IP case law Court of Justice

Judgment of 23 Feb 1999, C-63/97 (BMW / Deenik)



JUDGMENT OF THE COURT

23 February 1999 (1)

(Trade-marks directive — Unauthorised use of the BMW trade mark inadvertisements for a garage business)

In Case C-63/97,

REFERENCE to the Court under Article 177 of the EC Treaty by the Hoge Raadder Nederlanden (Netherlands) for a preliminary ruling in the proceedings pendingbefore that court between

Bayerische Motorenwerke AG (BMW) and BMW Nederland BV

and

Ronald Karel Deenik

on the interpretation of Articles 5 to 7 of First Council Directive 89/104/EEC of 21December 1988 to approximate the laws of the Member States relating to trademarks (OJ 1989 L 40, p. 1),

THE COURT,

composed of: G.C. Rodríguez Iglesias, President, P.J.G. Kapteyn, J.-P. Puissochetand P. Jann (Presidents of Chambers), C. Gulmann (Rapporteur), J.L. Murray,D.A.O. Edward, H. Ragnemalm, L. Sevón, M. Wathelet and R. Schintgen, Judges,

Advocate General: F.G. Jacobs,


Registrar: H. von Holstein, Deputy Registrar,

after considering the written observations submitted on behalf of:

—    Bayerische Motorenwerke AG (BMW) and BMW Nederland BV, by G. vander Wal, of the Brussels Bar, and H. Ferment, of The Hague Bar,

—    the Italian Government, by U. Leanza, Head of the Legal Service in theMinistry of Foreign Affairs, acting as Agent, assisted by O. Fiumara,Avvocato dello Stato,

—    the United Kingdom Government, by L. Nicoll, of the Treasury Solicitor'sDepartment, acting as Agent, and D. Alexander, Barrister,

—    the Commission of the European Communities, by B.J. Drijber, of its LegalService, acting as Agent,

having regard to the Report for the Hearing,

after hearing the oral observations of Bayerische Motorenwerke AG (BMW) andBMW Nederland BV, represented by G. van der Wal; of Mr Deenik, representedby J.L. Hofdijk, of The Hague Bar; of the United Kingdom Government,represented by Stephen Ridley, of the Treasury Solicitor's Department, acting asAgent; and of the Commission, represented by B.J. Drijber, at the hearing on 13January 1998,

after hearing the Opinion of the Advocate General at the sitting on 2 April 1998,

gives the following

Judgment

1.     By judgment of 7 February 1997, received at the Court on 13 February 1997, theHoge Raad der Nederlanden (Supreme Court of the Netherlands) referred to theCourt for a preliminary ruling under Article 177 of the EC Treaty five questionson the interpretation of Articles 5 to 7 of First Council Directive 89/104/EEC of 21December 1988 to approximate the laws of the Member States relating to trademarks (OJ 1989 L 40, p. 1, 'the directive‘).

2.     Those questions were raised in proceedings between the German companyBayerische Motorenwerke AG (BMW) and the Netherlands company BMWNederland BV (referred to separately as 'BMW AG‘ and 'BMW BV‘ and jointlyas 'BMW‘) and Mr Deenik, the owner of a garage, residing in Almere(Netherlands), concerning his advertisements for the sale of second-hand BMWcars and repairs and maintenance of BMW cars.

3.     Article 5 of the directive, which concerns the rights conferred by a trade mark,provides:

'1.    The registered trade mark shall confer on the proprietor exclusive rightstherein. The proprietor shall be entitled to prevent all third parties nothaving his consent from using in the course of trade:

    (a)    any sign which is identical with the trade mark in relation to goods orservices which are identical with those for which the trade mark isregistered;

    (b)    any sign where, because of its identity with, or similarity to, the trademark and the identity or similarity of the goods or services covered bythe trade mark and the sign, there exists a likelihood of confusion onthe part of the public, which includes the likelihood of associationbetween the sign and the trade mark.

2.    Any Member State may also provide that the proprietor shall be entitled toprevent all third parties not having his consent from using in the course oftrade any sign which is identical with, or similar to, the trade mark inrelation to goods or services which are not similar to those for which thetrade mark is registered, where the latter has a reputation in the MemberState and where use of that sign without due cause takes unfair advantageof, or is detrimental to, the distinctive character or the repute of the trademark.

3.    The following, inter alia, may be prohibited under paragraphs 1 and 2:

    (a)    affixing the sign to the goods or to the packaging thereof;

    (b)    offering the goods, or putting them on the market or stocking themfor these purposes under that sign, or offering or supplying servicesthereunder;

    (c)    importing or exporting the goods under the sign;

    (d)    using the sign on business papers and in advertising.

4.    Where, under the law of the Member State, the use of a sign under theconditions referred to in paragraphs 1 (b) or 2 could not be prohibitedbefore the date on which the provisions necessary to comply with thisDirective entered into force in the Member State concerned, the rightsconferred by the trade mark may not be relied on to prevent the continueduse of the sign.

5.    Paragraphs 1 to 4 shall not affect provisions in any Member State relatingto the protection against the use of a sign other than for the purposes ofdistinguishing goods or services, where use of that sign without due causetakes unfair advantage of, or is detrimental to, the distinctive character orthe repute of the trade mark.‘

4.     Article 6 of the directive, concerning limitation of the effects of a trade mark,provides inter alia:

'1.    The trade mark shall not entitle the proprietor to prohibit a third partyfrom using, in the course of trade,

...

    (c)    the trade mark where it is necessary to indicate the intended purposeof a product or service, in particular as accessories or spare parts;

    provided he uses them in accordance with honest practices in industrial orcommercial matters‘.

5.     Article 7 of the directive, concerning 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 thattrade mark 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, especiallywhere the condition of the goods is changed or impaired after they havebeen put on the market.‘

6.     In many countries, including, since 1930, the Benelux States, BMW AG marketsvehicles which it has manufactured and in respect of which it has registered withthe Benelux Trade Marks Office the trade name BMW and two figurative trademarks for, inter alia, engines and motor vehicles as well as for spare parts andaccessories ('the BMW mark‘).

7.     BMW AG markets its vehicles through a network of dealers. In the Netherlandsit supervises the network with the help of BMW BV. Dealers are entitled to usethe BMW mark for the purposes of their business, but are required to meet thehigh standards of technical quality deemed necessary by BMW in the provision ofservice and warranties and in sales promotion.

8.     Mr Deenik runs a garage and has specialised in the sale of second-hand BMW carsand in repairing and maintaining BMW cars. He is not part of the BMW dealernetwork.

9.     In the main proceedings BMW claimed that, in carrying on his business, Mr Deenikmade unlawful use, in advertisements, of the BMW mark or, at the very least, ofsimilar signs. By writ of 21 February 1994 it accordingly sought an order from theRechtbank (District Court), Zwolle, restraining Mr Deenik from, in particular, usingthe BMW mark or any similar sign in advertisements, publicity statements or otherannouncements emanating from him, or in any other way in connection with hisbusiness, and claimed damages from him. BMW relied on its rights under Article13A of the Uniform Benelux Law on Trade Marks in the version then in force.

10.     The Rechtbank took the view that a number of statements made by Mr Deenik inhis advertisements constituted unlawful use of the BMW mark, on the ground thatthey could give rise to the impression that they were put out by an undertakingentitled to use that mark, that is to say, an undertaking affiliated to the BMWdealer network. It therefore made an order prohibiting him from making such useof the BMW mark. However, the Rechtbank considered that Mr Deenik wasentitled to use expressions such as 'Repairs and maintenance of BMWs‘ in hisadvertisements, since it was sufficiently clear that these referred only to productsbearing the BMW mark. Furthermore, the Rechtbank deemed permissiblestatements such as 'BMW specialist‘ or 'Specialised in BMWs‘, on the groundthat BMW had not disputed the fact that Mr Deenik had specialist experience ofBMW vehicles and it was not for BMW to decide who were entitled to describethemselves as BMW specialists. The Rechtbank dismissed BMW's claim fordamages.

11.     BMW appealed against that judgment, requesting the Gerechtshof (Regional Courtof Appeal), Arnhem, to rule that, by referring in advertisements to 'Repairs andmaintenance of BMWs‘ and by describing himself as a 'BMW specialist‘ or as 'Specialised in BMWs‘, Mr Deenik was infringing the trade-mark rights belongingto BMW. Upon the Gerechtshof's confirmation of the Rechtbank's judgment,BMW lodged an appeal in cassation against that decision on 10 November 1995with the Hoge Raad.

12.     In the circumstances the Hoge Raad decided to stay proceedings and refer thefollowing questions to the Court for a preliminary ruling:

'(1)    In view of the fact that, with regard to the rights associated with a trademark, the directive contains a transitional legal provision only for thepurpose of the case described in Article 5(4), are Member States otherwisefree to lay down rules on the matter, or does Community law in general, orthe objective and tenor of Directive 89/104 in particular, have the effect thatMember States are not entirely free in that regard but must comply withspecific restrictions, and if so which?

(2)    If someone, without the authorisation of the trade mark proprietor, makesuse of that proprietor's trade mark, registered exclusively for specifiedgoods, for the purpose of announcing to the public that he

    (a)    carries out repair and maintenance work on the goods which havebeen placed on the market under that trade mark by the proprietoror with his consent, or that he

    (b)    is a specialist or is specialised with regard to such goods, does this,under the scheme of Article 5 of the Directive, involve:

    (i)    use of the trade mark in relation to goods which are identical to thosefor which it was registered, as referred to in Article 5(1)(a);

    (ii)    use of that trade mark in relation to services which must be deemedto constitute use of the trade mark within the meaning of Article5(1)(a) or use of the trade mark as referred to in Article 5(1)(b), onthe assumption that it can be stated that there is an identity betweenthose services and the goods for which the trade mark was registered;

    (iii)    use of the trade mark as referred to in Article 5(2); or

    (iv)    use of the trade mark as referred to in Article 5(5)?

(3)    For the purpose of answering Question 2, does it make any differencewhether announcement (a) or announcement (b) is involved?

(4)    In the light of the provision in Article 7 of the Directive, does it make anydifference, with regard to the question whether the proprietor of the trademark can prevent use of his trade mark registered exclusively for specifiedgoods, whether the use referred to in Question 2 is that under (i), (ii), (iii)or (iv)?

(5)    On the assumption that both or one of the cases described at the start ofQuestion 2 involve the use of the proprietor's trade mark within themeaning of Article 5(1), whether under Article 5(1)(a) or (b), can theproprietor prevent that use only where the person thus using the trade markthereby creates the impression that his undertaking is affiliated to the trade-mark proprietor's network, or can he also prevent that use where there isa good chance that the manner in which the trade mark is used for thoseannouncements may create an impression among the public that the trademark is in that regard being used to an appreciable extent for the purposeof advertising his own business as such by creating a specific suggestion ofquality?‘

The first question

13.     It is necessary first of all to give an account of the law and facts involved in thisquestion.

14.     It is clear from Council Decision 92/10/EEC of 19 December 1991 postponing thedate on which the national provisions applying Directive 89/104/EEC are to be putinto effect (OJ 1992 L 6, p. 35) that the directive was to be transposed intonational law by the Member States by 31 December 1992 at the latest. The rulesamending the Uniform Benelux Law on Trade Marks did not come into force until1 January 1996 pursuant to the Benelux Protocol of 2 December 1992 ('theamended Benelux Law‘ and, in its previous version, 'the former Benelux Law‘).

15.     The action in the main proceedings, which concerns a dispute between privatepersons, was brought after the period prescribed by Decision 92/10 for bringing intoforce national provisions applying the directive had expired, but before theamended Benelux Law entered into force. The appeal to the Hoge Raad was alsolodged before that latter date.

16.     In his opinion in the proceedings before the Hoge Raad, the Advocate Generalconsidered whether that court should, in the case pending before it, apply the rulesunder the former Benelux Law in force at the date on which the case was broughtbefore the Rechtbank and also at the date on which the appeal was lodged, orwhether it should not rather apply the rules under the amended Benelux Law,which would be in force at the date on which it gave its judgment. He took theview that, subject to the rule that once the date for implementing a directive haspassed national law must be interpreted as far as possible in conformity with thedirective, by analogy with Article 74(4) of the transitional law concerning the newNetherlands Civil Code the Hoge Raad should apply the former Benelux Law.

17.     In the order for reference the Hoge Raad made the following observations:

—    the Benelux Protocol of 2 December 1992 amending the Uniform BeneluxLaw on Trade Marks does not contain any provisions of a transitionalnature with regard to Article 13A of that Law, the first paragraph of whichtransposed into Benelux law Article 5(1), (2) and (5) of the directive, and

—    it has referred to the Benelux Court of Justice the question whether, on aproper construction of the Benelux Law on Trade Marks, where, inproceedings brought by the proprietor of a mark under the former Beneluxlaw, the appeal is directed against a decision given before 1 January 1996,the law in force before that date remains applicable.

18.     In the circumstances, the Hoge Raad wishes to ascertain whether Community lawmust be taken into consideration for the purposes of settling the question submittedto the Benelux Court of Justice.

19.     The Hoge Raad points out in that regard that, so far as Articles 5 to 7 of thedirective are concerned, the directive contains no rules relating to transitionalmatters other than that laid down in Article 5(4). Accordingly, it wishes to knowwhether the Member States may, by means of national measures, adopt rules fortransitional matters in cases other than those covered by that provision. Inparticular, the Hoge Raad asks whether Community law precludes a transitionalnational rule that an appeal against a decision given before the date on which therules transposing the directive into national law came belatedly into force must besettled in accordance with the rules applicable before that date, even if judgmentis given after that date.

20.     First of all, Article 5(4) of the directive seeks to limit the effects in time of the newnational rules transposing the directive. It provides that where, under the law ofthe Member State concerned, the use of a sign under the conditions referred to inArticle 5(1)(b) or (2) could not be prohibited before the date on which theprovisions necessary to comply with the directive entered into force, the rightsconferred by the trade mark may not be relied on to prevent the continued use ofthe sign.

21.     Similarly, the transitional problem actually facing the Hoge Raad is different inkind from that governed by Article 5(4), and the directive does not make provisionfor determining the national law applicable in such a situation. Since, moreover,no consideration based on the effectiveness of Community law in general or of thedirective in particular calls for any given solution, the national court must determinein the light of the applicable national rules whether the appeal before it is to beresolved in accordance with the rules of the former Benelux law or those of theamended Benelux law (see, to that effect, Case C-349/95 Loendersloot v Ballantine[1997] ECR I-6227, paragraph 18).

22.     None the less, whatever the applicable national law may be, it must be interpreted,as far as possible, in the light of the wording and purpose of the directive in orderto achieve the result pursued by the latter and thereby comply with the thirdparagraph of Article 189 of the EC Treaty (see, inter alia, Case C-106/89 Marleasing[1990] ECR I-4135, paragraph 8, and Case C-91/92 Faccini Dori v Recreb [1994]ECR I-3325, paragraph 26).

23.     That obligation applies equally to the transitional rules laid down by national law. Thus the national court must interpret those rules, as far as possible, in such a wayas to give full effect to Articles 5 to 7 of the directive in connection with the useof a trade mark subsequent to the date on which the directive ought to have beentransposed.

24.     In the light of the foregoing, the reply to the first question must be that, subject tothe duty of the national court to interpret national law as far as possible inconformity with Community law, it is not contrary to the latter for a transitionalrule of national law to provide that an appeal against a decision given before thedate on which the rules transposing the directive into national law were belatedlybrought into force is to be decided in accordance with the rules applicable beforethat date, even where judgment is given after that date.

Preliminary observations concerning Questions 2 to 5

25.     By its second to fifth questions, the Hoge Raad is asking the Court to interpretArticles 5 to 7 of the directive so that it can decide whether use of the BMW markin advertisements such as 'Repairs and maintenance of BMWs‘, 'BMW specialist‘or 'Specialised in BMWs‘ constitutes infringement of that mark.

26.     The Hoge Raad first asks questions with a view to determining the provision ofArticle 5 of the directive in the light of which the use of the mark concerned mustbe assessed. It then raises questions to enable it to decide whether, under thescheme of the directive, the use thus classified is lawful.

27.     It should at the outset be borne in mind that

—    Article 5(1)(a) of the directive concerns the use of any sign identical withthe trade mark in relation to goods or services which are identical withthose for which the trade mark is registered,

—    Article 5(1)(b) concerns the use of any sign where, because of its identitywith, or similarity to, the trade mark and the identity or similarity of thegoods or services covered by the trade mark and the sign, there exists alikelihood of confusion on the part of the public,

—    Article 5(2) concerns the use of any sign which is identical with, or similarto, the trade mark in relation to goods or services which are not similar tothose for which the trade mark is registered, where the latter has areputation in the Member State, and

—    Article 5(5) concerns the use of a sign other than for the purposes ofdistinguishing goods or services.

28.     Furthermore, paragraphs (2) and (5) of Article 5 of the directive lay down anadditional condition for their application, namely that the use of that sign withoutdue cause takes unfair advantage of, or is detrimental to, the distinctive characteror repute of the trade mark.

29.     It should in addition be borne in mind that Articles 6 and 7 of the directive containrules limiting the right of the proprietor of a trade mark, under Article 5, toprohibit a third party from using his mark. In this connection, Article 6 providesinter alia that the proprietor of a trade mark may not prohibit a third party fromusing the mark where it is necessary to indicate the intended purpose of a product,provided that he uses it in accordance with honest practices in industrial orcommercial matters. Article 7 provides that the proprietor is not entitled toprohibit the use of a trade mark in relation to goods which have been put on themarket in the Community under that trade mark by the proprietor or with hisconsent, unless there exist legitimate reasons for him to oppose furthercommercialisation of the goods.

30.     Lastly, having regard to the arguments before the Court, it must be emphasisedthat classifying the mark as falling under one specific provision or another ofArticle 5, as the case may be, is not necessarily determinant as regards theassessment as to whether the use in question is permissible.

Questions 2 and 3

31.     By its second and third questions, which should be considered together, the nationalcourt is in substance asking whether the use of a trade mark, without theproprietor's authorisation, in order to inform the public that another undertakingcarries out repairs and maintenance of goods covered by that trade mark or thatit has specialised, or is a specialist, in such goods constitutes a use of that mark forthe purposes of one of the provisions of Article 5 of the directive.

32.     In this regard, as the Hoge Raad has pointed out,

—    the trade mark at issue in the main proceedings is registered only in respectof particular goods (principally motor vehicles),

—    the statements in the advertisements in question — 'Repairs andmaintenance of BMWs‘, 'BMW specialist‘ and 'Specialised in BMWs‘ —concern goods marketed under that trade mark by the proprietor or withhis consent, and

—    the expressions 'BMW specialist‘ and 'Specialised in BMWs‘ refer bothto the sale of second-hand BMW cars and also to the repair andmaintenance of BMW cars.

33.     The questions referred therefore concern a situation in which the BMW mark hasbeen used to inform the public that the advertiser carries out the repair andmaintenance of BMW cars or that he has specialised, or is a specialist, in the saleor repair and maintenance of those cars.

34.     As described, this is a situation in which, at least at first sight — and as the UnitedKingdom Government has observed — the use in question falls within the scope ofArticle 5(1)(a) of the directive, since the BMW mark is used in respect of genuineBMW goods.

35.     That classification has, however, been disputed in some of the observationssubmitted to the Court, more specifically on the basis of two arguments.

36.     The first is that the expressions in question, particularly 'BMW specialist‘ and'Specialised in BMWs‘, use the BMW mark other than for the purposes ofdistinguishing goods or services and thus come within the scope of Article 5(5) ofthe directive.

37.     The second argument is that, in the advertisement for 'repair and maintenance ofBMWs‘, the BMW mark is not used in respect of goods but to describe a servicein respect of which the mark has not been registered. For that reason, Article5(1)(a) of the directive is not applicable, so that it must be ascertained whetherArticle 5(1)(b) or (2) may be applicable.

38.     In that connection, it is true that the scope of application of Article 5(1) and (2)of the directive, on the one hand, and Article 5(5), on the other, depends onwhether the trade mark is used for the purpose of distinguishing the goods orservices in question as originating from a particular undertaking, that is to say, asa trade mark as such, or whether it is used for other purposes. In a situation suchas that in the main proceedings, the issue is the use of the same trade markintended to distinguish the goods in question as the subject of the services providedby the advertiser.

39.     The advertiser uses the BMW mark to identify the source of the goods in respectof which the services are supplied, and thus to distinguish those goods from anyothers in respect of which the same services might have been provided. If the useof the trade mark in advertisements for the service which consists of selling second-hand BMW cars is undoubtedly intended to distinguish the subject of the servicesprovided, it is not necessary to treat any differently the advertisements for theservice consisting of repair and maintenance of BMW cars. In that case, too, themark is used to identify the source of the goods which are the subject of theservice.

40.     In that context, it is only in the situations covered by Article 5(2) or (5) that thequestion arises whether use of the mark takes unfair advantage of, or is detrimental

to, the distinctive character or the repute of the trade mark by, for example, givingthe public a false impression of the relationship between the advertiser and thetrade mark owner. Those matters are accordingly to be taken into account, notwhen classifying use under Article 5, but when assessing the legality of that use inthe situations covered by Article 5(2) or (5).

41.     Lastly, the use involved in the case in the main proceedings is in point of fact use'in the course of trade‘ within the meaning of Article 5(1) and (2) of the directive. Article 5(3) expressly mentions use of the sign in advertising as an example of thoseuses of a trade mark which may be prohibited under paragraphs (1) and (2).

42.     Accordingly, the answer to be given to the second and third questions must be thatthe use of a trade mark, without the proprietor's authorisation, for the purpose ofinforming the public that another undertaking carries out the repair andmaintenance of goods covered by that mark or that it has specialised or is aspecialist in such goods constitutes, in circumstances such as those described in thejudgment making the reference, use of the mark within the meaning of Article5(1)(a) of the directive.

Questions 4 and 5

43.     By its fourth and fifth questions, which should be considered together, the nationalcourt is in substance asking whether Articles 5 to 7 of the directive entitle theproprietor of a trade mark to prevent another person from using that mark for thepurpose of informing the public that he carries out the repair and maintenance ofgoods covered by a trade mark and put on the market under that mark by theproprietor or with his consent, or that he has specialised or is a specialist in thesale or the repair and maintenance of such goods.

44.     The Court is asked to rule, in particular, on the question whether the trade markproprietor may prevent such use only where the advertiser creates the impressionthat his undertaking is affiliated to the trade mark proprietor's distribution network,or whether he may also prevent such use where, because of the manner in whichthe trade mark is used in the advertisements, there is a good chance that the publicmight be given the impression that the advertiser is using the trade mark in thatregard to an appreciable extent for the purpose of advertising his own business assuch, by creating a specific suggestion of quality.

45.     In order to reply to that question, it must be pointed out that, in view of the answergiven to the second and third questions that the use of the trade mark in theadvertisements concerned in the main proceedings falls within the scope of Article5(1)(a) of the directive, the use in issue may be prohibited by the trade markproprietor unless Article 6, concerning the limitation of the effects of a trade mark,or Article 7, concerning exhaustion of the rights conferred by a trade mark, areapplicable.

46.     That question must be considered, first, in relation to the advertisements for thesale of second-hand cars and, second, in relation to the advertisements for therepair and maintenance of cars.

The advertisements for the sale of second-hand BMW cars

47.     As regards the advertisements for the sale of second-hand BMW cars put on themarket under that trade mark by the trade mark proprietor or with his consent, thecase-law of the Court should be borne in mind concerning the use of a trade markto inform the public of the resale of goods covered by a trade mark.

48.     In Case C-337/95 Parfums Christian Dior v Evora [1997] ECR I-6013, the Court firstheld, at paragraph 38, that on a proper interpretation of Articles 5 and 7 of thedirective, when trade-marked goods have been put on the Community market bythe proprietor of the trade mark or with his consent, a reseller, besides being freeto resell those goods, is also free to make use of the trade mark in order to bringto the public's attention the further commercialisation of those goods.

49.     In the same judgment, the Court then found, at paragraph 43, that damage doneto the reputation of a trade mark may, in principle, be a legitimate reason, withinthe meaning of Article 7(2) of the directive, allowing the proprietor to oppose theuse of his trade mark for further commercialisation of goods put on the Communitymarket by him or with his consent. As regards prestige goods, the Court stated, atparagraph 45, that the reseller must not act unfairly in relation to the legitimateinterests of the trade mark owner, but must endeavour to prevent his advertisingfrom affecting the value of the trade mark by detracting from the prestigious imageof the goods in question. At paragraph 48, the Court concluded that the proprietorof a trade mark may not rely on Article 7(2) to oppose the use of the trade mark,in ways customary in the reseller's sector of trade, for the purpose of bringing tothe public's attention the further commercialisation of the trade-marked goods,unless it is established that such use seriously damages the reputation of the trademark.

50.     In the context of the present case, the consequence of that decision is that it iscontrary to Article 7 of the directive for the proprietor of the BMW mark toprohibit the use of its mark by another person for the purpose of informing thepublic that he has specialised or is a specialist in the sale of second-hand BMWcars, provided that the advertising concerns cars which have been put on theCommunity market under that mark by the proprietor or with its consent and thatthe way in which the mark is used in that advertising does not constitute alegitimate reason, within the meaning of Article 7(2), for the proprietor'sopposition.

51.     The fact that the trade mark is used in a reseller's advertising in such a way thatit may give rise to the impression that there is a commercial connection betweenthe reseller and the trade mark proprietor, and in particular that the reseller'sbusiness is affiliated to the trade mark proprietor's distribution network or thatthere is a special relationship between the two undertakings, may constitute alegitimate reason within the meaning of Article 7(2) of the directive.

52.     Such advertising is not essential to the further commercialisation of goods put onthe Community market under the trade mark by its proprietor or with his consentor, therefore, to the purpose of the exhaustion rule laid down in Article 7 of thedirective. Moreover, it is contrary to the obligation to act fairly in relation to thelegitimate interests of the trade mark owner and it affects the value of the trademark by taking unfair advantage of its distinctive character or repute. It is alsoincompatible with the specific object of a trade mark which is, according to thecase-law of the Court, to protect the proprietor against competitors wishing to takeadvantage of the status and reputation of the trade mark (see, inter alia, CaseC-10/89 HAG GF [1990] ECR I-3711, 'HAG II‘, paragraph 14).

53.     If, on the other hand, there is no risk that the public will be led to believe thatthere is a commercial connection between the reseller and the trade markproprietor, the mere fact that the reseller derives an advantage from using thetrade mark in that advertisements for the sale of goods covered by the mark, whichare in other respects honest and fair, lend an aura of quality to his own businessdoes not constitute a legitimate reason within the meaning of Article 7(2) of thedirective.

54.     In that connection, it is sufficient to state that a reseller who sells second-handBMW cars and who genuinely has specialised or is a specialist in the sale of thosevehicles cannot in practice communicate such information to his customers withoutusing the BMW mark. In consequence, such an informative use of the BMW markis necessary to guarantee the right of resale under Article 7 of the directive anddoes not take unfair advantage of the distinctive character or repute of that trademark.

55.     Whether advertising may create the impression that there is a commercialconnection between the reseller and the trade mark proprietor is a question of factfor the national court to decide in the light of the circumstances of each case.

The advertisements relating to repair and maintenance of BMW cars

56.     First, the Court finds that the rule concerning exhaustion of the rights conferred bya trade mark laid down in Article 7 of the directive is not applicable to theadvertisements relating to repair and maintenance of BMW cars.

57.     Article 7 is intended to reconcile the interests of trade-mark protection and thoseof free movement of goods within the Community by making the furthercommercialisation of a product bearing a trade mark possible and preventingopposition by the proprietor of the mark (see, to that effect, Parfums ChristianDior, paragraphs 37 and 38). Advertisements relating to car repair andmaintenance do not affect further commercialisation of the goods in question.

58.     None the less, so far as those advertisements are concerned, it is still necessary toconsider whether use of the trade mark may be legitimate in the light of the rulelaid down in Article 6(1)(c) of the directive, that the proprietor may not prohibita third party from using the trade mark to indicate the intended purpose of aproduct or service, in particular as accessories or spare parts, provided that the useis necessary to indicate that purpose and is in accordance with honest practices inindustrial or commercial matters.

59.     In that regard, as the United Kingdom Government has observed, the use of thetrade mark to inform the public that the advertiser repairs and maintains trade-marked goods must be held to constitute use indicating the intended purpose of theservice within the meaning of Article 6(1)(c). Like the use of a trade markintended to identify the vehicles which a non-original spare part will fit, the use inquestion is intended to identify the goods in respect of which the service isprovided.

60.     Furthermore, the use concerned must be held to be necessary to indicate theintended purpose of the service. It is sufficient to note, as the Advocate Generaldid at point 54 of his Opinion, that if an independent trader carries out themaintenance and repair of BMW cars or is in fact a specialist in that field, that factcannot in practice be communicated to his customers without using the BMWmark.

61.     Lastly, the condition requiring use of the trade mark to be made in accordance withhonest practices in industrial or commercial matters must be regarded asconstituting in substance the expression of a duty to act fairly in relation to thelegitimate interests of the trade mark owner, similar to that imposed on the resellerwhere he uses another's trade mark to advertise the resale of products covered bythat mark.

62.     Just like Article 7, Article 6 seeks to reconcile the fundamental interests of trade-mark protection with those of free movement of goods and freedom to provideservices in the common market in such a way that trade mark rights are able tofulfil their essential role in the system of undistorted competition which the Treatyseeks to establish and maintain (see, in particular, HAG II, paragraph 13).

63.     Consequently, for the reasons set out in paragraphs 51 to 54 of this judgment,which apply mutatis mutandis, the use of another's trade mark for the purpose of

informing the public of the repair and maintenance of goods covered by that markis authorised on the same conditions as those applying where the mark is used forthe purpose of informing the public of the resale of goods covered by that mark.

64.     In the light of the foregoing, the answer to be given to the fourth and fifthquestions must be that Articles 5 to 7 of the directive do not entitle the proprietorof a trade mark to prohibit a third party from using the mark for the purpose ofinforming the public that he carries out the repair and maintenance of goodscovered by that trade mark and put on the market under that mark by theproprietor or with his consent, or that he has specialised or is a specialist in thesale or the repair and maintenance of such goods, unless the mark is used in a waythat may create the impression that there is a commercial connection between theother undertaking and the trade mark proprietor, and in particular that thereseller's business is affiliated to the trade mark proprietor's distribution networkor that there is a special relationship between the two undertakings.

Costs

65.     The costs incurred by the Italian Government, the United Kingdom Governmentand the Commission, which have submitted observations to the Court, are notrecoverable. Since these proceedings are, for the parties to the main proceedings,a step in the action pending before the national court, the decision on costs is amatter for that court.

On those grounds,

THE COURT,

in answer to the questions referred to it by the Hoge Raad der Nederlanden byjudgment of 7 February 1997, hereby rules:

1.    Subject to the duty of the national court to interpret national law as far aspossible in conformity with Community law, it is not contrary to the latterfor a transitional rule of national law to provide that an appeal against adecision given before the date on which the rules transposing First CouncilDirective 89/104/EEC of 21 December 1988 to approximate the laws of theMember States relating to trade marks into national law were belatedlybrought into force is to be decided in accordance with the rules applicablebefore that date, even where judgment is given after that date.

2.    The use of a trade mark, without the proprietor's authorisation, for thepurpose of informing the public that another undertaking carries out therepair and maintenance of goods covered by that mark or that it hasspecialised or is a specialist in such goods constitutes, in circumstances

such as those described in the judgment making the reference, use of themark within the meaning of Article 5(1)(a) of First Directive 89/104.

3.    Articles 5 to 7 of First Directive 89/104 do not entitle the proprietor of atrade mark to prohibit a third party from using the mark for the purposeof informing the public that he carries out the repair and maintenance ofgoods covered by that trade mark and put on the market under that markby the proprietor or with his consent, or that he has specialised or is aspecialist in the sale or the repair and maintenance of such goods, unlessthe mark is used in a way that may create to the impression that there isa commercial connection between the other undertaking and the trade markproprietor, and in particular that the reseller's business is affiliated to thetrade mark proprietor's distribution network or that there is a specialrelationship between the two undertakings.

Rodríguez IglesiasKapteynPuissochet

JannGulmannMurray

EdwardRagnemalmSevón

WatheletSchintgen

Delivered in open court in Luxembourg on 23 February 1999.

R. Grass G.C. Rodríguez Iglesias

RegistrarPresident

1: Language of the case: Dutch.


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