European Business Law, the fourth volume in our series, shows how the European authorities simultaneously abolish all restrictions on access to and exercise of economic activities and support the growth of domestic markets, through the harmonization the internal legislation or the enactment of genuinely unified regulations.

European Business Law

The theory of exhaustion of the right conferred by a trade mark meets the requirement of conciliation of freedom of movement and intellectual property. It means that the exclusive right conferred on the trade mark proprietor is exhausted as soon as the products or services are put on the market for the first time in the territory of the internal market. In effect, exercising rights conferred by a  …

Principle

The theory of exhaustion of the right conferred by a trade mark meets the requirement of conciliation of freedom of movement and intellectual property. It means that the exclusive right conferred on the trade mark proprietor is exhausted as soon as the products or services are put on the market for the first time in the territory of the internal market. In effect, exercising rights conferred by a trade mark cannot constitute obstacle to the free movement of goods beyond what is required to protect rights which constitute the specific subject-matter of the trade mark, i.e. to guarantee that the proprietor has the exclusive right to use it for the purpose of putting goods into circulation for the first time, and to protect him against competitors wishing to take advantage of the status and reputation of the trade mark by selling products illegally bearing that trade mark . That specific subject-matter derives from the basic function of the trade mark which is to guarantee to consumers that the product has the same origin  by enabling him to distinguish it without any risk of confusion from products of different origin . Article 15 of Directive No 2015/2436  which is inspired by the case law establishing the theory of exhaustion of the rights and Article 36 TFEU are interpreted in the same way .

According to that theory, the proprietor of the trade mark cannot oppose importation in a Member State of products which have lawfully been marketed in another Member State of the EEA by or with its consent or by a person legally or economically dependent on him . That person may be, inter alia, the same undertaking, a licensee, a parent company, a subsidiary of the same group, or an exclusive distributor . The fact that the licensee puts goods bearing a trade mark on the market in disregard of certain provisions of the license agreement is deemed to be made without the consent of the trade mark proprietor . In the absence of any economic link with the assignee, the trade mark proprietor who concludes a trade mark assignment agreement does not have any means of controlling the quality of the products which are marketed by the assignee and to which the latter has affixed the trade mark. Therefore he can lawfully oppose, under his trade mark right, importations made by the latter on his territory without infringing the principle of free movement of goods . By contrast, the proprietor's rights may be exhausted despite the absence of economic link with the trader having placed the products on the market where facts and circumstances prior to, simultaneous with or subsequent to that placing, unequivocally demonstrate that the proprietor has renounced his implied but non-equivocal right to oppose the placing of the goods within the EEA .

Likewise, the trade mark proprietor cannot prevent a third party from putting on the market a product which lawfully bears the trade mark in a Member State where, without his consent, the importer has repackaged, relabeled or repacked the products placed on the market with his consent, and has reaffixed the trade mark of the Member State of importation , where the repackaging proves to be indispensable to the sale of the products in the Member State of importation , the products remain intact and their origin is visible , and the exercise of a right of opposition by the proprietor would have the effect of artificially partitioning the markets .

The rights of the proprietor are not exhausted where he has not actually sold the products bearing his trade mark within the EEA , where the products are placed under a suspensive customs procedure such as external transit  or where they are put on the market only outside the EEA . In all events, his consent to the putting on the market within the EEA must relate to each individual item for which exhaustion is claimed . 

The burden of proof that the products bearing the trade mark have been put on the market within the EEA is, in principle, on the trader alleging the existence thereof . However, it is on the proprietor of the trade mark where the third party against whom proceedings have been brought succeeds in establishing that there is a real risk of partitioning of national markets if he himself bears that burden. This is the case where the marked products are sold using an exclusive distribution network: the fact that the third party reseller discloses to the proprietor of the trade mark right the identity of his supplier, member of the network, could prevent the third party from obtaining supplies in the future and thus definitively partition national markets .

Case 16/74 Centrafarm BV and others v Winthorp BV [1974] ECR 1183, LawLex200400003449JBJ.

Case 119/75 Terrapin v Terranova [1976] ECR 1039, LawLex200400003454JBJ.

Case C-427/93 Bristol-Myers Squibb and others v Paranova [1996] ECR I-3457, LawLex200500005306JBJ, which indicates that only a legitimate reason, within the meaning of Article 7(2) of Directive No 2008/95, may be opposed to the third party in such a case.

Case C-427/93 Bristol-Myers Squibb and others v Paranova [1996] ECR I-3457, LawLex200500005306JBJ.

Case 1/81 Pfizer v Eurim-Pharm [1981] ECR 2913, LawLex200500004093JBJ, which considers that the proprietor of a trade-mark right may not rely on that right in order to prevent an importer from marketing a pharmaceutical product manufactured in another Member State by the subsidiary of the proprietor and bearing the latter's trade mark with his consent, where the importer, in re-packaging the product, confined himself to replacing the external wrapping without touching the internal packaging and made the trade mark affixed by the manufacturer to the internal packaging visible through the new external wrapping, at the same time clearly indicating on the external wrapping that the product is manufactured by the subsidiary of the proprietor and re-packaged by the importer; C-352/95 Phytheron International v Bourdon [1997] ECR I-1729, LawLex200900000450JBJ, which considers that the owner of a trade mark in Member State A cannot prevent importation of a product manufactured in a non-member country, and imported into Member State B by the owner of the mark or by another company in the same group, and has then been lawfully acquired in Member State B by an independent trader having exported it to Member State A, where it has not been processed, and the packaging has not been changed, apart from the addition to the label of certain information to comply with the requirements of the legislation of the Member State of import, and insofar as the trade mark rights are held in Member States A and B by the same group. 

Case C-143/00 Boehringer Ingelheim and others [2002] ECR I-3759, LawLex200900000546JBJ.

Case C-16/03 Peak Holding [2004] ECR I-11313, LawLex200900000630JBJ.

Case C-405/03 Class International [2005] ECR I-8735, LawLex200900000710JBJ.

Case C-355/96 Silhouette International Schmied v Hartlauer Handelsgesellschaft [1998] ECR I-4799, LawLex200900000463JBJ; Case C-173/98 Sebago and Maison Dubois [1999] ECR I-4103, LawLex200900000728JBJ.

Case C-173/98 Sebago and Maison Dubois [1999] ECR I-4103, LawLex200900000728JBJ.

Case C-414/99 Zino Davidoff and Levi Strauss [2001] ECR I-8691, LawLex200900000760JBJ.

Case C-244/00 van Doren + Q [2003] ECR I-3051, LawLex200500004595JBJ.

Case C-10/89 CNL-SUCAL v HAG [1990] ECR I-3711, LawLex200500004633JBJ; C-379/97 Upjohn [1999] ECR I-6927, LawLex200500005075JBJ.

Previously Article 7 of Directive No 2008/95.

Case C-337/95 Parfums Christian Dior v Evora [1997] ECR I-6013, LawLex200500005099JBJ; C-427/93 Bristol-Myers Squibb and others v Paranova [1996] ECR I-3457, LawLex200500005306JBJ.

Case 144/81 Keurkoop v Nancy Kean Gifts [1982] ECR 2853, LawLex200500004094JBJ; C-10/89 CNL-SUCAL v HAG [1990] ECR I-3711, LawLex200500004633JBJ; See also C-324/08 Makro Zelfbedieningsgroothandel and others [2009] ECR I-10019, LawLex201100000389JBJ, finding the absence of connection between the proprietor of the trade mark and a trader to whom a trade mark license had been granted by an exclusive distributor who was a contracting party of the proprietor.

Case C-9/93 IHT Internationale Heiztechnik v Ideal-Standard [1994] ECR I-2789, LawLex200500005054JBJ, specifying, on the other hand, that the trade mark owner's rights are not exhausted as a result of the voluntary sale of that trade mark to a third party having no economic link to the assignor in order to limit marketing of the goods to certain Member States.

Case C-59/08 Copad [2009] ECR I-3421, LawLex201000000965JBJ.

Case C-9/93 IHT Internationale Heiztechnik v Ideal-Standard [1994] ECR I-2789, LawLex200500005054JBJ.

Case C-414/99 Zino Davidoff and Levi Strauss [2001] ECR I-8691, LawLex200900000760JBJ, also specifying that the implied consent of a trade mark proprietor to the marketing within the EEA of products previously placed on the market outside the EEA with his consent, cannot be inferred from the proprietor's silence, the fact that he has not communicated his opposition, the fact that the goods carry no warning of a prohibition of their being placed on the market within the EEA, or from the fact that the proprietor has transferred the ownership of the products bearing the trade mark without imposing any contractual reservations and where, according to the law governing the contract, the property right transferred includes, in the absence of such reservations, a right to market the goods subsequently within the EEA; see also C-324/08 Makro Zelfbedieningsgroothandel and others [2009] ECR I-10019, LawLex201100000389JBJ, considering that the consent of the proprietor of a trade mark to the marketing of goods bearing that mark carried out directly in the EEA by a third party who has no economic link to that proprietor may be implied, in so far as such consent is to be inferred from facts and circumstances prior to, simultaneous with or subsequent to the placing of the goods on the market in that area which, in the view of the national court, unequivocally demonstrate that the proprietor has renounced his exclusive rights.

European Business Law

250. Principle

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250. Principle

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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