ECJ interprets Article 5 of Directive 89/104

European Union

In TOP Logistics BV v Bacardi & Company Ltd (Case C-379/14, July 22 2015), the Court of Justice of the European Union (ECJ) has considered a request for a preliminary ruling by the Court of Appeal of The Hague concerning the interpretation of Article 5 of the Trademarks Directive (89/104/EEC). The ECJ (Third Chamber) ruled that the article must be interpreted as meaning that the proprietor of a trademark registered in one or more member states may oppose a third party placing goods bearing that trademark under the duty suspension arrangement after they have been introduced into the European Economic Area (EEA) and released for free circulation without the consent of that proprietor.

TOP Logistics, formerly Mevi Internationaal Expeditiebedrijf BV, is an undertaking active in the storage and transhipment of goods, which has a licence to operate a custom warehouse and an excise warehouse. Van Caem International BV is an undertaking active in the international trade in trademarked goods.

During 2006, at the request of Van Caem, several consignments produced by Bacardi were transported to the Netherlands from a third state and stored with Mevi in the Port of Rotterdam. The products were placed under the customs suspension arrangement for external transit or customs warehousing; such goods are also known as ‘T1 goods’. Some of those goods were released for free circulation and placed under the duty suspension arrangement. Accordingly, those goods left the customs suspension arrangement and were placed in a tax warehouse.

Claiming infringement of its Benelux trademarks, Bacardi had the goods seized and sought various orders from the District Court of Rotterdam, since it had never consented to the introduction of the goods into the EEA and, moreover, had learnt that the product codes had been removed from the bottles.

The District Court of Rotterdam had doubts as to whether, in relation to goods placed under the duty suspension arrangement, there can be ‘use in the course of trade’ within the meaning of Article 5(1) of Directive 89/104 and a likelihood of an adverse effect on one of the functions of the mark within the meaning of the case law of the ECJ. Therefore, the District Court of Rotterdam referred questions to the ECJ for a preliminary ruling.

Although Directive 89/104 has now been replaced by the Trademarks Directive (2008/95/EC), having regard to the date of the facts, the case continues to be governed by Directive 89/104.

According to the ECJ, importing goods into the European Union without the consent of the proprietor of the trademark and placing those goods under the duty suspension arrangement, also detaining them in a warehouse until the payment of import duties and their release for consumption, as Van Caem was doing, must be classified as "using in the course of trade any sign which is identical with the trademark in relation to goods identical with those for which the trademark is registered" within the meaning of Article 5(1) of Directive 84/104.

It is not necessary that the sign be used in the course of dealings with consumers, since interpreting Article 5(1) in a way that would refer only to immediate relationships between a trader and a consumer would deprive this article of any useful effect.  

By importing and sending goods bearing a trademark of which Van Caem was not the proprietor to a warehousekeeper with a view of releasing them for marketing, Van Caem was using the sign in its own commercial communications. According to the ECJ, this had to be qualified as ‘use’ within the meaning of Article 5 of Directive 89/104.

Regarding use ‘in the course of trade’, the ECJ stated that the importing and storing of goods by an economic operator active in the parallel trade of trademarked goods evidently qualified as use ‘in the course of trade’, since a sign identical to a trademark was used in the context of commercial activity with a view to economic advantage and not as a private matter.

Things were different with regard to the warehousekeeper, as the provision of a warehouse service for goods bearing another’s trademark does not constitute use of that sign. Inasmuch as such a service provider permits such use by its customers, its role cannot be assessed under Directive 89/104.

With respect to the risk of infringement of the functions of the mark, the ECJ stated that any act by a third party preventing the proprietor of a registered trademark in one or more member states from exercising its right to control the first placing of the goods bearing that mark on the market in the EEA, by its very nature, undermined that essential function of the trademark. Importing products without the consent of the trademark owner and holding those products in a tax warehouse before releasing them for consumption in the European Union deprived the proprietor of the possibility of controlling the conditions of the first placing on the market within the EEA of products bearing its trademark. This also adversely affected the function of the trademark of identifying the undertaking from which the products originate and under whose control the initial placing on the market was organised.

The fact that the goods can subsequently be exported to a third state and thus never be released for consumption in a member state does not invalidate this conclusion. All goods in free circulation may be exported. That possibility cannot preclude the application of the rules on trademarks to goods imported into the European Union, especially since exportation is also itself an act covered by Article 5(3) of Directive 89/104.

Marga Verwoert, Hoogenraad & Haak, Amsterdam

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