Trademarks

• Author: International Law Group

In November 1999, the Oberlandesgericht Wien (Higher Regional Court, Vienna) referred to the European Court of Justice a request for a preliminary ruling on EU law under Article 234 EC. It dealt with the interpretation of Article 7(2) of First Council Directive 89/104/EEC of December 21, 1988 to approximate the laws of the Member States relating to trade marks (OJ 1989 L 40, p. 1), as amended by the Agreement on the European Economic Area of 2 May 1992. (OJ 1994 L 1, p. 3)(the Directive).

The plaintiff in the Member State proceedings was Sharp & Dohme GmbH (Merck), an Austrian company forming part of the pharmaceutical group Merck & Co., Inc. (the Merck group), a United States establishment. The defending party was Paranova Pharmazeutika Handels GmbH (Paranova), a Danish company engaged in buying pharmaceutical products in a Member State where the price was lower and reselling it in a State where they brought a better price. In this case, Paranova was buying Proscar, a trademark of Merck, in Spain and marketing it in Austria. The product treats benign prostatic hyperplasia (BPH). Rather than placing stickers over the original package, Paranova repackaged the medication with instructions in German as to its proper use and with due recognition of Merck's trademark on it.

By an October 1997 letter to Paranova, the Austrian authorities, citing Community case-law, noted that the appearance of pharmaceutical products was of great importance to make it more likely that patients will comply with their treatment, and that over-stickering of the package might put this in jeopardy. In November 1997, the Austrian authorities allowed Paranova to place Proscar on the Austrian market which it had imported in parallel from Spain. After Paranova notified Merck of its plans the following year and sent along a sample of its new packaging, Merck objected that this would unlawfully impair its trade mark rights. Paranova replied, pointing out that Austrian Law required certain key information on the package to be in German. It noted the Austrian government's recommendation of repackaging and argued that attaching labels tended to impair sales since both pharmacists and consumers tended to mistrust products in relabelled foreign packs. At Merck's request, the Vienna Commercial Court ordered Paranova to cease and desist on the theory that placing stickers on all six sides of the original box would not thwart the marketing of the product in Austria. Paranova then...