UK: News Update, Winter 2000 - General Commercial Law

Last Updated: 21 March 2000

THE NEW CIVIL PROCEDURE CODE IN PRACTICE

Recent decisions illustrate the positive approach the courts are taking to case management under the new rules, the strict line on delays and an eagerness to embrace the new civil litigation code. The courts are making it clear that they intend to ensure that the promised revolution in litigation takes place and they are applying their new powers accordingly.

The new Civil Procedure Rules (CPR) introduced on 26 April 1999 have been described as 'a self-contained code' and it has been said, 'earlier authorities are no longer generally of any relevance once CPR applies'. The architect of the reforms, Lord Woolf has endorsed this view and made it clear that, "...authorities decided under the old procedure should not be taken as binding or probably even persuasive upon this court, any more than looking back to the old rules to interpret the new should be so" (please see endnote 5). It is a whole new ball game and the courts are applying this fresh approach.

The overriding objective of the new rules is to deal with cases justly. The court must actively manage cases and look for ways to deal with them which are proportionate to the financial position of the parties.

The judiciary have now had the opportunity to demonstrate how they intend to apply the reforms and they have done so with vigour. These are some examples of decisions:

  • Lord Woolf MR got his first opportunity to give guidance from the bench in a case involving extensive late amendments to the claim. He said that the pleadings in the case were too complex. When the claim is issued the statement of case should be no more than a concise statement of facts (please see endnote 6). The detail follows in witness statements and at disclosure of documents (please see endnote 7).
  • The Court of Appeal endorsed a decision to strike out a personal injury action for delay. The case should have been listed as ready for trial in April 1991. The claimant argued that such cases should only be struck out on the second strikeout application and that the circumstances must be exceptional for such a strike out or the legal advisers will not know how to proceed. The court disagreed (please see endnote 8).
  • The claimant did not prepare a full outline of the case for the judge at the trial but invited her to read the case documents. The outline did not set out the background to the case. The judge made it clear that this preparation was insufficient and unsatisfactory. She criticised the claimant for failing to comply with the rules and set a trial timetable herself. She made it clear that she would take a pro-active role at the trial and limit what she regarded as unnecessary evidence. These shortcomings in preparation do not incline a judge to look favourably on a claimant's case (please see endnote 9).
  • Personal injury proceedings were started in July 1996. The only issue was the amount of damages. The trial was fixed for June 1999. In March the defendant applied to adjourn the trial because the doctors giving evidence would not be available before December 1999. The court said that this was unacceptable; before instructing an expert his availability should be checked, and he should not be instructed or continue to be instructed if he is not likely to be available for a year (please see endnote 10).
  • The claimant, who was Portuguese, had returned home to Madeira. His solicitors had difficulty communicating with him and obtaining evidence in the proper form. Eventually the claimant was given 28 days to file a proper medical report failing which his claim would be struck out. The claimant failed to comply and the action was struck out. He wanted to appeal but the Court of Appeal did not permit him to do so. Referring to the new test for such permission (please see endnote 11) the judges ruled that justice did not demand that the claimant be permitted to continue with his claim (please see endnote 12)
  • Prior to 26 April an expert was ordered to comply with the CPR requirements for expert evidence. He did not. The judge ruled that the defendant could not use the expert evidence. Lord Woolf MR said that the power to debar evidence was within the power to control evidence. The expert by his conduct had demonstrated that he was unsuitable and he should not be allowed to give evidence. Although a draft consent order had been agreed by the parties Lord Woolf refused to make the order (please see endnote 13).
  • Medical evidence was disclosed very late, on the day of a hearing and when a Part 36 offer was made. The judge decided that the evidence could not be used. On appeal Lord Justice Brooke said the judge had used his case management powers under the rules correctly in accordance with the overriding objective. It was against the spirit of the rules for reports to be disclosed so late. Previous practices must stop. He issued a strong rebuke to the defendant's solicitor for this and other aspects of the conduct of the case and made an order with costs penalties (please see endnote 14).

Points to watch:

  • Tactical ploys on subsidiary issues will not be tolerated
  • Where possible all pre-trial issues will be dealt with at a single case management conference
  • Case management is essential and early planning and preparation of the whole case, not just the trial, is the key to success. This has always been good practice. The difference now is that failure to carry out the early preparation could seriously damage the prospects of success of a case
  • The courts are enforcing good practice and ensuring that the issues are properly identified in advance of the trial. If the work is not done or if the court disagrees with what has been done, it will take control
  • The judiciary will not look favourably on lawyers or their clients trying to resist change. As time passes it is likely that this view will harden.

Contact name: Gwendoline Davies

PARALLEL IMPORTS UPDATE

Pharmacia and Upjohn SA v Paranova A/S (please see endnote 15)

In the decision of Bristol-Myers Squibb v Paranova (please see endnote 16) the European Court of Justice ("ECJ") held that a trade mark owner may rely on Article 30 of the EC Treaty (formerly Article 36 of the Treaty of Rome) to prevent parallel imports of repackaged products to which the trade mark has been re-affixed unless:

  • Such use of trade mark rights would contribute to the artificial partitioning of the common market
  • The repackaging cannot adversely affect the original condition of the product
  • The new packaging indicates who is responsible for the repackaging of the product and who manufactured it, and dispels any impression that the trade mark owner is responsible for the new packaging
  • The trade mark owner is given advance notification of the repackaging before the product is put on sale

In that case the circumstances were that Bristol Myers Squibb manufactured and sold various pharmaceutical products in Member States and owned a number of trade marks for such products in Denmark. Paranova, a parallel importer, purchased the Plaintiff's products in Greece, UK, Spain and Portugal, where the prices were relatively low, and imported them into Denmark. In doing so it repackaged the products in new external packaging of its own style, on which it displayed the Plaintiff's trade mark together with statements that the product had been manufactured by Bristol-Myers Squibb and that the product had been imported and repackaged by Paranova. Additionally, for some products, Paranova changed the packaging size, or inserted new user information, or removed phials and ampules from their original packaging and stuck new labels on them before putting them in new external packaging. Bristol Myers Squibb brought proceedings in Denmark for trade mark infringement claiming inter alia that Paranova had affixed the plaintiff's trade marks without consent.

Does the decision in Bristol Myers Squibb v Paranova apply when a parallel importer repackages products and affixes the trade mark used in the country of import rather than the trade mark used on the product by the trade mark proprietor in the country of export?

Following the recent ECJ decision in Pharmacia and Upjohn SA v Paranova A/S, provided that the conditions listed above are satisfied and that the market circumstances prevailing at the time of importation make it objectively necessary for the parallel importer to rebrand the product in order to access the market of the importing member state, the answer is that the Bristol Myers principles will apply to such rebranding.

Pharmacia and Upjohn SA v Paranova A/S

This case, which originated in Denmark, concerned the rebranding and repackaging of Upjohn's Dalacin C antibiotic product by parallel importer Paranova. Upjohn marketed this antibiotic product under the trade mark Dalacin C in all Member States of the European Union except Denmark, Germany and Spain (where the trade mark Dalacin was used) and France (where the trade mark Dalacine was used). Paranova purchased the Dalacine product in France and the Dalacin C product in Greece and repackaged them as Dalacin for sale in Denmark. According to Upjohn, the trade mark Dalacin was used for its products in Denmark because the Danish authorities objected to the use of Dalacin C on the basis that such use could create a misleading association with Vitamin C. Upjohn also explained that the trade mark Dalacine was used in France so that the French pronunciation would be close to the English pronunciation of Dalacin. The ECJ were asked to consider questions seeking clarification on the circumstances in which a trade mark owner may, under national law, prevent the replacement of pharmaceutical trade marks by parallel importers. In answering these the Court affirmed the decision in Bristol Myers Squibb v Paranova and stated that a trade mark owner could not prevent such a replacement of trade marks if the market circumstances prevailing at the time of importation made it objectively necessary for the parallel importer to rebrand the product in order to access the market of the importing Member State.

It is for the national courts to determine in each case whether rebranding is objectively necessary, but the ECJ has indicated that this would be the case where there were rules or practices in the importing Member State, e.g. consumer protection rules, which prevented the pharmaceutical product being marketed under the trade mark of the exporting member state. By contrast, if the trade mark was replaced purely in order for a parallel importer to gain a commercial advantage, this would not satisfy the requirement of objective necessity.

Contact names: Isabel Gass/Patrick Cantrill

GUIDANCE ON WHEN USE OF A TRADEMARK IN RESPECT OF DISSIMILAR GOODS AND SERVICES WILL AMOUNT TO TRADEMARK INFRINGEMENT - GENERAL MOTORS CORPORATION v YPLON

In the recent decision of General Motors Corporation v Yplon SA, the European Court of Justice (ECJ) has offered some guidance as to when use of a trademark in respect of dissimilar goods to that covered by a trademark registration will amount to trademark infringement (please see endnote 17). Article 5(2) of the First Council Directive (89/104/EEC) to approximate the law of the Member States relating to trademarks (the Directive), which harmonised the trademark law of the United Kingdom and other European States, provides that:

"Any member state may also provide that the proprietor shall be entitled to prevent all third parties not having his consent from using in the course of trade any sign which is identical with, or similar to, the trademark in relation to goods or services which are not similar to those for which the trademark is registered, where the latter has a reputation in the Member State and where use of that sign without due cause takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trademark."

This was incorporated into UK law by section 103 of the Trade Marks Act 1994 which states:

"A person infringes a registered trademark if he uses in the course of trade a sign which:

(a) is identical with or similar to the trademark, and

(b) is used in relation to goods or services which are not similar to those for which the trademark is registered, where the trademark has a reputation in the United Kingdom and the use of the sign, being without due cause, takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trademark."

The ECJ has now addressed the issue of what is meant by 'has a reputation'. Reputation implies a lesser degree of recognition compared to the concept of 'well known'. Under Article 6bis of the Paris Convention, well known marks are viewed as marks which have an exceptional degree of recognition with the public such that protection should be granted regardless of whether there is registration in a particular territory. There is no such requirement for marks to claim to have reputation under the present case. For a mark to have reputation it must be known to a significant part of the relevant public. Such reputation need not cover an entire territory as long as it covers a substantial part of the territory. As this case arose from the Benelux, the Court held that reputation in one substantial part of the Benelux territory, even if it is only a part of a Benelux country, is sufficient.

Following from this decision a mark with reputation in one part of the UK will appear to be sufficient to claim such protection for the whole of the UK. This position seems highly favourable to the registered trademark owner. A note of caution has to be added that although there appears to be a substantial scope of protection afforded, trademark owners should not be too keen to claim protection throughout the European Community in this manner. This area of law is still relatively untested in practice and thus an element of uncertainty still lingers.

What is clear from this decision is that there is no requirement for likelihood of confusion and although this seems rather peculiar since such a requirement is needed for similar goods, this is the position of the law as it stands today.

Contact names: Patrick Cantrill/Cheng Tan

WEIGHTS AND MEASURES - TRADERS FACE BIG FINES FOR MISSING METRIC D-DAY

Under European Union law, weighing equipment used by retailers must be converted to metric measures by 1 January 2000. Supermarkets have already started making the changes. Trading standards officers are concerned that small retailers and market traders will not be able to comply by the deadline.

The penalties for not complying with the new rules and using the authorised measurement will be:

  • fines of up to Ł2,000
  • the forfeiture of the measuring equipment under the Weights and Measures Act 1985

There are some exceptions for using imperial units, including the use of pints for draught beer, cider and milk in returnable bottles.

Contact name: Roger Limbert

Walker Morris Client Newsletters can serve only to alert the reader to recent developments and to act as a preliminary, but no comprehensive guide. They should not therefore be relied upon in place of specific advice.

ENDNOTES:

  1. Biguzzi v Rank Leisure plc Court of Appeal 26 July 1999
  2. CPR Part 16, 8.3
  3. McPhilemy v the Times Newspapers Ltd & others, Court of Appeal May 21 1999
  4. Shikari v Malik, Court of Appeal May 5 1999
  5. St. Albans Court Ltd v Daldorch Estates & Others, High Court May 7 1999
  6. Rollinson v Kimberly Clark Ltd, Court of Appeal June 15 1999
  7. Consolidated Practice Direction 19 April 1999 para 2.19.1
  8. Nascimento v Kerrigan, Court of Appeal June 15 1999
  9. Stevens v Gullis Court of Appeal 27 July 1999
  10. Baron v Lovell Court of Appeal 27 July 1999
  11. Pharmacia and Upjohn SA v Paranova A/S 14 October 1999
  12. Bristol-Myers Squibb v Paranova [1997] FSR 102
  13. General Motors Corporation v Yplon SA

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