INTEllECTUAL PROPERTY 290 CHIMIA 2000, 54, No.5 ent may not be that easy to achieve. A sys- ventive step, industrial applicability tion of costs, remains an open question. The tem where harmonization would concen- (utility), disclosure requirements, etc.; answer depends on the willingness and the trate on the most important aspects of pat- • mutual recognition of search and exam- solidarity of all players involved. It seems, ent law, and leave other, less relevant, as- ination results by national and regional however, that all the users, includingappli- pects to the discretion of national laws may patent offices, based on agreed guide- cants, practitioners and patent Offices can already constitute a big step forward. In the lines and training of examiners. only benefit from future progress on har- meantime, the worldwide discussion on Some of the above measures are already monization of patent law. further harmonization of patent law must under consideration within, e.g. the frame- continue. work of the Trilateral Cooperation (Japa- Some possible steps in order to achieve nese Patent Office, European Patent Office, further improvements on harmonization United States Patent and Of- may be the following: fice), or under the PCT, as mentioned ear- Received: March 15,2000 • easier access to and concentration of ex- lier. Whether these efforts will ultimately isting databases on prior art; lead to a harmonization of the substanti ve [1] The PL T documents, as well as other docu- • harmonization of the main conditions of criteria of patent law, or even to a unitary ments for the Diplomatic Conference for the patentability, for instance novelty (in- international patent system, which would Adoption of the PLT, may be found on the cluding the definition of prior art), in- constitute a major step towards the reduc- website of WIPO: http://www.wipo.intl,

Chimia 54 (2000) 290-292 © Neue Schweizerische Chemische Gesellschaft ISSN 0009-4293

Importance of Trademark Protection for the Chemical and

Werner Haring*

Abstract: This article gives an overview of the marked shift which trademark protection has undergone during the past years. Burning trademark issues in the chemical and pharmaceutical area are parallel imports, central pharmaceutical product registration in the EU. counterfeiting, and Internet domain names. Keywords: Central product registration· Community trademark' Counterfeiting' Internet domain names· Madrid Agreement Protocol· Parallel imports· Pharmaceutical industry'

For many years, law Since the early 1990s, however, trade- - and trademark law in particular -led a mark thinking has undergone a marked shadowy existence. In management circles shift. at many companies the was reduced During the last decade trademarks ha ve to 'trademark, product labeling and protec- increasingly been used as an importantstra- tion law'. It thus came to be regarded as an tegicinstrument, even in companies not in- instrument whereby short -term goals could volved in consumer business. 'Correspondence: Dr. W. Haring Head of Trademarks be achieved. This attitude prevented trade- With the realization that trademarks are Novartis AG marks from coming into their own, since an essentially a positive force in the conscious- CH-4002 Basel emphasis on labeling and rights of use of- ness of the consumer of goods and ser- Tel.: +41 61 3243206 Fax: +41 61 3242851 ten prevents a trademark's energy - its es- vices, they are being increasingly integrat- E-Mail: [email protected] sential value - from being released. ed into management responsibility. This INTELLECTUAL PROPERTY 291

CHI MIA 2000, 54, No.5 new approach has led to a global boom in • provide a guarantee of quality, in par- maceutical companies. To date, however, trademark law. It is now legitimate to speak ticular consistent bioavailability and these have not put a stop to the erosion of of a trademark 'megatrend', characterized therapeutic efficacy, and trademark law in the European pharmaceu- by: • justify the confidence of doctors, phar- tical . • intensive international harmonization macists and patients. efforts, e.g, EU trademark harmoniza- tion and numerous alignments of na- Trademarks are used in the OTC sector 3. Trademarks and Centralized tionallaws, (= Over The Counter), as well as in the eth- Registration in the EU • introduction of the EU trademark on ical sector, but with a markedly different April 1,1996 [1], expectations being ex- customer orientation. Advertising is ad- While the industry has in general wel- ceeded many ti mes over wi th more than dressed not to the scientifically trained phy- comed the introduction of an economic, 100000 new applications, sician or pharmacist, but directly to the centralized product registration procedure • launch of the Madrid Agreement Pro- patient as a consumer of non-prescription for the European pharmaceutical market, tocol, also on April 1, 1996 [2]; with drugs. one mandatory precondition has encoun- many countries already being signato- Brand management and strategic posi- tered major resistance - the requirement ries, this agreement promises to be of tioning are clearly oriented towards the that the product submitted for registration major international significance in the consumer goods sector and for this reason should have an identical trademark regis- future. require a high degree of responsibility on tered in all EU countries [3]. the part of companies active in the OTC Notwithstanding all the efforts to achieve sector. The top priorities are clearly word- internationally or even globally uniform 1. Significance of Trademarks in the ed information for patients, rigorous trademarks, trademark practitioners agree Pharmaceutical Market screening in terms oftrademark and com- that in the pharmaceutical sector, with its petition laws and the need to prevent con- profusion of registrations, it is extraordinar- In the past, trademarks already played an sumers from being misled. ily difficult to implement a uniform trade- important role in the highly sensitive phar- With generics on the one hand and OTC mark for all EU member states. maceutical market. Now the rapid pace of products on the other, branded pharmaceu- In what seems to be an overzealous at- modern developments is accentuating the ticals face fierce competition. Still more tempt to achieve a functional internal EU significance ofthe drug trademark factor. pressure, however, stems from so-called market, obstacles delete are being set up In technical terms, the trademark of parallel imports, especially in Europe. which lack any clear legal basis, which go a respected company stands for quality. beyond the minimum requirements for The drug trademark conveys to the au- healthcare protection, and which contra- thorities, doctors, pharmacists and pa- 2. Parallel Imports and Intellectual vene Article 20 of the GATT-TRIPs agree- tients a guarantee of safety and therapeu- Property Law ment [4]. tic efficacy for the whole product, and not just for the active substance, as is the With parallel and re-imports, what is at case with generics. stake is the extent to which considerations 4. Trademarks and Counterfeiting In commercial terms, it is useful for all of national sovereignty permit a pharma- parties - above all, patients - to sell a drug ceutical manufacturer to prevent third par- The phenomenon 'counterfeiting' mani- under a tradename, rather than using com- ties from importing trademarked drugs fests itself on a worldwide basis. Counter- plicated chemical or generic denomina- which have been manufactured by a foreign feitsoften originate in China, Taiwan-and tions. licensee or produced by the manufacturer SouthEastAsiaasa whole-, India, Brazil, With an easily memorized trademark himself and subsequently exported. South Africa, Israel, the Middle East, Tur- and the associated guarantee of quality, the Imports of this kind are attractive to key and the former communist bloc. In pharmaceutical manufacturer is invoking third parties since drugs originating from addition, there are cases in which counter- the reputation of the company as a whole. the same manufacturer are often cheaper feit goods are manufactured in an EU coun- Of course, defects must be avoided at all abroad. According to economic theory, try and are then sold inside and outside the costs, to prevent fatal damage to the com- parallel imports may indeed help to reduce ED. pany's reputation. price distortions provided that free market The chemical industry is in some ways In economic terms, the trademark car- conditions prevail and the parallel import- a special case: Pharmaceutical ingredients ries a high value-adding potential in the er offers an identical product. are produced in large quantities in third pharmaceutical market. This in tum acts as In some EU countries, however, drug countries (India, China, Cyprus) and dis- an incentive for the manufacturer to invest prices are kept at an artificially low level by tributed via theEU to otherthird countries. in new research programs, or to provide state controls; parallel imports are thus a The goods are re-declared, given new pa- comprehensive medical information on consequence of previously created market pers and marked as goods of European or- new drugs. In a somewhat emotional fash- distortions. The bulk of the profit arising igin. In addition, medicines and crop pro- ion, part of the blame for the explosion of from this type of business accrues to the tection products are fabricated illicitly in healthcare cost has been laid on branded wholesaler or retailer concerned. In what Spain, Italy, Greece, Cyprus and Turkey pharmaceuticals. are surely illegitimate efforts to maximize and imported into other EU countries un- In this debate, certain points of differ- profits, trademark law is grossly breached der the guise of an apparently legal paral- ence from generics are overlooked, name- and even product safety isjeopardized (e.g. lel import. ly that branded drugs repackaging from glass to plastic bottles One of the major problems for combat- • state where the product originates, and cutting up blister packs). Numerous ing trans-border piracy is the implementa- • establish the manufacturer's responsi- lawsuits have been brought to the Europe- tion of different types of protection in indi- bility, an Court of Justice by research-based phar- vidual countries under different legal 01'- INTEllECTUAL PROPERTY 292

CHIMIA 2000, 54, NO.5 ders and with different procedural rules, global business of the chemical and phar- Patent and design protection provide a good maceutical industry. The respective activ- example of these differences, whereas it is ities are clearly focused to the business- easier in the trademark field. oriented use of Domain Names and the de- A further problem is tracing counter- fense against the unauthorized use and feits back to the original manufacturers. registration of Domain Names by 'cyber- This is especially difficult with copies from squatters' and/or 'grabbers'. Trademarks . Prosecution can only be successful if and Internet Domain Names, if closely in- the plaintiff can produce actual products, terlinked, will considerably contribute to proof of protection and the address of the generate value. Moreover, trademarks have manufacturer. proven to be one of the best tools against Many chemical companies face addi- ! tional problems which stand in the way of effective defense against counterfeiting: • Cost of acquiring and maintaining 6. Perception of Trademark and rights Drug • Incomplete information about the exist- ing legal instruments Without any doubt, the chemical and • Difficulty for customs to recognize cop- specially the pharmaceutical market is a ies on import politically sensitive and emotionally • Difficulties in tracing such cases to their charged area of economic activity. As de- source scribed above, particular difficulties are • Problems of cooperation with the au- attached to the use of trademarks, which are thorities in the country where the copy subject to special regulatory requirements. was manufactured. Nonetheless, good drug trademarks enjoy a special status amongst 'consumers' ,ow- All in all, it is a problem that the mea- ing in particular to the high degree of dif- sures in place to combat counterfeiti ng take ferentiation provided by their mediation of too long to be effective and are often un- the key message associated with a product. wieldy. The costs of prosecution are too If a drug trademark is strategically managed high in some countries. It is also regretta- and consistently 'recharged' with positive ble that courts give different interpretations energy in the customer's consciousness, it to counterfeiting or piracy in individual is a highly potent value-adding factor. De- countries. spite all the challenges it faces, namely parallel imports, counterfeiting and Inter- net domain names, the trademark should 5. Internet Domain Names thus retain its key role in the pharmaceuti- cal market. The Internet Domain Name System in general, but to a large extent also in the chemical and pharmaceutical arena, has Received: March 23, 2000 reached such a high level in its development that business competition has heightened [I] The 'Regulations on the Community Trade and global participation significantly in- Mark' may be found at www.oami.eu.int/en/ creased. This has led to E-Business, a new aspects/reg.htm. [2] The of International Regis- form of doing business on the Internet. tration of Marks may be found at Trademarks and Domain Names playa key www.wipo.int/eng/madridltexts.htm. role in this context. [3] Information and rules on the 'EMEA Certif- However, the Internet Corporation for icateof a Medicinal Product' may be found at Assigned Names and Numbers (ICANN) www.eudra. 0 rg/techdoc s/technical/ce rtif and other major intellectual property orga- htm. nizations from around the globe are still [41 The text of the TRIPs agreement may be found at www.wto.org./eol/e/p(ff/27.trips.pdf. trying to solve a number of critical issues, [5] The ICANN rules for 'Uniform Domain Name namely to develop a structure and the pro- Dispute Resolution Policy' may be found at cedural rules for this new form of intellec- www.ican/l.org/udrp/udrp-rules.htmand the tual property (including trademarks, copy- WIPO 'Supplemental Rules' atwww.arbiter. right, and patents) as the fundamental com- wipo. intldomains/rules/supplemental. htm!. ponents of meaningful commercial activi- ty in the national, regional, and global realms in the fields of the Internet Domain Name System [5]. In spite of all the still existing difficul- ties, Internet Domain Names and E-Busi- ness are of very high importance for the