UK EU USA
Exhaustion & Parallel Importation
Repackaging and Rebranding
Important European Cases
Introduction
The ownership and use of intellectual property rights, including
patents and trade marks, may be subject to (Unfair) Competition
or anti-trust law and regulations in various jurisdictions.
For example, corporate mergers and acquisitions may require clearance
by various competition authorities depending on where the parties
are incorporated and the location of their major markets. Official
approval of such deals may be made conditional on divestment of
specified business interests, including relevant intellectual property
rights to avoid undue concentration of market power in a single
entity leading to restriction of effective competition.
The competition authorities may also scrutinise agreements or
concerted practices between separate businesses if these could
have adverse effects on competition in the marketplace. Similarly,
intellectual property licences which contain unduly restrictive
terms may risk being declared void in whole or in part.
The use of intellectual property rights to create artificial barriers
to free movement of goods and services, particularly against parallel
importation of genuine goods put on the market elsewhere with the
consent of the owner of the applicable rights is frequently subject
to critical appraisal. In the European Union, the restraints on
use of intellectual property rights for perceived anti-competitive
purposes has led to the development of the so-called "existence vs. exercise" dichotomy,
whereby a rights owner may own relevant intellectual property
rights (e.g. registered trade mark rights) but will be prevented
from exercising (or enforcing) those rights in circumstances
where to do so would be anti-competitive or would otherwise offend
against EU Single Market principles.
Consequently, it is important to be aware of potential competition
law issues particularly when contemplating mergers and acquisitions
or if negotiating distribution, franchise, licensing or R&D
agreements involving intellectual property rights.
UK Competition Law
From 1 March 2000, the UK implemented a much revised competition
law framework under the Competition Act 1998. This new legislation introduced a
so-called "effects-based" regime modelled on the European
Community law. The 1998 Act replaced or significantly amended most
of the previous UK competition legislation, including the Restrictive
Trade Practices Act 1976, the Resale Prices Act 1976 and the Competition
Act 1980. Transitional provisions apply in specified cases.
The UK Patent Office published
a commentary entitled "The Competition Act 1998: Intellectual
Property Agreements" (unfortunately no longer available online),
which summarised the impact of some relevant secondary legislation
implementing the new Competition Law principles. In particular,
so-called "vertical agreements" between parties at different
levels in a production or distribution chain have been excluded
from the Chapter 1 Prohibition (see below) subject to certain conditions (under The Competition Act 1998 (Land and Vertical Agreements Exclusion)
Order 2000 SI 310). Certain sections of the Patents Act 1977
relating to "tie-in" conditions (Sections 44 & 45)
ceased to have effect from the coming into force of the Competition
Act 1998 (under The Competition Act 1998 (Commencement No. 5) Order 2000 SI
344) subject to certain savings (as specified in The Competition
Act 1998 (Transitional, Consequential and Supplemental Provisions) Order
2000 SI 311).
The Act is applied and enforced by the Director General of Fair
Trading in conjunction with various sectoral regulators for the
major utilities. The Office of Fair Trading provides helpful guidelines on the
Act and its application.
In July 2001, the UK Government published a White
Paper "Productivity and Enterprise: A World Class Competition
Regime" with proposals for reforms to merger and
monopoly regimes with decisions taken by independent competition
authorities, new duties for the OFT to
promote competition, and consultation on criminal penalties for
those involved in cartels. Further details of the reform proposals
are also available on the DTI Competition
Policy website.
Consistent with these proposals, the Government has also revised
the enforcement
regulations for EC Competition law in the UK, removing
Ministerial participation, with the Director
General of Fair Trading (DGFT) having the final decision
making role, subject to appeal to the Competition
Commission Appeals Tribunal. The new rules have been implemented
as The EC Competition Law (Articles 84 And 85) Enforcement Regulations
2001 SI 2916.
Prohibitions
The Act includes two principal prohibitions:
"The
Chapter I Prohibition" - against agreements in any form which have the
effect of preventing, restricting or distorting competition in the UK.
"The
Chapter II Prohibition" - against conduct which amounts to abuse of
a dominant position and which may effect trade in the UK.
The Chapter I Prohibition provides for agreements to be excluded
or exempted from the application of the prohibition in some circumstances.
The Act anticipates the adoption of so-called "block exemptions" for
agreements of certain types meeting specified criteria, consistent
with European Union law.
The Chapter II Prohibition is subject to some limited exclusions,
specifically to allow for mergers and concentrations which are
treated under separate legislation and in cases of overriding General
Economic Interest or public policy.
The Competition Commission - dealing with mergers and
appeals
In the UK, mergers were previously scrutinised by the Monopolies
and Mergers Commission (MMC) upon reference by Director General
of Fair Trading, The Secretary of State for Trade and Industry
or the sectoral utility regulators. The MMC's brief was generally
to determine whether a particular monopoly or merger which was
the subject of a reference was against the public interest. Under
the Competition Act 1998, the MMC has been replaced by the Competition
Commission.
The Competition Commission now has a dual role:
1. It has taken over the MMC's previous responsibility to report on monopolies
and mergers as laid down in the Fair Trading Act 1973; and
2. It will be responsible for hearing appeals from decisions of the Director
General of Fair Trading under the Competition Act 1998.
One interesting feature of the appeal system introduced by the
Competition Act, is the right for third parties which have "sufficient
interest" in a decision to appeal against aspects of such
decisions (other than penalties). This provision is intended to
allow consumer groups, for example, to intervene directly if a
decision is considered inadequate to protect the interests of those
they represent.
European Union Competition Law
EU Competition Law is governed by the well-known Article
81 (formerly 85) and Article
82 (formerly 86) of the Treaty of Rome - as amended
by the Treaty of Amsterdam.
European Competition Law is administered and enforced by the Competition
Directorate (formerly DGIV), whose website is an excellent
source of reference information, particularly on the applicable EU
Legislation. There are established Block
Exemptions, which are relevant to intellectual property agreements,
for example, for Licensing
agreements for the transfer of technology (in particular
for licensing of patents and know-how) and for Horizontal
Co-operations Agreements (Specialization and research and development
agreements) (relevant to certain joint-ventures and R&D
agreements).
As of November 29, 2000, the Commission adopted revised
Competition Rules for Co-operation between Companies, which
include a number of revisions
to Block Exemptions. The new Rules come into effect on January
1, 2001. Pre-existing agreements remained covered by the former
Block Exemptions until 30 June, 2001. The Commission has also
recently proposed
a new Council Regulation on the implementation of the competition
rules, which is intended to replace the original Regulation
17 of 1962. This proposal is presently at the draft stage.
The European Commission published a Report (.pdf
format) evaluating the utility of Block
Exemption Regulation 240/96 and, as of January, 2002, is asking
for comments on its competition policy regarding licensing
agreements. The consultation period is open until April 26, 2002.
Thereafter, the Commission may propose revisions to the competition
rules for the application of the principal prohibition on anti-competitive
activity (Article
81 of the EC Treaty) to licensing agreements. Also, on 7 January,
2002, the Commission announced the
adoption of a new Notice
on agreements of minor importance (.pdf format) which do not
appreciably restrict competition under Article 81(1) of the EC
Treaty ("de minimis Notice").
The Competition Directorate also has responsibility under the
EU Merger
Regulation and associated
legislation for reviewing mergers which have a European dimension.
US Anti-Trust Law
US Anti-Trust Law is embodied in Title
15 of the US Code on COMMERCE AND TRADE which is more frequently
referred to as the Sherman Act, together with subsequent amendments
and additions under the Clayton Act, the Federal Trade Commission
Act and the Hart-Scott-Rodino Act.
The Anti-Trust provisions are enforced by the Federal
Trade Commission Bureau of Competition and the Department
of Justice - Anti-Trust Division. The Anti-Trust provisions
also cover mergers where specified criteria apply. Further information
is available on the FTC
Antitrust/Competition pages and the DoJ website.
Exhaustion of Rights and Parallel
Imports
One of the activities which frequently upsets original suppiers
of goods is the practice of so-called "parallel importation",
whereby a business purchases legitimate goods put on the market
by the supplier in one jurisdiction at one price and then resells
them in another jurisdiction where the supplier normally also sells
at a higher price, and perhaps through a restricted distribution
chain.
Where possible, original suppliers will generally try to assert
relevant copyright, trade mark, design or patent rights to prevent
this activity, which they portray as unfair competition. They argue
that different markets require different levels of promotion and
support, the costs of which are avoided by the parallel importer,
and differences in quality (of the goods and/or associated services)
may exist, which the parallel importer is unfairly exploiting to
the disbenefit of the ultimate consumer.
On the other side, the parallel importer, often supported by consumer
and user groups, will counterclaim that the suppliers are simply
using their intellectual property rights to artificially partition
markets and to maintain unfairly exploitative price-differentials
to the disbenefit of the ultimate consumer.
Legislators have recognised the tension between these contrasting
positions and have sought to moderate the potential for a supplier
to abuse its rights to restrict resale and exert market control
by establishing the principle of "exhaustion of rights".
This principle is applied to prevent a supplier from reasserting
its rights once its goods have first been distributed in the relevant
market with its consent. However, disputes still arise depending
on whether exhaustion is applied to national, regional or
international markets in any particular jurisdiction.
Thus, in countries which recognise only national exhaustion,
a supplier cannot prevent secondary marketing of goods it puts
on sale in that country, but can use its rights in that country
to prevent unauthorised importation of goods first put on the
market with or without its consent in another country.
In countries which apply regional exhaustion, such as
the member states of the European Economic Area (EEA -
the European Union plus EFTA Countries), which consider their
region as comprising a single market, then a supplier cannot
generally prevent circulation within the countries of that region
of legitimate goods which have first been marketed with the supplier's
consent in any country in the region. However, in most circumstances,
the supplier can still act to prevent importation into the region
of goods first marketed outside the region, although there have
been some cases where Courts have taken a contrary view!
If a country applies the principle of international exhaustion,
then a supplier will not be able to prevent importation of legitimate
goods once these have been put on the market with its consent
anywhere in the world.
Repackaging and
Re-branding
In the European Union, the many different national language and
regulatory regimes may themselves present a significant barrier
to marketing of parallel imports from one country in another. Parallel
imports may require repackaging to meet local standards and expectations
in the import market, re-labelling in the local language and even
re-branding with a local trade mark, if the original manufacturer
happens to use a different mark itself in the source and import
countries. This is frequently the case with pharmaceutical products,
which are subject to specific national (non-trade mark) regulations,
for example, and where drugs may be sold under generic names as
well as under different trade marks. Parallel importers have therefore
sought to legitimise the practices of repackaging,re-labelling
and re-branding and trade mark owners have sought to restrain them.
Consequently, a considerable body of case law has been established,
setting out the conditions under which, on the one hand, a parallel
importer may carry out such activities and, on the other hand,
a brand owner may exercise its trade mark rights to prevent them.
The Opinion
of Advocate General Jacobs in combined cases C-443/99 Merck,
Sharp & Dohme GmbH v. Paranova Pharmazeutika Handels
GmbH and C-143/00 Boehringer Ingleheim KG & Boehringer
Ingleheim Pharma KG & Others v. Swingward Ltd and Others provides
a particularly lucid and thorough review of the precedents
relevant to the majority of parallel import disputes, which
are between the so-called PPC's (the proprietary pharmaceutical
companies) and the PIPC's (the parallel importation
pharmaceutical companies).
This Opinion followed one Reference following
a substantive
judgment of UK High Court on the repackaging and re-labelling
issues in a case brought by Glaxo Group Limited and a number of
other PPCs against PIPCs Swingward Ltd and Dowelhurst Ltd. As the interim
judgment in this case explains, this case is also interesting
from a Competition Law perspective because, in addition to the
conventional defence based on Articles
28 and Article 30 of the Treaty of Rome, the defendants also
sought to run a counterclaim that, in bringing their various trade
mark actions against the defendants, the PPCs were acting pursuant
to an agreement or concerted practice which affected trade between
Member States of the European Union and which had as its object
or effect the restriction, distortion or prevention of competition.
As such it would be in breach of Article
81.
In the UK, in a strategy which is presented as an attack on "Rip-Off
Britain" for the potential benefit of the ordinary
consumer, a number of major retailers have been attempting
to circumvent the restrictive distribution policies beloved
of luxury, or "up-market", goods manufacturers who
would normally refuse to supply such retailers, by obtaining
so-called "grey-market" supplies of such goods
from authorised outlets and distributors in other countries,
including countries outside the EEA,
and reselling them in the UK at prices lower than those charged
by the relevant authorised outlets. ThusTesco and Costco have
sold parallel-imported Levi 501 jeans in the face of a refusal
by Levi Strauss to supply either company. Marks and Spencer
and A&G Imports Limited have similarly obtained and sold
parallel-imported Zino Davidoff toiletries.
The manufacturers consequently brought trade mark infringement
actions against the importing companies to try to suppress this
competition. The English High Court has not previously looked favourably
on such actions, taking the view (as expressed when refusing summary
judgment in Zino
Davidoff SA v. A&G Imports Limited) that
the trade mark owners were effectively trying to assert a "parasitic
right to interfere with the distribution of goods which bears little
or no relationship to the proper function of the trade mark right" (the
the English Court considered to be as an indication of the origin of
the marked goods). However, before taking a final decision, the
English Court recognised that it did need to make a Reference
to the ECJ for a preliminary ruling regarding the key questions
of whether the consent of a proprietor of a trade mark to the parallel
importation of genuine goods obtained from outside the EEA could
be implied if no contractual restrictions on resale were imposed
when the importer purchased those goods, or whether any such consent
must be explicit.
Interestingly, and by contrast, in a corresponding Scottish case
(Zino
Davidoff SA v. M&S Toiletries Ltd), the
Scottish Court of Session was prepared to grant an interim interdict
(injunction) against resale of the disputed goods pending full
trial of the issues.
The References in the English Zino Davidoff v. A&G Imports,
Levi Strauss v. Tesco and Costo cases were the subject of a provisional
Opinion by Advocate General Stix-Hackl. Unfortunately, this
Opinion was so turgid as to be almost incomprehensible and did
little to clarify the specific points at issue. Nevertheless, Stix-Hackl
appeared to recommend that the ECJ should decide that "consent" must
be in relation to first marketing in the EEA,
whenever that may occur, and that it is for the national courts
to determine whether or not a "trade mark proprietor ha[s]
waived his exclusive right to control distribution within the EEA",
but that there can be no "general presumption of waiver".
The final ECJ Decision (in joined Cases
C-414/99 to C-416/99), which was issued on November 20, 2001,
is rather more clearly expressed, and indeed confirms that trade
mark owners' must have given unequivocal consent to (re)importation
from outside the EEA and consent may not be inferred from absence
of express objections or lack of contractual restrictions. See
further summary below for more details of the ECJ ruling.
This is a significant legal victory for luxury brand owners,
but they will still have a way to go to win over a sceptical
UK public, in particular, to the view that their actions are
not directed at enabling the brand owners to gouge European markets
by maintaining unjustified price differentials over US and Far
Eastern prices, which are usually significantly lower.
Selected Competition Law Cases
relevant to Licensing of Intellectual Property, Exhaustion and
Parallel Imports
Case 78/70: Deutsche
Grammophon Gesellschaft mbH v Metro-SB-Großmärkte
GmbH & Co. KG.
Established the principle that national rights may not be used
by a manufacturer to prevent the free movement of goods placed on
the market with the manufacturer's consent in one member state from
that state into another member state.
Case 192/73: Van
Zuylen frères v Hag AG. (HAG I)
In this first decision relating to a dispute between different
owners of the HAG mark, the Court averred that "to prohibit
the marketing in one member state of a product legally bearing a
trade mark in another member state for the sole reason that an identical
trade mark, having the same origin, exists in the first state, is
incompatible with the provisions for the free movement of goods in
the Common Market". This decision, with its drastic restriction
on trade mark enforcement, was subsequently expressly disapproved
in HAG II (Case C-10/89), and in IHT (Case C-9/93) - see below.
Case 15/74: Centrafarm
BV et Adriaan de Peijper v Sterling Drug Inc.
Patents case. Confirmed the "existence/exercise" dichotomy; held
that "the exercise, by the patentee, of the right which he enjoys
under the legislation of a member state to prohibit the sale, in that state,
of a product protected by the patent which has been marketed in another member
state by the patentee or with his consent is incompatible with the rules
of the EEC Treaty concerning the free movement of goods within the Common
Market." It was of no significance whether the patentee or the undertakings
to which it had granted licences were members of the same concern nor that
there were price differentials owing to differences in Governmental measures
in the relevant member states.
Case 16/74: Centrafarm
BV et Adriaan de Peijper v Winthrop B.V.
Trade marks case. Again, confirmed the "existence/exercise" dichotomy;
held that price differences owing to differences in Governmental measures
were not relevant to the overriding obligations allowing free movement of
goods in the EU; and treated Parent and Subsidiary companies as a common "economic
unit".
Case 102/77: Hoffmann-La
Roche & Co. AG v Centrafarm Vertriebsgesellschaft Pharmazeutischer
Erzeugnisse mbH.
Established the basic rules for repackaging and re-labelling:
(a)The proprietor of a trade mark right which is protected in
two Member States at the same time is justified pursuant to the
first sentence of Article 36 [now Article
30]of the EEC Treaty in preventing a product to which the
trade mark has lawfully been applied in one of those States from
being marketed in the other Member State after it has been repacked
in new packaging to which the trade mark has been affixed by
a third party.
(b)However, such prevention of marketing constitutes a disguised restriction
on trade between Member States within the meaning of the second sentence
of Article 36 where:
-It is established that the use of the trade mark right by the proprietor,
having regard to the marketing system which he has adopted, will contribute
to the artificial partitioning of the markets between Member States;
-It is shown that the repackaging cannot adversely affect the original
condition of the product;
-The proprietor of the mark receives prior notice of the marketing of the
repackaged product; and
-It is stated on the new packaging by whom the product has been repackaged.
Case 3/78: Centrafarm
BV v American Home Products Corporation.
Specifically addressed the issue of re-branding where a trade
mark owner uses different trade marks for the same goods in different
member states. Reiterated that a trade mark owner may only assert
its rights to preven parallel imports if such practice does not have
the effect of artifically partitioning the market in the EU so as
to constitute a disguised restriction on trade between member states,
contrary to Article 36 [now
30] of the EC Treaty.
Case 144/81: Keurkoop
BV v Nancy Kean Gifts BV.
This was a case on registered design protection under Benelux
uniform design law. The Court held that the owner of the design right
could not prevent parallel importation of products to the design
put on the market in another member state "by, or with the
consent of, the proprietor ... or a person legally or economically
dependent on him".
Case 10/89: SA
CNL-SUCAL NV v HAG GF AG. (HAG II)
The Court reversed the opinion expressed in HAG I (Case 192/73
above), and more reasonably held that "Articles 30
and 36 [now
28 and 30] of the EEC Treaty do not preclude national legislation
from allowing an undertaking which is the proprietor of a trade mark
in a Member State to oppose the importation from another Member State
of similar goods lawfully bearing in the latter State an identical
trade mark or one which is liable to be confused with the protected
mark, even if the mark under which the goods in dispute are imported
originally belonged to a subsidiary of the undertaking which opposes
the importation and was acquired by a third undertaking following
the expropriation of that subsidiary."
Cases C-241/91; C-242-91: Radio
Telefis Eireann (RTE) and Independent Television Publications
Ltd (ITP) v Commission of the European Communities.
This case related to the abusive exercise of copyright to prevent
the independent publication of television listings. The Court upheld
the Commission's decision that the television companies were guilty
of an abuse of their dominant position in the secondary market (for
them) of TV listings, contrary to Article
86 (now 82) of the Treaty of Rome.
Case C-9/93: IHT
Internationale Heiztechnik GmbH and Uwe Danzinger v Ideal-Standard
GmbH and Wabco Standard GmbH.
This case concerned the splitting of ownership of a trade mark
in different member states as a consequence of a voluntary assignment
and subsequent attempts to block imports from the state where the
assignment had been made. The Court stated that "[t]he consent
implicit in any voluntary assignment of a trade mark is not the consent
required for application of the doctrine of exhaustion of rights.
For that, the owner of the right in the importing State must, directly
or indirectly, be able to determine the products to which the trade
mark may be affixed in the exporting State and to control their quality.
That power is lost if, by voluntary assignment, control over the
trade mark is surrendered to a third party having no economic link
with the assignor."
Cases C-427/93; C-429-93; C- 436/93: Bristol-Myers
Squibb v Paranova A/S (C-427/93) and C. H. Boehringer Sohn,
Boehringer Ingelheim KG and Boehringer Ingelheim A/S v Paranova
A/S (C-429/93) and Bayer Aktiengesellschaft and Bayer Danmark
A/S v Paranova A/S (C-436/93).
Re-affirmed the basic rules for repackaging and re-labelling.
Cases C-71/94; C-72/94; C-73/94: Eurim-Pharm
Arzneimittel GmbH v Beiersdorf AG (C-71/94), Boehringer Ingelheim
KG (C-72/94) and Farmitalia Carlo Erba GmbH (C-73/94).
Addressed the factors affecting permissibility of various repackaging
options without re-branding or re-affixing of the manufacturers'
trade marks. Followed the Hoffmann-La Roche reasoning.
Case C-232/94: MPA
Pharma GmbH v Rhône-Poulenc Pharma GmbH.
Again followed the Hoffmann-La Roche principles and clarified
that new packaging must clearly state who repackaged the product
and the name of the manufacturer in print such that a person with
normal eyesight, exercising a normal degree of attentiveness, would
be in a position to understand; but it is not necessary to indicate
if the repackaging is carried out without the authorization of the
trade mark owner.
Case C-337/95: Parfums
Christian Dior SA and Parfums Christian Dior BV v Evora BV.
A case involving resale of perfumes rather than pharmaceuticals,
held that "the proprietor of a trade mark or holder of copyright
may not oppose their use by a reseller who habitually markets articles
of the same kind, but not necessarily of the same quality, as the
protected goods, in ways customary in the reseller's sector of trade,
for the purpose of bringing to the public's attention the further
commercialization of those goods, unless it is established that,
having regard to the specific circumstances of the case, the use
of those goods for that purpose seriously damages their reputation."
Case C-349/95: Frits
Loendersloot, trading as F. Loendersloot Internationale Expeditie
v George Ballantine & Son Ltd and Others.
In another diversion from pharmaceutical disputes, this case dealt with parallel
importation of whisky.The case addressed questions of re-labelling, where
this involved removal of manufacturer's (non-trade mark) identification codes.
Case C-352/95: Phytheron
International SA v Jean Bourdon SA.
This case concerned plant health products originally imported
from outside the EU and marketed in one member state by one company
in a group, the goods then being purchased by a parallel importer
and resold in another member state where another group company held
the relevant trade mark rights. The Court again held that the exercise
of trade mark rights to prevent such resale was precluded by Community
law, in this case the specific provisions of Article 7 of the First
Council Directive (89/104/EEC) of 21 December 1988 to approximate
the laws of the Member States relating to trade marks.
Case C-355/96: Silhouette
International Schmied GmbH & Co. KG v Hartlauer Handelsgesellschaft
mbH.
Held that national laws purporting to provide for international
exhaustion of rights are contrary to Article 7(1) of First Council
Directive 89/104/EEC of 21 December 1988 to approximate the laws
of the Member States relating to trade marks, as amended
by the Agreement on the European Economic Area. A trade mark
owner is therefore able to exercise its rights to prevent the reimportation
and resale within the EEA of
genuine goods put on the market with its consent outside the EEA.
Case C-63/97: Bayerische
Motorenwerke AG (BMW) and BMW Nederland BV v Ronald Karel Deenik.
BMW objected to use of its trade mark by a dealer in advertisments for
the dealer's specialised BMW sales and service operations, when the
dealer conceerned was not a member of BMW's own official dealership network.
The Court held that Articles 5 to 7 of First
Directive 89/104/EEC of 21 December 1988 to approximate the laws of the Member
States relating to trade marks, do not entitle the proprietor of a trade
mark to prohibit a third party from using the mark for the purpose of informing
the public that he carries out the repair and maintenance of goods covered
by that trade mark and put on the market under that mark by the proprietor
or with his consent, or that he has specialised or is a specialist in the
sale or the repair and maintenance of such goods, unless the mark is used
in a way that may create to the impression that there is a commercial connection
between the other undertaking and the trade mark proprietor, and in particular
that the reseller's business is affiliated to the trade mark proprietor's
distribution network or that there is a special relationship between the
two undertakings.
In a subsequent UK case Aktiebolaget Volvo v Heritage (Leicester)
Ltd (Ch.D. May 7, 1999) a former Volvo dealer was found to have used
the Volvo mark (albeit with the words "Independent Specialist" in
small print) in just such a misleading manner and an injunction was granted
against further such use.
Case C-379/97: Pharmacia & Upjohn
SA v Paranova A/S.
Clarified the Hoffmann-La Roche and Bristol-Myers Squibb principles
noting that the test for permissible re-branding requires an assessment
whether the circumstances prevailing at the time of marketing in
the Member State of import make it objectively necessary to
replace the original trade mark by that used in the Member State
of import in order that the product in question may be marketed in
that State by the parallel importer.
Case C-173/98: Sebago
Inc. and Ancienne Maison Dubois & Fils SA v G-B Unic SA.
Followed the Silhouette judgment and added that consent to first
marketing within the EEA must
be in respect of the specific goods being resold. In this case a
parallel importer had imported genuine goods from outside the EEA
and had sought to argue that because the manufacturer had itself
marketed similar goods itself within the EEA then it should be deemed
to have consented to the parallel imports as well. The Court did
not agree.
Joined Cases C-414/99 to C-416/99: Zino
Davidof SA v. A&G Imports Ltd.; Levi Strauss & Co. & Levi
Strauss (UK) Ltd. v. Tesco Stores Ltd. & Tesco
plc; Levi Strauss & Co. & Levi Strauss (UK)
Ltd. v. Costco Wholesale UK Ltd.
The final judgement in these cases means that effectively an
importer of branded goods purchased ouside the EEA for
resale within the EEA can only be confident of avoiding infringement
of relevant trade mark rights if it has the brand owner's express
consent to such importation and resale, although the judgement
says this at greater length and in rather more convoluted terms.
In summary, the key conclusions in the judgement are:
1. [T]he consent of a trade mark proprietor to the marketing
within the EEA of products bearing its mark which have previously been placed
on the market outside the EEA by the proprietor or with his consent may
be implied, where it follows from facts and circumstances prior to,
simultaneous with or subsequent to the placing of the goods on the market
outside the EEA which unequivocally demonstrate that
the proprietor has renounced his right to oppose placing of the goods on
the market within the EEA.
2. Implied consent cannot be inferred:
- from the fact that the proprietor of the trade mark has not communicated
to all subsequent purchasers of the goods placed on the market outside the
EEA his opposition to marketing within the EEA;
- from the fact that the goods carry no warning of a prohibition of their
being placed on the market within the EEA;
- from the fact that the trade mark proprietor has transferred the ownership
of the products bearing the trade mark without imposing any contractual reservations
and that, according to the law governing the contract, the property right
transferred includes, in the absence of such reservations, an unlimited right
of resale or, at the very least, a right to market the goods subsequently
within the EEA.
3. With regard to exhaustion of the trade mark proprietor's exclusive right,
it is not relevant:
- that the importer of goods bearing the trade mark is not aware that the
proprietor objects to their being placed on the market in the EEA or sold
there by traders other than authorised retailers, or
- that the authorised retailers and wholesalers have not imposed on their
own purchasers contractual reservations setting out such opposition, even
though they have been informed of it by the trade mark proprietor.
