WHEN ARE TRADEMARK RIGHTS EXHAUSTED IN THE EU? PART II – THE EXCEPTIONS

07 May 2019

In case trademarked goods have been put on the market by the proprietor or with his consent in the EEA, the exhaustion rule allows the parallel importer to further commercialize those products. However, this is not the case, if the trademark proprietor has legitimate reasons to oppose the commercialization. In this article we summarize the main cases when the proprietor can prohibit the use of the trademark.

1. Legitimate reasons to oppose

As a small reminder, based on the exhaustion rule the use of the national or EU trademark cannot be prohibited in relation to goods which have been put on the market in the EEA under that trademark by the proprietor or with his consent.

The CJEU developed the types of cases, where the proprietor, despite the fulfilment of the above conditions, has legitimate reasons to oppose the further commercialization of the goods.

The main types of cases are the following:

1. serious damage to reputation,
2. (false) impression of commercial connection
3. de-branding
4. repackaging,
5. refilling.

2. Serious damage to reputation

The CJEU emphasized that the damage done to the reputation of a trademark may, in principle, be a legitimate reason to oppose further commercialization of goods[1].

The question whether a damage to reputation of the trademark is done, arose in relation with the second hand market.

In this context, the CJEU held that generally, it cannot be deemed seriously detrimental to the reputation of the trademark if the trader uses the indications ‘used’ or ‘second-hand’ in order to announce the resale of the trademarked goods[2].

3. Impression of commercial connection

As a general principle the proprietor has a legitimate reason to oppose the further commercialization when a reseller uses the trademark in advertising in a such a way that it may give a rise to the impression that there is a commercial connection between the reseller and the proprietor[3].

However, if there is no risk that the public will be led to believe that there is a commercial connection between the reseller and the proprietor, the mere fact that the use of the trademark in advertising lends the reseller’s own business an aura of quality does not constitute a legitimate reason to oppose the further commercialization.

4. De-branding

De-branding means cases where the original trademark is removed, and it is replaced by the trademark of the reseller.

The CJEU established that this gives rise to the proprietor to oppose the use of the original trademark for advertising purposes. The reason for that is that otherwise the consumers could no longer distinguish clearly between the goods originating from the proprietor and from the reseller which would damage the origin function of the trademark[4].

Repackaging

Repackaging comprises cases where the reseller changes the package of the goods without altering the goods themselves.

The CJEU established five conditions[5] which exclude the opposition to the further commercialization as listed below:

1. opposing would contribute to the artificial partitioning of the markets between the Member States,
2. repackaging does not affect the original condition of the product inside,
3. the new packaging clearly states who repackaged the goods,
4. the presentation of the repackaged products is not detrimental to the reputation of the trademark and the proprietor,
5. the importer gives prior notice to the proprietor before putting the product on sale

5. Refilling

Refilling means cases where trademarked containers are refilled by a supplier who is not an authorized dealer of the proprietor after the first sale.

In relation to those situations, the CJEU established that the sale of the products exhausted trademark rights and transferred to the purchaser the right to use the product freely. This includes the right to exchange the product or have it refilled, once the original contents have been consumed, by an undertaking of his choice, that is to say, not only by that licensee and proprietor, but also by one of its competitors[6].