"BOSWELAN" - No Special Treatment for Medicinal Product Trade Marks

Obtaining a marketing authorization for a new medicinal product can notoriously take a very long time. Should trademark law, and in particular the five-year grace period to commence “genuine use“ (Art. 18(1) EUTMR), be adapted to account for the time lost waiting for the marketing authorization? In a recently published case (C-668/17 not yet available in English at the time of writing), the EU Court of Justice answers the question in the negative.

Germany-based Viridis applied for an EU registration of the word mark “BOSWELAN” in class 5 in 2003. In parallel, it started clinical trials of a medicinal product for the treatment of multiple sclerosis. In the framework of the trials, 400’000 “BOSWELAN”-branded capsules were distributed in a participating hospital. However, ten years later, Viridis has still not obtained a marketing authorization for the product; indeed, it has not yet even applied for one.

In need of a longer grace period

In 2013, Hecht-Pharma filed an action for revocation of the “BOSWELAN” mark for lack of genuine use within the meaning of Art. 51(1)(a) of Regulation 207/2009. The EUIPO and the EU General Court found that the trademark has lapsed because it has not been put to genuine use within five years of registration (see Art. 18(1) EUTMR).

The CJEU has now confirmed the AG’s opinion (Katpost here) on all issues. First, it ruled that “genuine use” must necessarily relate to identifying the origin of goods and services and that it must necessarily involve use with third parties (i.e. use within the company does not count as “genuine”). Clinical trials do not meet these criteria because they neither qualify as use “outside” of the entity owning the mark, nor are they directed to identifying the origin of goods and services. On the latter issue, given that it is legally forbidden to advertise medicinal products prior to marketing authorization, it is not possible to make “genuine use” of such trademark at this stage.

While it is correct that preparations for future marketing can qualify as “genuine use”, this applies only if entry to the market is imminent. Here, the trade mark owner has not provided evidence of imminent distribution; in fact, a marketing authorization has not even been applied for ten years after registering the trade mark. Importantly, in response to the trade mark owner’s contention that five years are insufficient in the pharmaceutical industry, the Court underscores that the five-year grace period does not depend on the industry or the claimed goods. Thus, there is no reason to grant additional time to trade mark owners because of the purported regulatory characteristics of a given industry.

Second, the trade mark owner also argued that the prohibition of advertising prior to marketing authorization should constitute a “proper reason” for non-use under Art. 58(1)(a) EUTMR and that thus the five-year grace period should be suspended until marketing authorization. The Court also rejects this argument. A “proper reason” for non-use must be independent of the trade mark owner’s intent. The owner was not obliged to apply for a trade mark already in 2003, at a time of “considerable uncertainty” about whether and when a product under this mark could in fact be marketed.

Indeed, the owner did not even start clinical trials for three years after registering the trade mark and the factual circumstances of the clinical trials suggest that the owner did not substantially invest in the clinical trials either. While it cannot be excluded that pending clinical trials can constitute a “proper reason” for non-use, the circumstances of this case, in particular, the time elapsed since registration, the duration of the trials, and the lack of steps taken by the owner to speed up the regulatory approval process, all lead the Court to the conclusion that the clinical trials in this case are not a “proper reason” for non-use of the mark. 

Comment

The facts of this case were clear enough so the Court could avoid answering some difficult questions. Waiting for three years after trade mark registration before even starting clinical trials, and still not having commenced the marketing authorization process ten years later, made it difficult to argue that the Court should adjust the five-year rule to the pharmaceutical industry or to make the absence of a marketing authorization into a “proper reason for non-use”.

The reasoning of the decision certainly suggests that the answer could have been different if the owner had evidenced diligent efforts to go to market as soon as possible.

One take-away from the decision is that in regulated industries, marketing strategies should focus not only on the relevant geographical markets and lists of goods and services, but also on the right time for applying for trade mark registration. Applying too early for a trade mark application can ultimately result in the loss of registered rights, as illustrated by this case.

As well, when circumstances delay entry into the market, trade mark owners are well-advised to undertake and document any efforts to speed up the regulatory approval process. If the ultimate test is the trade mark owner’s diligence, it is too late to try and create material evidence in the face of a pending action for invalidation of a trade mark registration.