On 25 July 2018, the European Court of Justice ("ECJ" or the "Court") rendered judgment in the Mitsubishi case (C-129/17) on the issues of de-branding and subsequent re-branding of goods imported into the EU. The Court examined whether such conduct could be considered a "use in the course of trade" and could therefore benefit from the protection of EU trademark law. Disagreeing with the Advocate-General ("AG"), the Court held that it could.
1. Factual background
The case involved, on the one hand, Duma – a Belgian company specialised in the worldwide purchase and sale of new and second hand forklift trucks – and GSI – an affiliate of Duma active in the construction and repair of forklift trucks, and, on the other hand, Mitsubishi and Mitsubishi Caterpillar Forklift Europe BV ("MCFE"), an undertaking to which Mitsubishi had granted the exclusive right to manufacture and sell forklift trucks supplied under the Mitsubishi mark within the European Economic Area ("EEA").
Without Mitsubishi's consent, Duma and GSI had acquired forklift trucks from an undertaking outside of the EEA. They placed the trucks on a customs warehousing procedure prior to importing them into the EEA. Duma and GSI removed all signs identical to the Mitsubishi marks from the trucks; they made modifications to ensure compliance with EU standards; they replaced the identification plates and serial numbers and attached their own signs. Finally, they placed the trucks onto the EEA market.
Mitsubishi and MCFE tried to obtain an injunction against Duma and GSI before the Belgian courts. They claimed that Duma and GSI had infringed the right of the proprietor of the mark to control the first placing on the market in the EEA of the goods bearing the mark involved and had harmed the mark’s functions of indicating origin and quality, as well as the functions of investment and advertising.
The Dutch-speaking commercial court of Brussels rejected their claims. On appeal, the Brussels court of appeal decided to refer two questions to the ECJ.
2. Legal background
The questions before the Court pertained to the meaning of Article 5(1) of Directive 2008/95 (the "EU Trade Marks Directive") and Article 9(1) of Regulation 207/2009 (the "EU Trade Marks Regulation"). Both provisions confer certain exclusive rights with regard to the use of signs to the trademark holder which aim to protect the interests of the holder.
The Brussels court of appeal asked the following questions to the ECJ:
1) a. Do Article 5 of Directive 2008/95 and Article 9 of Council Regulation No 207/2009 cover the right of the trade mark proprietor to oppose the removal, by a third party, without the consent of the trade mark proprietor, of all signs identical to the trademarks which had been applied to the goods (debranding), in the case where the goods concerned have never previously been traded within the EEA, such as goods placed in a customs warehouse, and where the removal by the third party occurs with a view to importing or placing those goods on the market within the EEA?
b. Does it make any difference to the answer to question (a) above whether the importation of those goods or their placing on the market within the EEA occurs under its own distinctive sign applied by the third party (rebranding)?
2) Does it make any difference to the answer to the first question whether the goods thus imported or placed on the market are, on the basis of their outward appearance or model, still identified by the relevant average consumer as originating from the trade-mark proprietor?’
3. Opinion of the AG
On 26 April 2018, the AG had invited the Court to rule that the removal of a trademark under the circumstances of the case at hand could not be considered "use" of that trademark in the course of trade and that therefore the questions related to the issue of de-branding and re-branding fall outside of the scope of EU law. To make this argument, the AG engaged in a comparative analysis of UK, German and French law. He noted that UK and German courts have considered that de-branding does not constitute a use of a trademark, and that the French legislator has enacted a statute expressly prohibiting de-branding – the premise being in all three jurisdictions that de-branding is not considered a "use" in the meaning of the EU trademark rules.
As a consequence, Member State law and not EU law governs the issues of de-branding and re-branding, which the AG refers to as forms of "non-use." However, he added that different types of remedy might be available under EU law to act against de-branding than those provided by EU trademark law. In that regard, the AG pointed out that, in certain circumstances, de-branding could be considered a form of unfair commercial conduct, as it might mislead customers.
The Commission disagreed with the AG and submitted to the Court that de-branding ought to be seen as a form of trademark use.
4. The Judgment
The ECJ disagreed with the AG's assessment. It held that the proprietor of a mark is entitled to oppose a third party, without its consent, removing all the signs identical to the mark and affixing other signs on the products placed in the customs warehouse, as in the main proceedings, with a view to importing them or trading them in the EEA where they have never yet been marketed.
The Court reasoned as follows:
The judgment of the Court should be welcomed by trademark holders, since the Court's interpretation of the provisions involved bolsters the protection of trademark holders and broadens the scope of the notion of "use in the course of trade."
However, in certain respects the decision unfortunately remains overly case-specific:
Considering the above, it remains to be seen how national courts – and firstly so the Brussels court of appeal – will apply the ECJ's judgment. In any event, it is likely that the questions surrounding the issue of de-and re-branding will remain with us for some time to come.