EFTA Court issues rare trademark decision

International
In L’Oréal Norge AS v Per Aarskog AS (Joined Cases E-9/07 and E-10/07, July 8 2008), the European Free Trade Association (EFTA) Court has considered the interpretation of Article 7(1) of the First Trademarks Directive (89/104/EEC), pitting the principle of regional exhaustion of trademark rights against that of international exhaustion.
 
The case before the EFTA Court raised the issue of whether the principle of international exhaustion of trademark rights is in conformity with European Economic Area (EEA) law.
 
The defendants (Per Aarskog AS and Nille AS in Case E-9/07, and Smart Club AS in Case E-10/07) parallel imported REDKEN-marked products into Norway from the United States via third parties without the consent of the trademark proprietor, the L’Oréal Group. The plaintiffs, L’Oréal SA and L’Oréal Norge AS (collectively L’Oréal), filed suit before the Follo District Court (Case E-9/07) and the Oslo District Court (Case E-10/07) in January 2007, alleging that the imports infringed their exclusive trademark rights. L’Oréal sought an order that the defendants be prohibited from importing, offering for sale and placing on the market products bearing the REDKEN mark which had not been placed on the EEA market by L’Oréal or with the consent of L’Oréal.
 
The Follo District Court and the Oslo District Court both made a request to the EFTA Court for an advisory opinion on the following questions:
Is Article 7(1) of [the directive] to be understood to the effect that a trademark proprietor has the right to prevent imports from third countries outside the EEA when such imports take place without the consent of the trademark proprietor?
Is Article 7(1) of [the directive] to be understood to the effect that international exhaustion is permitted?
The Norwegian Trademark Act contains no explicit rules on exhaustion. However, it was established law that the principle of international exhaustion applied to trademark rights. In Mag Instrument Inc v California Trading Company Norway (Case E-2/97), the EFTA Court had concluded that the principle of international exhaustion was in conformity with the EEA Agreement. However, in Silhouette International Schmied v Hartlauer Handelsgesellschaft (Case C-355/96) and Sebago Inc v G-B Unic SA (Case C-173/98), the European Court of Justice (ECJ) came to the conclusion that Article 7(1) of the directive entails mandatory EEA-wide exhaustion of trademark rights.
 
Since the EFTA Court has an obligation to “pay due account to the principles laid down by the relevant rulings” of the ECJ (see Article 3(2) of the Agreement between the EFTA States on the Establishment of a Surveillance Authority and a Court of Justice), in the present case the court came to a different conclusion than in Mag Instrument.
 
The EFTA Court held that Article 7(1) of the directive:
 “is to be interpreted to the effect that it precludes the unilateral introduction or maintenance of international exhaustion of rights conferred by a trademark, regardless of the origin of the goods in question.”
The decision is in conformity with the ECJ’s decisions in Silhouette and Sebago – that is, the principle of EEA-wide exhaustion of trademark rights prevails.
 
Felix Reimers and Siw Lysell Benjaminsen, Advokatfirmaet Grette DA, Oslo

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