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Olm: another re-fill in a Heineken cask bites the dust

On August 18, 2011 the Presiding Judge of the District Court Amsterdam (Tonkens-Gerkema) passed judgment on the summary proceedings between Dutch brewers Heineken and Olm (some background here) with regard to the alleged trade mark infringement by Olm due to the re-fill of Heineken casks with Olm beer (as it were Heineken). The decision offers a glance behind the scenes of beer distribution to wholesalers and pubs and how this distribution is organized (amongst others from a contractual point of view).

Heineken (amongst others) uses standard agreement concluded with cafés. These cafés are more or less bound by an obligation to serve only Heineken beer. Heineken are either served from bottles (or cans) and/or as draught. Draught beer is either stored in casks and/or beer containers (most of the times located in the cellar of a café). In practice Heineken is prepared to loan such beer containers (for which a costy financial investment is needed) to the cafés if the cafés accept an obligation to serve only Heineken beer. The beer containers loaned by Heineken are provided with the Heineken logo trade mark. Cafés who do not have a beer container receive the draught beer in casks. In the casks from Heineken the word ‘Heineken’ is punched. In the General Conditions of Heineken, applicable on the relevant agreements that cafés have entered into with Heineken, it is stipulated that the casks are owned by Heineken and that property thereof is not transferred to the other party to the contract, notwithstanding payment of a deposit of 30 euro. Furthermore according to the General Conditions the other party to the contract is not allowed to re-fill the casks. Around the mouth of the casks a green coloured cap with a watermark (a hop leaf) is ‘shrink-wrapped’ after they are filled with beer. The cap is removed from the mouth of the cask before the cask is connected to the tap.

Olm does not produce Olm beer herself. Production is done by Brauerei Königshof in Krefeld (Germany). For the distribution of Olm beer Olm uses casks which have the word ‘Olm’ punched in them, and also Heineken casks. The mouth of the casks with Olm beer have a green cap ‘shrink-wrapped’ around it. On the cap Olm attaches a sticker with Olm on it.

Apparently Heineken started the proceedings against Olm after it had received unsubstantiated reports that some cafés who have entered into agreements with Heineken served other beer to consumers as it were Heineken. Heineken started an investigation and interviewed two former Olm employees who declared that Olm was behind this alleged fraud. The rationale being that the purchase price of Olm beer is lower than Heineken. Furthermore Heineken hired two investigators for an undercover operation at Olm’s office: presenting themselves as potential buyers of beer they had a meeting with Olm’s director who apparently declared that Olm fills Heineken casks with Olm. The investigators even did observations of deliveries of Heineken casks filled with Olm beer from a white pick up truck bearing no Olm signs, early in the morning. According to Heineken a secret operation. The observations also included that consumers were drinking Olm beer flowing from a Heineken cask to a Heineken tap in a Heineken glass, presented on a Heineken beer mat. Heineken tested the beer and the results showed that the casks did not contain Heineken, but Olm. One of the cafés the investigators shadowed named ‘Café De Klikspaan’, a name that - coincidence or not - perfectly matches the rumours that were the incentive for Heineken to go forward against Olm, because it literally means in English translation ‘Café The Telltale’. Last but not least Heineken presented indications of evidence to the Presiding Judge that Olm beer is offered for sale on the internet as it were Heineken.

The Presiding Judge takes as a starting point – based on the evidence filed by Heineken – that it is plausible that there have been some sales of Olm beer as it were Heineken. This leads the Presiding Judge to the central question whether Olm is to blame, because Olm argued that re-filling Heineken casks with Olm beer as such is allowed as is the (offer for) sale thereof. Olm furthermore argued that if third parties abuse this situation, Olm can not be held responsible for such abuse. Such abuse is possible because 70% of Olm beer is sold to wholesalers and accordingly disappears in the chain of suppliers and customers. Olm has no control over this chain. With regard to the re-fill of Heineken beer containers with Olm beer Olm held that it was entitled to do so if a café owner requests Olm such a re-fill, since Olm is under no obligation to investigate whether the café owner is authorized to submit such a request.

With regard to the re-fill of casks Olm put up the defense that in practice a rotation system has been developed in which almost all brewers take part, provided that the connector system of the casks is identical. Because of this there is a continous cycle of issuing and collection of full and empty casks. As a consequence the casks of different brewers mingle. This system is disadvantageous for small brewers, according to Olm, because they lose sight more easily on their own casks as for example Heineken. Relatively Olm receives more caskets back from other brewers. Olm can not afford it financially to leave the returned Heineken casks unused. Olm’s own casks that are still in trade are not sufficiently available for a re-fill. With regard to the property of the casks themselves Olm argued that Heineken loses the property of the casks as soon as those casks find their way to a third party, not being Heineken’s contracting party. Olm based this defense on article 3:86 of the Dutch Civil Code (DCC), under which the buyer of a cask containing Heineken beer, obtained indirectly from Heineken, becomes the owner of said cask, if this buyer has acted in good faith. The provision of article 3:86 DCC protects the acquirer in good faith of a movable transferred to him by a person without power of disposition.

With regard to the property of the casks the Presiding Judge first of all holds that Olm did not succeed in the proof that a pool of casks exists in the Netherlands (more than that Olm acknowledged that no cooperation agreement has been concluded between the brewers to use each others casks). Although it is conceivable that in practice the casks of different brewers are used at random, this is not taken into consideration by the Presiding Judge, because the case is dealt with in summary proceedings which are not proceedings that give a possibility to research the fact of a case in more detail. Accordingly the Presiding Judge could not determine on which scale and since when this pooling of casks occurs. The Presiding Judge decided that the sole use of each others casks anyhow does not establish any rights.

Secondly the Presiding Judge rejected Olm’s appeal to article 3:86 DCC. The Presiding Judge holds that it is irrelevant whether or not the acquirer of a cask has acted in good faith. Preceding is the question whether or not the conditions for a valid transfer of the ownership of a movable are met (article 3:84 DCC). Said provision requires amongst others that such transfer is based on a valid legal title: a legal act aimed at the transfer of the ownership of the movable. The Presiding Judge finds such act absent: a buyer of a cask with Heineken beer purchases the beer and not the cask. He only pays for the content. The legal act – the purchase - is only aimed at transfer of the ownership of the beer. A cask as such has no purpose for the buyer and consumer. An empty cask is only an obstacle. Although Heineken can not enforce third parties to return empty Heineken casks, this does not mean a contrario that the ownership of such casks is transferred to these parties. Payment of 30 euro as a deposit does not transfer ownership either. This is only an incentive for the return of the cask to its owner.

From there the Presiding Judge has no difficulties in finding trade mark infringement. Olm’s appeal to the judgement of the ECJ in the recent case Viking Gas/Kosan Gas is rejected, because in that case the buyers of gas cylinders became the owner of the cylinders. This is obviously not the case with the Heinekens casks. Therefore the trade mark infringement is an article 2.20 par. 1 under a of the Benelux Convention for Intellectual Property (BCIP) infringement: trade mark and sign used are identical and used for identical goods. In this situation the risk of confusion is assumed. The use by Olm of the sign Heineken harms the function of Heineken’s trade mark as an indication of origin. For this trade mark infringement the Presiding Judge issues an appropriate injunction.

With regard to the re-filling of Heineken beer containers with Olm the Presiding Judge finds relief for Heineken in the doctrine of the so called ‘profiteren van wanprestatie’ (benefitting as a third party from a breach of contract). This is a wrongful act. Olm commits such a wrongful act according to the Presiding Judge – to be short – by denying the reality that a Heineken café with a beer container has an obligation to only serve Heineken to customers and that a re-fill of such a container with any other beer is not allowed. The Presiding Judge sets the standard that Olm should obey in this regard: starting point in a Heineken café is that it has a loan agreement with Heineken with regard to a beer container, unless evidence to the contrary. The Presiding Judge leaves undiscussed whether or not a re-fill of such a beer container is a trade mark infringement.

Only positive point for Olm: Heineken was ordered by the Presiding Judge to release Olm casks it had seized.

Posted by: Gino Van Roeyen @ 16.47
Tags: Heineken, Olm, re-fill, Netherlands, trade mark infringement,
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MARQUES does not guarantee the accuracy of the information in this blog. The views are those of the individual contributors and do not necessarily reflect those of MARQUES. Seek professional advice before action on any information included here.

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