Opinion of mr advocate general Capotorti

Mr President,

Members of the Court,

1. It is of the very essence of the industrial and commercial property rights recognized by the legal systems of the various Member States that their exclusive and territorial nature should impede the free movement of goods in the Community and the proper functioning of the rules of competition. It was there fore necessary to provide in Article 36 of the EEC Treaty a provision protecting such rights; but we know how delicate and difficult the balance is that Article 36 seeks to establish when it states that prohibitions or restrictions on imports, exports or goods in transit justified on the grounds of the protection of industrial and commercial property shall not be precluded and then immediately adds that such prohibitions or restrictions shall not, however, constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States. Accordingly, on several occasions in the exercise of its jurisdiction to interpret the Treaty the Court has had to determine the exact point at which the fundamental Community principles of the free movement of goods and freedom of competition are actually to be reconciled with the recognition accorded to the rights in question by the various national laws.

2. I have already summarized the facts which are at the origin of the present case in my opinion of 5 May 1977 in Case 107/76 between the same parties ([1977] ECR 975). It will be recalled that by order dated 14 October 1976 the Oberlandesgericht Karlsruhe had referred to this Court the two questions of interpretation which are today raised by the Landgericht Freiburg in the same circumstances; those questions at the time were subject to a procedural question concerning the third paragraph of Article 177 of the EEC Treaty and the Court restricted itself in its judgment of 24 May 1977 to answering that preliminary question. For the sake of clarity I cannot avoid today referring briefly to certain facts which I mentioned at the time, supplementing them with other matters which appear to me appropriate. Since 1963 the undertakings of the multi-national pharmaceutical group Roche-SAPAC have been manufacturing and selling in all countries a tranquillizer called Valium. This is a psycho-therapeutic medicinal product coming within the class of products called benzo-diazepine. In Germany this medicinal product is manufactured by the German company Hoffmann-La Roche under a licence given it by Hoffmann-La Roche, Basel, and it is sold under the name Valium-Roche. Both those names are internationally protected by means of registered trademarks, the proprietor of which is the parent company in Basel. The German company puts Valium on the market in the Federal Republic of Germany exclusively in packages of 20 and 50 tablets; further, it sells to hospitals as one single package five of such packages of 50 tablets in one wrapping.

3. The problems raised in these questions are, as I have already said, the same as those put to the Court by the Oberlandesgericht Karlsruhe in Case 107/76. The Landgericht Freiburg seems to share the opinion in respect of them already expressed by the Oberlandesgericht Karlsruhe in its order of reference and it recalls the grounds contained in that order. It accordingly seems to me necessary to take account of that statement, especially as in my view it seems correctly to reflect the rules and legal concepts of German law on the subject as applicable to this particular case.

4. Let us now consider the case-law of the Court of Justice concerning industrial and commercial property rights. Of the judgments treating the question of the compatibility of such rights with the Community system having regard to Article 36 of the EEC Treaty, I shall recall in particular the judgments of 8 June 1971 in Case 78/70 Deutsche Grammophon ([1971] ECR 487); of 3 July 1974 in Case 192/73 Hag ([1974] ECR 731); of 31 October 1974 in Cases 15/74 and 16/74 Centrafarm v Sterling Drug and Centrafarm v Winthrop ([1974] ECR 1147 and 1183), and of 22 June 1976 in Case 119/75 Terrapin ([1976] ECR 1039).

5. I must now consider the present case in the light of these decisions, whose main points I have recalled. This case does not turn purely and simply on a matter of parallel imports: the plaintiffs have stated that they would have no objection whatever to the importation by any person of Valium in the form in which it is produced in Great Britain by their subsidiary and that they challenge only the repackaging of the product. Nor does it present a problem of identical marks having the same origin: the only mark in question is Valium Roche and the plaintiffs complain that the defendant has applied it to new containers without their consent, and not that it has used a competing mark. With regard to passing off, this point could be raised only if the application to the new packaging of the name Centrafarm in addition to the name Valium Roche were considered as such: this is an aspect of the problem to which I shall turn later. However, the problem does not concern similar trademarks covering like products on the same basis: in fact the mark Valium Roche denotes the product and its manufacturer whilst the name Centra-farm has been added together with the words marketed by Centrafarm.

6. Before broaching the substance of the problem it is necessary to dispose of two arguments which have been sustained by the plaintiff undertakings and by certain of the governments which submitted observations in this case but which in my view cannot affect the answers to be given to the first question of the Landgericht Freiburg.

7. For reasons of completeness, however, I cannot omit a rapid analysis of the tendencies displayed by the domestic legal systems of the Member States in so far as they concern the problem arising when a distributor carries out an unauthorized alteration of the packaging of products bearing a manufacturer's mark.

8. We must now broach the main problem in the present case, that is, to consider whether the right of the proprietor of a mark to prohibit the repackaging of the product, even though bearing the same mark, may be held to be justified by the requirement of avoiding confusion as to the origin of the product.

9. In the course of these proceedings the parties have frequently referred to the preparatory work on the regulation which is to establish the Community trade-mark. I do not consider that the view which I have put forward is invalidated by the fact that in the course of those preparations provision has recently been made, in derogation from the principle of the exhaustion of the proprietor's right, for a clause whereby that principle shall apply only to products which retain the form in which they were originally put on the market. In this connexion, it should be decided from the outset whether the form of the product always includes the packaging or whether it may refer only to the product contained in such packaging. Apart from the foregoing it is perfectly conceivable that the proprietor of a mark covered by a single system for the entire Community should enjoy rights which are not restricted to the protection of the essential function of distinguishing the product defined above but which extend also to certain ancillary functions of the mark itself. This would in fact be an exclusive right subject to the Community rules and thus uniformly applicable throughout the entire Community; in that context the protection of further rights does not entail those risks of abuse, with adverse effects on the principle of the free movement of goods, which would on the other hand follow from the indiscriminate protection of such rights for the benefit of proprietors whose marks are recognized on the basis of the national territory.

10. Finally, brief consideration should be given to an argument of another nature put forward by the plaintiff undertakings: namely that, since the original proprietor of the mark is responsible for the quality of the product, he must for that purpose be able to check both the manufacture and packaging of the product and he can no longer be answerable for the quality of a product which has been repacked by third parties. It seems to me in fact that this argument was effectively rejected in the judgment of the Court in the Centrafarm v Winthrop case, from which I have already quoted the passage which emphasizes the distinction between the specific subject-matter of industrial and commercial property and the objective of the protection of consumers and any responsibilities which may be entailed thereby. I should like to add that it is always possible to establish the liability of a person who, in repacking a product, has altered its quality; where has it ever been laid down that a manufacturer is also liable for events taking place after production and over which he has no control? However, in order to assist in establishing any fault on the part of an importer who has altered a product in the course of repackaging it, it appears to me possible to concede, along the lines of the Danish case-law to which I have earlier referred, the right of the proprietor of the mark to require that there should appear on the new packaging a statement to the effect that the repackaging was carried out by the importer.

11. Let us now turn to a consideration of the second question, by which the Court of Justice is asked whether an undertaking which enjoys a dominant position on the market for specific pharmaceutical product in a Member State infringes Article 86 of the Treaty by prohibiting on the basis of its trademark the importation of the above-mentioned product on the ground that it has been repacked without authorization in a new container to which the importer has re-affixed the original mark.

12. In conclusion, I suggest that the Court of Justice should reply as follows to the preliminary questions submitted by the Landgericht Freiburg im Breisgau by its order of 20 June 1977:

1 Translated from the Italian.