Parallel Imports And Repackaging Of Pharmaceuticals
The concept of “Parallel Import” and the exhaustion principle known as the “First-Sale Doctrine”, which is directly related to this concept, are frequently come to the fore in terms of industrial property rights in current commercial practices. The most prominent problem in parallel import arise in the area of pharmaceuticals, caused by public health, European trade policies and creative repackaging solutions. Especially in the importation of pharmaceuticals, changes in packaging due to the legal regulations of the importing countries may lead to different interpretations in terms of the exhaustion of the trademark right and thus, parallel importation obstacles may be encountered.
II. PARALEL IMPORTATION AND EXHAUSTION PRINCIPLE
“Parallel imports” are defined as the import of the same goods that have been put on the market and are being sold in a country or within the borders of an economic union by third parties by obtaining them from a country abroad where they are sold at a cheaper price. The principle of exhaustion, which is a prerequisite for parallel importation, means the protection granted to the right holder as a result of the inability to prohibit the sale and purchase of these goods in a certain geographical area and to prevent their circulation after the goods subject to the trademark right are put on the market once by the right holder. In this context, three different principles have been accepted as “national exhaustion”, “regional exhaustion” and “international exhaustion”.
In this context, in line with the precedent decisions of the Court of Justice of the European Union (“CJEU“); the “regional exhaustion principle” has been accepted for the European Union (“EU“) countries. International exhaustion, which is applied by Turkey under article 152 of the Industrial Property Law (“IPL“), is the recognition of the exhaustion of the right of first sale in every country of the world after the placing on the market of any goods bearing the trademark in any country of the world by the owner or with his consent.
Customs Union with the EU makes the concept of parallel imports more important in EU-Turkey trade. With the decision of Competition Authority on pharmaceutical trade between the EU and Turkey, explanations are provided in terms of parallel imports in line with the existing exhaustion principles between the two actors. In this context, the aforementioned decision states that parallel importation of a product offered to the market in EU countries is possible for Turkey, which has adopted the principle of international exhaustion, while this situation differs for EU countries that have adopted the principle of regional exhaustion, and it is underlined that parallel importation of a product offered to the market in Turkey, which is outside the European Economic Area, to EU countries is not possible, other than in exceptional cases.
III. RE-PACKAGING OF THE PHARMACEUTICALS
a. Repackaging of Pharmaceuticals in EU
Repackaging refers to the repackaging of goods in such a way that they are offered to consumers in another country’s market with a significant change in packaging. Especially in the pharmaceutical sector, when pharmaceuticals are placed on the market in different countries, it may become necessary, and sometimes mandatory, to change the packaging of pharmaceuticals due to the limits imposed by the domestic legislation of each country such as prescribing, dosage, etc. The divergence of country practices within the scope of the exhaustion principle and the problem of the inability to prevent parallel imports of a good whose trademark rights are deemed exhausted within the EU has led to many discussions in the field of repackaging.
In this context, in the Bristol-Myers v. Squibb decision on repackaging, the so-called BMS conditions were set out in order to distinguish between the exercise of trademark rights and restraint of trade. It is understood from this decision that the repackaging must have resulted from a special arrangement which prevented the product from being marketed in the country where it was to be placed on the market.
However, in a number of decisions the CJEU has conditioned the prevention of parallel imports by repackaging on “objective necessity” In addition, the CJEU has held that the requirement of notification to the trademark owner must be met at least 15 working days in advance and a sample of the repackaged product must be sent to the trademark right holder upon request.
b. Repackaging of Pharmaceuticals in Turkey
Although there is no recent Court of Cassation precedent in the field of pharmaceuticals within the scope of the principle of exhaustion amended by the IPL, the Tempur decision, which was rendered after the amendment of the law, established a precedent case regarding the Court of Cassation’s view on parallel imports.
The Tempur decision essentially discusses the prevention of the sale of trademarked products cheaper than the sole seller by importing them to Turkey within the scope of parallel imports in accordance with competition law and unfair competition and Court of Cassation has ruled that it is possible to benefit from the price advantage that comes with parallel import originally imported from another country and that it will not cause an obstacle. Within the scope of this decision, any product whose trademark right has been exhausted by being offered for sale in another country where the principle of international exhaustion has been accepted is not subject to any obstacle to be offered for sale in Turkey through parallel importation.
However, in the pharmaceutical sector, where parallel imports are common, special arrangements are envisaged regarding the exhaustion principle and repackaging free from parallel imports. Parallel imports of pharmaceuticals in Turkey are regulated differently from other types of goods in the Law on Pharmaceuticals and Medical Preparations. In this context, contrary to the general industrial property practice in the pharmaceutical sector, specific restrictions have been imposed on parallel imports.
However, with regard to repackaging of pharmaceuticals, the packaging criteria for pharmaceuticals marketed in Turkey are set out under the provisions of the Regulation on Packaging Information, Instructions for Use and Follow-up of Medicinal Products for Human Use (“Regulation”) within the scope of the pharmaceutical sector. Therefore, although there is no provision preventing the import of pharmaceuticals marketed abroad into Turkey, the packages/packaging of imported pharmaceuticals will be required to meet the criteria set out in the Regulation.
In Turkey, it is necessary to comply with the provisions of the Regulation regarding the repackaging of pharmaceuticals, and since the packaging of pharmaceuticals may be changed in accordance with this Regulation, this situation can be interpreted as the creation of a different packaging trademark for the pharmaceuticals within the scope of IPL.
For parallel import applications, the trademark rights of a good must initially be exhausted, and different practices of countries within the scope of the exhaustion principle may lead to parallel import conflicts. Within the scope of the Customs Union between the EU and Turkey, parallel import practices are in place. In the pharmaceutical sector, which is subject to special regulations and restrictions, parallel importation of a product whose trademark rights have been exhausted can be prevented by the legislation regulations specific to the health sector in terms of both the EU and Turkey. In addition, this article evaluates the trademark right and parallel importation issues within the scope of repackaging regulations subject to health legislation and conveys the implementation principles adopted in the light of the case law of the Court of Cassation and the CJEU.
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