Judgment of 30 November 2020, Case No 23 Cdo 397/2020 –⁠⁠⁠⁠⁠⁠ Trademark and packaging of medical products

Judgment of the Supreme Court of 30 November 2020, Case No 23 Cdo 397/2020

(Trademark, packaging of goods, medical products)

The Supreme Court dealt with a dispute concerning the question whether repackaging of imported pharmaceutical products – “MIRENA” and “DIANE-35” infringed trademark rights and constituted unfair competition.

The defendant company imported plaintiff´s pharmaceutical products from Portugal into the Czech Republic and before the distribution, it repackaged these products into Czech-language boxes. It argued that such step was necessary due to consumer preferences and differences in packaging sizes. Specifically, the product DIANE-35 was imported in packs of 21 tablets, while Czech prescription practice favoured packs of 63 tablets. The plaintiff objected, claiming that repackaging violated its trademark rights and sought especially an injunction and publication of an apology.

The Czech lower courts partially upheld plaintiff´s claims. The first instance court ordered the defendant to publish an apology in a professional journal but rejected broader publication and injunction requests. The second instance court mostly confirmed this decision. The defendant company then filed the extraordinary appeal to the Supreme Court. It raised two legal questions – whether a trademark owner can prohibit repackaging based on packaging size differences, and whether failure to object promptly after notification waives trademark rights.

The Supreme Court assessed the case under the Czech trademark law, the Civil Code, pharmaceutical regulations, and EU law, particularly Directive 2008/95/EC and Directive 2015/2436. Essential at this point was the principle of trademark exhaustion – once goods are lawfully placed on the EU market by the trademark owner or with consent, the owner cannot generally oppose their further commercialization. However, exceptions apply where legitimate reasons exist, such as changes to the product or packaging that could harm the trademark’s reputation.

The Court relied on the decision-making practice of the Court of Justice of the European Union which established strict conditions under which repackaging of parallel-imported goods is permissible. These conditions include objective necessity for market access, preservation of the product’s original condition, clear identification of the repackager, maintenance of the trademark’s reputation, and prior notification to the trademark owner with a sample provided upon request. All conditions must be met cumulatively and failure of anyone allows the trademark owner to object.

After the Supreme Court confirmed Czech jurisdiction under the Brussels I Regulation and national procedural law, it examined whether repackaging was objectively necessary. Commercial convenience or marketing strategy did not suffice, and necessity existed only if regulatory requirements or established medical practice in the importing state prevented effective market access without repackaging. For the MIRENA product, no such barrier was proven, and consumer resistance to labelled packaging was not substantiated. For the DIANE-35 product, however, the appellate court had not adequately considered whether Czech law and prescription practice (favouring 63-tablet packs) created a genuine need for repackaging. Evidence indicated that most of the Czech market uses this size and that regulatory approval referenced it, suggesting potential necessity.

Regarding the second question, the Supreme Court rejected the notion that plaintiff´s silence after notification amounted to implied consent. Notification was a mandatory condition but absence of objection did not waive rights as all other conditions still had to be satisfied. The Court also addressed the doctrine of abuse of rights under Section 8 of the Civil Code, noting that enforcement of trademark rights could, in exceptional cases, constitute abuse.

The Supreme Court upheld the obligation for the defendant to publish an apology for infringement related to the MIRENA product but dismissed the appellate decision concerning the DIANE-35 product, remanding the case for further proceedings.