IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
PATENTS COURT
Before: The Hon. Mr. Justice Laddie

Mr. Justice Laddie:

1. These are contested applications by defendants in seven sets of proceedings to amend their defences and to introduce counterclaims. The proceedings are all for alleged trade mark infringement but some of them also raise claims in passing off as well. The issues sought to be introduced by the proposed amendments are said to arise under or to concern the application of Article 81 (formerly Article 85) of the Treaty of Rome.
2. The claimants are Glaxo Group Limited, The Wellcome Foundation Ltd, Boehringer Ingelheim KG, Boehringer Ingelheim Pharma KG, SmithKline Beecham Plc, Beecham Group Plc, SmithKline and French Laboratories Limited and Eli Lilly and Company. They are all well known pharmaceutical companies. They have discovered and sell many clinically important proprietary drugs throughout world. Those drugs have been and are sold under proprietary names, all, or substantially all, of which are the subject of trade marks which are registered in most, if not all, of the markets in which they are sold. For the purpose of this judgment, I shall refer generically to the claimants and other companies which engage in carrying out research to find and then introducing proprietary drugs to the market as the proprietary pharmaceutical companies ('PPCs').
3. The defendants are Dowelhurst Limited and Swingward Limited. They also are engaged in the sale of pharmaceuticals. Part at least of their business involves the exploitation of price differentials which exist between the same pharmaceuticals in different countries. They import from low cost to high cost countries. The United Kingdom is currently a high cost country as far as pharmaceuticals are concerned. Other countries such as, for example, Spain are comparatively low cost. So a potentially lucrative trade exists in exporting from Spain to the United Kingdom. The imported pharmaceuticals sell in competition with the identical goods placed directly on the United Kingdom market by the original PPC or one of its associates. This type of trade is called parallel importation. Companies such as the defendants which are engaged in this trade will be referred to in this judgment as parallel importation pharmaceutical companies ('PIPCs').
4. The PPCs object to parallel importation of their products. It creates downward pressure on their prices in high price markets and thereby reduces their profit margins. The PPCs say that this trade is to the long term disadvantage of consumers because a reduction in profits results in less money being available to fund the research which is necessary to find the next generation of pharmaceuticals. PIPCs say that the trade is desirable because it reduces the cost of drugs to the public.
5. There are a number of ways in which PPCs can reduce the size of the parallel importation trade beside reducing the price differential. One of these involves the use of intellectual property rights such as patents, trade marks and copyrights. At the moment most of these rights are national in scope. As a result they can sometimes be used to isolate the market in one country from others. This is because under most national laws, selling imported products and the act of importation itself are treated as infringements of the intellectual property right. For example if a PPC produces a new drug which is protected by patents in a number of countries, it may be able to use its patent rights to prevent the importation of its own drugs from one country into another. It will have consented to the particular consignment of drugs being sold in the country of first marketing but not in the country of importation. Therefore in the country of importation the drugs are not licensed and they infringe the national patent. Similarly a PPC may put a drug on the market in country A under a particular trade mark. If it has a registration of the same mark in country B it may be able to use the domestic trade mark law in country B to prevent its own goods being parallel imported from country A.
6. The ability to use national intellectual property rights to hinder parallel importation is significantly hindered within the European Community by the provisions of the Treaty of Rome. The law may be summarised as follows. If a trader places goods on the market in one Member State they must be free to move throughout the Community. In general, he may not use his national intellectual property rights to impose a restraint on this free movement. The trader is said to have exhausted his rights in respect of his own goods or goods which were placed on the market with his permission. This does not mean that the trader's intellectual property rights have ceased to exist: only that he cannot exploit them in a way which offends against the provisions of the Treaty of Rome. So the Treaty of Rome does not affect the system of intellectual property right ownership but it can affect the manner in which such rights are used. The difference can be illustrated by reference to patents for pharmaceuticals. If a PPC has a patent for a new drug in, say, Spain and the United Kingdom and it puts the new drug on the market in Spain, it cannot use its United Kingdom patent to stop his own product from being imported from Spain. On the other hand until quite recently Italy did not grant patents for pharmaceuticals. As a result a thriving business grew up which consisted of making in Italy unlicensed copies of drugs which were protected in other Member States of the Community. If an unlicensed copy of a drug from Italy was imported into the United Kingdom, it could be stopped by use of British patents. Although in this case the enforcement of the patent impeded Italian/British trade, this was due to differences in the national law of patents in the two countries. The proprietor of the British patent in the second case had not exhausted his rights since the offending products had not been put on the market in Italy by him or with his consent. Furthermore, his deployment of his intellectual property rights for his own benefit did not involve a breach of any other provision of the Treaty of Rome, such as Art. 81. These principles have now been extended to the European Economic Area (the "EEA").
7. The present cases are concerned with the interrelationship between the principles of international exhaustion and registered trade mark rights. The basic national law of registered trade mark subsistence, validity and infringement is now set out in the Community Trade Mark Directive EC89/104, lies behind our Trade Marks Act 1994 and confirms at Art. 7(1) (cf s. 12(1) of the 1994 Act) that the principles of international exhaustion applies to registered trade marks, at least in respect of goods placed on the market within the EEA. This has been confirmed in the leading case Silhouette International Schmied G.m.b.H & Co. KG v. Hartlauer Handelsgesellschaft mbH (Case C - 355/96) [1999] Ch 77, [1998] ECR I 3457 ECJ. That case supports the general principle that a trademark owner cannot use his trademark rights to prevent free circulation of his own goods within the EA but he can use them to prevent any of his goods which were placed on the market outside from being imported into the EA.
8. However the principle of exhaustion of rights within the EA is subject to an important qualification. Art. 7(2) of the Directive (s. 12(2) of the 1994 Act) provides that a trade mark proprietor may object to the remarketing of his own goods if there are 'legitimate reasons' for him to do so. This provision gives effect to a line of authority in the European Court of Justice ("ECJ") which allows trade mark owners, particularly in relation to trade marks used on pharmaceuticals, to control the way in which parallel imported goods are placed on the market. For example, if a parallel importer repackages the goods in a way which is particularly harmful to the reputation of the PPC's trade mark and goods, he may object to the manner of repackaging and thereby, indirectly, interfere with the parallel importation.
9. This line of authority commenced with cases such as Hoffmann-La Roche v. Centrafarm [1978] ECR 1139 and Pfizer v. Eurim Pharm GmbH [1981] ECR 2913. A more recent one is Bristol-Myers Squibb v. Paranova [1996] ECR I - 3457. The latter case contains a number of statements which have been treated as guidelines indicating what constitute legitimate reasons for objecting to remarketing. For example the ECJ has said that the parallel importer must give adequate advance notice to the proprietor of the manner in which he intends to package the imported products. This has been taken to mean that if adequate advance notice is not given then the PPC can sue successfully for trade mark infringement. The absence of notice constitutes 'legitimate reasons' for objecting to the importation and whether or not trade mark rights can be enforced to prevent parallel importation within the EEA are thus dependent upon whether notice is given or not. If this interpretation of Paranova is right, the result is that if there is failure to notify, infringement follows even if, had there been notification, there is no legitimate ground on which the PPC could object to the sale of the repackaged goods. If two PIPCs import the same drug and repackage it in exactly the same way so that neither the public nor the PPC could tell them apart, if one PIPC gives advance notice and the other does not, the former can sell while the latter can be sued for infringement. That is what some at least have said is the consequence of the Paranova guidelines.
10. The Paranova guidelines are at the heart of all the cases which are before me. For example, in some of them absence of notice is advanced as the justification for bringing proceedings against parallel importers. The more restrictive the effect of Art. 7(2) of the Directive as interpreted by the guidelines, the greater the ability of PPCs to prevent, hinder or interfere with intra-EEA parallel importation. Needless to say the claimants advocate a restrictive view and defendants advocate the opposite. In the present proceedings the claimants complain of a number of different types of product labelling, repackaging or presentation by the defendants. Removing the proprietor's mark completely is said to infringe his rights, retaining it on a repackaged goods is said to be an infringement and so on. It is not necessary to go into the details of the issues raised. It suffices to say that some of the arguments advanced on behalf of claimants in one action appear to be inconsistent with arguments advanced by other claimants in other actions. This is not a criticism of the claimants. The defendants do not argue that any of the claims advanced against them are so clearly bad that they are unarguable. Nor do they say that any of the claims have been advanced in bad faith. The diversity of arguments simply reflects the fact that the scope and effect of the line of authority leading to Paranova and of Art. 7(2) of the Directive are open to alternative interpretations.

The applications before the court

11. A number of different applications are before the court. All are concerned with the future conduct of this litigation. However it has been agreed that one group of them should be considered first since they are likely to affect all the others. These are the applications by the defendants to amend their defences and to have permission under CPR Part 20 to make counterclaims against the claimants. The defendants wish to argue that the current proceedings have been brought or continued by the claimants pursuant to, or are affected by, an agreement or concerted practice which affects trade between Member States of the European Union and which has as its object or effect the restriction, distortion or prevention of competition. The defendants acknowledge that the precise details of the concerted practice are unclear. They say that is not surprising since the concerted practice was formulated in secret by the PPCs. They say, however, that there is sufficient evidence to show that it exists, what its purpose is and that it has influenced the conduct of the litigation and the collective efforts of the PPCs to deter parallel imports. In substance they say that many of the leading PPCs have decided to collaborate in attacking parallel importers. The purpose of this collaboration is, in particular, to isolate the United Kingdom pharmaceutical market from imports and thereby protect the profits made here from the effect of low price competition. The defendants say that since the concerted practice came into existence, the PIPCs in general and the defendants in particular and their customers have been subject to a barrage of threats and litigation from the claimants and other PPCs and that this has had the effect of 'chilling' the parallel importation trade into the United Kingdom. They say that if this is so, the present proceedings are or have become a tool used illegitimately by the claimants to further an objective which is contrary to the provisions of the Treaty of Rome. This gives them not only a defence to the current proceedings but an entitlement to claim compensation. Importantly, the defendants argue that this defence and counterclaim is available to them even if (which they do not admit) they have infringed the claimants' trade mark rights. The effect of success on these grounds may be, therefore, to restrict the right of the proprietors of the trade marks in issue to enforce them against infringers, at least to the extent that such enforcement is a part of an illicit concerted practice.
12. These applications have proceeded on the basis that whether leave to amend should be granted should be decided in the same way as if the amendments had been part of the original pleadings and these were applications to strike out. The dispute before me centers on two questions: Are the defences and counterclaims arguable as a matter of law and, if so, is there an arguable case that a relevant concerted practice exists here? The claimants say that the defendants fall at both hurdles.

(1) Are the defence and counterclaim arguable as a matter of law?

13. Mr. Green QC, who appears on behalf of the defendants, says that the agreement or concerted practice is to collaborate and enforce all possible trade mark rights for the purpose of making parallel importation within the EEA as difficult as possible. To this end a co-ordinated attack has been made on PIPCs including the assertion of claims against trade mark infringement which have for some years been left unasserted. Such a concerted practice is no less offensive under Art. 81 of the Treaty of Rome than any other. The fact that it makes use of registered trade mark rights to achieve its objective is neither here nor there. What is crucial is the collaboration between the PPCs to achieve their market-distorting objective.
14. Mr. Silverleaf QC, who appears on behalf of the Boehringer Ingelheim and Glaxo/Wellcome claimants, puts this part of his case simply. He says that even if there is an agreement between all the PPCs to enforce legal rights which they genuinely believe they possess, that is unobjectionable at law. The bringing of the individual proceedings is entirely lawful and proper. He says that it follows that there can be no objection to the bringing of a multiplicity of proceedings by different claimants to protect their similar rights even if they do it in concert. The interference with intra-EEA trade, even if it exists, is a consequence of the way in which trade mark rights may be enforced in accordance with the decision of the ECJ in Paranova.
15. Mr. Brealey, who appears for the SmithKline and Eli Lilly claimants, adopts the same approach as Mr. Silverleaf. He also says that what the defendants are doing is trying to deprive trade mark owners of access to the courts. The right to access to the courts is not only a fundamental principle in our domestic law but it is also a fundamental principle of Community law. For the first proposition he relies on the decision of Hoffmann J in Pitney Bowes Inc v. Francotyp-Postallia GmbH [1990] 3 CMLR 466 at paragraphs 15 - 16 and for the latter he relies on Case T-111/96 ITT Promedia v. Commission in which the Court of First Instance said:

" ... as the Commission has rightly emphasised, the ability to assert one's rights through the courts and the judicial control which that entails, constitute the expression of a general principle of law which underlies the constitutional traditions common to the Member States and which is also laid down in Articles 6 and 13 of the European Convention for the Protection of Human Rights and Fundamental Freedoms of 4 November 1950 (see Case 222/84, JOHNSTON V. CHIEF CONSTABLE OF THE ROYAL ULSTER CONSTABULARY). As access to the Court is a fundamental right and a general principle ensuring the rule of law, it is only in wholly exceptional circumstances that the fact that legal proceedings are brought is capable of constituting an abuse of a dominant position within the meaning of Article 86 of the Treaty." (para 60)

16. These are powerful and attractive arguments. If, pursuant to Art. 7(2) of the Trade Mark Directive and the line of cases ending in Paranova, it is legitimate to use a trade mark in certain circumstances to restrict or interfere with intra community trade in the proprietor's own goods, how can it offend against the provisions of Art. 81 if two or more trade mark owners collaborate in the enforcement of their rights? If the defendants are right, the trade mark owners are deprived of their legal rights to object to infringement.
17. However, the issues are not as simple as the claimants' arguments would suggest. Most of the numerous cases in the ECJ on exhaustion of intellectual property rights involved the argument that the proprietor was entitled to enforce his national rights. To stop a patentee from suing an importer of his products under his national patent rights was to deprive the proprietor of some of those rights. But this argument has not prevailed. Save in very special circumstances, of which RTE and ITP v. Commission [1995] ECR I-743 (Magill II) may be an example, the Treaty of Rome does not take away a proprietor's property rights but it may affect the way he exploits them. Furthermore it is not sound to argue that because a trader can do something alone he must be free to do the same thing in concert with others. A single trader acting alone, assuming he does not hold a dominant position in the market, has the right to raise and lower prices as he wishes. He can refuse to buy from or sell to anyone he likes, even if his objective is to harm competitors and prevent importation of goods. But he may well be prohibited from agreeing with others to form a competition-distorting cartel to do all or any of these things. This is not surprising. Our law of conspiracy recognises that in trade, as in war, it is easier to fight one to one than against a phalanx. Similarly, in many respects provisions in the Treaty are designed to enforce a level playing field between competitors. This does not take away from the individual trader the right to raise or lower prices. All it does is prevent him from obtaining the additional commercial weight of working in collaboration with others. As Mr. Green puts it, litigation embarked upon by individual traders is unlikely to have the same form and intensity as litigation embarked upon by them as a group, nor will it have the same economic effect.
18. Mr. Green points out that this prohibition on collaboration can go a long way. One trader may decide to follow the prices of his nearest competitor. Those prices may be available to the public. The trader is entitled to do this. After all it is central to competition that a trader is able to look at what others in the trade are doing and is free to imitate or improve on their method and terms of trading. Yet the courts have said that he must go to those public sources to find out the competitor's prices and must make his own mind up as to the prices he will charge. He cannot cut corners by sharing price information with his competitors, because that may replace the sharpening effect of competition with the security of a cartel. This is illustrated by Suiker Unie v. Commission [1975] ECR 1663 in which the alleged wrongdoers argued that there would be no difference in economic effect between a friendly interchange of trading information between a group of traders and the results of each trader reacting intelligently to public information about his nearest rivals. The ECJ said at p. 1942:

"173. The criteria of co-ordination and co-operation laid down by the case-law of the Court, which in no way require the working out of an actual plan, must be understood in the light of the concept inherent in the provisions of the Treaty relating to competition that each economic operator must determine independently the policy which he intends to adopt on the common market including the choice of the persons and undertaking to which he makes offers or sells.

174. Although it is correct to say that this requirement of independence does not deprive economic operators of the right to adapt themselves intelligently to the existing and anticipated conduct of their competitors, it does however strictly preclude any direct or indirect contact between such operators, the object or effect whereof is either to influence the conduct on the market of an actual or potential competitor or to disclose to such a competitor the course of conduct which they themselves have decided to adopt or contemplate adopting on the market."

19. These passages are also significant in that they emphasise how wide the concept of concerted practice is. This is a topic I will return to below, but for present purposes it should be noticed that a concerted practice can exist even if there is no fully worked out plan and even if the contact between the traders is indirect. Having an arrangement which facilitates interchange of relevant commercial information so that members of the network are better able to ensure that their individual actions in the market are consistent with the actions of other members of the network may be enough to constitute a concerted practice.
20. It is also attractive but misleading for the claimants to say that the restriction on inter state-trade comes from the trade mark rights as interpreted by Paranova and not from any concerted practice (assuming there is one). A similar argument has been deployed in many exhaustion of rights cases. But it is the co-operation with others to effect the illicit purpose which offends against Art. 81. The defendants here are not complaining of the enforcement of the claimants' rights per se. The fact that trade mark law provides a tool which makes it easy to achieve an offensive end does not legitimise the co-operation. On the contrary, the fact that these rights can easily be used to impede free movement of goods within the EEA may make them attractive tools to a group of co-operatively-minded traders who wish to achieve that objective. The choice of those tools may throw light on the purpose of the co-operation. It is not the trade mark rights which offend against the provisions of Art. 85(1) but the co-operative use to which they are put. The ends may contaminate the means. Even though Silhouette, Art. 7(2) of the Trade Mark Directive and Paranova all allow a proprietor to hinder the free movement of his own goods to some extent, the ability to do this on his own does not mean that he is similarly entitled to club together with others so as to put in place a collaborative attack on parallel importers. This is consistent with the decision of the ECJ in Sirena Srl v. Eda [1971] ECR 69 at p. 82:

"The exercise of trade-mark rights is particularly apt to lead to a partitioning of markets, and thus to impair the free movement of goods between States which is essential to the Common Market. ...

... A trade-mark right, as a legal entity, does not in itself possess those elements of contract or concerted practice referred to in Article 85(1). Nevertheless, the exercise of that right might fall within the ambit of the prohibitions contained in the Treaty each time it manifests itself as the ... means ... of a restrictive practice." (paragraphs 7 and 9)

21. Similar sentiments were expressed by the ECJ in Parke, Davis & Co. v. Probel, Reese, Beintema-Interpharm and Centrafarm [1968] ECR 55 at 71 and by Advocate General Jacobs in Silhouette [1998] ECR I 4799, 4815-6 at paragraph 53.
22. Nor is it accurate to say, as the claimants do, that the defendants in these proceedings are attempting to deprive them of their right to litigate. Once again, all that the defendants can complain of is the alleged concerted practice and its implementation by the claimants. Even if the pleadings are allowed to be amended and the defendants win at the trial, that does not mean that the individual trade mark owners are deprived of the right to sue for infringement. Mr. Green concedes, as he has to, that they can. The impact of an adverse finding would be to prevent them from litigating in concert. This may create practical difficulties. If bringing proceedings in concert is prohibited but bringing them individually and independently is not, how do you distinguish one from the other? This difficulty, however, is not new to this area of law. A cartel which agrees to raise prices and to refuse to supply to a particular trader may offend against Art. 81(1), but each member of the would-be cartel is free to raise prices and to refuse to supply as long as that decision is taken by him alone and even if the decision to raise prices and the level to raise them to is taken by looking at the prices decided upon and publicly announced by one of the leading members of the cartel. The decision by a number of traders to follow market trends closely and immediately is treated quite differently to collaboration between them to fix the market. The former is permissible but the latter may not be. The difficulty to the outsider is distinguishing one from the other. So here, if the amendments are allowed and the concerted practice is proved, any relief granted will have to be carefully worded to prevent the collaboration but without taking away the right to sue for infringement of trade mark.
23. Once it is appreciated that the only complaint that the defendants can raise and are attempting to raise by the proposed amendments is the alleged concerted practice, neither Pitney Bowes nor Promedia appear to be in point. In Pitney Bowes the complaint was that the patentee claimant had threatened the defendant with infringement proceedings under numerous patents, even though he knew or ought to have known that many of them were not infringed. The claimant was acting alone. The argument was one of abuse of process. The defendant was asking for an order that the claimant be prohibited from enforcing its patent rights at all. That is quite different to what the defendants are asking for here. They accept that the claimants can enforce their trade mark rights but object to most of the important proprietors ganging up to subject them to what they believe is a litigation and threats broadside.
24. Similarly, in Promedia, the ECJ was only concerned with an argument that an individual claimant could be prevented from asserting his rights as a result of Article 86 (now 82) of the Treaty. Being deprived of that right would only be sanctioned in the most extreme and unusual circumstances. But the defendants here acknowledge that they cannot prevent individual trade mark proprietors from asserting their rights. It is the alleged collaboration in asserting them to which they object.
25. It appears to me that if there was a concerted practice as alleged, if the claimants here were parties to it and if the commencement or continuation of these proceedings is part of that concerted practice, it is at least arguable in the current state of European law that the defendants will have a defence or a claim for compensation. As I have indicated above, even if the defendants make out all of their allegations, there could well be difficult questions of what relief would be appropriate on their counterclaim but that is not a matter on which I have been addressed.

(2) Is there an arguable case that a relevant concerted practice exists here?

26. Before looking at the pleadings and the facts on this issue, there are two preliminary matters which should be mentioned. First it is necessary to have in mind the nature of the inquiry. As indicated above, all sides agree that these applications should be approached as if they were to strike out the defendants' pleadings. How to deal with such applications under the CPR has been considered recently by the Court of Appeal in Swain v. Hillman (The Times, 4 November 1999). Such a strike out is possible when there is 'no real prospect of success'. The Master of the Rolls said that those words needed no amplification but he drew a distinction between realistic prospects of success on the one hand and fanciful prospects on the other. Importantly, he also said that the proper disposal of an issue under Part 24 did not involve the judge in conducting a mini-trial. That does not mean that a court has to accept without thinking everything said by a party in its pleadings. In some cases it may be clear that there is no substance in factual assertions made by a party. If so, causes of action dependent upon those assertions can be struck out at an early stage rather than subjecting the parties to the cost and delay in trying an issue, the outcome of which is already known. Mr. Silverleaf and Mr. Brealey say that in these cases there is no credible evidence pointing to the existence of a concerted practice.
27. Secondly it is necessary to bear in mind what type of collaboration falls within the ambit of Art 81(1), in other words what is a 'concerted practice'. This has already been touched on in paragraph 18 above. It has also been explained in the European Court of Justice in ICI v. Commission [1972] ECR 619 at 655 as follows:

"... a form of co-ordination between undertakings which, without having reached the stage where an agreement properly so-called has been concluded, knowingly substitutes practical co-operation between [the participants] for the risks of competition." (para 64)

28. Neither Mr. Silverleaf nor Mr. Brealey suggests that this had been qualified by subsequent authority or that it does not accurately summarise what is involved in a concerted practice. This is important because it is by no means clear that the evidence filed on behalf of the claimants had this broad definition in mind. Many of their witnesses appeared to be addressing the question "was there a relevant binding contract or agreement between major PPCs?". They say that there was no agreement.
29. Mr. Green describes the features and fingerprints of a concerted practice in his skeleton argument. It is not challenged by Mr. Silverleaf or Mr. Brealey and is a useful summary:

"A concerted practice by its very nature is loose and may be ill defined. It does not require proof of a plan. Undertakings may become parties to a concerted practice even though they are on the "periphery" of a more formal agreement or concerted practice (Polypropylene Cartel: The Community v. ICI [1988] 4 CMLR 347, Re the PVC Cartel: The Community v. Atochem SA [1990] 4 CMLR 345, Re the LdPE Cartel: The Community v. Atochem SA [1990] 4 CMLR 382 paras 49-54, Re Soda-Ash v. Solvay Et Cie SA [1994] CMLR 454). Proof of a concerted practice may arise from direct or indirect evidence and includes circumstantial evidence. The Court of Justice has emphasised that the doctrine applies to ensure that undertakings take decisions entirely independently and, accordingly, prohibits any communication which has the effect of eliminating "...uncertainty as to each other's conduct" (ICI v Commission [1972] ECR 619 paras 65, 66 and 68). An act of an undertaking which was commenced on a unilateral and independent basis can be subsumed into a concerted practice by reference to the subsequent conduct of the undertaking in question (Scottish Salmon Board [1993] 5 CMLR 602)"

30. Finally, before turning to the nature of the alleged concerted practice and the evidence filed by the parties, two other general considerations should be mentioned. First, Mr. Green points to the fact that if there is a concerted practice to harm the trade of parallel importers, it is not surprising that his clients were not party to the discussions which led to its creation and implementation. The participants in such activity are hardly likely to advertise what they are doing. In nearly all cases the party complaining about a concerted practice will be on the outside and will only be able to rely on signs from which it will invite the courts to draw inferences. I accept that this will frequently be so. It should be taken into consideration when deciding at the stage of a strike out whether it is proper to come to the conclusion that a concerted practice does not exist without the need for a trial. On the other hand, it is all too easy to make allegations of conspiracy. A trader facing a rash of litigation may have a bona fide belief that he is the subject of an orchestrated campaign by his competitors. Someone who treads on the toes of a number of competitors should not be surprised if they all complain. Multiple actions may simply be a reflection of multiple torts. Issues arising under Art. 81(1) are likely to add significantly to the costs and duration of a trial and care must be taken to distinguish between an honestly held persecution complex and evidence of collaboration. I can now turn to the alleged concerted practice here.
31. In the proposed amended defences, the defendants allege that the present proceedings:

"are brought pursuant to an agreement or concerted practice (hereafter 'the Agreement') which has as its object and/or effect the deterrence of the parallel distribution of pharmaceutical products into the United Kingdom. The Agreement affects trade between the Member States of the European Union (hereafter 'the EU') and has as its object and/or effect the prevention, restriction or distortion of competition within the EU. As such, the bringing and continuation of the proceedings and the relief sought herein constitute the object the means and/or the consequence of a contravention of Article 81(1) EC and/or an abuse of process. In the premises the proceedings and/or relief are illegal under Article 81 EC and this court is obliged under Article 10 EU not to permit its process to be used in a manner inconsistent with Community law."

32. The concerted practice or agreement is alleged to have come into existence as follows. On 24 and 25 February, 1999, two conferences were held at the Radisson Hotel in Vienna under the general title "Parallel Trade in European Pharmaceuticals". These were followed by a post-conference workshop on 26 February. The conference was arranged by a company called Vision in Business. It specialises in organising and putting on conferences. It is said that the discussions and exchanges of information held during the second conference and during the post-conference workshop led to the creation of the concerted practice or agreement to deter competition from parallel imports of pharmaceutical products. It is also said that an informal grouping, called the "Pharma Legal Forum" was set up, or agreed to be set up, at some point during the second conference to advance or finalise the alleged concerted practice of agreement. The defendants allege that one aspect of the concerted practice or agreement was the pursuit of trade mark infringement proceedings and that these proceedings are a consequence of that.
33. A fair amount of the evidence filed on this application turned on the issue of whether or not the Legal Pharma Forum was created during the second conference. In my view this is quite peripheral. Whether or not an identifiable body was created there and, if so, its name, is of secondary importance. The crucial issue is whether it is credible that a concerted practice as that term is understood (see paragraph 27 above) was entered into between PPCs in Vienna in February, particularly during the post-conference workshop, with the objective of co-ordinating efforts to suppress the parallel importation of pharmaceuticals. The defendants rely on a variety of matters to show that such a concerted practice is not only credible but likely. The claimants deny the allegations. Mr. Silverleaf suggests that these were nothing more than the type of conference and workshops in relation to recent developments in intellectual property law which are regularly and frequently put on as a speculative venture by conference organisers and which inevitably attract representatives of industry.
34. However the second conference and workshop had many features which make them quite unusual. These were not simply educational meetings to discuss recent developments open to any interested member of the trade. Although the first conference was open to all, the second and the workshops were closed sessions from which all but PPCs were to be excluded. This was deliberate policy. Indeed one of the defendants' witnesses, Mr. Barker - who is, amongst other things, the Chairman of the Association of Pharmaceutical Importers, a body representing the interests of many PIPCs - paid to attend on all three days. However at the beginning of the second conference on 25 February he was evicted, apparently on the insistence of a number of PPCs including SmithKline Beecham. Similarly he was refused admission to the crucial workshops session on 26 February. Mr. Barker complained of this treatment. Vision in Business, wrote rejecting his complaints. Its letter contains the following statements, none of which have been qualified by the claimants in the evidence before me:

"1. We restricted two days of our event to the research-based pharmaceutical industry and its representatives because our pharmaceutical delegates specifically requested that we organise an event at which parallel importers were not present. ...

2. There is no dispute that you are the chairman of the Association of Pharmaceutical Importers, a group that represents parallel importers. In this situation, your position with a very small research-based company cannot possibly outweigh your position with the API. ...

3. ... With your considerable experience of the pharmaceutical industry, you must have been aware of the politics of parallel trade and therefore aware that the research-based industry would not want you to be present at such a restricted event. ...

5. Other non-research organisations attempted to bypass our restrictions and register for the event. We called all organisations that were not clearly research-based before the event and asked them to withdraw, which they did without exception or complaint.

6. Before excluding you from the conference, Sabine Roettgen took care to check with other conference delegates who were absolutely adamant that, as the chairman of the API, you not be allowed to attend, regardless of any other organisation/s that you might represent.

7. Other delegates felt that our clearly worded explanation on all the conference literature was more than sufficient to make the purpose of the restricted days clear. None of the other delegates had any trouble understanding the nature of the restriction. As a matter of fact, when another parallel importer asked for an exception to be made to allow him to register on the two restricted days (without attempting to mask his association with the import industry), we explained that he could not attend and why. ...

In summary, it is perfectly clear that the conference was restricted to the research-based industry and why."

35. The relevant conference advertising literature referred to in paragraph 7 of this letter was produced as part of the evidence on this application. It is apparent that the organisers considered the open session on 24 February to be a different event to that on the 25 and 26 of February. Indeed, in relation to the latter, they offered a discount to PPCs who booked for "both events" - i.e. 24 February as well. The conferences on 25 February and the workshop on 26 February were stand-alone events, set up by or on behalf of PPCs to allow them to discuss parallel importation amongst themselves. The overall purposes of these two days are set out in the advertising literature. Under the rubric "Legal and Commercially Viable Responses to Parallel Trade", it says that the two-day meeting (i.e. the second conference and the workshop) would be:

"An intimate, controlled and exclusive forum for pharmaceutical manufacturers, where the research industry can openly debate its fears and concerns regarding parallel trade and its impact on the business."

36. The literature describes the purpose of the workshops and how they were to be conducted as follows:

"This event offers straight answers and frank discussion in a single day - exclusively designed to meet the needs of pharmaceutical manufacturers and their representatives. Under strict confidentiality, key industry speakers and industry's legal representatives will reveal legal, ethical, commercially viable solutions to combat parallel trade, including:

pricing policies

distribution strategies

packaging and repackaging issues

protection of trademark rights

... and the application of recent judgments and pending cases on your company's situation."

37. The literature does not deal in any detail with what was to take place during the case studies but it does give some feel for what was going to happen;

"Third case study: Strategies to impede parallel imports (this case study will look, in particular, at volume-based distribution strategies and intellectual property rights issues)

... During this practical hands-on day you will develop a variety of strategies for dealing with parallel imports, using case study material. Working in teams, you will put these strategies into practice and select the most valuable options for your company. Your workshop leaders will encourage cross-fertilisation of ideas and enrich debate, making best use of their vast experience in this field."

38. Mr. Green also relies on literature which was distributed by Vision in Business when it was planning the conferences and workshops. In particular he relies on a letter of November 1998 which includes the following description of the purpose of the proposed second conference:

"The conference Legally and Commercially Viable Responses to Parallel Trade, 25th February 1999 is exclusively designed for the researching pharmaceutical industry. An intense, executive level day packed with invaluable strategies to minimise the impact of parallel trade. After attending this day, you will be able to:

* develop the best pricing strategies to defend your market position in view of the single currency

* develop practical strategies to minimise the impact of parallel trade on your business

* analyse current cases and their impact on your company's situation.

... These two events well (sic) provide you with critical facts and solutions to maximise your company's competitive market position and will also offer you an opportunity to network with your industry peers. ..."

39. In relation to the promise to help delegates analyse current cases and their impact on other company's situations, it is known from the evidence put in on behalf of Boehringer Ingelheim that the cases brought by that company against parallel importers in the UK including, presumably, the first of the seven actions which are the subject of these applications, were to be the subject of one of the presentations. In the absence of evidence of what actually happened during the 2nd and 3rd days in Vienna, there is no way of knowing whether or not those Boehringer Ingelheim cases were the subject of discussion and analysis amongst PPCs.
40. In addition to the above matters, the defendants rely on other material. Mr. Barker says in his witness statement that he has spoken to two representatives of companies which were represented at the conference. He says that one of those representatives was present during the workshop session and he believes the other one was also. He says that they informed him that the Legal Pharma Forum was established during February 26 and that this comprised a number of PPCs "who would co-operate to develop a strategy designed to deter and block parallel imports." He says that he was asked to keep the fact that those representatives had given him information confidential but he goes on:

"I do not want to name those who gave me the information referred to above. I am prepared to do so if necessary in strictest confidence to lawyers acting for the parties provided a proper undertaking as to confidentiality is given."

41. By the time of the hearing before me the parties had been unable to agree a confidentiality regime so the identities of the informants were not disclosed. Mr. Green says that there is other material which reinforces the defendants' allegation. Although a small number of letters raising trade mark concerns were sent by some PPCs to PIPCs before 26 February, in the following months a very large number of complaints, some written in virtually identical terms, flooded into the PIPCs including, in particular, the defendants. Exhibit JB7 to Mr. Barker's witness statement contains copies of this correspondence. Furthermore, within months of the conferences the defendants found themselves on the receiving end of six new trade mark infringement proceedings. Mr. Green says that this burst of PPC activity should be seen in the proper historical context. Even if one ignores the earlier ECJ cases concerning the repackaging of pharmaceuticals, the Paranova decision was handed down in 1996. Trade mark infringement proceedings could have been brought at any time since then. Furthermore some of the packaging which is now being complained of has been used by the defendants to the knowledge of the relevant claimants for years. He suggests that the sudden activity by numerous PPCs within weeks or months of each other cannot be put down to mere coincidence. He says the informants were right. Adopting the words of the ECJ in ICI v. Commission [1972] ECR 619, he says that this litigation is part of a co-ordinated attack by many of the PPCs on major PIPCs. It is of no consequence whether an agreement properly so-called has been reached between them. The material before the court supports his clients' case that knowingly the PPCs have co-operated with each other co-operation to use, inter alia, litigation to impede parallel importation. He relies on the view of the ECJ in that decision (at p. 665) that although parallel behaviour may not by itself prove a concerted practice it may amount to strong evidence of such a practice.
42. As against this, I must consider the counter evidence filed on behalf of the claimants. It has not been suggested that it would have been difficult for the claimants to ask Vision in Business to identify who was at the second Vienna conference or at the workshop day and to provide copies of any documentation produced and circulated. Neither of these appears to have been done. Instead of that someone in each of the claimants appears to have made unspecified efforts to discover who, if anyone, from his or her company or group of companies was present. As a result, only one person has been produced who was present on that day. He is Dr. Tietz, a director of a United Kingdom subsidiary of Eli Lilly. Even though he attended the whole of the workshop session, his evidence says very little indeed. Insofar as material, it reads as follows:

"4. While there were papers given and general discussions on the subject of parallel imports throughout the conference, I do not recall participating in or witnessing any discussions in which pharmaceutical companies agreed on any strategy or activity together against parallel importers.

5. I have never heard of the Euro Pharma Forum referred to in paragraph 14(1v) of the Pleading.

6. I do not recall any 'template letter' being referred to or circulated at the conference or any discussion or agreement concerning letters to be sent to parallel importers, as referred to in paragraph 15(i) of the pleading."

43. This really takes the matter no further. It will be noticed that although Dr. Tietz is able to say with certainty that he has never heard of Euro Pharma Forum, he can only say that he has no recollection in relation to the other important matters. He gives no information as to what was discussed and who else was there. Although he says that papers were given, he does not disclose them nor does he indicate their content. He does not say whether or not he made notes or sent a report of his attendance to anyone in Eli Lilly or elsewhere. Evidence from other employees of the claimants who were not present at the conference throws no light on what happened.
44. It is not for me to decide now whether a concerted practice to co-ordinate actions against parallel importers was arrived at in Vienna, particularly during the workshop day. But I have found Mr. Green's arguments persuasive. I have come to the conclusion that the defendants' allegation that such a concerted practice came into existence cannot be dismissed as fanciful. I do not think it would be safe to dismiss this allegation at this stage.
45. However, this is not an end to the matter. Even if it is arguable that an offensive concerted practice existed, before it could give rise to any form of defence or cross claim it would be necessary to show that the claimants were participants in it. At least the defendants would need to show that such an allegation was not fanciful.
46. Even if it is assumed that a relevant concerted practice came into existence, it is not and cannot be suggested that all PPCs participated in it. Mr. Barker expressly concedes that according to his information two PPCs, Novartis and Pfizer, were not supportive of the alleged strategy of co-operation to fight parallel importation. Even if a concerted practice exists, it does not follow that all of the present 7 sets of proceedings were commenced as a part of it. Each of the claimants and actions has to be looked at on its own facts.
47. First I can deal with the Glaxo Wellcome claimants. Both defendants' evidence and the arguments advanced on their behalf by Mr. Green allege that the concerted practice was created during the Vienna conference and particularly on the workshop day. This is consistent with the relevant proposed amended defence in the two sets of proceedings in which the Glaxo Wellcome companies are claimants. It asserts, inter alia, that it was the discussions and exchanges of information held during the second Vienna conference (i.e. the one from which everyone except PPCs were excluded) which led to the agreement or concerted practice. The proposed amended pleading also says: "To the best of the defendants' knowledge the Vienna conference and/or the Workshop were attended by the Claimant herein." That assertion is not supported by any evidence filed on behalf of the defendants. Mr. Barker, who furnishes most of the defendants' evidence as to what is believed to have happened in Vienna, lists those companies which are known or believed to have participated. He explains that he has made up this list not just from such Vienna conference documents as he has seen but also from meeting some of the delegates during breaks in the period he was allowed to be present, seeing the list of attendees pinned to a notice board and from information supplied by third parties. He does not include Glaxo Wellcome on that list. It appears that the only connection between those Claimants and the conference on which he relies is the fact that Clifford Chance, who acted for those companies at the time, presented a talk at the conference concerning Glaxo's case on dual pricing in Spain. As against this, Glaxo Wellcome have filed evidence that the only representative of theirs known to have attended was Ms Peers, the Legal Affairs Manager and Company Secretary of Glaxo Wellcome Belgium SA. She was not present on the workshop day. She states affirmatively that at no point during the period when she was present was there a general discussion regarding a proposed joint strategy between all the pharmaceutical companies within Europe to minimise the effect of parallel imports. I have come to the conclusion that there is not the beginning of a case that Glaxo Wellcome were party to any concerted practice which may have been hatched at the Vienna conference. To the extent that the amendments assert that Glaxo Wellcome were present in Vienna and there participated in the creation of a concerted practice, I will not allow the amendments to the defence and the counterclaim as against them.
48. The position of the other groups of claimants in relation to Vienna is rather different. None of them actually deny that they had representatives present during the workshop sessions. As mentioned above, Eli Lilly admit that they were represented at least by Dr. Tietz. None of them gives evidence as to what went on there. Save for Dr. Tietz, none of them is in a position to deny the substance of the information supplied to Mr. Barker by his informants (which is consistent with such literature and documentation as has been produced on this application) that the PPCs present on the workshop day decided to co-operate to develop a strategy to deter or block parallel imports. As for Dr. Tietz he cannot remember what was said. Furthermore the purpose of the second conference and workshop was set out in the documentation quoted above. Mr. Green says that it is not fanciful to suggest that those companies which sent representatives to Vienna wished to exploit it for those purposes. If so, they would almost inevitably have shared information and tactics with a view to defeating or hindering the business of their common and excluded enemies, the PIPCs.
49. I do not find this easy. The evidence that these three groups of claimants decided to co-operate together at the Vienna conference is thin. It is made up, at least in part, of inferences and information from unidentified sources. Mr. Silverleaf says that claims like this could cast a heavy documentary and costs burden on the claimants and should not be allowed unless there is real substance to support them. I have taken that submission into account but, in the end, I cannot say that the allegations against these claimants are so insubstantial that they do not merit being tried.
50. When a draft of this judgment was provided to Counsel in advance, it ended by noting that part of the evidence on these applications consisted of what was alleged to have passed between Mr. Barker and Mr. Römhild of Boehringer Ingelheim during their discussions and correspondence earlier in the year. I said that in view of the conclusions I had come to in relation to the Vienna meetings, referred to above, it was not necessary to go into a dispute between the parties as to whether the Barker/Römhild communications were covered by privilege and therefore inadmissible. However, Mr. Green drew my attention to the fact that part of the allegation made on behalf of the defendants was that the concerted practice or agreement was put in place at the second conference, at the workshop "or at a Forum meeting". This is a reference to the "Pharma Legal Forum", mentioned in paragraph 32 above, which was allegedly set up or agreed to be set up during the Vienna meetings to advance or finalise the concerted practice or agreement. He said that the evidence relating to the Forum threw light on whether or not a case of concerted practice could be made out against Glaxo Wellcome and that that allegation needed to be resolved in view of the findings that I had come to in paragraph 47 above. Having considered what he has said, I agree that it is necessary to say something about the Barker/Römhild discussions. However for this purpose it is not necessary to go into the dispute as to what was or was not said save in relation to one point.
51. Mr. Barker says that during the discussions, Mr. Römhild referred to the "Pharma Legal Group" or Pharma legal forum". He says that he was told that the function of the group was to exchange ideas and develop common strategies for constraining the activities of PIPCs. Mr. Barker's note of his meeting with Mr. Römhild contains a list of members of this alleged grouping. It includes a number of solicitors who are very well known in the intellectual property field and Glaxo Wellcome amongst others. Not only does Mr. Römhild deny that he ever mentioned any such group but, more importantly, evidence has been filed from a number of the named solicitors denying any involvement with such a group or for such a purpose. Furthermore Ms Edwards, the Trade Marks Manager in the Global Intellectual Property Department of Glaxo Wellcome Plc says:

"I have never heard of any "Pharma Legal Group", "Legal Pharma Forum", "Pharma Legal Forum" or any similar organisation allegedly set up at the Vienna Conference. I am certainly not a member of any such organisation and, to the best of my knowledge, neither is anyone else in Glaxo Wellcome."

52. Before considering the evidence relating to the Forum and what it is alleged to have done or discussed, for which purpose the question of privilege surrounding the Barker/Römhild conversations would need to be considered, it is convenient to come to a conclusion as to whether there is any credible evidence that, if the Forum exists, one of its members is Glaxo Wellcome.
53. In my view there is no such credible evidence. This is not simply a matter where there is a dispute between Mr. Barker on the one side and various witnesses from the claimants on the other. If that were the case then, assuming that the question of privilege could be disposed of, this could be a triable issue. In reality there is no such dispute. The firm evidence given by the various solicitors and Ms. Edwards can not be challenged by the defendants. Not only was Mr. Barker not present at any Forum meeting (assuming it exists), he does not purport to know who its members are. His note of his meeting with Mr. Römhild mentions the "Pharma legal group" and, at paragraph 3.3, sets out a list of members of it. That list of members could only have come from Mr. Römhild. However Mr. Barker's evidence in relation to this is as follows:

"I confirm that at our meeting on 30th June Jurgen Römhild specifically referred to "a pharma legal group", mentioned some or all of the names contained in the list ..." (emphasis added).

54. What is apparent from this evidence is that Mr. Barker cannot now recall who he says was mentioned by Mr. Römhild as being members of the alleged Forum and that the list may well contain the names of some who are not members. This goes nowhere near raising a credible case of Forum membership against Glaxo Wellcome. It follows that on this issue as well, the allegation made against Glaxo Wellcome can be described accurately as fanciful.
55. In paragraph 49 above, I have mentioned the fact that the case against the other claimants is thin and that allowing the amendments to be pleaded could cast a heavy documentary and costs burden on them. It may well be that some of Mr. Silverleaf's concerns will need to be addressed, for example by circumscribing the areas of disclosure which the claimants will have to give.
56. There is one final point to mention. First, one of the actions brought by Boehringer Ingelheim was commenced before the Vienna conference. Had this been the only action brought by them I would not have allowed the defence against them to be amended. It is difficult to see how an action commenced before the concerted practice is unlikely to be a product of the practice. The defendants sought to get round this by accusing Boehringer Ingelheim of being the ringleader of the concerted practice so that their first action was the nucleus around which the practice was formed. There appears to me to be no evidence to support that allegation. However the second and third actions brought by Boehringer Ingelheim were commenced a few weeks after the Vienna conference and included complaints about packaging which the claimant had known about for at least a year. It is not entirely fanciful that those proceedings were commenced in accordance with the alleged common strategy. If the defences are to be amended in relation to them, there is little point in refusing like amendments in the first Boehringer Ingelheim action particularly since there is a possibility, which is the subject of an outstanding application, that all the Boehringer Ingelheim actions will need to be heard together.