The pharmaceutical market presents unique challenges to pharmaceutical companies seeking to launch new products. One such challenge involves the lengthy process of executing clinical trials as a prerequisite for obtaining market authorization. In this context, the fact that trademark laws in most jurisdictions provide only a five-year grace period for non-use after registration can make a significant impact on retaining trademark rights, as early applicants for pharmaceutical trademarks risk revocation of their marks based on non-use if the marketing approval process outlasts this period. Therefore, the crucial considerations for trademark owners in the pharmaceutical sector are whether to seek registration of their trademarks before the grant of marketing authorization and whether clinical trials can be used to justify non-use of the trademarks after the five-year grace period.
The Court of Justice of the European Union (“CJEU”) recently addressed these significant issues in its decision on July 3, 2019 and ruled that use of a European Union trademark (“EUTM”) in connection with pharmaceuticals can only constitute “genuine use” pursuant to Article 18(1) of the Regulation 2017/1001 (“EUTMR”) if the relevant drug has already been authorized for marketing to the public. Notwithstanding this requirement, clinical trials may constitute a “legitimate reason” for non-use of a trademark pursuant to Article 18(1) EUTMR, provided that the circumstances leading to the non-use exceeding the five-year term were beyond the trademark owner’s control.
On September 23, 2003, Viridis Pharmaceutical Ltd (“Viridis”) filed an application for the word mark BOSWELAN with the European Union Intellectual Property Office (“EUIPO”), claiming protection for the goods described as “pharmaceutical and sanitary preparations.” The trademark was granted registration in 2007. On November 18, 2013 Hecht-Pharma GmbH successfully sought revocation of Viridis’ registration before the Cancellation Division of the EUIPO claiming that the mark was not put to genuine use within the five-year period after registration. Both, the EUIPO’s Board of Appeal and the General Court (“EGC”; formerly known as the Court of First Instance) upheld this decision.
Viridis appealed to the CJEU, arguing that the BOSWELAN mark had already been put to use in publicly advertised clinical trials. Viridis put forth the view that since clinical trials are mandatory in order to obtain marketing authorization for pharmaceuticals, such use must be sufficient for “genuine use” of a trademark or at least constitute a “legitimate reason” for non-use.
The CJEU confirmed the EGC’s decision and dismissed Viridis’ appeal.
Use of a mark within clinical trials as “genuine use” and “preparatory measurements”
In its decision, the court ruled that Viridis’ clinical trials cannot be considered genuine use of the mark or preparatory measures that would be a substitute for actual genuine use. According to the CJEU’s established case law, genuine use of a mark requires that the public perceive such use as an indication of the commercial origin of the goods or services for which the mark was registered. This will be the case if the mark is used (i) outwardly on the market for the relevant goods or services and (ii) in order to obtain a market share, in contrast to purely internal processes of the trademark owner. Such requirements, in each instance, necessitate the distribution of goods or services to the relevant public.
Clinical trials, however, constitute merely internal processes, because the trials are not directly for the purpose of distribution of the branded drug and are thus not directed to the public in order to obtain or secure a market position. Instead the CJEU notes that the main purpose of clinical trials is to obtain market authorization, and therefore take place outside of the relevant market, aimed only at a narrow circle of participants.
The court takes the position that conducting clinical trials and the advertising related thereto cannot constitute genuine use of a trademark or preparatory measures of use because market authorization is a necessary prerequisite for selling or advertising a drug in the EU. Therefore, any use of a trademark on drugs or in advertising prior to authorization cannot be considered use in connection with entering the market or securing a market position.
Clinical trials as legitimate reason for non-use
The CJEU further found that conducting clinical trials in the present case could not serve as a “legitimate reason” for non-use of Viridis’ mark, which would have a right-preserving effect in accordance with Article 18(1) EUTMR.
The CJEU specifically confirms that clinical studies may in principle be a legitimate reason for non-use, but only if such trials (i) have a direct connection with the trademark, (ii) render use of the trademark impossible or impracticable, and (iii) are not under the control of the owner.
Here, the court found that Viridis did not meet the third requirement, since several incidents hindering the completion of the clinical trials could be attributed to Viridis and were therefore under Viridis’ control. In this regard, the CJEU points out that Viridis, without being subject to any legal requirement, decided to register the mark at a very early stage, despite the considerable uncertainty as to both the timing and possibility of marketing of the designated drug. Furthermore, Viridis filed the clinical trial application three years after it filed the EUTM application and several events during the clinical trials indicated that Viridis lacked the financial resources necessary to swiftly execute the trials.
- According to the CJEU, use of a pharmaceutical trademark cannot constitute “genuine use” of the trademark within the meaning of Article 18(1) EUTMR before marketing authorization for the designated drug has been obtained, since the trademark cannot be used in relation to delivery of the drug without such authorization.
- Clinical trials may in principle be a “legitimate reason” for non-use of a trademark pursuant to Article 18(1) EUTMR, preserving the rights granted by the trademark. However, as the course and duration of a clinical trial is largely dependent on factors that are within the trademark owner’s responsibility, circumstances such as a very early trademark application combined with a delayed filing of the application for the clinical trial, as well as a lack of efforts to bring the clinical trial to a swift and successful conclusion, will hinder a company’s ability to cite such clinical trials as a “legitimate reason” for non-use.
- When obtaining and maintaining trademark registrations for pharmaceuticals in the EU, particular attention should be paid to the five-year grace period when formulating a conclusive time and budget strategy for obtaining marketing authorization for the relevant drug. As “genuine use” of a trademark in this timeframe might not be possible due to the lack of marketing authorization, pharmaceutical companies should be sure to coordinate scheduling of trademark filings and the application for marketing authorization, and constantly pursue the mandatory clinical trials, in order to be able to claim it a “legitimate reason” for non-use of the mark in a potential revocation proceeding.