20 November 2001
Judgment of the Court of Justice in Joined Cases C-414/99, C-415/99 and C-416/99
Zino Davidoff SA v A & G Imports, Levi Strauss & Co Ltd, Levi Strauss (UK) Ltd v Tesco Stores, Tesco plc and Costco Wholesale UK Ltd
The consent of a trade mark proprietor to marketing within the EEA of goods placed on the market outside the EEA must be expressed unequivocally, whether it is express or implied. Such is not the case where the trade mark proprietor is merely silent.
Zino Davidoff is the proprietor of two trade marks, "Cool Water" and "Davidoff Cool Water", registered in the United Kingdom and used for toiletries and cosmetic products. The goods in question carry batch code numbers and are sold by Davidoff or on its behalf both within and outside the European Economic Area ("the EEA").
A & G Imports acquired stocks of products which had originally been placed on the market in Singapore by Davidoff or with its consent. A & G imported those products into the Community (the United Kingdom, in this case) and began to sell them. Only the removal or obliteration of the batch code numbers distinguishes those products from other goods bearing the Davidoff trade mark.
The Levi Strauss companies are the proprietor of the trade marks 'LEVI'S' and '501', registered in the United Kingdom and used for jeans, among other products.
Tesco and Costco obtained genuine Levi's 501 jeans from suppliers importing them into the Community from countries outside the EEA and sold them in the United Kingdom. Levi Strauss had always refused to sell jeans to Tesco and Costco.
Davidoff and Levi Strauss commenced proceedings before the High Court of Justice, claiming that the import and sale of those goods within the Community constituted an infringement of the rights conferred on them by the registration of their trade marks.
In the three cases, A & G Imports, Tesco and Costco contend that the rights conferred by the trade mark have been exhausted.
In Community law, the principle of exhaustion laid down in the trade marks directive prevents the trade mark proprietor from relying on the exclusive rights conferred by the trade mark where goods bearing that mark have been placed on the market within the Community (now the EEA) by the proprietor or with his consent.
The questions referred by the High Court of Justice to the Court of Justice of the European Communities seek chiefly to determine the circumstances in which exhaustion occurs and more specifically, to clarify the concept of "consent". The importance of those questions prompted five governments (the German, French, Italian, Finnish and Swedish Governments) to submit observations.
At the outset, the Court considers the effect of the Directive on trade marks in general. It states that the Directive limits exhaustion of the rights conferred on the proprietor of a trade mark to cases where goods have been put on the market in the EEA and allows the proprietor to market his products outside that area without exhausting his rights within the EEA. In addition, by making it clear that the placing of goods on the market outside the EEA does not exhaust the proprietor's right to oppose the importation of those goods without his consent, the Directive allows the proprietor of the trade mark to control the initial marketing in the EEA of goods bearing the mark
The Court then goes on to consider the manner in which the consent of the trade mark proprietor to marketing within the EEA is expressed; must consent be express or may it be implied?
The Court considers that consent, which is tantamount to the proprietor's renunciation of his exclusive right to prevent all third parties from importing goods bearing his trade mark, constitutes the decisive factor in the extinction of that right. The Court considers that is necessary for it to provide a uniform interpretation of the concept of "consent" to the placing of goods on the market within the EEA in order to avoid a situation in which protection varies according to the national legal systems of the Member States.
In view of its serious effect in extinguishing the exclusive rights of the proprietor of the trade mark, consent must be expressed in such a way that an intention to renounce those rights is unequivocally demonstrated. This intention will normally be gathered from an express statement of consent. Nevertheless, it may in some cases be inferred 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 rights.
Finally, the Court considers whether implied consent might be inferred from the mere silence of a trade mark proprietor
The Court finds that consent must be expressed positively; the factors taken into consideration in finding implied consent must unequivocally demonstrate that the trade mark proprietor has renounced any intention to enforce his exclusive rights. It follows that it is not for the trade mark proprietor to demonstrate absence of consent, but rather for the trader alleging consent to prove it.
Implied consent to the marketing within the EEA of goods put on the market outside that area cannot be inferred from the mere silence of the trade mark proprietor. Furthermore, implied consent cannot be inferred from the fact that contractual reservations were not imposed at the time of the transfer of ownership of the goods bearing the mark, or from the fact that the trade mark proprietor has not communicated his opposition to marketing within the EEA or from the fact that the goods carry no warning of a prohibition on their being placed on the market within the EEA.
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