Genuine use or non-use for proper reasons in the pharmaceutical field: a squaring of the circle? A little coughing is due…
A trademark gives its owner a monopoly on use, enabling them to distinguish their goods and services in the market, to affiliate their clientele and to embody the economic and financial values of the enterprise.
1/ the Principle: the protection of a trademark is only justified when it is used. French legislation (and even that of the EU in general) grants the owner a “grace” period of 5 years from its date of registration to establish that use. If the trademark has not been used for an uninterrupted period of 5 years, the owner risks losing their rights.
In generals, the trademark must be used in the form in which it was registered (or as a variant which does not alter the distinctive character of the sign), for goods and/or services specified in the registration, and that use must be “genuine”. Thus, token use aimed solely at maintaining the rights conferred by the trademark does not suffice. Actual use is necessary, in accordance with the essential function of the trademark, which is to guarantee to consumers the identity of origin of the goods or services designated, in order to create or maintain an opening for to those goods or services. Furthermore, the trademark must be used publicly and outwardly in the course of commercial activity conducted for the purpose of obtaining an economic advantage. Private or purely internal use within a company does not constitute genuine use.
Assessment of the genuine use of the trademark is carried out in concreto taking into account in particular uses considered as justified in the economic sector concerned, the nature of the goods or services and for example the characteristics of the market.
2/ The exception: In the absence of real and genuine use, the only way for the owner to avoid the invalidation of its trademark is to show the existence of “proper reasons” for non-use thereof.
Case law has set three cumulative conditions to justify the non-use of a trademark. The impediment must be independent of the will of the owner, must have a sufficiently direct link to the trademark and must render use thereof impossible or unreasonable.
The proper reasons exception is very strictly interpreted. In addition to cases such as import restrictions or prohibitions by public authorities mentioned in the TRIPS Agreement, the courts have allowed a rather small number of exceptions, for example pending litigation (but only in very particular cases), or for instance while awaiting the response from the Medicines Agency to an application for a marketing authorization (MA). However, financial difficulties or for instance health problems are not considered as proper reasons.
3/ Specificity: The pharmaceutical sector is particularly sensitive to the issue of use. This is because a medicinal product may not be marketed until the MA has been issued by the competent authority. Moreover, the regulations prohibit all publicity for medicinal products not yet under MA, and three prohibit any act of external communication.
In order to obtain an MA, a pharmaceutical company must file an application including in particular the results of clinical trials (and notably the first human trials). The latter are generally conducted in three phases and may sometimes take several years.
The Court of Justice of the European Union (CJEU) has been called upon to rule on the interpretation of the concepts of “genuine use” and of “proper reason for non-use” for a pharmaceutical trademark
The question to settle had two parts:
- does the use of a pharmaceutical trademark in the context of a clinical trial intended for obtaining an MA constitute genuine use?
- can conducting clinical trials constitute a proper reason for non-use of a pharmaceutical trademark?
This dispute involved the Community trademark “Boswelan” of the company Viridis Pharmaceutical Ltd, filed on 30 September 2003 in class 5 for “pharmaceutical products and health-care products”.
The trademark was registered on 24 April 2007.
In October 2010, Viridis filed an application for a clinical trial relative to a medicinal product intended to be designated under the trademark in question for the treatment of multiple sclerosis.
On 18 November 2013 the company Hecht-Pharma filed an application for revocation of the trademark “Boswelan” and Viridis had its rights revoked by the EUIPO Cancellation Division for all the goods for which it had been registered.
The decision revoking the trademark was the subject of successive appeals filed by Viridis before the Board of Appeal of the EUIPO, before the General Court and finally before the CJEU.
The Arguments put forward by Viridis
In essence, Viridis relied on two series of arguments:
- in the first place, that the use of the trademark “Boswelan” took place in the context of a clinical trial, conducted in support of the MA application. Viridis asserted that this use was indeed public and outward, on account of the delivery of 400 000 capsules under the name “Boswelan” to a University clinic, their invoicing by a third party acting as intermediary, and the recruitment to participate in the trials of volunteers whose public data referred to the “Boswelan” trademark. As the lack of an MA prohibited any other marketing or communication at this stage, these instances of use should be considered sufficient for a finding of “genuine use”.
- in the second place, an application for a clinical trial made to the competent authorities had been filed by Viridis in October 2010 and approved in March 2011. As of the filing of such an application, a proper reason for non-use thus existed, given that the clinical trial had been conducted diligently and seriously after its authorization. In this connection, Viridis maintained that volunteers had been recruited to participate in that trial, which was to begin in the autumn of 2011. However, given the specificity of the selection criteria for the trial candidates, their recruitment apparently took longer than initially planned and finishing the trial by the middle of the year 2013 could not be envisioned. In addition, large sums of money had been invested in the project. These factors showed that the clinical trial had been conducted seriously and that the fact that placing on the market had not yet been achieved could not be imputed to a lack of diligence on the part of Viridis.
The Court’s response
All these arguments were dismissed by the European instances, this position being upheld by the CJEU.
At first instance, it had been held that genuine use of the “Boswelan” trademark had not been shown, for the following reasons.
- the lack of any commercialization of the goods on the market;
- no imminent commercialization had been shown, as none of the evidence adduced by Viridis showed that the clinical trial was on the point of completion;
- the use of the “Boswelan” trademark in the context of a clinical trial could not be regarded as placing on the market, but should be considered as being internal in nature, since it took place without any market competition, within a restricted circle of actors, and without the aim of obtaining or maintaining market share.
At second instance, it was held that the acts and events asserted by Viridis were within its sphere of influence and arose from the field of its own responsibility in that:
- Viridis’s clinical trial application was filed more than three years after registration of the “Boswelan” trademark.
- the difficulties linked to recruiting candidates for the trial were a result of insufficient investment by Viridis with regard to the specificities of the pharmaceutical sector. As a professional in the sector concerned, Viridis could not be unaware of these difficulties which are inherent to the development of a new pharmaceutical product.
- the filing as a trademark of the name of a medicinal product which is still in development phase and subject to clinical trials is not a legal obligation, but a choice of the owner. Viridis had made the choice of protecting a trademark very early, despite a high level of uncertainty be the as to the date and as to the possibility of marketing the medicinal product which merely in the development phase.
Thus, without excluding the possibility that a clinical trial could constitute a proper reason for non-use, the CJEU held that a time elapsed between the registration date of the trademark and that of launching the clinical trial, the duration of the latter and the financial resources mobilized, fell within the sphere of the owner’s own responsibility and could not be characterized as impediments independent of its will.
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As the development of a pharmaceutical product and its placing on the market are strictly regulated and take several years, the grace period of 5 years may prove insufficient for launching its commercialization.
Although the courts generally accept that waiting for a MA may constitute a proper reason for non-use, since once the MA application has been filed, the owner no longer has control over its processing which entirely depends on the competent authority, this is not necessarily the case for a clinical trial, the progress of which in principle depends on the efforts and investments made by the owner.
It is thus important to consider the proper timing to file the application for the associated trademark knowing that
- there is little reassurance in not a minima having one’s trademark registered before being launched on the market and in the fact that registration takes several months (or even years in case of opposition)
- the procedures for obtaining a MA are long and painstaking
- there is no guarantee of how long it will take to obtain the MA
- a MA has a limited term which expires after three years if not used.
These are numerous parameters to consider and place in order in a program which is both long and tight and which varies from country to country.
Our group is here to assist you in searching for and choosing your trademarks and in developing a strategy with you for filing trademark applications based on appropriate timing.
Tetyana Delory is a French IP Attorney and European Trademark and Industrial Designs Attorney. She has nine years of experience in IP firms and has practiced in Santarelli Group since 2019. She advises and assists clients of varied profile – ranging from international groups to SMEs – in the management of their portfolios and in the defense of their rights both in France and abroad.