Intellectual Property: Trade Mark Infringement - Pharmaceutical Product - Exhaustion of Rights

By Rosanna Cooper

In the case of Bolton Pharmaceutical Co 100 Limited -v- Swinghope Limited and Others [2005], the claimant was the new owner of a trademark registered in respect of a pharmaceutical product which was commonly used to treat hypertension. It acquired the product from AZ, another pharmaceutical company, in September 2004, who had previously sold its trademark rights to a Spanish company.

The claimant acquired the trademark in the United Kingdom, and later realised that the product was being imported into the UK by certain third parties, including the defendant, and bearing its trademark. They had not sought the claimant's consent and the claimant therefore commenced proceedings alleging that the defendants were illegally impinging on its market and as a result, they were causing the claimant 'harm'. The claimant applied for summary judgment.

The defendants argued that:

The doctrine of exhaustion of rights applied, which provided that where a product had been put on the market in a member state by the trademark owner or with his consent, there could be no question of infringement of that mark; and

Estoppel applied, on the basis that the claimant had failed to assert his rights under the trademark in the preceding five months. The court held that the claimant's application for summary judgment would be allowed on the grounds that:

"For the doctrine of exhaustion of rights to apply, the owner of the rights in an importing state had to be able to determine the products to which the mark might be applied in the exporting state and to be able to control the quality of the product. That power would be lost if, as the result of an assignment, control over the trademark was surrendered to a third party which was not economically linked to the assignor. In this case, there was no evidence to support the claim that AZ was linked to either the claimant, or that the claimant and T were linked".

It followed therefore that any defence based on the doctrine of the exhaustion of rights had no real prospect of succeeding.

The defendant's argument that estoppel should bar the claimant from obtaining the relief sought, was inconsistent with section 10(4) Trademarks Act 1994, which imposes strict liability for trademark infringement. The court went on to find that the defendant's argument was inconsistent with the law of acquiescence, which provides that in order for estoppel to apply the claimant must have carried out some act or omission, beyond mere delay in commencing proceedings, which would have led the defendant to reasonably believe that the claimant would not enforce its rights under the trademark. On this reasoning, the defence had no real prospect of success. The claimant was granted the relief sought.

This is the test that must be satisfied in order for an applicant to obtain a summary judgment.

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