Ipsofactoj.com: International Cases [2001] Part 2 Case 9 [HL]


HOUSE OF LORDS

Coram

Consorzio Del Prosciutto

Di Parma

- vs -

Asda Stores Ltd

LORD NICHOLLS OF BIRKENHEAD

LORD HOFFMANN

LORD HOPE OF CRAIGHEAD

LORD CLYDE

LORD SCOTT OF FOSCOTE

8 FEBRUARY 2001


Judgment

Lord Nicholls of Birkenhead

My Lords,

  1. I have had the advantage of reading in draft the speeches of my noble and learned friends Lord Hoffmann and Lord Scott of Foscote. I agree that, in order to decide this appeal, it is necessary for the House to refer to the European Courts of Justice a question to the effect mentioned by Lord Hoffmann.

    Lord Hoffmann

    My Lords,

    THE ISSUE

  2. Prosciutto di Parma, or Parma ham, has been made in the Parma area from pigs reared in northern and central Italy since Etruscan times. It is famous throughout the world. It is made according to traditional methods and standards. The name "Prosciutto di Parma", signifying ham from the Parma area, is a "protected designation of origin" (PDO) under European Community legislation, which I shall later have to analyse in some detail. The outward guarantee of the authenticity of the product is the brand mark in the form of a five pointed coronet (the "corona ducale") symbolising the ancient Grand Duchy of Parma. By Italian law this has to appear upon the product in whatever form it is sold to the customer. If he buys a complete ham, or slices cut from a ham in the shop, it must appear branded upon the ham itself. If he buys pre-packaged pieces or slices, it must appear stamped upon the package. The authority which under Italian law enforces compliance by producers with the required methods and standards of manufacture and also protects the name and mark against misuse by others is the "Consorzio del Prosciutto di Parma" or Parma Ham Association ("the Association"). It has a system of inspection, which includes supervision of the application of the corona ducale brand on hams and packaging.

  3. The second respondent, Hygrade Foods Ltd ("Hygrade") is a reputable food processor with premises at Corsham in Wiltshire. It imports boned hams from a producer in Parma. There is no dispute that the hams are authentic, properly made and branded. But Hygrade then slices and packages the hams in Wiltshire. It puts the slices into packages on which they are described as Parma ham but which do not bear the corona ducale. It supplies the packages to the first respondent Asda Stores Ltd ("Asda") which sells them to the public in its supermarkets. The Association say that this is unlawful, not only under Italian law but also under European law, enforceable in the courts of all the member states. In the present proceedings, the Association claims an injunction against Hygrade and Asda, restraining them from marketing the packages as Parma ham. The judge (Mr. Lawrence Collins QC, sitting as a deputy High Court judge of the Chancery division) held that they had no rights under European law and his decision was affirmed by the Court of Appeal. The Association, and one of the Parma ham producers which was added in a representative capacity when a question was raised about the Association's locus standi, appeals to your Lordships' House.

    ITALIAN LAW

  4. In Italian law, the designation "Parma ham" is protected by Law No. 26 of 13 February 1990, entitled "Protection of denomination of origin 'Prosciutto di Parma'". Article 1 provides that the designation is exclusively reserved for-

    .... ham equipped with a distinguishing mark that allows permanent identification, obtained by processing fresh legs of national pigs .... produced according to the provisions laid down in this law and aged in the [traditional] area of production ....

  5. Article 6 deals with the application of the mark:

    1.

    After the mark has been applied, Parma ham can be sold deboned and in pieces of varying weight and shape, or it may be sliced and suitably packaged.

    2.

    In cases provided for in sub-paragraph 1, if it is not possible to keep the mark on the product, the former shall be indelibly stamped so that it cannot be removed from the packaging, under the control of the competent body and according to methods determined in the statutory instruments. In these cases, packaging operations shall be carried out in the [traditional] production area ....

  6. The "competent authority" for this purpose was declared in article 11 to be the Ministries of Industry and Agriculture, which could and did delegate its functions to the Association. Article 23(c) conferred a power to make regulations concerning, inter alia, the "application of the indelible stamp .... including the affixing of the mark on packaging in accordance with .... article 6." These regulations were made by the two Ministries by Decree No 253 of 15 February 1993. They contain the most elaborate provisions designed to ensure the authenticity of the product at every stage in the chain of supply. Breeders have to stamp their pigs with an identification code, slaughterers have to be authorised and apply their identification code to the pork legs, producers have to keep records of properly marked fresh pork legs received for processing. Slicing and packaging must take place in approved "laboratories" within the traditional area, supervised by inspectors of the Association, who keep records of hams received, weights sliced and so forth. Article 29 of the regulations also provides for labels on packages to bear various items of information additional to the mark required by article 6 of the law.

  7. It is therefore clear that the marketing as "Parma ham" of ham packaged in Wiltshire without the appropriate mark on the package would be unlawful in Italy, whatever the authenticity of the ham at earlier stages in the chain of manufacture. But the Association does not, and probably cannot, rely upon Italian law. It relies upon European law.

    EUROPEAN LAW: THE ARGUMENTS

  8. European protection of "geographical indications and designations of origin" was instituted by Council Regulation (EEC) No 2081/92 ("the Regulation") of 14 July 1992 which came into force on 24 July 1993. It creates a procedure by which the Commission can register a name which satisfies specified criteria as a "protected designation of origin" ("PDO") or a "protected geographical indication" ("PGI"). A PDO is the name of a place used to describe a product, originating in that place, with characteristics that are due to its particular environment. A PGI is similar to a PDO except that the causal link between the place of origin and the quality of the product may be a matter of reputation rather than verifiable fact. I need not say much more about a PGI because we are concerned solely with a PDO which, after going through the prescribed procedure, was registered by the Commission on 12 June 1996. A registered PDO was to enjoy, in the language of one of the recitals to the Regulation, "protection in every member state". Accordingly, the Association claims such protection in the United Kingdom.

  9. The respondents attack the Association's case at a number of different levels.

    • At the highest level, they say that the Regulation is invalid. But the courts of this country have no jurisdiction to declare the act of a Community institution invalid: Foto-Frost v Hauptzollamt Lubeck-Ost (Case 314/85) [1987] ECR 4199. So this defence would require a reference to the European Court of Justice.

    • Secondly, they say that upon its true construction, it was not intended to create rights and duties directly enforceable in the courts of member states.

    • Thirdly, they say it should not be enforced because the extent of the protection afforded to the PDO was not precisely defined, or not sufficiently publicised, or both. Arguments of this kind might, as it seems to me, be regarded as operating in one of two ways: either in aid of construction, to support the argument that the Regulation was not intended to have direct effect, or alternatively, as showing that, as a Regulation intended to have direct effect, it should be treated as invalid. The latter form of argument would again require a reference to the European Court. I am not sure that Mr. Green, who appeared for the respondents, accepted this last proposition. He suggested, I think, that a regulation might be intended to create directly enforceable rights but not create them for one or other of the reasons upon which he relies and yet somehow be valid. I shall return to this point in due course.

    • Fourthly, the respondents say that while the PDO may confer a degree of protection which requires ham sold as Prosciutto di Parma to have been made in Parma, it does not extend to a requirement that packages should bear a mark which has to be applied in Parma. This argument again takes different forms. One is that the Regulation, upon its true construction, read with the documents to which it refers, does not confer the wider protection. Alternatively, if it should be so construed, the Commission did not have power under the Regulation (or possibly even under the EEC Treaty (Treaty of Rome) (Cmnd 5179-II)) to register a PDO purporting to confer the wider protection. The latter form of argument would again require a reference.

    THE REGULATION

  10. As the effect of the Regulation is central to all the above arguments, I am afraid that I must summarise its provisions in some detail. It recites that certain member states had successfully introduced "registered designations of origin" which enabled producers to secure higher returns for high quality products and enabled consumers to purchase such products "with guarantees as to the method of production and origin". The Italian protection of the designation "Prosciutto di Parma" was no doubt an example. It recited that there was however a diversity in national practices. A "framework of Community rules on protection" would provide a more uniform approach. The method to be adopted was that "to enjoy protection in every member state", a PDO (or PGI) would have to be "registered at community level". A product bearing a registered PDO or PGI "must meet certain conditions set out in a specification." Article 1 then defines the scope of the Regulation and articles 2 provides that "Community protection of designations of origin and of geographical indications of agricultural products and foodstuffs shall be obtained in accordance with this Regulation". The specific provisions for obtaining such protection are set out in articles 2 to 7. A PDO and a PGI are defined, in the way I have already indicated, in article 2(a) and (b) respectively.

  11. Article 4 is the first of the provisions which deals with the procedure for registration. It starts with a general provision (4.1) that "to be eligible to use" a PDO "an agricultural product .... must comply with a specification". Article 4.2 then sets out what must appear in the specification under various headings. Sub-paragraphs (a) and (b) are concerned with the name of the product and its description. Sub-paragraph (c) is the definition of the geographical area, (d) is the evidence that the product originated in the area, (e) is the description of how it is made and (f) is the evidence of the link between the product and the area required by article 2(a). For present purposes, since this case is about packaging and labelling, the important parts of the specification are sub-paragraphs (g) "details of the inspection structures provided for in article 10", (h) "the specific labelling details relating to the .... PDO" and (i) "any requirements laid down by Community and / or national provisions". I shall return later to the significance of these parts of the specification.

  12. Article 5 provides in paragraph 1 that a group of producers may apply for registration and in paragraph 3 that the application must include the product specification. The application is not sent direct to the Commission but to the applicant's member state, which checks that it is justified and sends it to the Commission. By article 5.6, member states are required to introduce the necessary laws to enable this application procedure to function.

  13. Article 6 then takes on the story from the point at which the application is received by the Commission from the member state. The Commission must verify "by means of a formal investigation" whether the application includes all the particulars required by article 4. If the result is favourable, it must publish in the Official Journal of the European Communities-

    the name and address of the applicant, the name of the product, the main points of the application, the references to national provisions governing the preparation, production or manufacture of the product and, if necessary, the grounds for its conclusions.

  14. After publication, article 7 provides for objections by "legitimately concerned" persons on various grounds. These must be sent to the competent authorities in the member states and the member state may then object to the registration. If the applicant member state and the objecting member state cannot arrive at an agreement within a specified time table, the Commission decides whether to maintain the registration or not.

  15. Articles 8 to 14 then deal with the consequences of registration. The most important is article 8, which simply says that a PDO "may appear only on agricultural products and foodstuffs that comply with this Regulation." Article 9 provides for the amendment of a specification, "in particular to take account of developments in scientific and technical knowledge". Article 10.1 provides that member states must set up "inspection structures":

    the function of which shall be to ensure that agricultural products and foodstuffs bearing a protected name meet the requirements laid down in the specification.

  16. There must be designated inspection authorities (paragraph 2) which "offer adequate guarantees of objectivity and impartiality with regard to all producers or processors subject to their control" and have sufficient staff and resources: paragraph 3. If the inspection authority establishes that a product bearing a PDO in its member state does not meet the specification criteria, it must take steps to ensure that the Regulation is complied with: paragraph 4. And the costs of the inspection system must be borne by the producers using the PDO.

  17. Article 11 provides for complaints by member states that a product produced in another member state is not in accordance with the specification. If there are "repeated irregularities" and no agreement is reached, the Commission may take the "necessary steps" which may include cancellation of the registration.

  18. Article 13 extends the protection of registered names beyond the use of the name in respect of the registered product. It provides that registered names "shall be protected" against various forms of infringement, including

    1. use in certain circumstances in respect of products not covered by the registration

    2. any "misuse, imitation or evocation" of the name

    3. various forms of misleading get-up and

    4. "any other practice liable to mislead the public as to the true origin of the product".

    Article 14 deals with potential clashes between a PDO and a trade mark registration. Once a PDO has been registered, a member state may not register a trade mark which would infringe the extended protection given by article 13. On the other hand, there are savings for existing trade marks in paragraph 2.

  19. Finally, articles 15 and 17 deal with the registration procedure. Article 15 provides that the Commission is to be assisted by a committee of representatives of member states which gives its opinion on a draft measure submitted by the Commission. If the Committee does not deliver an opinion, the Commission must submit the draft to the Council. If the Council does not act within three months, the Commission will adopt the proposed measure. Article 17 provides what has been called a "fast track" procedure by which, within six months of the Regulation coming into force, member states may apply to the Commission for registration without going through the objection provisions of article 7. The application for the Parma PDO was submitted under this provision, went through the procedure of article 15 (neither the Committee nor the Council expressed a view) and was registered by the Commission, together with many other such applications, by the Commission Regulation (EC) No 1107/96 of 12 June 1996.

    DIRECT ENFORCEABILITY

  20. My Lords, I think that the best place to begin is by considering whether, as a matter of construction, the Regulation was intended to confer protection upon a PDO which is directly enforceable in the courts of member states. Once one has decided this question, the other arguments put before your Lordships tend to fall into place.

  21. Unlike a directive, which requires implementation by the member states, a regulation is usually intended to lay down generally enforceable rules of Community law. Article 249 (ex article 189) of the EEC Treaty provides: "A regulation shall have general application. It shall be binding in its entirety and directly applicable in all member states." Of course the fact that it is directly applicable does not necessarily mean that it creates rights and duties enforceable in the courts. It may, like some domestic statutes, create public duties without creating private law rights. One would normally assume, however, that unless the Regulation contemplated that it would have to be fleshed out by domestic or Community legislation, it was intended to be effective to create rights or duties or both and not be what Lord Simonds once called a "pious aspiration". (Cutler v Wandsworth Stadium Ltd [1949] AC 398, 407).

  22. In the present case, I have no doubt that the exclusive right to the use of a PDO was intended to be enforceable in the courts of member states. The Regulation was intended to create a Community right in substitution for previous national rights. The recitals speak of registration enabling a PDO to "enjoy protection in every member state." Article 4.1 provides that to be eligible to use a PDO a product must comply with the relevant specification and article 8 says quite unequivocally that a PDO may appear only on products which comply with the Regulation. Article 13 says that registered names "shall be protected" against the various additional forms of misuse which I have mentioned and article 17.3 contemplates that the national protection of such names shall lapse when the PDO is registered. In Consorzio per la Tutela del Formaggio Gorgonzola v Käserei Champignon Hofmeister GmbH & Co KG (Case C-87/97) [1999] E.C.R. I-1301 the European Court of Justice said (in paragraph 18, p 1331) that upon the registration of a PDO (in that case, Gorgonzola) national rules ceased to apply and "only the legal rules laid down in [the Regulation] are, together with the Treaty rules, relevant for the purpose of answering the questions referred [about the scope of the protection of the PDO]. The whole judgment (see, for example, paragraph 36) proceeds on the assumption that protection of the PDO is now guaranteed by Community law.

  23. In the Court of Appeal, Aldous LJ said that the Regulation was "only intended to set up a framework to set up a uniform approach" and made a number of other references to the Regulation being a "framework". The word appears to have been taken from one of the recitals which says that "a framework of Community rules on protection will permit the development of .... designations of origin". Aldous LJ seems to have thought that the word "framework" indicated that national or subordinate Community legislation would be needed to implement the Regulation, by analogy with what is sometimes called a "framework directive", which lays down very general principles to be embodied in national legislation.

  24. In my opinion the analogy is unsound. What the recital to the Regulation contemplated was a framework of Community rules, on which would proceed the development of PDO's - not a framework of principles, on which would proceed the development of national or Community rules. The Regulation does specifically require the introduction of national rules as to certain matters: setting up the application procedure under article 6 and the inspection procedure under article 10. But there is no other requirement for national rules and, as I have said, a clear statement that the Community protection of a PDO will replace that accorded by national rules. Article 16 refers to detailed Community rules for applying the Regulation being adopted, but, as I shall later explain, I do not think that this power was intended to detract from the direct effect of the main provisions.

  25. Aldous LJ also described articles 10 and 11 as a "framework for enforcement of registered rights", which he appears to have regarded as exhaustive. But that seems to me to rest upon a misunderstanding of the purpose of those articles. Article 10 provides that, as a price of the exclusive right to use the PDO, the producers in a member state must pay for an impartial and efficient inspection system which will ensure that the products they sell conform to the specification. Article 11 allows another member state to complain that the producers who have the right to use the PDO are marketing goods under that description which are below specification. The ultimate sanction of the Commission for "irregularities" of this kind is cancellation of the registration. Thus both articles 10 and 11 are concerned with the quality of goods marketed by producers authorised to use the PDO. They are designed to ensure that producers who enjoy the protection of a PDO do not market goods of inferior quality, to the detriment of consumers in that and other member states. But these articles have nothing to do with the enforcement of the exclusive right by authorised producers against others. Such enforcement depends simply upon the fact that article 8 lays down a clear rule and upon the general principle that the courts of member states are obliged to provide remedies to enforce Community rights.

    THE SCOPE OF THE PDO

  26. The next question is the nature of the directly enforceable right conferred by the registration of the PDO. Again, the Regulation is entirely clear upon this point. Article 8 provides that the PDO may appear only on products which comply with the Regulation and article 4.1 provides that to be eligible to use a PDO, a product must comply with the specification. Thus the specification lays down, for authorised producers within the designated area, the standards they must observe in producing the product and the labelling and other measures they must take to guarantee its authenticity to the consumer. At the same time, for outsiders, it defines the product in respect of which the producers have the exclusive right to use the PDO.

  27. The Parma ham specification runs to some 84 pages, organised under the lettered heads of article 4.2 to which I have already referred. As one would expect, it contains a good deal of material about the history of the pig in the Po Valley and the details of breeding, slaughtering and curing. But your Lordships need be concerned only with sections under (G) (details of inspection structures), (H) (labelling details) and (I) (Community and national requirements). Part H is headed "Specific Requirements Concerning the Presentation, Identification and Labelling of Parma Ham". It refers to and summarises the Italian legislation to which I have already referred. Paragraph H.2 says:

    The 'ducal coronet' brand is affixed at the end of the maturing period on the hams which, after all the necessary inspections have been carried out, meet the product and quality requirements provided for by the rules. The 'ducal coronet' provides identification and authorisation of the Parma ham, in that it both distinguishes the product from other raw hams, guaranteeing its authenticity, and guarantees that the product has gone through all the mandatory production stages .... In any case, the product qualifies as Parma ham solely if it bears the 'ducal coronet' brand together with the producer identification initials, irrespective of the type of product presentation (bone in, boneless, put up in cuts or sliced and pre-packaged as appropriate.) ....

    .... the devices used for the 'ducal coronet' branding bear special identification marks established by the Association for controlling purposes. In conclusion, the most relevant peculiarity of the Parma ham - indeed the sole formal discriminating element - at the level of product presentation to customers is therefore the 'ducal coronet' brand. The presence of this marking is the sole element allowing lawful use of the designation of origin: a product without the 'ducal coronet' cannot bear the designation of origin on labels, packages, sales documents or at the time of sale (whole, sliced and pre-packaged or at retail outlets.).

  28. Under section G of the specification, reference is made to the role of the Association in supervising the application of the brands, attending the slicing and packaging and verifying that the Italian regulations have been complied with. Under section I, reference is made to the domestic provisions to which I have referred.

  29. Mr. Green submitted that the requirements as to slicing, packaging and labelling do not form part of the exclusive rights conferred by the PDO. The specification is a discursive document and not everything it contains is intended to be enforceable. The purpose of the PDO is to protect products which have the quality link with a geographical area required by article 2.2(a) and it cannot therefore protect matters which have no effect upon the quality of the product. The fact that a ham, whether whole or in a package, bears a mark affixed under the supervision of the Association, does not affect the question of whether it is a genuine Parma ham or not. It either is or it is not and in the present case it is accepted that the respondents' packages contained genuine Parma ham of appropriate quality.

  30. The judge accepted this argument. He said that neither the Regulation nor the Commission Regulation by which the PDO was registered contained any reference to slicing and packaging. The fact that it was mentioned in the specification was not enough. There had to be some provision in the Regulation which incorporated the slicing and packaging requirements. In his opinion there was nothing in article 4 of the Regulation which required the product specification to include "the subsequent commercial stages, such as slicing and packaging, by persons other than farmers". They fell outside the scope of protection.

  31. My Lords, it is noticeable that the judge discusses "slicing and packaging" without in any way connecting these operations to the reason why the Italian authorities require them to be controlled and supervised, namely, for the purpose of ensuring that the authenticity of the product in sliced form can be guaranteed to the consumer by an authentic label. The purpose of protection of the PDO, according to the recitals to the Regulation, is to enable the consumer to "purchase high quality products with guarantees as to the method of production and origin". The PDO will "enhance the credibility of the products in the consumers' eyes". Article 4.2(h) specifically requires that "abelling details" be included in the specification. I can therefore see no reason why labelling requirements should not form a part of the specification with which article 4.1 requires the product to comply. As a matter of plain language, the rules in section H (which incorporate by reference the Italian law and regulations) are part of the specification.

  32. My Lords, the authenticity of Parma ham has traditionally been guaranteed by the brand on the ham itself. The consumer in the butcher or delicatessen has been able to satisfy himself on this point by inspecting the ham from which his order was sliced. But the retail revolution of the past 30 years has meant that much more ham is now sold pre-packaged in supermarkets. In the absence of control by the producers over the labelling of such packages, the supermarket consumer would have no guarantee other than the word of the retailer. He would have to take on trust the claim that the package contained genuine Parma ham. And the producers in Parma would have no convenient way to protect their goodwill except by testing packages in retail outlets all over the Community to establish, perhaps by some form of analysis, whether the product sold as Parma ham is genuine or not. In the present case, it is accepted that the respondents are honest traders and that their packages contain the authentic product. But this will not always be the case. The point of the labelling rules, which in the case of packaged products are inseparable from the packaging and slicing rules, is to provide a reliable and easy way to detect infringement of the PDO. They complement the inspection process in Parma, which otherwise would serve no purpose.

    CERTAINTY AND TRANSPARENCY

  33. Mr. Green next says that even if

    1. the Regulation was intended to confer directly enforceable protection of the PDO and

    2. the description of the product in respect of which there is protection is contained in the specification, including the packaging, slicing and labelling rules, nevertheless it does not achieve such protection because,

      • first, the language of the specification is too imprecise and

      • secondly, the specification is not readily available to the public.

    (a) Certainty

  34. In H J Banks & Co Ltd v British Coal Corporation (Case C-128/92) [1994] E.C.R. I-1209, 1236-1237 Advocate General Van Gerven summarised the state of European jurisprudence on the requirements for direct effect. He cited Hurd v Jones (Case 44/84) [1986] ECR 29, para 47:

    According to a consistent line of decisions of the court, a provision produces direct effect in relations between member states and their subjects only if it is clear and unconditional and not contingent on any discretionary implementing measure.

  35. He went on to say that it was an eminently practical test. The question was whether the provision of Community law was sufficiently operational in itself ; it must be "capable of being applied by a court to a specific case".

  36. I have already said that in my opinion the Regulation did not contemplate any implementing measures in domestic law except on the two ancillary points which I have mentioned. Article 16 refers to "detailed rules for applying this Regulation" being adopted (as Community rules) by the procedure laid down in article 16. But no further rules were needed to enable the provisions under consideration to be applicable and no such rules have ever been adopted. I can see no difficulty in applying the terms of the Regulation to a specific case. Mr. Green complained that nowhere in the specification does it say specifically what his clients are forbidden from doing. It does not in my opinion need to. That is the function of the Regulation itself, which says in terms in article 8 that a PDO may appear only on products which comply with the Regulation. It follows that no one may put it on products which do not comply. The function of the specification, under article 4, is to tell you which products comply. And the terms of Part H of the specification makes it clear that packaged ham which has not had the corona ducale stamped on the package under the supervision of the Association does not comply. My Lords, I do not see how it could be more clearly spelled out.

    (b) Transparency

  37. Both the judge and Aldous LJ in the Court of Appeal said that the Regulation did not have direct effect because the specification containing the description of the product (and in particular the requirements as to the packaging and labelling of sliced ham) had not been published in the Official Journal, or, for that matter, anywhere else. They said that it was a general principle of European law that any measures directly enforceable against the citizen should be "transparent", readily accessible. The Commission will have a copy of the specification and, if so requested, would no doubt make it available pursuant to Commission Decision of 8 February 1994 on public access to Commission documents published in the Official Journal on 18 February 1994 (L 46/58). (This Community act does not appear to have been cited to the Court of Appeal, who said that there was no obligation upon the Commission to provide a copy of the specification.) Alternatively, an interested person could obtain it from the Association, whose name and address is published in the Official Journal as part of a list of inspection bodies notified to the Commission under article 10 of the Regulation. But in either case it would be in Italian. The judge and the Court of Appeal said that this was not good enough. A dealer in the U.K. should be able to ascertain from a readily accessible document in his own language precisely what products he was entitled to sell. Mr. Green painted an alarming picture of the difficulties of the corner grocer in obtaining and comprehending the 300 or so specifications, in a variety of Community languages, of products enjoying a PDO or PGI.

  38. The "ordinary" application procedure under articles 5 and 6 requires the Commission to publish "the main points of the application" and the "references to national provisions governing the preparation, production or manufacture of the product" in the Official Journal: see paragraph 6.2 It is then open to objections under article 7. But, under the "fast track" procedure in article 17, article 7 is excluded. Although it does not expressly say that article 6 is excluded, there is no evidence of publication and I shall assume there was none. Mr. Green said, without making any concession, that publication under article 6.2 might have satisfied the requirements of transparency but the fast track procedure certainly did not.

  39. My Lords, the Court of Appeal regarded this argument as supporting their view that the Regulation was not intended to be directly effective. But, if your Lordships agree that the language and purpose of the Regulation shows beyond doubt that it was intended to be directly effective, then the argument on transparency becomes an attack on the validity of the Directive, on its competence to achieve its purpose. Mr. Green is saying that although the Council which made the Regulation intended it to be directly effective, it was for this purpose ultra vires because the method of legislation adopted was not sufficiently transparent. Furthermore, the criticisms which are made of the lack of transparency of the Parma ham specification would also apply, one would imagine, to every other specification by reference to which a PDO or PGI has been registered. It is unlikely that the specification for Buxton blue cheese is more readily available to an Italian grocer than the specification for Parma ham to an English one. The Regulation specifically contemplates that registration will be by reference to a specification for which no provision for publication or translation is made. So the argument is an attack on the validity of the entire system of PDO's and PGI's created by the Regulation. If your Lordships regard such a submission as arguable, it would have to be referred for decision to the European Court. In my opinion, however, it is for a number of reasons not so arguable.

  40. The Regulation itself is published in the Official Journal. Article 4 will inform the reader that the PDO is protected in respect of a product described in the specification. So the objection is not that the law itself is inaccessible. It is that it refers to a document filed with the Commission and available for inspection but for which no public register (such as a register of patent specifications) is expressly provided.

  41. We were referred to no case in which a Regulation has been held invalid, or ineffective to achieve direct effect, because it created rights by reference to an unpublished document. The Court of Appeal referred only to Commission of the European Communities v Federal Republic of Germany (Case 29/84) [1985] ECR 1661 in which the question was whether Germany had given effect in domestic law to a directive which required the mutual recognition of nursing diplomas. German law conferred no right of recognition upon holders of diplomas from other member states but allowed their holders, if thought suitably qualified, to be given authority to practice on a case by case basis. But the German Government said that they had adopted an administrative policy which would result in recognition being accorded to all nurses from other member states. There was, however, nothing to stop them from changing the policy. The European Court said that this did not amount to an adequate implementation of the directive. Sir Gordon Slynn, Advocate General, said at p 1666, that the German administrative policy, which was not to be found in any public document, lacked transparency:

    There are two reasons for this requirement:

    (1)

    to enable the Community citizen to know his rights and have at his disposal a text on which he can rely simply and cheaply;

    (2)

    to ensure sufficient transparency to enable the Commission to check effectively whether a directive has been implemented.

  42. These are, if I may say so, sensible remarks in the context of the implementation in national law of a directive conferring rights upon a class of citizens. In the German case, there was no way that a nurse with a foreign diploma could have obtained any document telling her that she was entitled to recognition. It is far from the present case, in which anyone interested in dealing in a product protected by a PDO can easily discover that it is protected and that the protection is defined by a specification held by the Commission and the local inspection authority.

  43. The question, then, is whether the Council of Ministers, in framing the Regulation, was entitled to consider that this was enough. I put the question in this way because clearly the Council has a legislative discretion in the matter. It is entitled to adapt the degree of publicity required for documents to which the Regulatuion refers to the circumstances of the case. The burden of showing that a Community institution exceeded the limits of its discretion in such a matter is a heavy one. In The Queen v Ministry of Agriculture Fisheries & Food, Ex parte Fedesa (Case C-331/88) [1990] ECR I-4023, 4061 the European Court said in relation to an alleged infringement of the principle of legal certainty:

    .... having regard to the discretionary power conferred on the Council in the implementation of the common agricultural policy, be limited to examining whether the measure in question is vitiated by a manifest error or misuse of powers, or whether the authority in question has manifestly exceeded the limits of its discretion.

    Likewise in relation to the principle of proportionality, which requires that prohibitory measures be "appropriate and necessary in order to achieve the objectives legitimately pursued by the legislation in question, the Court said at para 14 that in view of the discretionary power to implement the common agricultural policy, the legality of the measure would be affected only if it was "manifestly inappropriate"

  44. In considering whether the Council was entitled to regard the specification as sufficiently available, it is important to bear in mind that its main purpose is to lay down manufacturing standards, labelling requirements and so forth for persons engaged in production, who will by definition be operating in a defined area of a member state. It is therefore entirely appropriate that the specification should be in the language of the relevant area and available from the local inspection authority. In practice, no one outside Parma needs to know anything about the specification except the fact that ham sold bearing a label saying that it is Parma ham must have the corona ducale mark. It is different from a patent specification, in which the purpose of the claims is to mark out the extent of the patentee's monopoly in respect of a product or process which may be made or utilised anywhere in the area covered by the patent.

  45. It is only in an unusual case like the present, in which a trader in another member state wants to change the packaging or way in which the product is presented to the consumer, that he will need to know whether such a change would be inconsistent with the use of the PDO. The notion that the local delicatessen will want to satisfy himself that his Roquefort, Gorgonzola and White Stilton have been made in accordance with their respective specifications seems to me fanciful.

  46. This leads me to the next point, which is that the degree of publicity appropriate for the specification is also linked to the remedy which the national court is expected to provide. Mr. Green's submissions seemed to assume that if the Regulation was directly enforceable in domestic courts, it would follow that any grocer who, even in good faith, sold Camembert de Normandie or Single Gloucester which deviated from the recipe in their specifications would face criminal or civil penalties. There seems to me no reason why this should be so. First, it does not seem to me to be the business of domestic courts in other member states to enforce compliance with the specification by authorised producers within the area of the PDO, still less by the indirect method of imposing sanctions upon retail vendors within their own countries. That is the business of the member state concerned and the complaint machinery under article 11. The only remedy which the Regulation requires is for the protection of the producers within the PDO against outsiders. Secondly, it is a general principle of Community law that the nature of the remedy provided for protection of a Community right is a matter for domestic law, subject to the requirement that it must not be such as to make the Community right ineffective. So, for example, I do not think that if English domestic law adopted a rule that an action for damages against a seller of goods which infringed a PDO would lie only if he knew or ought to have known that the goods infringed, it could be said to be rendering the Commuinity right ineffective. I rather think that this would also be the case even if the U.K. courts decided that the only appropriate remedy was an injunction, but this point need not be decided: compare Garden Cottage Foods Ltd v Milk Marketing Board [1984] AC 130. In either case there could be no injustice arising from the difficulty of obtaining a copy of the specification. If the defendant needed the specification to know that the goods infringed and could not reasonably have been expected to obtain a copy, he would not be liable until the relevant provisions had been communicated to him.

  47. In the present case, of course, the respondents are fully aware that their product does not comply with the specification. They have a copy. But they claim the right to go on selling the product on the ground of what seem to me to be imaginary injustices which might be inflicted on other people if the Regulation were directly enforceable. I would reject this argument.

    VALIDITY OF THE COMMISSION REGULATION

  48. The next point is that the Commission, in registering the Parma ham PDO with a specification which included the provisions for slicing, packaging and labelling, exceeded its powers under the Regulation or the EEC Treaty or both. Again this is a matter which would have to be referred to the European Court if your Lordships thought the point was arguable. But for my part, I do not see how it can be.

  49. So far as the Regulation is concerned, I have already pointed out that article 4.2 specifically requires that labelling requirements be included in the PDO. The requirements as to slicing and packaging are integral to be operation of the requirements for labelling ham in the sliced and packaged form. But Mr. Green argues that these requirements are for two reasons outside the powers conferred by the Treaty.

  50. First, because they cannot be regarded as within the powers conferred by article 37 (ex article 43) of the Treaty under which the Regulation was made. These powers, relating to the common agricultural policy, are limited by article 32(3) (ex article 38(3)) to products within Annex I (ex Annex II). This lists a large number of agricultural products, including "Preparations of meat". A cross-reference to the Common Customs Tariff, item 1602 41 shows that this includes "hams and cuts thereof". The respondents concede that the Treaty therefore confers a power to regulate dealing in sliced ham but say that this does not include regulation of the packaging of sliced ham. But in my opinion the provisions of the specification are not concerned with the regulation of packaging as such. The supervision of the packaging is entirely for the purpose of ensuring the authenticity of the sliced ham and this object, it seems to me, is well within the powers conferred on the Community institutions by the Treaty.

  51. Secondly, it is said that the effect of the slicing, packaging and labelling provisions is to confine those activities to the Parma area and to prevent firms elsewhere, in Italy or other member states, from carrying on what should be legitimate slicing and packaging activities. This, it is said, amounts to a quantitative restriction on exports (from Italy) or imports (of unsliced hams into other member states): see articles 28 and 29 (ex 30 and 34). Or alternatively, it is simply an undue restriction on freedom of trade.

  52. If, as I suggest, the control of slicing and packaging is in furtherance of a legitimate Community objective of guaranteeing the authenticity of sliced Parma ham bought under the PDO, then the only ground upon which the above argument can succeed is that the means adopted have a disproportionately adverse effect upon trade between member states or trade generally. Given that the act of a Community institution will be held to fail the proportionality test only if it is "manifestly inappropriate", I do not see how it can possibly pass this test. The PDO is a form of intellectual property right, conferring upon producers in a certain area the exclusive right to use their regional name as descriptive of the product. That exclusive right, like all intellectual property rights, is inherently restrictive of trade. The exercise of that right is linked to strict requirements designed to ensure that the product conforms to established standards. And in the case of sliced Parma ham, the packaging and labelling requirements are the only effective way of ensuring the authenticity of the product when it is sold to the consumer in what is now probably the most common form. In my opinion it is quite unarguable that the enforcement of such requirements is a manifestly inappropriate way of giving effect to the objects of the Regulation. The only alternative would be to require the Association to supervise the activities of anyone who chose to slice and package Parma ham anywhere in the Community. I do not think that the Commission could be criticised for taking the view that this would be unreasonable.

  53. In my opinion the respondents were infringing a valid Community right directly enforceable in a U.K. court. But since preparing this judgment, I have had the advantage of reading in draft the speech of my noble and learned friend Lord Scott of Foscote. In the light of his views, it is not possible to say that the conclusion which I have reached on the effect of the Regulation and specification is acte claire. Since the conclusion turns upon the construction of Community instruments, it is therefore necessary for your Lordships to refer the question to the European Court of Justice. I would advise your Lordships to refer the general question of whether, as a matter of Community law, Council Regulation (EEC) No. 2081/92 read with Commission Regulation (EC) No 1107/96 and the specification for the PDO "prosciutto di Parma" create a valid Community right, directly enforceable in the court of a member state, to restrain the retail sale as "Parma ham" of sliced and packaged ham derived from hams duly exported from Parma in compliance with the conditions of the PDO but which have not been thereafter sliced, packaged and labelled in accordance with the specification. A question formulated in such terms should enable the respondents to put before the Court of Justice all the grounds upon which they say that no such Community right exists.

    Lord Hope of Craighead

    My Lords,

  54. I have had the advantage of reading in draft the speech of my noble and learned friend Lord Hoffmann. I agree with it, but I also agree that it is not possible to say that the conclusion which he has reached is acte claire . I too would refer the question which he has proposed for a preliminary ruling by the European Court of Justice.

    Lord Clyde

    My Lords,

  55. Having had the opportunity of reading in draft the speeches which have been prepared by my noble and learned friends Lord Hoffmann and Lord Scott of Foscote I agree that it is necessary for this House to refer a question along the lines mentioned by Lord Hoffmann to the European Court of Justice.

    Lord Scott of Foscote

    My Lords,

  56. Asda Stores Ltd (Asda) offers sliced Parma ham for sale at its supermarkets in this country. It offers the ham for sale in packages. Hygrade Foods Ltd (Hygrade) supplies Asda with the packages containing the sliced Parma ham. Hygrade imports the ham from a producer in Parma. Whether the imported ham is on the bone or boneless is not clear and does not, for present purposes, matter. Whichever it is, the imported ham bears the corona ducale stamp, the badge of authenticity and, it is common ground, is authentic Parma ham complying with all the national, i e Italian, requirements and specifications applicable to the sale of on-the-bone, or boneless, Parma ham. Hygrade, at its premises in Wiltshire, slices the ham and places the slices in Asda packages. The packages declare the contents to be "genuine Italian Parma Ham", as indeed is the case. But the packages do not bear the corona ducale. Hygrade have no authority to place the corona ducale on the packages. Nor do Asda. Only the Consorzio del Prosciutto di Parma (the Consorzio), or somebody authorised by the Consorzio, can do so. Moreover, the slicing and packaging of the Parma ham outside the local Parma area disqualifies the ham, according to Italian regulations, from being sold as Parma Ham, notwithstanding that that is what the product is. So if Asda or Hygrade asked for authority to place the corona ducale on their packages, they certainly would not get it. The Italian regulations stipulate that if Parma ham is to be sold in slices, the slicing and packaging must be carried out in the Parma area. These regulations would, ordinarily, have only territorial effect. They would not be enforceable in this country (see Consorzio del Prosciutto di Parma v Marks & Spencer plc [1990] FSR 530). But the Consorzio contends that the Italian regulations have become, via Council Regulation (EEC) No. 2081/92 of 14 July 1992 and Commission Regulation (EC) No. 1107/96 of 12 June 1996, part of European law and enforceable against Asda and Hygrade. Injunctions are sought restraining Asda and Hygrade from selling as Parma Ham, Parma ham "that has not been sliced, packaged and prepared under the supervision of the [Consorzio] in factories approved by the [Consorzio] in the Parma region of Italy".

  57. My noble and learned friend, Lord Hoffmann, has, in his opinion which I have had the advantage of seeing in draft, set out more fully the background to the case and has described the purpose and effect of Council Regulation 2081/92. I need not repeat what he has said and will confine myself to referring briefly to those matters that seem to me of particular importance for the purposes of this appeal.

  58. Council Regulation 2081/92 was intended to provide protection on a Community wide basis for "designations of origin" (PDOs) and "geographical indications" (PGIs) in relation to agricultural products and foodstuffs. "Parma Ham", the English version of "Prosciutto di Parma" is unquestionably a PDO for the purposes of the Regulation. The purpose of giving protection to PDOs and PGIs is twofold. It is intended both to protect producers of the products from unfair competition and to protect consumers from being misled by the application to products of false or misleading descriptions. These purposes clearly appear from the recitals to the Regulation.

  59. The Regulation did not itself specify the PDOs (I will for convenience omit any further reference to PGIs) entitled to protection. It provided, instead, registration procedures whereby PDOs could be entered on a register and thereby become entitled to Community wide protection. There were two distinct procedures. One, provided for by articles 5, 6 and 7, involved application (article 5), investigation by the Commission (article 6) and opportunity for objections (article 7). The other, a summary "fast track" procedure, was provided for by article 17. This was the procedure whereby "Prosciutto di Parma" became a registered PDO.

  60. The article 17 procedure required each member state, within six months of the coming into force of the Regulation, to inform the Commission of the PDOs it wished to be registered. The Commission was then obliged to "register the names .... which comply with articles 2 and 4". There was no provision for objection. Article 7 was disapplied. Article 15 set out the manner in which the Commission was then to proceed. It said that the Commission was to be assisted by a committee composed of representatives of the member states and that the Commission was to submit "a draft of the measures to be taken" to the committee. The committee was then, within a specified time limit, to give its opinion on the draft. If within the time limit the committee had failed to give any opinion, the Commission was to submit the proposed measures to the Council. If within three months thereafter the Council had taken no action, article 15 required the Commission to adopt the proposed measures.

  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".

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

  62. 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.

    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: ....

    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.

  63. 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.

    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.

    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.

  64. 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.

  65. 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."

  66. 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."

  67. 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.

  68. 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.

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

    • 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.

    • 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.

    • 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.

  70. 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.

    THE FIRST QUESTION

  71. 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.

  72. 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.

  73. 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.

  74. 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.

  75. 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.

  76. 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.

  77. 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).

  78. 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?

    THE SECOND QUESTION

  79. 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.

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

  81. 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.

  82. 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.

  83. 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.

  84. 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.

  85. 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.

  86. 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.

  87. 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.

  88. 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.

    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.

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

  89. 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.

  90. 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

    1. the product has been re-packaged and the re-packaging does not comply with the packaging and labelling requirements of the product specification; or

    2. 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

    3. both.

    THE THIRD QUESTION

  91. 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.

  92. 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.

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


Cases

Foto-Frost v Hauptzollamt Lubeck-Ost (Case 314/85) [1987] ECR 4199; Cutler v Wandsworth Stadium Ltd [1949] AC 398; Consorzio per la Tutela del Formaggio Gorgonzola v Käserei Champignon Hofmeister GmbH & Co KG (Case C-87/97) [1999] E.C.R. I-1301; H J Banks & Co Ltd v British Coal Corporation (Case C-128/92) [1994] E.C.R. I-1209; Hurd v Jones (Case 44/84) [1986] ECR 29; Commission of the European Communities v Federal Republic of Germany (Case 29/84) [1985] ECR 1661; The Queen v Ministry of Agriculture Fisheries and Food, Ex parte Fedesa (Case C-331/88) [1990] ECR I-4023; Garden Cottage Foods Ltd v Milk Marketing Board [1984] AC 130; Consorzio del Prosciutto di Parma v Marks & Spencer plc [1990] FSR 530; Terrapin (Overseas) Ltd v Terranova Industrie CA Kapferer & Co [1976] 2 ECR 1039; Hoffman-La-Roche & Co AG v Centrafarm Vertriebsgesdlschaft Pharmazeutischer Erzeuguisse mbH [1978] 2 ECR 1139; Pfiser Inc v Eurim-pharm GmbH (Case 1/81) [1982] 1 CMLR 406; Bristol-Myers Squibb v Paranova A/S (Joined Cases C-427/93, C-429/93 and C-436/93) [1996] ECR 1-3457; 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; Commission of the European Communities v Federal Republic of Germany [1985] ECR 1661

Legislations

Italian

Protection of denomination of origin 'Prosciutto di Parma' ( No. 26 of 13 Feb 1990): Art. 1, Art. 6

Decree No 253 of 15 February 1993, Art. 29

European Union

Council Regulation (EEC) No 2081/92 of 14 July 1992, Art. 4, Art. 5, Art. 6, Art. 7, Art. 8, Art. 9, Art. 10, Art. 11, Art. 13, Art. 15, Art. 17

Authors and other references

Kerly's Law of Trade marks, 13 ed (2001)


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