Class International fears appear well-founded

Netherlands

The Hague Court of Appeal has applied the European Court of Justice's (ECJ) reasoning in the Class International Case to dismiss Nike Inc's claim against a parallel importer of Nike footwear (Case 05/1100, April 13 2006). (For discussion of the ECJ's ruling, see Mark owners cannot stop illegal parallel imports in transit.)

The ECJ's Class International decision indicated that there is no trademark use in the course of trade in the European Union as a result of the mere importation of products into the European Union, as long as the products have not been released for free circulation within the European Union. In other words, as long as the relevant customs procedures have not been fulfilled, the products cannot be said to have been put onto the EU market, hence there is no use of the trademark within the European Union. Unless the trademark owner proves that the products will "necessarily" be put onto the EU market, the trademark owner can take no action. Class International was expected to bring serious drawbacks for trademark owners, since in principle they could no longer take pre-emptive measures (such as seizure) once the products were imported into the European Union.

The fears expressed following the Class International Case appear to have foundation following the ruling of The Hague Court of Appeal. The case arose after Nike seized 5,000 pairs of Nike shoes in the port of Rotterdam, which it suspected would be sold to end consumers in the European Union. If so, there would be trademark infringement due to unauthorized parallel import. According to Dutch Customs, the end destination of the shoes was The Netherlands. However, the importer, Marimina BV, stated that the shoes, which were imported from the United Arab Emirates, were meant for final sale in Egypt. Nike challenged this statement as highly unlikely. It questioned why anyone would make a detour via The Netherlands to ship products from the United Arab Emirates to nearby Egypt.

Affirming the Class International decision, the court held that Nike had not managed to prove that the shoes were not meant to be sold in Egypt. Consequently, Nike's claims were dismissed by the court.

The decision shows that Class International has made it considerably more difficult for mark owners to fight unauthorized parallel imports. Instead of seizing products as they are imported into the European Union, mark owners may need to wait until the products are sold to EU consumers before they can act. In practice, this means that mark owners now have to focus on the traders and retail outlets that actually sell the imported products to end consumers in the European Union, rather than a central attack at the ports.

Paul Reeskamp, Allen & Overy LLP, Amsterdam

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