IP case law Court of Justice

Judgment of 1 Jul 1999, C-173/98 (Sebago)



JUDGMENT OF THE COURT (Fifth Chamber)

1 July 1999 (1)

(Trade mark — Exhaustion of a trade-mark proprietor's rights — Proprietor'sconsent)

In Case C-173/98,

REFERENCE to the Court under Article 234 EC (ex Article 177) by the Courd'Appel de Bruxelles, Belgium, for a preliminary ruling in the proceedings pendingbefore that court between

Sebago Inc. and Ancienne Maison Dubois et Fils SA

and

GB-Unic SA

on the interpretation of Article 7(1) of the First Council Directive 89/104/EEC of21 December 1988 to approximate the laws of the Member States relating to trademarks (OJ 1989 L 40, p. 1),

THE COURT (Fifth Chamber),

composed of: J.-P. Puissochet, President of the Chamber, P. Jann, J.C. Moitinhode Almeida, C. Gulmann (Rapporteur) and D.A.O. Edward, Judges,

Advocate General: F.G. Jacobs,


Registrar: H. von Holstein, Deputy Registrar,

after considering the written observations submitted on behalf of:

—    GB-Unic SA, by Richard Byl, of the Brussels Bar,

—    the French Government, by Kareen Rispal-Bellanger, Head of theSubdirectorate for International Economic Law and Community Law in theLegal Affairs Directorate of the Ministry of Foreign Affairs, and Anne deBourgoing, Chargé de Mission in the same directorate, acting as Agents,

—    the Commission of the European Communities, by Karen Banks, of itsLegal Service, acting as Agent,

having regard to the Report for the Hearing,

after hearing the oral observations of Sebago Inc. and of Ancienne Maison Duboisand Fils SA, represented by Benoît Strowel, of the Brussels Bar, of GB-Unic SA,represented by Richard Byl, and of the Commission, represented by Karen Banks,at the hearing on 28 January 1999,

after hearing the Opinion of the Advocate General at the sitting on 25 March 1999,

gives the following

Judgment

1.     By judgment of 30 April 1998, received at the Court on 11 May 1998, the Courd'Appel (Court of Appeal), Brussels, referred to the Court for a preliminary rulingunder Article 234 EC (ex Article 177) various questions on the interpretation ofArticle 7 of the First Council Directive 89/104/EEC of 21 December 1988 toapproximate the laws of the Member States relating to trade marks (OJ 1989 L 40,p. 1, 'the Directive‘), as amended by the Agreement on the European EconomicArea of 2 May 1992 (OJ 1994 L 1, p. 3, 'the EEA Agreement‘).

2.     Those questions were raised in proceedings between Sebago Inc. ('Sebago‘) andAncienne Maison Dubois et Fils SA ('Maison Dubois‘), on the one hand, and GB-Unic SA ('GB-Unic‘), on the other, concerning the sale by GB-Unic, withoutSebago's consent, of goods bearing a trade mark of which Sebago is the proprietor.

3.     Article 7 of the Directive, entitled 'Exhaustion of the rights conferred by a trademark‘, provides:

'1.    The trade mark shall not entitle the proprietor to prohibit its use in relationto goods which have been put on the market in the Community under that trademark by the proprietor or with his consent.

2.    Paragraph 1 shall not apply where there exist legitimate reasons for theproprietor to oppose further commercialisation of the goods, especially where thecondition of the goods is changed or impaired after they have been put on themarket.‘

4.     In accordance with Article 65(2), in conjunction with Annex XVII, point 4, of theEEA Agreement, Article 7(1) of the Directive has been amended for the purposesof the EEA Agreement so that the expression 'in the Community‘ has beenreplaced by 'in a Contracting Party‘.

5.     Sebago is a company incorporated in the United States of America and is theproprietor of two Benelux trade marks in the name 'Docksides‘ and three Beneluxtrade marks in the name 'Sebago‘. Those trade marks are registered, inter alia, forshoes. Maison Dubois is the exclusive distributor in the Benelux of shoes bearingSebago's trade marks.

6.     In the tenth issue of its 1996 brochure entitled 'La quinzaine Maxi-GB‘,announcing prices valid from 29 May until 11 June 1996, GB-Unic advertisedDocksides Sebago shoes for sale in its Maxi-GB hypermarkets. The goods inquestion were 2 561 pairs of shoes manufactured in El Salvador and purchasedfrom a company incorporated under Belgian law which specialises in parallelimportation. The entire stock was sold during the summer of 1996.

7.     Sebago and Maison Dubois do not dispute that the shoes sold by GB-Unic weregenuine goods. They claim, however, that since they had not authorised the sale ofthose shoes in the Community GB-Unic had no right to sell them there.

8.     In those circumstances, Sebago and Maison Dubois claimed before the Belgiancourts that GB-Unic had infringed Sebago's trade-mark right by marketing thosegoods within the Community without their consent. They relied on Article 13A(8)of the Uniform Benelux Law on Trade Marks (Loi Uniforme Benelux sur lesMarques), as amended by the Benelux Protocol of 2 December 1992 ('the UniformLaw‘), which is in similar terms to Article 7(1) of the Directive.

9.     In its order for reference, the Cour d'Appel observes that the interpretation ofArticle 13A(8) by the parties to the main proceedings differs in two materialrespects: first, as to whether that provision lays down the principle of internationalexhaustion (GB-Unic's contention) or the principle of Community exhaustion only

(Sebago's contention); and, secondly, as to the conditions under which the trade-mark proprietor's consent may be deemed to have been given.

10.     Concerning the second question, GB-Unic submits that in order to satisfy therequirement of consent in Article 13A(8) of the Uniform Law it suffices that similargoods bearing the same trade mark have already been lawfully marketed in theCommunity with the consent of the trade-mark proprietor. Sebago, on the otherhand, claims that its consent must be obtained in relation to each defined batch ofgoods, that is to say, each consignment imported at a particular time by a particularimporter. Thus it considers that it can be deemed to have given its consent only ifGB-Unic can prove that it obtained the shoes in question from a seller who waspart of the distribution network established by Sebago in the Community, or froma reseller who, although not belonging to that network, had obtained those shoeslawfully within the Community.

11.     GB-Unic also submitted before the Cour d'Appel that it was now settled thatSebago, by not prohibiting its licensee in El Salvador from exporting its goods tothe Community, had given its implied consent to the marketing of the shoes at issuein the Community. However, the Cour d'Appel expressly held that it had not beenproved that Sebago had granted a licence — Sebago having disputed that there wassuch a licence —, and that, in those circumstances, the mere fact that themanufacturer in El Salvador had exported the goods in question to the Communitycould not be regarded as proof that Sebago had consented to their being marketedthere.

12.     In those circumstances, the Cour d'Appel de Bruxelles decided to stay proceedingsand refer the following questions to the Court for a preliminary ruling:

'Is Article 7(1) of the First Council Directive 89/104/EEC of 21 December 1988to approximate the laws of the Member States relating to trade marks to beinterpreted as meaning that the right conferred by the trade mark entitles itsproprietor to oppose the use of his trade mark in relation to genuine goods whichhave not been put on the market in the European Economic Community (extendedto Norway, Iceland and Liechtenstein by virtue of the Agreement of 2 May 1992establishing the European Economic Area) by the proprietor or with his consent,where:

—    the goods bearing the trade mark come directly from a country outside theEuropean Community or the European Economic Area,

—    the goods bearing the trade mark come from a Member State of theEuropean Community or of the European Economic Area in which they arein transit without the consent of the proprietor of the trade mark or hisrepresentative,

—    if the goods were acquired in a Member State of the European Communityor of the European Economic Area in which they were put on sale for thefirst time without the consent of the proprietor of the trade mark or hisrepresentative,

—    either where goods bearing the trade mark — which are identical to thegenuine goods bearing the same trade mark but are imported in paralleleither directly or indirectly from countries outside the European Communityor the European Economic Area — are, or have already been, marketedwithin the Community or the European Economic Area by the proprietorof the trade mark or with his consent,

—    or where goods bearing the trade mark — which are similar to the genuinegoods bearing the same trade mark but imported in parallel either directlyor indirectly from countries outside the European Community or theEuropean Economic Area — are, or have already been, marketed within theCommunity or the European Economic Area by the proprietor of the trademark or with his consent?‘

13.     In its judgment of 16 July 1998 in Case C-355/96 Silhouette International Schmiedv Hartlauer [1998] ECR I-4799, which was delivered after the national court madeits order for reference in the present case, the Court held that national rulesproviding for exhaustion of trade-mark rights in respect of products put on themarket outside the European Economic Area ('the EEA‘) under that mark by theproprietor or with his consent are contrary to Article 7(1) of the Directive, asamended by the EEA Agreement.

14.     The parties to the main proceedings, the French Government and the Commissiontake the view that the Court answered the first three questions in Silhouette, so thatit is necessary to answer only the last two.

15.     As to those last two questions, Sebago, Maison Dubois, the French Governmentand the Commission contend that the consent of the trade-mark proprietor to themarketing in the EEA of one batch of goods does not exhaust the rights conferredby the trade mark as regards the marketing of other batches of his goods even ifthey are identical.

16.     GB-Unic considers, on the other hand, that Article 7 of the Directive does notrequire that the consent relate to the actual goods involved in the parallel import.It bases its argument, in particular, on the concept of the essential function of thetrade mark, which, according to the case-law of the Court, is to guarantee to theconsumer the identity of the product's origin, the object being to enable him todistinguish that product without any risk of confusion from those of different origin.However, according to GB-Unic, that function does not imply that the proprietorhas the right to prohibit the importation of genuine goods. It would thus be wrong

to argue that Article 7 of the Directive refers only to the consent of the proprietorto the marketing of imported individual items of original goods. GB-Unic thus takesthe view that there is consent within the meaning of Article 7 of the Directive if theconsent relates to the type of goods in question.

17.     The Court finds, first, that the interveners in the present case are correct insubmitting that the answer to the first three questions referred has already beengiven by the Court in Silhouette. The Court held, in paragraphs 18 and 26 of thatjudgment, that, according to the text of Article 7 of the Directive itself, rightsconferred by the mark are exhausted only if the products have been put on themarket in the Community (in the EEA since the EEA Agreement entered intoforce) and that the Directive does not leave it open to the Member States toprovide in their domestic law for exhaustion of the rights conferred by the trademark in respect of products put on the market in non-member countries.

18.     Next, it should be noted that, by its last two questions, the national court is askingessentially whether there is consent within the meaning of Article 7 of the Directivewhere the trade-mark proprietor has consented to the marketing in the EEA ofgoods which are identical or similar to those in respect of which exhaustion isclaimed or if, on the other hand, consent must relate to each individual item of theproduct in respect of which exhaustion is claimed.

19.     The text of Article 7(1) of the Directive does not give a direct answer to thatquestion. Nevertheless, the rights conferred by the trade mark are exhausted onlyin respect of the individual items of the product which have been put on themarket with the proprietor's consent in the territory there defined. The proprietormay continue to prohibit the use of the mark in pursuance of the right conferredon him by the Directive in regard to individual items of that product which havebeen put on the market in that territory without his consent.

20.     That is the interpretation of Article 7(1) that the Court has already adopted. Thus,the Court has already held that the purpose of that provision is to make possiblethe further marketing of an individual item of a product bearing a trade mark thathas been put on the market with the consent of the trade-mark proprietor and toprevent him from opposing such marketing (Case C-337/95 Parfums Christian Diorv Evora [1997] ECR I-6013, paragraphs 37 and 38, and Case C-63/97 BMW vDeenik [1999] ECR I-0000, paragraph 57). That interpretation is, moreover,confirmed by Article 7(2) of the Directive which, in its reference to the 'furthercommercialisation‘ of goods, shows that the principle of exhaustion concerns onlyspecific goods which have first been put on the market with the consent of thetrade-mark proprietor.

21.     Furthermore, in adopting Article 7 of the Directive, which limits exhaustion of theright conferred by the trade mark to cases where the goods bearing the mark havebeen put on the market in the Community (in the EEA since the EEA Agreemententered into force), the Community legislature has made it clear that putting such

goods on the market outside that territory does not exhaust the proprietor's rightto oppose the importation of those goods without his consent and thereby tocontrol the initial marketing in the Community (in the EEA since the EEAAgreement entered into force) of goods bearing the mark. That protection wouldbe devoid of substance if, for there to be exhaustion within the meaning of Article7, it were sufficient for the trade-mark proprietor to have consented to the puttingon the market in that territory of goods which were identical or similar to those inrespect of which exhaustion is claimed.

22.     In the light of the foregoing, the answer to the questions referred must be thatArticle 7(1) of the Directive must be interpreted as meaning that:

—    the rights conferred by the trade mark are exhausted only if the productshave been put on the market in the Community (in the EEA since the EEAAgreement entered into force) and that provision does not leave it open tothe Member States to provide in their domestic law for exhaustion of therights conferred by the trade mark in respect of products put on the marketin non-member countries;

—    for there to be consent within the meaning of Article 7(1) of that directive,such consent must relate to each individual item of the product in respectof which exhaustion is pleaded.

Costs

23.     The costs incurred by the French Government and by the Commission, which havesubmitted observations to the Court, are not recoverable. Since these proceedingsare, for the parties to the main proceedings, a step in the proceedings pendingbefore the national court, the decision on costs is a matter for that court.

On those grounds,

THE COURT (Fifth Chamber),

in answer to the questions referred to it by the Cour d'Appel de Bruxelles byjudgment of 30 April 1998, hereby rules:

Article 7(1) of the First Council Directive 89/104/EEC of 21 December 1988 toapproximate the laws of the Member States relating to trade marks, as amendedby the Agreement on the European Economic Area of 2 May 1992, must beinterpreted as meaning that:

—    the rights conferred by the trade mark are exhausted only if the productshave been put on the market in the Community (in the European EconomicArea since the Agreement on the European Economic Area entered intoforce) and that provision does not leave it open to the Member States toprovide in their domestic law for exhaustion of the rights conferred by thetrade mark in respect of products put on the market in non-membercountries;

—    for there to be consent within the meaning of Article 7(1) of that directive,such consent must relate to each individual item of the product in respectof which exhaustion is pleaded.

PuissochetJannMoitinho de Almeida

GulmannEdward

Delivered in open court in Luxembourg on 1 July 1999.

R. Grass J.-P. Puissochet

RegistrarPresident of the Fifth Chamber

1: Language of the case: French.


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