R v Secretary of State for Social Services, ex parte Wellcome Foundation Ltd

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeTHE MASTER OF THE ROLLS,LORD JUSTICE STEPHEN BROWN,LORD JUSTICE CROOM-JOHNSON
Judgment Date03 June 1987
Judgment citation (vLex)[1987] EWCA Civ J0603-2
Docket Number87/0537
Date03 June 1987
The Queen
and
The Secretary of State for Social Services
Ex Parte The Wellcome Foundation Limited

[1987] EWCA Civ J0603-2

Before:

The Master of the Rolls

(Sir John Donaldson)

Lord Justice Stephen Brown

Lord Justice Croom-Johnson

87/0537

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

COMMERCIAL COURT

Royal Courts of Justice

MR A. B. COLLINS, Q.C., and MR N. P. B. PAINES, instructed by The Treasury Solicitor, appeared for the Appellant (Respondent).

MR A. P. LESTER, Q.C., and MR D. P. PANNICK, instructed by Messrs Theodore Goddard, appeared for the Respondent (Applicant).

THE MASTER OF THE ROLLS
1

This is an appeal from a decision of Mr Justice Webster who, in judicial review proceedings, granted the applicants a declaration that infringements of trade mark rights are relevant considerations for the Secretary of State in the exercise of his power to issue Product Licences (Parallel Imports) under the Medicines Act 1968.

2

I cannot improve upon the statement of the nature and background of this dispute which is contained in the judgment of Mr Justice Webster and gratefully adopt it:

3

"This is an application by the Wellcome Foundation Limited for judicial review of a decision of the Secretary of State for Social Services made on or about 16th September 1986.

4

"Wellcome manufactures a wide range of pharmaceutical products, including an antibacterial product the active ingredient of which is co-trimoxazole, which is manufactured and marketed in the United Kingdom under the registered trade marks SEPTRIN and SEPTRIN FORTE. The turnover of those products in the last three years has been more than £9.5 million per annum.

5

"The product is also manufactured and marketed by Wellcome or its subsidiary companies in a number of other Member States of the European Community. In Spain, in Portugal and the Republic of Ireland it is marketed under the trade mark SEPTRIN. In Greece the product is manufactured under licence and marketed under the trade mark SEPTRIN. In all other Member States of the European Community it is sold under the trade mark EUSAPRIM.

6

"According to the evidence in the affidavit of Mr. Harry Mitchell (who is Wellcome's company secretary), none of whose evidence has been challenged, in developing co-trimoxazole it was Wellcome's intention to market the product worldwide. At all material times it has been Wellcome's general aim to have, if possible, a global trade mark, that is to say the same product sold under the same name worldwide. In or about 1967 Wellcome began investigating whether the trade mark SEPTRIN could be used in countries outside the UK. Wellcome found, following trade mark searches in overseas countries, that the SEPTRIN trade mark was confusingly similar to a number of registered marks existing at that time in other countries, particularly in some Member States of the European Community. It was therefore decided that in order to achieve uniformity in the marketing of this product in the European Community then comprising the original six Member States it should be sold under the trade mark EUSAPRIM in those Member States. By the time the product was launched in Europe it had already been extensively marketed in the UK under the trade mark SEPTRIN and had become well established under that name. It was therefore not practical to attempt to change the product's name in the UK to EUSAPRIM.

7

"It is unlawful under the provisions of the Medicines Act 1968 to import medicinal products into the UK except in accordance with an appropriate product licence issued by the Department of Health and Social Security. Licenses are also required under the Act for the manufacture of and wholesale dealing in such products in the UK.

8

"In the case where an importer wishes to import from a Member State of the European Community a medicinal product which corresponds to one for which a licence has already been granted in the UK, the DHSS has issued a modified form of application for a parallel import licence.

9

"In granting a licence, the licensing authority must be given particulars relating to the safety, quality and efficacy of the product to be sold. Such evidence was and is still not always available to a parallel importer who wishes to market a product in the UK in competition with the product licence holders' own marketing arrangements because the parallel importer is not normally privy to information given in confidence by an existing licence holder to the licensing authority. The modified form of application for a parallel import licence was therefore introduced in May 1984 to take account of that fact and of recent decisions of the European Commission and of the European Court of Justice.

10

"The procedure referred to as product licence (parallel imports) ('PL(PI)') procedure provides an abridged procedure for the licensing of parallel imported medicines. On an application under that procedure the proposed product must be imported from a Member State of the European Community; a proprietary medicinal product; covered by a valid marketing authorisation granted in the Member State from which it is imported; covered by a current valid authorisation to market of the UK licensing authorities; and made by the same manufacturer or by a member of the same group of companies (or an appointed licensee) which manufactures the product corresponding to that covered by the UK product licence.

11

"Applicants are also required to submit specimens of the product or mock-ups of the product in the packaging in which it will be marketed in the UK.

12

"The Secretary of State has issued a number of PL(PI)s to certain importers for the importation from other European countries, namely, France, Italy, Belgium and the Netherlands, into the UK of a product identified on the relevant licences as SEPTRIN or SEPTRIN/EUSAPRIM. Those products imported pursuant to those licences have been put on sale in the market under the trade mark SEPTRIN without the consent of Wellcome.

13

"This, say Wellcome, is an infringement of their registered trade mark in the UK, and they have taken action of one kind or another against those who, according to evidence received by them, have been infringing their mark in that way. They have taken proceedings against a company called Chemgrange limited (trading as Dobber Pharmacy), which apparently dispensed EUSAPRIM FORTE tablets in a box labelled SEPTRIN FORTE in response to a prescription for SEPTRIN FORTE. That company gave an undertaking to Wellcome not to infringe their trade mark, and they made a substantial contribution to Wellcome's costs. Accordingly that action was withdrawn or discontinued.

14

"They also took proceedings against a company named Whitworth Pharmaceuticals (Midlands) Limited and Mr. John Whitworth trading as Whitworth Pharmaceuticals. They were selling to pharmacists quantities of EUSAPRIM tablets labelled as EUSAPRIM tablets but to which they affixed their own label describing the contents as SEPTRIN tablets. That action was settled in October 1986. Again the defendants gave undertakings not to infringe Wellcome's SEPTRIN trade mark, and again an agreement was made to make a substantial payment towards Wellcome's costs.

15

"Then a company called Townendale Pharmaceuticals produced a product list in which they referred to EUSAPRIM/ SEPTRIN when the product they were supplying was in fact EUSAPRIM. In this case it was not necessary for Wellcome to institute proceedings because that company gave them an undertaking which satisfied Wellcome.

16

"As at January 1986, the latest dates for which figures are available, according to Mr. Mitchell's evidence, it has been calculated that the annual value of EUSAPRIM imported to the United Kingdom was over £900,000. According to his evidence, in about 10% of cases where a doctor had prescribed SEPTRIN, EUSAPRIM was being dispensed.

17

"According to his evidence, the matters to which I have referred have serious and damaging consequences for Wellcome. He says that the repeated infringements of Wellcome's trade mark registration make it necessary for Wellcome to resort to legal action whenever it can identify the wrongdoer. He says that because the price of EUSAPRIM is lower in some of the Community countries than the price of SEPTRIN in the UK there is a strong financial incentive for parallel importers to buy EUSAPRIM in those countries and sell it to pharmacists in the UK. He also says (and in relation to this part of his evidence Mr. Collins tells me that according to his instructions there is some doubt about whether it is factually accurate) that EUSAPRIM is sold as SEPTRIN by the importers to pharmacists in the UK who in breach of their terms of service with the DHSS dispense it against prescriptions for SEPTRIN issued by registered medical practitioners. He says that pharmacists following this practice make a profit on each prescription so dispensed in excess of the profit which they would have made if they had supplied UK produced SEPTRIN. This is because, he says, they are reimbursed by the National Health Service at a rate applicable to UK produced SEPTRIN rather than the lower price at which EUSAPRIM can be purchased. This profit, he said, is made at the expense of Wellcome, the National Health Service and ultimately the British taxpayer. As I have said, this part of Mr. Mitchell's evidence, though not formally challenged, is not admitted.

18

"He says that Wellcome believes that infringements of its trade mark registration of SEPTRIN and SEPTRIN FORTE are encouraged or facilitated by the manner in which the DHSS licenses the importation of its products from the relevant countries. He refers to the fact...

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