The European Court of Justice (ECJ) has held that a trade mark owner can oppose a third party placing goods bearing its trade mark under the duty suspension arrangement if those goods have been introduced into the EEA and released for free circulation without the owner’s consent.

Background

Trade mark owners are entitled to prevent third parties not having their consent from using in the course of trade any sign which is identical with the trade mark (Articles 5(1) and (3), Trade Marks Directive (89/104/EEC, now replaced by 2008/95/EC)) (Article 5). The prohibited activities include offering, marketing, importing or exporting goods under the sign.

The Council Regulation establishing the Community Customs Code (92/2913/EEC, now replaced by 2008/450/EC) provides for a customs suspension arrangement for goods that are brought into the EU with the intention that they will be re-exported to a country outside the EU without being released for free circulation within any EU member state (the customs suspension arrangement).

A suspension arrangement is defined as a tax arrangement applied to the production, processing, holding and movement of products, excise duty being suspended (Directive 92/12/EEC, now replaced by 2008/118/EC).

The placing of trade-marked goods in transit under a suspension customs arrangement does not in itself infringe the exclusive right of a trade mark owner (Koninklijke Philips Electronics NV v Lucheng Meijing Industrial Company Ltd and others, Nokia Corporation v Her Majesty’s Commissioners of Revenue and Customs (Philips v Nokia).

Facts

Goods produced by the trade mark owner B were transported by V to the Netherlands from a country outside the EEA. At V’s request the goods were stored by T in T’s Rotterdam warehouse and placed under the customs suspension arrangement.

Some of the goods were then released for free circulation, which brought an end to the customs suspension arrangement and gave rise to the payment of import duties in a tax warehouse.

B issued proceedings in the Netherlands district court, claiming that its “Benelux” trade marks had been infringed.
The Hague Court of Appeal stayed the proceedings and referred questions about the relevance of the customs arrangement to the potential infringement to the ECJ.

Decision

The ECJ ruled that Article 5 must be interpreted as meaning that the proprietor of a trade mark registered in one or more member states may oppose a third party placing goods bearing that trade mark under the duty suspension arrangement after they have been introduced into the EEA and released for free circulation without the consent of that proprietor.

Philips was distinguished as here the customs arrangement had ended once the goods had been released for free circulation.

A trade mark owner was not obliged to wait for the release for consumption of the goods covered by its trade mark to exercise its exclusive right. It could also oppose certain acts committed without its consent before that release for consumption, including the importation of goods and storage for the purpose of putting them on the market.

V’s actions of importing the bottles into the EU without B’s consent, placing them under the duty suspension arrangement, then detaining them in a tax warehouse until the payment of import duties and their release for consumption, must be classified as “use in the course of trade” under Article 5(1) of the Trade Marks Directive (Article 5(1)).

The terms “using” and “in the course of trade” in Article 5(1) did not refer only to immediate relationships between a trader and a consumer, but would also apply where an economic operator imports or sends to a warehouse keeper goods which bear a trade mark of another company with a view to releasing them for marketing. Similarly, “in the course of trade” would apply where an economic operator, such as V, active in the parallel trade of trade-marked goods, imports and stores these goods. However, T’s actions in providing a warehouse service for goods bearing another’s trade mark did not constitute “use” of a trade mark.

Importing products without the trade mark owner’s consent and holding them in a tax warehouse before their release for consumption in the EU deprived the owner of the possibility of controlling the conditions of the first placing on the market within the EEA of products bearing its trade mark. Those acts also adversely affected the function of the trade mark of identifying the undertaking from which the products originated and under whose control the initial placing on the market was organised.

Comment

The revised Community Trade Mark Regulation and Trade Marks Directive, which is due to come into force later in 2015, will change the rules on transit goods. Trade mark owners will be entitled to prevent the bringing into the EU of counterfeit goods that are not being released for free circulation there, unless the holder of the goods can show that the trade mark owner is not entitled to stop the marketing of the goods in the final destination country.

This decision provides guidance on the status of goods that are placed under a suspension customs arrangement and later released for circulation, and the position of the companies involved in these operations. In order to obtain a remedy for infringement, such as destruction of the goods, the trade mark owner must prove not only that the goods would infringe an intellectual property right applicable within the EU if released onto the market there, but also that their release into circulation in the EU is envisaged.

Case: TOP Logistics BV and another v Bacardi and Company Ltd and another C-379/14.

First published in the September 2015 issue of PLC Magazine and reproduced with the kind permission of the publishers. Subscription enquiries 020 7202 1200.

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