Davidoff's Cool Water Testers and Exhaustion

Coty Prestige Lancaster Group GmbH (CPLG) won summary proceedings before the Presiding Judge (P.W. van Straalen) at the District Court The Hague on November 18, 2008 against Tico Trading. CPLG acting in these proceedings in its own name, but on behalf of licensor Zino Davidoff SA, who owns CTM's for the figurative trade marks for the perfumes 'Davidoff' and 'Cool Water', argued that Tico Trading infringed these CTM's by putting Davidoff and Cool Water samples and testers into the market. Tico Trading has no contractual relationship with Coty nor permission to put samples or testers into the market. Tico offers for sale testers bearing the trade marks.

Coty sells the perfumes only to depositaries (retailers who have a delivery agreement with Coty), a so called selective distribution system. Coty is under a contractual obligation to support the depositaries. This includes the free delivery of samples and testers. According to the agreement the depositaries are only allowed to use the testers for marketing goals. Each commercial use, especially sale of the testers, is prohibited. The ownership of the testers remains with Coty according to the agreement. The testers delivered by Coty to depositaries in the Benelux carry indications like 'demonstration'. The packaging of the testers are from cardboard with an inscription in black letters. Furthermore the text 'Not for sale-Vente Inderdite-Unverkauflich' is imprinted.
Tico Trading's primary defence is that the involved trade mark rights are exhausted. The Presiding Judge finds that the proceedings have not clarified where the involved testers come from. Because Tico Trading only stated that the testers were not originating from a depositary, the Presiding Judge decides that the question is who needs to prove where the testers have been put into the market for the first time. According to the ECJ's decision in Van Doren/Lifestyle it's the alleged infringer who had to come forward with evidence that the first entry in the market occurred in the EC/EEA, unless the requirements of the free movement of goods within the EC impel an alteration of this basic evidence rule. Such is the case if the basic evidence rule enables the trade mark owner to protect the national markets and thus advances the existence of price differences between the member states. The ECJ however stressed in Van Doren/Lifestyle that this occurs especially with an exclusive distribution system.

The Presiding Judge does not follow Tico Trading's viewpoint that Coty had to prove that the testers were put into the market for the first time outside the EEA. Such a shift of the burden of proof can only be applied if the alleged infringer (Tico Trading) shows that there is a real danger that the national markets will be protected in case the burden of proof that the involved goods were put on the EEA market by Coty or with its permission lies on the alleged infringer. Because Tico Trading did not come forward with an explanation why the ECJ's decision in Van Doren/Lifestyle with regard to the shift of evidence should also apply in cases where a selective distribution system is involved, the Presiding Judge concludes that the danger of national market protection does not occur. The fact that Coty's depositary agreement contains a provision that a depositary is only entitled to sell and deliver to selected distributors, and that the packaging mentions that the testers may not be sold to third parties, is not enough to solely rely by referral to the ECJ's decision in Van Doren/Lifestyle for a successful exhaustion defense. The Presiding Judge awards Coty's infringements claims on the basis of art. 9 par. 1 sub a CTMR.

Interesting to mention with regard to legal costs is that the Presiding Judge does not apply the indicative rates applicable since August 1, 2008. Coty moderated the legal costs to the amount for easy cases (€ 6,000) at the hearing. But because the real costs and the outline of the costs were only presented to the court at the hearing (this should be done earlier) the Presiding Judge accepted Tico Trading's defense that the cost order should be based on the old court-approved scale of costs, which resulted in a cost order for € 1,229.80 (although the decision itself mentions the amount of € 1,1229.80).

Posted by: Gino Van Roeyen @ 21.35
Tags: Benelux case law, Community trade mark courts, Cool Water, Davidoff, exhaustion,
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