Select Committee on Trade and Industry Minutes of Evidence


Examination of witnesses (Questions 449 - 459)

TUESDAY 11 MAY 1999

MR B MARCH, MR J SLATER and MR K HAVELOCK

Chairman

  449. Good morning. Mr March, would you like to introduce your colleagues?
  (Mr March) I should be pleased to do that. On my left is Mr John Slater, he is the immediate past president of the Institute of Trade Mark Attorneys and is also Chairman of our Laws and Practices Committee. On my right is Mr Keith Havelock, who is a past president of the Institute and is also our permanent representative on SACIP, the Standing Advisory Committee on Industrial Property.

  450. I take it we have to refer to you as the Institute and not ITMA. Some members of the Committee seem old enough to remember a wartime comedy programme. No-one called Hanley is appearing to give evidence this morning. We realise that as lawyers you, like previous witnesses, are adept fence-sitters. Is it fair to say that if goods are identical, jeans, sunglasses, etcetera, ITMA believe that international exhaustion should apply? What are your views on the US situation where grey goods which are physically and materially different are restricted unless they are labelled as being without the brand owners' consent? How do you view this situation? Would it be right to say that you believe international exhaustion should apply?
  (Mr March) We view the American situation as going a little too far. According to our stance, international exhaustion should apply when the goods are genuine, that is they come from the recognised source, and that their quality is at least equal to the quality of the goods on the domestic market. The situation you have just described in America seems to go a little bit beyond that, so it is not one which would have our support.

  451. On this question of "materially the same", how do you define that? Is it packaging? Is it sizing or is it contents? For example, we have had evidence from the pharmaceutical industry who have said that one of the unacceptable aspects of parallel trading has been the importation into the United Kingdom of drugs whose composition is the same as it would be in the UK but they are provided with instructions which to say the least are not very helpful. How would you therefore define "materially the same" or would you say that it can vary from one product to another?
  (Mr March) The first point I would make is that it is dangerous to generalise. On the specific subject you are raising, pharmaceuticals, one has to be particularly careful. Our view would be that there "materially the same" would have to be in all respects, not just the pharmaceutical product itself but obviously instructions as to usage and dosage. If they are not there in English, that raises a quite separate question of damage to health. Others I am sure have made the point that that is a very serious consideration and that would fit in with our stance in that if the product coming in did not have the English instructions it would not be materially the same, so we would object to that.

  452. What about the case of brand owners who alter products for different markets purely to prevent parallel imports and not to reflect customer preferences. There is beginning to be evidence in the electronics field for example that some of the new recording—not equipment—disks on which the recording can take place, can be adjusted in certain ways so as to prevent parallel importing of cheaper ones from other parts of the world. Do you see this as being an attempt by the manufacturers to fly in the face of custom or consumer preference? Are you concerned about this?
  (Mr March) First of all, we as an institute do not have any evidence of companies actually making modifications to products simply and solely for the reason of preventing parallel imports. We would need to be convinced that that was a genuine problem and concern.

  453. This is the DVD hi-fi equipment where the disks are quite important in terms of price and where in a similar related area, mini disks, which were at one stage quite high in price, are now available at a far lower price because of parallel importing which is being done by some of the hi-fi suppliers.
  (Mr March) We are talking on the hoof here but if it were shown beyond reasonable doubt that the modifications were made simply and solely to prevent the parallel importation of that product, then we would stand behind the consumer and say that the importation should be allowed. However, it would be a tremendously difficult prospect for someone to prove in court that the modification was made simply and solely for that reason.

Mr Berry

  454. What problems, if any, do your members face in operating within the current regime? Where are the areas of difficulty? Or perhaps there are none.
  (Mr March) That is a very difficult question to answer. Firstly you have to bear in mind that our members are trademark attorneys. These are the people doing the day to day registration work and advising companies on registrability and what they can and cannot do. If you had asked me what was causing us the most difficulty, it is simply the degree of change in law that has been happening in recent years, the introduction of the Community trademark for example, the new British Trademarks Act which gave trademark proprietors stronger and wider rights. These are the issues which are of most concern to our members but our members are trademark practitioners not large industry as it were.
  (Mr Slater) One difficulty—it is not a problem because our job is to advise—is a matter of consistency. Consistency in the way in which the UK Patent Office or the Trademark Registry operates, which is what we are concerned with, and the way in which the office in Alicante operates. The standards of examination are clearly quite different and yet, at the end of the day, the right is the same, the trademark right can be enforced, a Community trademark right can be enforced in the UK courts as can a registered trademark granted in the UK. The way in which the UK courts are going to deal with this to say the least is going to be quite interesting.
  (Mr Havelock) Our members have had a lot of difficulty recently in the field of look-alikes. Again we have to look at that subject from the point of view that we are sometimes advising the supermarkets and sometimes advising the proprietors. That is one area. Earlier the point about bottle protection was raised. That is another area where there have been a lot of problems, mainly, as Mr Slater says, in the field of getting those forms of trademark protected consistently at the trademarks registries.

  455. You have referred to one of the problems or challenges of the changing regime and there has been some discussion earlier about the historical position of the UK in terms of international exhaustion of trademark rights. What is your interpretation of that historical position because we have had some slightly varying comments on that?
  (Mr March) A case has been mentioned in previous hearings, the case of Revlon, where the British court did in fact rule in favour of international exhaustion. That decision certainly caused an element of surprise at the time. As has been said earlier however, things have moved on. The international market is shrinking, the global market is becoming a reality more and more every day. One has to look at trademarks in that light.

  456. You kindly led me from my first question to my second; now you have led me to my final question. As I understand it, both Australia and New Zealand now permit international exhaustion.
  (Mr March) So I understand.

  457. I should be very interested to know whether you have looked into that experience and whether it is too early to draw conclusions or whether it is possible to draw any conclusions from that.
  (Mr March) Australia and New Zealand allowing international exhaustion is a relatively recent step by those countries. It is probably too early to draw any conclusions as to what changes, benefits or harm that will have done. Just to allow international exhaustion per se we think is going too far. We rather suspect that what Australia and New Zealand have done is taking things a little too far and we shall obviously be watching the situation very carefully over the coming years.

  458. Would your prediction therefore be that they will modify their position on this?
  (Mr March) I did not realise I would be coming here today to try to predict what the New Zealand or Australian countries might be doing a few years hence. Yes, I would have to say that. If we take the view that a certain amount of restricted international exhaustion is allowable and they have gone beyond that, then yes, we would say that in a few years' time they will probably have to change their position.

Mr Laxton

  459. Can you tell us what effect you think the Silhouette judgment has had? Has it made it easier for trademark owners or worse? Perhaps you could give an opinion.
  (Mr March) It has made it easier for trademark owners because with a decision there comes a certain certainty, certain unanswered questions get answered. We learnt from the Silhouette decision what the European Court position was that parallel importation, in the case of the particular products in question, which were not of equal quality to the products currently being sold by the proprietor, should not be allowed. Yes, in that sense we all know what the position is. It has made life easier, yes.


 
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