In the MedTech industry, medical device products often comprise a number of separate third party hardware and software components. In the enthusiasm to brand and launch MedTech products, particularly by start ups in this space, companies need to be aware of the risk of potential trade mark infringement, if, for example, trade marks on original products are overlabelled or products are repackaged.
The exhaustion of the trade mark rights principle establishes that where trade marked goods are put on the market, eg the EEA, with the consent of the registered proprietor, the relevant trade mark rights cannot be used to prevent further trade in those goods within the relevant market, after the first sale. This is provided for under both Irish and EU law. For example, if a company buys a product sold in the EU with the trade mark owner’s consent, then the trade mark owner cannot use its trade mark rights to object to the onsale of the product in the EEA. Exhaustion does not apply where goods were put on the market without the consent of the trade mark proprietor.
There is also an exception to the exhaustion rule where there are legitimate reasons for the proprietor to oppose further commercialisation of the goods in question, particularly where the goods have been changed or impaired after being put on the market.
This issue has often arisen for pharmaceuticals, with a number of cases being brought before the CJEU where trade marked goods have been repackaged or relabelled.
The same issue can potentially arise in the context of medical devices. For example, if a third party smart watch formed part of a package for a new medical device and was relabelled or overlabelled by the medical device company, using its own brand. This could give rise to the exception to the exhaustion of rights doctrine. Third-party proprietors may object to the further commercialisation of their goods where their trade marks have been removed and/or replaced with someone else’s, particularly, if, for example, the smart watch was recalibrated in some way, impairing the original product.
Medical device companies could then find themselves on the receiving end of infringement proceedings where they repackage or relabel another proprietor’s product without complying with the requirements imposed on parallel importers.
Repackaging / relabelling requirements
Parallel imports or grey goods, are genuine goods purchased outside a jurisdiction (eg, the EU) and imported into the EU by a third party. This often occurs in the pharmaceuticals space. Throughout case law, the CJEU has accumulated requirements which a parallel importer must abide by when repackaging and overstickering grey goods. These include:
(a) The importer must give the trade mark owner notice of the product being put for sale and provide a sample before it goes on sale
(b) The presentation of the repackaged product must not damage the reputation of the trade mark and of the proprietor
(c) The name of the manufacturer and repackager must be stated on the outer packaging
(d) The original condition of the product must not be affected, and
(e) Overstickering must be necessary
The court has held that the following may damage the reputation of a trade mark: de-branding; co-branding overstickering in any way that obscures the trade mark; and printing the name of the parallel importer in capitals. The courts in each Member State will decide the damage to the reputation in question.
The use of a third-party’s product as a component of a medical device could potentially also give rise to a passing off claim in Ireland, if used in a particular way. Passing off can arise where an entity can show goodwill or reputation in its trade mark, or where there is a misrepresentation, such as due to a different label being affixed to the genuine product, which causes or is likely to cause damage to it.
Conclusion
Medical device companies should ensure they comply with the relevant conditions if using third-party products as an element of their newly developed devices. It would be best for medical device companies to engage with the original device manufacturer prior to using their product, and to enter into a licence agreement with that proprietor to reduce the risk of any infringement claims being brought against them. The last thing a medical device company needs is to have their innovation set back by infringement or passing off proceedings, particularly on the launch of a new product on the market.
For more information on successfully protecting your organisation’s intellectual property rights, contact a member of our Intellectual Property team.
The content of this article is provided for information purposes only and does not constitute legal or other advice.
