(back to preceding text)

    61. I will return in a moment to articles 2 and 4, but it is convenient, at this point, to describe how the Parma Ham PDO, along with many others, found its way on to the register. Italy, and most of the other member states, including the United Kingdom, submitted a large number of PDOs for registration under article 17. Those submitted by Italy included "Prosciutto di Parma". The measure, which eventually became Commission Regulation No 1107/96, was presumably submitted in draft to the committee, but no opinion on it was expressed by the committee and no action was taken by the Council. So, Commission Regulation No. 1107/96 was, accordingly, brought into force. The Regulation provided, in article 1

"The names listed in the Annex shall be registered as . . . [PGIs] or . . . [PDOs] pursuant to article 17 of Regulation (EEC) No 2081/92. Names not included in the Annex which have been forwarded pursuant to article 17 shall continue to be protected at national level until a decision has been reached on them".

    One of the names in the Annex was "Prosciutto di Parma".

    62. Accordingly, Parma Ham, "Prosciutto di Parma", became a registered PDO and entitled to the protection afforded by Council Regulation 2081/92.

    63. Article 2 of the Council Regulation simply describes what PGIs and PDOs are. Nothing turns on its contents. Article 4 is, however, important. Compliance with article 4 was a necessary condition for registration, whether under the articles 5, 6 and 7 procedure or under the article 17 "fast track" procedure.

    64. Article 4 provides:

"1. To be eligible to use … a [PDO] … an agricultural product or foodstuff must comply with a specification.

2. The product specification shall include at least:

. . . ."

    65. A number of sub-paragraphs, lettered (a) to (i) then follow. Each sub-paragraph describes a subject matter that the product specification must deal with. Sub-paragraph (h) requires the specification to include:

"the specific labelling details relating to the indication PDO … or the equivalent traditional national indications".

    66. Article 4.1 speaks of eligibility to use a PDO. In order to be eligible the foodstuff in question must comply with the product specification. It is implicit in article 4.1 that if a foodstuff does not comply with the product specification, the PDO may not be used in relation to it.

    67. Article 8 is in similar terms:

"The indications PDO … or equivalent traditional national indications may appear only on agricultural products and foodstuffs that comply with this Regulation".

    68. These two articles, 4.1 and 8, contain, expressly or by implication, a prohibition on the use of a PDO in relation to foodstuffs that do not comply with the relevant product specification. One of the issues that arises in this case is the duration of the prohibition. I shall return to this issue later.

    69. Article 13.1 provides that registered PDOs:

"shall be protected against:

(a) any direct or indirect commercial use of a [PDO] in respect of products not covered by the registration . . .

(b) any misuse, imitation or evocation [of a PDO] . . .

(c) any other false or misleading indication as to the provenance, origin, nature or essential qualities of the product, on the inner or outer packaging . . . liable to convey a false impression as to its origin.

(d) any other practice liable to mislead the public as to the true origin of the product."

70. Article 14 deals with the relationship between PDO's and registered trademarks. Where a PDO has been registered, an application for registration of the designation of origin as a trademark must be refused (article 14.1). Where a designation of origin has been registered as a trademark before the application for registration as a PDO was made, use of the trademark may continue notwithstanding the registration of the mark as a PDO (article 14.2). Article 14.2 is, presumably, contemplating a situation in which the product to which the registered trademark may be applied fails in some respect or other to comply with the product specification applicable to the PDO (see article 4). And article 14.3 prohibits the registration of a PDO "where, in the light of a trademark's reputation and renown and the length of time it has been used, registration [as a PDO] is liable to mislead the consumer as to the true identity of the product."

    71. Finally, so far as protection of designations of origin is concerned, article 17.3 provides that where an application for registration of a name as a PDO has been made, "member states may maintain national protection … until such time as a decision on registration has been taken."

    72. These provisions, taken as a whole, show that save for the exception provided for by article 14.2, the registration of a name as a PDO substitutes the protection of Council Regulation 2081/92 for the national protection that would otherwise have been afforded to the name whether as a registered trademark or otherwise.

    73. In the present case, since it is accepted that the ham in the Asda packages was in fact Parma Ham, and there is nothing on the packaging that can be said to be false or misleading, article 13.1 cannot assist the Consorzio. If the Consorzio is to be held entitled to the protection of the injunctions sought, it must be on the footing that Asda and Hygrade are in breach of a prohibition contained in article 4.1 or article 8 and that the prohibition is capable of direct enforcement against them.

    74. There are, therefore, in my opinion, three critical questions for your Lordships.

    75. The first question is whether the article 4 product specification applicable to "Prosciutto di Parma" does bar the marketing as "Parma Ham" of Parma ham sliced and packaged in Wiltshire. This is a question of interpretation of the product specification.

    76. The second question, if the answer to the first question is "yes", is whether Council Regulation 2081/92 prohibits the marketing as Parma Ham of Parma ham sliced and packaged in Wiltshire. This is a question of interpretation of the Council Regulation and general Community law.

    77. The third question, if both the prior questions are answered in the affirmative, is whether the legal prohibition, brought into effect by a combination of Council Regulation 2081/92, Commission Regulation 1107/96 and the Prosciutto di Parma product specification, is sufficiently transparent and ascertainable to be enforceable. This question is one of validity.

    78. If there is any doubt about the answer to either the second question or the third question, the question should be submitted to the European Court for a decision.

    79. The Prosciutto di Parma product specification is a lengthy document of just under 100 pages. It is in Italian. Translations are not generally available and have to be specially procured. A translation into English was procured for the purposes of this litigation. The text of the document has never appeared in any official Commission or Council publication.

    80. The document, in its English translation, is entitled "Parma Ham, Protected Designation of Origin, General Rules and Dossier pursuant to article 4 of Council Regulation (EEC) No 2081/92 of 14 July 1992". It is divided into sections, lettered A to I and broadly corresponding in subject matter to sub-paragraphs (a) to (i) of article 4.

    81. Section B, although dealing with a quite different subject matter, has a paragraph referring to labelling:

"B.4 Once branded, Parma ham can be marketed also boneless, or in cuts of different shapes and weights, or sliced and packed as appropriate. Should it not be possible to retain the brand on the product, the same will have to be affixed on the package in such a way that it cannot be deleted or detached, under the supervision of the Approved Body."

    82. Section C deals with the geographical area of Parma ham production. It has a paragraph relating to slicing and packaging.

"C.2 The manufacturing plants (ham factories) and the slicing and packaging facilities must be located within the territory defined in paragraph C.1 where all raw material processing stages, as envisaged by the General Rules, must take place".

    83. The producers of Parma ham have a number of options as to how they will present the product to their customers. They can sell the Parma ham on the bone or boneless or sliced. Whichever of these options is chosen, the corona ducale must be fixed to the product. Section H sets out the requirements. If the Parma ham is to be sold on the bone or boneless, the corona ducale will be stamped on the product itself. But if it is to be presented to the customer in sliced form that is not possible. So instead of being stamped on the product itself, the corona ducale must be stamped on the package in which the slices are placed. But, in whatever form the Parma ham is marketed, paragraph H.4 says that

"the affixing of the 'ducal coronet' brand is chronologically the last identification and qualification element of the protected product."

    84. Paragraph H.6(c) sets out, in the case of Parma hams "presented sliced and pre-packaged", the wording that, in addition to the corona ducale, must be placed on the packaging. The words include:

"Packaged under the supervision of the Parma Ham Producers Association"

    85. It is quite clear that these requirements of stamping and labelling apply to the product when it leaves the processing or packaging plants in the Parma area that operate under the supervision of the Consorzio. As is stated in paragraph H.4, the affixing of the corona ducale is "chronologically the last identification and qualification" requirement. The difficult question, to my mind, arises where the product has left the processor, or packager, in a form that complies with the product specification and has been sold to a customer but is then marketed by the customer in some different mode. The present case is an example. Asda, or Hygrade, it does not matter which, buys a leg of Parma ham stamped with the corona ducale. For its own marketing purposes, Asda slices the ham and packages the slices. Is this a process which the specification is aiming to control? Suppose, alternatively, Asda buys sliced ham in packages bearing the corona ducale but, for its own marketing purposes, removes the slices from the packages and places them in its own Asda packages. Is that a process which the product specification is aiming to control? Consider, also, the case of a restaurant or delicatessen. A restaurant buys a leg of Parma ham, duly stamped with the corona ducale, slices it in the restaurant kitchen and, on its menu, offers "Parma Ham with melon". It would be absurd to suppose that this was a process that the product specification was intended to control. If a delicatessen purchases a leg of Parma ham, cuts some slices off the ham and places those slices in its front counter with a label "Parma Ham", is that a process the product specification is intended to control? I would have thought that the answer to this question would be "Obviously not". But in the Marks & Spencer case, the Consorzio apparently argued that if the slices were to be sold as "Parma Ham" the slicing had to take place in the presence of the purchaser (see p 539 of Morritt J's judgment in [1990] FSR 530, 532).

    86. The question, therefore, is whether, as a matter of interpretation, the product specification is intended to control the manner of marketing of the product after it has had the corona ducale duly affixed, whether on the product itself or on the packaging, and has left the local processors or packagers. There is, in my view, a fair argument for concluding that, at that point, the supervisory role of the Consorzio in ensuring that only the genuine product is sold as Parma ham has been discharged. Whatever may be the policing function of the Consorzio, is it any business of the Consorzio to try and control the manner in which purchasers of Parma ham market their purchases?

    87. If it is right to conclude that Asda's marketing of the Parma ham is not in breach of the product specification, that is an end of the case. If that is wrong, the next question is whether that marketing is prohibited by Council Regulation 2081/92.

    88. A sensible, workable construction must be placed on article 4.1 and article 8.

    89. Article 4.1 simply says that to be eligible to use a PDO the foodstuff must comply with the relevant specification. There is no dispute but that the ham purchased from the Italian producer, Cesare Fiorucci SpA, was eligible to use the Parma Ham PDO. The ham complied in all respects with the product specification. The proposition that the product subsequently lost its eligibility because it was sliced and packaged in Wiltshire seems to me an odd one. A product ought not to come in and out of eligibility.

    90. Consider again the example of the restaurant or delicatessen. If Parma Ham, eligible to be so described because it was sold on the bone, or boneless, with the corona ducale stamp, is sliced by the restaurateur and offered to the public in slices described in the menu as Parma Ham, the slices must surely have the same eligibility as the leg from which they were sliced. And if the proprietor of a delicatessen slices the Parma ham in a back room and places the slices under his glass counter with a label declaring them to be Parma Ham, the argument that the slicing and labelling has deprived the product of its eligibility to be described as Parma Ham seems to me a very difficult one to accept.

    91. The question is whether there comes a time in the marketing history of a PDO product at which the article 4 prohibition ceases to apply. One answer, and that which I think Lord Hoffmann would give, is that the prohibition applies until the product reaches the ultimate consumer. My difficulty with that answer is that it would appear to place restaurateurs or delicatessen owners in breach of the prohibition in circumstances to which, in my view at least, the prohibition could not sensibly have been intended to apply. Another possible answer is that once a PDO product complying with its product specification has been marketed, its eligibility to have the PDO applied to it is established once and for all and is not lost by a subsequent re-packaging and re-marketing of the product. Or there may be some intermediate line to be drawn.

    92. The doctrine of exhaustion of rights, developed by the European Court in relation to national intellectual property rights, seems to me to be of some relevance. The European Court has held that where a proprietor of an intellectual property right relating to goods has put the goods into free circulation, the proprietor cannot rely on the intellectual property right in order to prevent re-sales of the goods.

    93. In Terrapin (Overseas) Ltd v Terranova Industrie CA Kapferer & Co [1976] 2 ECR 1039, 1061 the Court held that:

". . . the proprietor of an industrial or commercial property right protected by the law of a member state cannot rely on that law to prevent the importation of a product which has lawfully been marketed in another member state by the proprietor himself or with his consent."

    This is the so-called exhaustion of rights doctrine.

    94. In its application to trademarks the doctrine was considered by the European Court in Hoffman-La-Roche & Co AG v Centrafarm Vertriebsgesdlschaft Pharmazeutischer Erzeuguisse mbH [1978] 2 ECR 1139. The court made clear that the exercise of trade mark rights had to take account of and might be restricted by the prohibitions contained in the Treaty of Rome intended to promote the free movement of goods. The court dealt specifically with the question whether, where a product marketed under a trade mark had been re-packaged by a third party, the third party could be prevented from applying the trade mark to the re-packaged product. As to that, the court concluded that the answer would depend upon the nature of the product and the circumstances and method of the re-packaging and that the application of the mark to the re-packaged product should be allowed where it could be shown that the re-packaging could not adversely affect the condition of the product (pp 1164 and 1165). The court said also that the re-packager should give the proprietor of the mark prior notice and state on the new packaging that the product had been re-packaged.

    95. Pfiser Inc v Eurim-pharm GmbH (Case 1/81) [1982] 1 CMLR 406 is another leading case on the same topic. In Pfiser the European Court gave the following guidance, at p 420, para 8:

" . . . regard must be had to the main function of the trade mark which is to give the consumer or final buyer a guarantee of the identity of origin of the marked product, by enabling him to distinguish this product, with no risk of confusion, from products of a different origin. This guarantee of origin implies that the consumer or final buyer can be sure that any marked product offered to him has not been interfered with by a third party, at an earlier stage of marketing, in any way which has affected the original condition of the product, without the consent of the trade mark owner."

    96. The exhaustion of rights doctrine, developed in relation to trade marks by, among others, the cases referred to, was incorporated into Community legislation by article 7 of the First Council Directive 89/104 EEC of 21 December 1988.

    97. Article 7 provides as follows:

"Exhaustion of the rights conferred by a trademark.

1. The trade mark shall not entitle the proprietor to prohibit its use in relation to goods which have been put on the market in the Community under that trade mark by the proprietor or with his consent.

2. Paragraph 1 shall not apply where there exist legitimate reasons for the proprietor to oppose further commercialization of the goods, especially where the condition of the goods is changed or impaired after they have been put on the market."

    98. Article 7 was incorporated into domestic law by section 12 of the Trade Marks Act 1994.

    99. In two subsequent re-packaging cases the European Court has elucidated the manner in which article 7 should be applied. The two cases are Bristol-Myers Squibb v Paranova A/S (Joined Cases C-427/93, C-429/93 and C-436/93) [1996] ECR 1-3457 and Pharmacia & Upjohn v Paranova A/S (Case C-379/97) [1999] All E R (EC) 880. In Glaxo Group Ltd v Dowelhurst Ltd [2000] ETMR 415 Laddie J examined the guidelines set out in the two cases and commented as follows, at p 453:

"Free movement of goods is fundamental to the creation, operation and development of the Common Market. Derogations from it are only possible where justified under Community law. One such justification exists where the principle of free movement of goods would give protection to activities which undermine an intellectual property right by harming that right's specific subject matter or function. The derogation extends no further than the justification for it. As a consequence, activities which do not harm the specific subject matter of the rights do not fall outside, but are protected by, the principle of free movement of goods."

Laddie J nonetheless referred a number of questions to the European Court. The new edition of Kerly's Law of Trade marks, 13 ed (2001), contains a valuable discussion of the case law relating to the exhaustion of rights doctrine (see paras 15-05 to 15-59). It is clear that the development of the doctrine is still continuing.

    100. There is an obvious similarity of purpose shared by trademarks and PDOs. The views expressed by the European Court in relation to trademarks, to re-packaging and to the point at which trademark rights become exhausted have potential relevance, in my view, also to PDOs. There appears to have been no case in which the like problems have been examined in relation to PDOs, but there must surely come a point at which an intermediate purchaser of a product marked with a PDO can re-package and re-market the product, applying to it the PDO without infringement of Council Regulation 2081/92. But where the line should be drawn and whether it can be drawn so as to enable re-marketers such as Asda and other supermarkets to be free of the slicing and packaging requirements of the Parma Ham product specification is not clear. It is, in my opinion, a matter for the European Court. In my opinion there should be a reference to the European Court of the question whether a purchaser of a product complying in all respects with a PDO product specification, including the labelling and packaging requirements, can apply the PDO to the product for re-marketing purposes notwithstanding that

"(i) the product has been re-packaged and the re-packaging does not comply with the packaging and labelling requirements of the product specification; or

(ii) the form of the product has been changed, e.g. by slicing, and the change has not been carried out in accordance with the requirements of the product specification; or

(iii) both.

The third question

    101. Lord Hoffmann has analysed the argument presented by Mr Green in support of his contention that the law brought into effect by a combination of Council Regulation 2081/92, Commission Regulation 1107/96 and the Parma Ham product specification is insufficiently accessible and transparent. I respectfully agree with his analysis and need not repeat it. I am unable however, to agree with my noble and learned friend's conclusion.

    102. It is, of course, true that Council Regulation 2081/92 and Commission Regulation 1107/96 were published. Asda no doubt knew, and if they did not must be have taken to have known, that Prosciutto di Parma was a PDO. Asda must have known that if it was going to market "Parma Ham" in its stores, it would need to take care that it acquired the authentic product that complied with the product specification referred to in article 4.1 of the Council Regulation. Asda did take care. It, or Hygrade, acquired the ham from a Parma producer and the ham supplied was stamped with the corona ducale. In my opinion, Asda was entitled at that point to suppose that it had acquired a product that was eligible, for Council Regulation 2081/92 purposes, to be marketed as Parma Ham. If Asda was wrong in that supposition, i.e. if the two prior questions have been answered in the affirmative, it is because the product specification not only controlled the processing and packaging of the product up to the point at which it was marketed by an authorised producer in the Parma area, but also prohibited any slicing and repackaging of the product thereafter, I do not think it would occur to a reasonably well informed and prudent customer that this might be so. This, in my view, is the context in which the absence of any official publication and the general inaccessibility of the Italian product specification must be considered. In my opinion, the remarks of Sir Gordon Slynn, Advocate-General, in Commission of the European Communities v Federal Republic of Germany [1985] ECR 1661, cited by my noble and learned friend, are very much in point. Asda, and any other purchaser of Parma Ham, is entitled to know what restrictions, if any, apply to the marketing of the product. It is, in my opinion, no answer to the general inaccessibility of the Italian product specification to observe that when summoned to court to meet a claim for an injunction the alleged transgressor will be supplied with a copy. Citizens and companies are entitled to order their affairs by reference to accessible laws. Disclosures that accompany court proceedings do not constitute an acceptable means of providing transparency to laws that are otherwise insufficiently accessible. In my opinion there is an issue of principle to which the legislative technique associated with PDOs gives rise. The issue is whether prohibitions contained in a legislative measure of a member state can achieve Community wide effect via a Council Regulation and/or a Commission Regulation notwithstanding that the legislative measure in question is not identified in the Regulation, nor published in any official Community publication, nor available in translation. This issue should, in my opinion, be referred to the European Court.

    103. For the reasons given I would refer to the European Court the question formulated by Lord Hoffmann at page 32 of his opinion.