The case: The brand use in the product development phase raises issues that an entrepreneur should be aware of and prepared to address in order to protect their trade mark.

The UK company Viridis Pharmaceutical Limited had acquired the EU registered trade mark for pharmaceutical products from its predecessor

with a priority date of 2003. In order to remain valid, the trade mark had to be put to genuine use within five years of its registration, i.e. by 24 April 2012 at the latest.

In 2013, the German company Hecht Pharma GmbH filed an application for revocation of the trade mark due to non-use and then registered the same name as its own trade mark for medical preparations in 2014.

The brand name Boswelan is attractive. It is derived from the name of the frankincense plant Boswellia serrata and is generally well suited for labelling medicinal products made from frankincense extract.

Viridis considered the application for revocation to be unfounded. After all, a standardised frankincense extract had been developed for the treatment of relapsing-remitting multiple sclerosis. And in 2010, an application was submitted for approval of a Phase II study for the first clinical trial of the drug in a small group of patients (the SABA study), which was approved in 2011. The aim was to test the efficacy and dose of the drug.

The SABA study, which involved a total of 28 patients, was promising. It was completed in 2017 with positive results in terms of the efficacy of the drug; 400,000 boswellia capsules were supplied for this study.

Did this mean Viridis was safe?

An EU trade mark must be put to genuine use within five years of its registration in order to maintain its rights. If there is no genuine use, there may still be valid reasons for non-use that can help to overcome this deficiency.

The first requirement for genuine use is that the mark must be used in a way that is consistent with its essential function. In other words, the use must guarantee that the goods or services for which the mark is registered originate from a particular company. It must not be merely a token use, but must actually serve to create or preserve an outlet for those goods or services. This means that the use must relate to goods and services that are already being sold or whose sale is being prepared by the company in order to attract customers, in particular through advertising campaigns, and that such sale is imminent. The use must be public and outwardly directed with a view to penetrating the relevant market.

In this case, there was no valid use of the trade mark in the period in question. The marketing and advertising of the drug for the treatment of multiple sclerosis covered by the trade mark could not have taken place because this was prohibited during the clinical trial phase. The trial was therefore only for the internal testing of the drug at Viridis and did not concern any aspect of its marketing. It did not constitute the necessary external action.

Furthermore, Viridis could not rely on the fact that distribution of the drug was imminent on 24 April 2012. At that time it was not anticipated that the trial was going to be successfully completed in the near future.

Furthermore, sales of only 400,000 capsules – as used in the trial – would not have been sufficient to be considered serious use of the trade mark for pharmaceutical products. In the pharmaceutical industry, much higher sales are regularly required in order to gain or maintain market share.

However, Viridis invoked the special interests of the pharmaceutical industry, whereby companies are obliged to carry out extensive clinical trials for each new drug. However, this situation does not justify the recognition of the use of the trade mark in the context of internal clinical trials as a use which preserves rights. It does not justify an extension of the five-year period within which use of a trade mark must commence, nor the adjusting of the requirements relating to the necessary scope of use based on the fact that a relatively small group of customers and a limited number of participants are involved in the studies.

Viridis therefore needed valid reasons to justify the non-use of its trade mark. However, according to international law (TRIPS) and the case law of the Court of Justice of the European Union, which is bound by international law, such reasons are essentially certain obstacles to use of the trade mark, which have a sufficiently direct connection with the trade mark. These obstacles must make it impossible or unreasonable to use the trade mark. In particular, they must not depend on the will of the trade mark proprietor. Valid reasons for not being able to meet the deadline for commencing use of a trade mark include import restrictions, other government regulations or bureaucratic obstacles, the duration of which cannot be influenced by the trade mark proprietor. An authorisation procedure under pharmaceutical law would have been such a valid reason. However, this had not been initiated.

In theory, the conduct of a clinical trial could constitute a reason for not using a trade mark. However, Viridis was in a position to influence the duration of the trial through its financial resources, and the responsibility for the timescales lay solely with Viridis. Furthermore, the difficulties in recruiting participants and the strict selection criteria were foreseeable on the part of Viridis and could have been prepared for.

Viridis was therefore not in a position to put forward valid reasons to justify the non-utilisation of the mark.

As a result, the trade mark was filed far too early to be used in time for the marketing of the multiple sclerosis drug.

The trade mark was therefore cancelled for non-use.

Court of Justice of the European Union, 3 July 2019, C-668/17 P.

 

Learnings: The timing of a trade mark application for a new product should be aligned with the expected duration of product development. The finished product must be ready to be marketed within five years of registration. If necessary, you should wait to register the trade mark and carry out the necessary testing of the product under a code name. Use of the trade mark outside the time limit is justified only if there are valid reasons for doing so. However, such reasons are rare because they must be independent of the trade mark owner’s intention and control.

 

Note: Please also read the following BestCase on genuine use of a trade mark in which the same plaintiff brought an action for revocation against another trade mark for a product also containing frankincense extract:

Badly thought-out list of goods? – Gufic