## Facts

- Bristol-Myers Squibb owned Danish trademark rights for several medicines, including Capoten, Mycostatin, Vepesid, Vumon, and Diclocil.
- Boehringer sold medicines under Danish-registered trademarks including Atrovent, Berodual, Berotec, and Catapresan in Denmark and other EU Member States.
- Bayer manufactured and sold Adalat under a Danish-registered trademark across the EU.
- Paranova A/S did not manufacture medicines; it bought genuine, trademarked pharmaceuticals marketed in other Member States by (or with the consent of) the trademark proprietors.
- Paranova imported those medicines into Denmark as parallel imports and, to market them there, repackaged the products in an outer packaging style uniform to Paranova and distinct from the manufacturers’ usual presentation.
- The new outer packaging displayed the relevant manufacturer’s trademark and indicated the product name, while presenting the goods in Paranova’s standardized packaging format.
- Bristol-Myers Squibb and Boehringer (and, in related proceedings, Bayer and Bayer Danmark) brought actions in the Danish courts alleging trademark infringement based on Paranova’s repackaging and reaffixing/use of the marks without authorization.
- The Danish Maritime and Commercial Court stayed the cases and referred questions to the Court of Justice on the scope of EU trademark exhaustion and when a trademark owner may stop marketing of repackaged parallel-imported medicines.

## Issues

1. Whether Article 7 of Directive 89/104 (Trade Marks Directive), read in light of Article 36 EC (now Article 36 TFEU), prevents a trademark proprietor from stopping the marketing of genuine pharmaceuticals imported from another Member State where the importer has repackaged the goods and reaffixed/used the mark without consent.
2. What “legitimate reasons” under Article 7(2) permit the proprietor to oppose further commercialization of repackaged medicines, including reasons tied to product condition and harm to the mark’s reputation.
3. What conditions a parallel importer must satisfy so that the proprietor may not rely on trademark rights to block sale of repackaged pharmaceuticals.

## Decision

- The Court held that the proprietor’s ability to oppose marketing must be assessed under national trademark law as harmonized by Article 7 of Directive 89/104, interpreted in light of the Treaty rules on free movement of goods (including Article 36 EC).
- Article 7(1) precludes a trademark proprietor—save for the circumstances in Article 7(2)—from preventing an importer from marketing a product put on the market in another Member State by the proprietor or with its consent, even where the importer has repackaged the product and reaffixed/used the trademark without the proprietor’s authorization.
- The proprietor may oppose further commercialization where there are “legitimate reasons” within Article 7(2), including where the condition of the goods is changed or impaired or where the presentation of the repackaged product is liable to damage the reputation of the trademark.
- The Court stated that the proprietor cannot oppose the marketing of repackaged pharmaceuticals if five cumulative conditions are met (the national court must apply them to the facts).

## Legal Principles

- EU trademark exhaustion applies to goods first placed on the EU market by the trademark proprietor or with its consent; repackaging and reaffixing/using the mark do not automatically restore the proprietor’s power to stop resale.
- Article 7 of Directive 89/104 provides the framework for exhaustion and its limits; it must be interpreted consistently with the Treaty’s free movement of goods rules.
- A trademark proprietor may object to further commercialization only where “legitimate reasons” exist under Article 7(2), particularly:
  - where repackaging affects the original condition of the product; or
  - where the new presentation is liable to damage the trademark’s reputation.
- A parallel importer seeking to rely on exhaustion after repackaging must satisfy all five conditions (often called the BMS conditions):
  - the proprietor’s opposition would contribute to artificial partitioning of Member State markets;
  - the repackaging does not affect the original condition of the product inside the packaging;
  - the new packaging states clearly who repackaged the product and identifies the manufacturer;
  - the presentation of the repackaged product is not liable to damage the reputation of the trademark;
  - the importer gives prior notice to the proprietor before the repackaged product is put on sale and, on request, supplies a specimen.

## Conclusion

In a preliminary ruling arising from Danish disputes between major pharmaceutical trademark owners and a parallel importer, the CJEU held that EU exhaustion generally bars trademark owners from stopping parallel imports of genuine medicines even when the importer repackages and reaffixes/uses the mark, unless the owner shows “legitimate reasons” under Article 7(2); the Court also set five cumulative conditions that, when satisfied, mean the proprietor may not prevent sale of the repackaged products.


Bristol-Myers Squibb v. Paranova, [1997] 1 C.M.L.R. 1151 (1996)