The CJEU recently had to decide on the scope of a trade mark owner's right to oppose the importation of goods affixed with its trade mark, where those goods had been placed on the market by its assignee in another EEA member state. In the case decided by the CJEU, the trade mark owner had, inter alia, sold its trade mark in Spain but kept its trade mark rights for the UK; Red Paralela and another v Orangina Schweppes Holding BV and others (C-291/16) of 20 December 2017.  The CJEU found that the trade mark owner may not oppose the import of products bearing the same trade mark if it has actively given the impression that it is a single global trade mark.

By way of legal background:  the exhaustion rule of Article 7(1) Trade Marks Directive (2008/95/EC) provides that a trade mark shall not entitle the proprietor to prohibit its use in relation to goods which have been put on the market in the EU under that trade mark by the proprietor or with his consent.

CJEU decision

The CJEU held Schweppes could not oppose the importation of goods bearing the bearing its trade mark since it had promoted the trade mark as single global trade mark and had had joint control over the mark together with its assignee.  More specifically, the CJEU decided that

• Article 7(1) Trade Marks Directive  does not entitle a trade mark proprietor to oppose the import of identical goods bearing the same mark originating in another member state in which it has assigned that mark to a third party if, after the assignment:    

(1) the proprietor (acting alone or with the assignee) has actively and deliberately continued to promote the appearance or image of a single global trade mark, thereby generating or increasing confusion on the part of the public concerned as to the commercial origin of goods bearing that mark;

or   

(2) there are economic links between the proprietor and the assignee involving co-ordination of their commercial policies or an agreement to exercise joint control over the use of the mark, so that they can determine (either directly or indirectly) the goods to which the trade mark is affixed and control the quality of those goods. The latter slightly differs from the AG opinion which had used the term "unitary control".

• Deciding this differently would risk distorting or compromising the origin function of the trade mark. However, merely continuing to evoke the historical geographical origin of the national parallel trade marks will not amount to a distortion or compromise of the origin function. It was for the national court to decide based on the facts.
• If two parties have co-ordinated their commercial policies and/or exercised joint control over the use of a mark, then any marketing of goods bearing that trade mark was deemed to have been with the consent of the other: if the same parties were allowed to protect their territories against the parallel import of such goods, then this would lead to a partitioning of national markets.

Comment

The decision highlights the potential risks for trade mark assignors, who split their mark by assigning it in some territories but retain the identical mark in other territories, of being unable to prevent parallel imports of goods placed on the market by that assignee if they continue to closely co-operate with their assignee.