Examination of witnesses (Questions 449
TUESDAY 11 MAY 1999
MR B MARCH,
MR J SLATER
and MR K HAVELOCK
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 recordingnot equipmentdisks 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.
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 difficultyit is not a problem
because our job is to adviseis 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
(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.
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.