Nexus: #goodwill

GSK fails in purple inhaler passing off claim against Sandoz and Vectura (...and breathe)

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Lord Justice Arnold (as he now is) has handed down his customarily chunky judgment in the latest stage of "Purple Inhaler Wars" [ideas for a better name on a postcard, please] in Glaxo Wellcome UK Limited and Anor v Sandoz Limited and Ors [2019] EWHC 2545.

This GuestKat finds the final result [spoiler alert: paragraph 316] - "all of Glaxo's claims are dismissed" - unsurprising. The author thought the writing was on the wall following the pre-trial review ([2019] EWHC 1528 (Pat) - not publicly available) in which Mr Justice Arnold (as he then was) excluded swathes of undeclared expert evidence from several of Glaxo's witnesses, although last week's judgment reminds us that this was just part of a "regrettable procedural history" going back to 2015, including "a great deal of interlocutory skirmishing".

Background

Since 1999, Glaxo has sold purple "Evohaler" and "Accuhaler" (see below) inhalers for its blockbuster salmeterol / fluticasone propionate product, Seretide/Advair, a treatment for asthma and chronic obstructive pulmonary disease (COPD). Until 2015, Seretide inhalers were the only purple inhalers (and only inhalers sold in purple packaging) on the UK market; over 113 million had been sold by 2014. Glaxo also sells Accuhalers containing other active ingredients, which are distinguished from the Seretide Accuhaler by different colours (blue, green and orange); the earliest was sold in 1994.

A Seretide Accuhaler, minding its own business, yesterday.

Glaxo's combination patent has long expired, and a patent protecting the Seretide Accuhaler dry powder inhaler (DPI) device expired in the UK (and was revoked in other jurisdictions including Germany) more recently. The UK market accordingly saw its first generic entry in 2015, albeit via a different form of inhaler delivery system. Pulmonary-delivered drugs, it seems, are hard to mimic. Later in 2015, Sandoz launched a branded generic competitor to the Seretide Accuhaler, the AirFluSal Forspiro [it just rolls off the tongue], a proprietary DPI manufactured by Vectura, with a different mode of operation to the Accuhaler. Coincidentally, or perhaps not, the Forspiro device is predominantly purple, although it is a different shape to the Accuhaler:

Like the packaging for the Seretide Accuhaler, the AirFluSal Forspiro packaging is also purple and white.

Glaxo was, it seems, displeased. Its trade mark infringement action failed when GSK's EUTM for the colour purple was revoked on summary judgment. Therefore, passing off it would have to be. By the time of trial, the key battleground was over the colour purple [the most popular colour in IP disputes, scientifically-speaking, with the possible exception of orange].

The judgment

If you ever wanted to know more about the complex authorisation, prescribing and reimbursement systems and guidelines governing asthma and COPD treatments and their marketplace more generally, but were afraid to ask, this is your lucky day: enjoy paragraphs 8 to 155 of the judgment. For the sake of brevity, all that you really need to know is that both the Seretide Accuhaler and AirFluSal Forspiro are prescription-only medicines (POMs), the promotion of POMs to patients is highly restricted, and prescriptions are normally (and increasingly) written by brand name, not generically. This is because pulmonary-delivered products are not necessarily bioequivalent, and different inhalers have different modes of actuation and (potentially) variations in the dose delivered.

The parties agreed that informal colour conventions have developed in the UK in relation to certain types of inhaler (e.g. blue for SABA relievers), but Glaxo did not agree with the Defendants that such a convention had developed in respect of purple for salmeterol/fluticasone. The several other salmeterol/fluticasone combination inhalers launched in the UK since 2015, however, all featured purple and/or pink elements.

Glaxo's case outlined two forms of passing off, originally based on the entire "get-up" of the AirFluSal Forspiro, but later narrowed to just the colour purple:

"Traditional" misrepresentation i.e. deception as to trade origin. Originally, Glaxo alleged such deception in relation to healthcare professionals (HCPs) and patients; by the time of trial, this ground was confined to patients (the evidence given by HCPs showed that they would see the colour purple as denoting the combination of salmeterol and fluticasone, and not necessarily Seretide specifically).
Misrepresentation to HCPs and patients as to equivalence between the products, on the basis that AirFluSal Forspiro (unlike the Seretide Accuhaler) (i) was not licensed for asthma (only COPD) prior to February 2017, and still is not licensed for adolescents; (ii) is only available in a single strength; and (iii) has a different mode of operation, so patients have to be trained to use it. The Defendants accepted that this is an established form of misrepresentation, but emphasised that it is necessary to consider carefully the goodwill actually owned by a claimant in the relevant indicia, and whether the misrepresentation would cause damage to this goodwill.

There was copious evidence from trade witnesses, and survey evidence running to 16 expert reports in total. Glaxo's surveys had, however, been commissioned for earlier UK trade mark registry proceedings in 2015 and 2016. Consequently, none complied fully with the Whitford guidelines; the surveys were of HCPs, and not patients; only one question from the surveys provided any form of (indirect) evidence of patient identification of inhaler origin; and none of the surveys dealt with misrepresentation as to equivalence. As one might expect, the judge concluded that Glaxo's survey evidence was of limited value, and only established that HCPs would recognise the colour purple as a feature of Seretide inhalers (but not that HCPs would assume that any purple inhaler had the same trade origin). The judge also concluded, in pretty blunt terms, that he had seen no evidence that patients would perceive the colour purple as denoting any specific product characteristics.

Unsurprisingly, the judge dismissed both forms of passing off claim in relation to patients with little difficulty. The question of misrepresentation of equivalence to HCPs was slightly more complex, but with the same result. The evidence showed high levels of awareness among HCPs regarding the differences in the mode of operation of different inhalers; this is precisely why inhalers (especially DPIs) are increasingly prescribed by brand. And both sides' evidence showed that HCPs would not make assumptions about the scope of a product's marketing authorisation on the basis of colour; they would instead check the Summary of Product Characteristics (SmPC), British National Formulary (BNF), etc..

The Defendants were also required to give extensive disclosure against their alleged intention to deceive / recklessness as to deception in adopting the colour purple. The evidence showed no such intention; to the contrary, the judge found that the Defendants had good and legitimate reasons to adopt the colour purple (see below).

Comment

If there is a golden thread running through the judge's reasoning, it is adherence to careful analysis of the precise nature of Glaxo's goodwill. Yes, the evidence suggested that HCPs and patients would expect a purple inhaler to contain familiar active ingredients (salmeterol/fluticasone), but not that the colour denoted product characteristics beyond this, or a particular trade origin. It makes sense in this context that the judge seemed convinced by the point that there were legitimate reasons for the Defendants to choose purple. In particular, many asthma/COPD patients have more than one inhaler (for immediate "rescue" and longer-term "maintenance" use), so it is important that they can tell these apart. More generally, in light of the evidence regarding informal colour coding conventions, the Defendants' use of purple would help to reassure patients that they are receiving the correct medication.

A cynic might say that this case was more about the fact that UK market for Seretide is still worth £400 million per year to Glaxo, and less about the merits. GSK has enjoyed a long and lucrative ride with Seretide/Advair, which is only just tailing off. There was scant evidence of actual confusion (even though more than 500,000 prescriptions for AirFluSal Forspiro have now been filled), much less even recognition of Glaxo's alleged goodwill in the colour purple and/or its association with certain product characteristics.

In a dispute of this value, it stands out that Glaxo did not adduce survey evidence from patients. It is eminently possible, of course, that Glaxo attempted pilot surveys, but the results were not favourable. But perhaps the explanation is instead that because POMs cannot be marketed directly to patients and patients do not make the buying "decision" as such, what patients may or may not think is a secondary issue.

Overall, the judgment seems (to this GuestKat at least) a sane and predictable result based on well-established principles. The judgment turns entirely on the facts and therefore any appeal (if one is brought) is likely to be challenging.

Willow Tea Rooms: A tale of tea and trade marks (Part 2)

By 0x000216

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The post below follows on from Part 1 of this post regarding Ms Mulhern, owner of the mark The Willow Tea Rooms opposing the Willow Tea Rooms Trust attempt to register the mark “The Willow Tea Rooms” in classes 35, 41, 42 and 43. The matter came before Mrs J Pike on the 27 January 2017 and the UK Intellectual Property Office (IPO) published the full 73 page decision here, in which two interesting points arose:

Use of a modified / part of a trademark registered in a series

Firstly, Ms Mulhern opposed the registration under sections 5(2)(b) of the Trade Mark Act 1994 (TMA) [similar to an earlier mark and is registered for identical or similar goods or services] and 5(3) TMA [is identical with or similar to an earlier trade mark, and the earlier trade mark has a reputation, and the use of the later mark without due cause would take unfair advantage of, or be detrimental to, the distinctive character or the repute of the earlier trade mark]. She based these claims on her registered trade marks for Willow (1276805, series of two marks in Class 42: Restaurant, tea room, catering and cafe services; all included in Class 42; but not including any of the aforesaid services relating to the provision of alcoholic drinks) and The Willow Team Rooms (2251332A, series of 8 marks, goods and services in classes 9, 11, 16, 20, 21, 24, 30 and 43).

In their counterstatement, the Trust denied all of the grounds and relied on 6A of the TMA requiring Mulhern to demonstrate genuine use of her marks. In particular, it questions whether there had been use of any or all of the stylised forms of the mark and argued that no use had been made of the trade mark “Willow,” since it is only used in conjunction with the overall words “The Willow Tea Rooms” (which is a separate trade mark).

Pike noted [at 34] that there was no evidence of use of the “Willow” mark by itself. The difference in the second series of marks is the additional of the words ‘tea’ and ‘rooms’. She also noted [at 50] that in Comic Enterprises Ltd v. Twentieth Century Fox Film Corporation, Kitchin LJ stated [at 66]: “An application for the registration of a series of trade marks is an application to register a bundle of trade marks under a single reference number. Each of the marks in the series must satisfy the requirements of the 1994 Act…namely a bundle of different marks, albeit now registered under the same reference number” (emphasis added).

With that in mind, Pike set out [at 51] to assess whether there was use in respect of any or all of the marks registered as a series of eight. To do this, she considered [at 52] the test to be: what sign was presented as the trade mark on the goods and whether that sign differs from the registered trade mark in elements which do not alter the latter’s distinctive character (referring to Nirvana Trade Mark, BL O/262/06 at 33 and 34). For example in Hypen GmbH v EU IPO, Case T-146/15 the General Court held that, taking into account the intrinsic qualities and the greater or lesser degree of distinctive character of the mark, a circle around the mark in question was not sufficient to alter the distinctive character of the mark.

Lets look at it this way....

As such, the relative distinctiveness of the registered mark and the components added to (or omitted from) it in use are relevant factors to take into account. Pike stated [at 57] that the distinctive character of the "Willow Tea Rooms" mark lies firstly in the words, and secondly in their stylisation. As the goods are sold within the tea rooms as merchandise, it is a reasonable assumption that the way in which the mark appears on the goods replicates the form of use in relation to the services. Therefore, even if the mark used was only “Willow Tea Rooms”, the stylisation of the words in the marks registered is not sufficiently distinctive that its absence from the used mark alters its distinctive character, since in this case the distinctive character of the mark is overwhelmingly concentrated in the words.

[So it seems to me that Pike went around the problem of the non-use of “Willow” by establishing use of “The Willow Tea Rooms” and then extracted the word “Willow” from the second series to justify the registration of the first? Interesting.]

Good will of the building or the business within the building?

So on to the second point of interest: As explained in Part 1, the building on Sauchiehall Street, was designed by Scottish architect Charles Rennie Mackintosh in 1903 with Kate Cranston as a tea room, which Anne Mulhern restored to its original purpose in 1983.

Ms Mulhern also opposed the Trust’s mark under 5(4)(a) TMA 1994 arguing that its use would constitute passing off by misrepresentation and damage to her goodwill. The Trust, however, argued that the goodwill was theirs as the owners of the building, since the name The Willow Tea Rooms was associated with the historical development of the building itself and not the business carried on within it. Pike recalled [at 86] the concept of goodwill in Inland Revenue Commissioners v Muller & Co’s Margarine Ltd [1901] AC 217, where Lord Lindley said: “Goodwill regarded as property has no meaning except in connection with some trade, business, or calling… In this wide sense, goodwill is inseparable from the business to which it adds value.” It therefore concluded [at 87] that goodwill is generated by trade or custom, and is capable of being owned. She believed that whilst the building might have a reputation amongst those who know of its heritage, that is different to goodwill. [note to self and legal dictionaries (e.g. here, here, here, here), goodwill is not reputation.]

Pike turns to Professor Christopher Wadlow, in The Law of Passing-Off: Unfair Competition by Misrepresentation, 5th Edition, to explain the difference between goodwill and reputation: “Goodwill as a form of legal property is also to be distinguished from mere reputation, which is primarily a matter of fact. In so far as reputation may be a legally protected interest, it is a non-proprietary one. It is true that the two are very closely related, and a business with goodwill (at least in the sense in which the term is used in passing-off) can hardly fail to have a reputation in some sense. The converse, however, is not true, and the existence of a reputation associated with a person, product, name or mark does not necessarily imply the existence of goodwill.”

So, reputation can exist without a supporting business, but goodwill can only exist via business or trade. Thus, Pike states [at 89] that a building per se cannot have goodwill because goodwill can only exist if there is something to buy in order to generate custom. As such, the Trust could not establish goodwill on the basis of the architectural reputation of the building [92]. Consequently, the Trust was prevented from registering the mark under the law of passing-off.

Ms Mulhern successfully opposed approximately two-thirds of the application and was entitled to a contribution towards her costs. The Willow Tea Rooms Trust has 28 days to appeal against the ruling but as mentioned in Part 1, a spokesman for the Trust reportedlysaid that it accepts the decision.

Photo: Beryl McMillan

Nexus

GSK fails in purple inhaler passing off claim against Sandoz and Vectura (...and breathe)

Willow Tea Rooms: A tale of tea and trade marks (Part 2)

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