot legitimately object to the further marketing of a repackaged pharmaceutical.

Both cases before the Supreme Court concerned the parallel importation into the Belgian market of the pharmaceutical product based on the active ingredient "losartan" which is sold in Benelux under the Benelux trade marks "Cozaar" and "Loortan", both owned by Merck Sharp & Dohme ("MSD").

First Judgment

The first case concerned the parallel importation from the Italian market of "losartan" under the registered trade mark "Loortan" in a dosage form of 100 mg. In Italy, this product is only sold in packaging formats of 28 tablets, while in Belgium "Cozaar" and "Loortan" 100 mg are sold in packaging formats of 98 tablets. Pi Pharma, the parallel importer, repackaged the product into a new packaging of 98 tablets and affixed the trade mark "Cozaar". MSD claimed that Pi Pharma had infringed MSD's trade mark rights. At first instance, the President of the Commercial Court granted MSD's claims and ordered Pi Pharma to cease and desist the infringements. Conversely, the Court of Appeal of Brussels dismissed the claims of MSD. The reasoning of the Court of Appeal of Brussels echoes that of the Court of Appeal of Mons in its judgment of 14 September 2015 in a case between MSD and parallel importer Impexeco (See VBB on Belgian Business Law, Volume 2015, No. 10, p. 14, available at www.vbb.com). Finally, the case was brought before the Supreme Court.

In order to assess the requirement of "objective necessity" under the first "BMS" criterion, the Supreme Court reasoned that the entire Belgian market of pharmaceuticals based on the active ingredient "losartan" in a dosage of 100 mg must be considered, rather than the Belgian market for the pharmaceutical "Cozaar 100 mg" in a packaging format of 98 tablets. In addition, the Supreme Court considered that the actual circumstances at the time of importation, including national rules and practices, must be taken into account to determine whether repackaging is necessary. Based on these considerations, the Supreme Court held that repackaging and affixing a different trade mark was objectively necessary in order to gain effective access to the Belgian market since the pharmaceutical product based on "losartan" 100 mg is solely sold by MSD in packaging formats of 98 tablets. Other packaging formats are not known by prescribing doctors or pharmacists and have not obtained reimbursement status in Belgium. Accordingly, objecting to the fact that parallel imported products of "losartan" 100 mg would be repackaged to a format of 98 tablets and sold under the trade mark "Cozaar" would result in foreclosure of the Belgian market for parallel imports.

Second Judgment

In the second case, Pi Pharma imported from the Polish market the pharmaceutical product based on the active ingredient "losartan" under the trademark "Cozaar" in a dosage form of 50 mg and in a packaging format of 28 tablets. The pharmaceutical product Cozaar 50 mg is sold by MSD on the Belgian market in packaging formats of 28, 56 and 98 tablets. The market share of the different packaging formats of MSD with regard to Cozaar 50 mg in the third quarter of 2012 was 2%, 9% and 89%, respectively. Pi Pharma repackaged the product into a new packaging format of 98 tablets and reaffixed on the new packaging the trademark "Cozaar". MSD claimed that Pi Pharma had infringed its trade mark rights in the verbal trade mark "Cozaar". Both at first instance and on appeal, the court dismissed the claims of MSD.

For its part, the Supreme Court again held that it must be determined to what extent the imported product in the packaging of the country of exportation can be sold in the entire market of the relevant product of the country of importation. The Supreme Court found that Pi Pharma was able to sell the pharmaceutical product in a dosage of 50 mg and in a packaging format of 28 tablets in only a limited part of the Belgian market, while a packaging format of 98 tablets represented most of the demand on the Belgian market. The Supreme Court thus held once more that repackaging was objectively necessary in order to gain effective access to the entire Belgian market.

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