Blog » WHEN ARE TRADEMARK RIGHTS EXHAUSTED IN THE EU? PART I – THE BASIC RULE
WHEN ARE TRADEMARK RIGHTS EXHAUSTED IN THE EU? PART I – THE BASIC RULE
29 April 2019
A trademark right gives the proprietor the sole right to use and exploit the trademark and to prohibit others form using that trademark. However, there is an exception from this general prohibition, which is the principle of exhaustion giving possibility for parallel importers to commercialize trademarked goods. In this article we summarize when trademark rights are exhausted under the EU law.
1. Harmonized EU law
When it comes to the exhaustion of trademarks rights, it is fully harmonized within the European Union in order to ensure the free movement of goods. The exhaustion applies to both the trademarks of an EU Member State (“national trademark”) and to the European Union trademarks (“EU trademark”).
The exhaustion of trademark rights occurs throughout the European Economic Area (EEA) and the territorial scope of the exhaustion cannot be broadened by the national laws of an EU Member State.
2. The exhaustion-rule
Based on the exhaustion rule the use of the 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.
Even if the above conditions are met, exhaustion does not apply if the proprietor has legitimate reasons to oppose further commercialization of the goods.
First, we will analyse the general conditions of the exhaustion rule, while in a further article we will examine what are legitimate reasons based on which the proprietor can still prohibit the use of trademark.
3. Putting on the market
The first condition of the exhaustion is that the individual goods bearing the trademark shall be put on the market in the EEA.
The goods are only considered to be put on the market if the proprietor carried out an act, for example a sale, which allows him to realise the economic value of the trademark. Sole preparatory acts, such as importing are not sufficient for the exhaustion.
In several case, the CJEU dealt with the issue, whether the exhaustion rule applies in relation with trademarked samples of goods (eg. small perfume battles and testers) which the proprietor provides to authorized dealers. In these cases, the CJEU held that if the proprietor makes available the testers for demonstration purposes and prohibits their sale, the goods cannot be considered as put on the market.
4. The proprietor’s consent
The exhaustion only takes place if putting on the market has been carried out by the proprietor or with his consent.
It is easier to decide whether it was the proprietor who put the goods on the market. It is much more difficult to establish if putting on the market happened with the proprietor’s consent.
Based on the CJEU’s case-law, the burden of proving consent rests on the person seeking to justify the commercialization of the trademarked goods, and it is not for the proprietor to demonstrate the absence of the consent.
5. Under „that” trademark
Finally, putting on the market shall happen under the same trademark in order for the exhaustion rule to be applicable.
It is the CJEU’s well-established case law that the exhaustion rule does not apply if the parallel importer replaced the original trademark with another one used by the proprietor in the country of importation.
However, the exhaustion rule may apply if the replacement is objectively necessary in order to place the products on the market in the country of importation.
DOES THE LACK OF HANDOVER MAKE THE DISMISSAL UNLAWFUL IN HUNGARY?
Whether the lack of handover makes the dismissal unlawful based on the recent judgment of the Hungarian Supreme Court? What happens in case the employee fails to take over the dismissal? We address these issues in our article by analysing a recent judgment of Hungarian Supreme Court.Read more »
UNPAID CAPITAL CONTRIBUTION IN A HUNGARIAN LLC? HOW TO SOLVE THIS PROBLEM?
The „start-up capital” of the limited liability company is the initial capital which is the totality of the capital contributions provided by the shareholders. Since the shareholders may declare that the capital contribution shall only be provided after the establishment of the company in a later date, the painful situation might occur that the shareholder does not provide or only partly provides the capital contribution. Given that this may create unwanted consequences, the settlement of the capital-related problem is the common interest of the shareholders. In this article we summarize the possible methods to solve this issue.Read more »
COVID-19 BRIEFING – RESTRICTIONS ON NON-EUROPEAN FOREIGN INVESTMENTS IN HUNGARY
After the bill, passed in 2018 on restrictions of foreign investments, Hungary further limits the domestic investments of the foreigners because of the COVID-19. The new decree extends the scope of the investments to be notified and introduces fines, too. We explain the most important provisions of the decree in this article.Read more »