Memorandum: New Developments in Danish Case Law on Parallel Import

On December 19, 2002 the Danish Supreme Court rendered a decision in Handelsselskabet af 5. januar 2002 (p.k.a. Orifarm A/S) v. Løvens Kemiske Fabrik (see Danish Supreme Court decision of 19 December 2002 in case 214/2001, Handelsselskabet af 5. januar 2002 (p.k.a. Orifarm A/S) v. Løvens Kemiske Fabrik, unpublished but available in full text in Danish at www.psglaw.dk) further limiting what is considered "necessary" and therefore legal for the parallel importation of pharmaceutical products.

At issue were the repackaging/co-branding of DAIVONEX, and the rebranding of ONE-ALPHA as ETALPHA.

Reboxing 1:1 and co-branding

Orifarm parallel-imported DAIVONEX and repackaged these in new packages, reaffixing the DAIVONEX mark, and adding a triangular logo and some additional markings. The DAIVONEX products were sold under the same trademark and in the same size packages in Denmark and Sweden and in the country from which they were parallel-imported.

The Supreme Court held that defendant could have marketed the original products in the original packages with a label containing required information in Danish/Swedish, such that reboxing was unnecessary. The Supreme Court hereby confirmed its former decisions in Astra vs. Paranova from 2 July 1999 concerning the illegality of reboxing 1:1.

Further, the use of the Orifarm triangular logo with drops and additional markings had the character of illegal co-branding.

The decision in that respect confirms the Supreme Court's decisions in Orifarm vs. AstraZeneca from 4 January 2002 and Orifarm vs. Hoechst Marion Roussel from 22 April 2002 concerning the illegality of co-branding.

Use of Orifarm's drop logo and Orifarm's name in logotypes on the inserts were, however, not held to constitute illegal co-branding. This may indicate that the Supreme Court applies a kind of de minimis rule with respect to co-branding.

Rebranding

In contrast to DAIVONEX, the ONE-ALPHA products purchased in the country from which they were parallel-imported were sold under a different trademark, namely ETALPHA, in Denmark and Sweden. Accordingly, Orifarm repackaged the ONE-ALPHA products and resold them as ETALPHA.

During the parallel importation, the Danish pharmaceutical authorities changed the rules regarding generic substitution from what might be termed an "opt-in" system to an "opt-out" system; pursuant to the new rules, generic pharmaceuticals (including original product sold under another trademark but the one used by the original producer in Denmark) would be substituted unless the prescribing doctor expressly forbade such substitution. In Sweden an "opt-in" system existed (Sweden is, however, now also introducing generic substitution).

With express reference to the ECJ judgment of 12 October 1999 in Case C-379/97, Pharmacia & Upjohn SA v. Paranova A/S, premises 43-45, the Court held that defendant could have marketed the products as ONE-ALPHA in Denmark as well as Sweden, as the difference in respect of generic substitution was found to relate only to mere commercial advantages. Nor did the old "opt-in" act as a hindrance to effective access to the market.

The Supreme Court hereby confirms the case law of the Maritime and Commercial Court according to which rebranding generally is not regarded as necessary to obtain access to the Danish market neither under the former "opt-in" system nor under the existing "opt-out" system. Although two judges dissented with respect to the former "opt-in" system, it is to be expected that the Supreme Court majority's ruling will be followed in the future in Denmark.

Export

The case also represents a new development in the Supreme Court's case law in so far as it confirms the applicability of the "export-rule" in the Danish Trademark Act, which corresponds to the Trademark Directive art. 5 (3) (c), to stop (unnecessary) repackaging and rebranding performed for the purpose of export to Sweden.

(As mentioned above the Swedish rules were similar to the former Danish "opt-in" rules. Swedish Courts have also - in preliminary decisions at least - held that rebranding and repackaging 1:1 is not necessary to gain access to the Swedish market).

Compensation

The Court awarded damages calculated at 5% of defendant's turnover of the illegally marketed products, namely DKK 200.000 (about € 27.000). In that respect the Supreme Court confirms that the level of compensation measured out by the Supreme Court in Astra vs. Paranova in 1999 (5 %) cannot be deviated from. This is in line with its former parallel import decisions from this year in Orifarm vs. AstraZeneca of 4 January 2002 and Orifarm vs. Hoechst Marion Roussel from 22 April 2002. In both Løvens Kemiske Fabrik and Hoechst Marion Roussel the Supreme Court thus inversed more generous compensation decisions of the Maritime and Commercial Court, which had awarded 15 %, and limited the compensation to 5 % of the parallel importer's turnover. In Orifarm vs AstraZeneca the compensation was also 5% of the parallel importer's turnover.

PLESNER SVANE GRØNBORG

Katja Høegh