Exception to Article 7(2) not applicable in repackaging case

In Kraft Foods v JD Tankstället AB (Case T 3436-02), the Swedish Court of Appeal has overturned a lower court's decision and has ruled that the defendant's repackaging of the plaintiff's trademarked chocolate bars infringed Article 7(2) of the Community Trademark Directive.

Kraft Foods, a well-known food and beverage manufacturer, launched a new chocolate bar with a special promotion - buy one chocolate bar, send in the wrapper and get two for free. JD Tankstället AB, a retailer, bought 100,000 chocolate bars, removed the packaging and claimed the double amount of bars back. It then repackaged the chocolate bars and resold them.

Kraft Foods refused JD Tankstället's claim under the special offer and JD Tankstället sued for damages. The lawsuit failed and Kraft Foods counterclaimed for trademark infringement. It argued that trademark exhaustion had not taken place because JD Tankstället had tampered with the products, meaning that they were not the same as those originally put on the market by Kraft Foods. In the alternative, Kraft Foods claimed that the rule on trademark exhaustion did not apply pursuant to Article 7(2) of the Community Trademark Directive because the condition of the goods had been changed or impaired after having been put on the market.

A district court rejected the arguments and dismissed Kraft Foods' claim. It held that, under Swedish law, there is an exception to the rights set out in Article 7(2). This exception indicates that exhaustion still exists if it is obvious to consumers (i) that the goods have been changed or impaired, and (ii) who is responsible for these measures. Applying this rule, the court held that it was obvious to consumers that the goods had been changed, and also that it was the retailer and not the trademark owner who was responsible.

On appeal, the decision was overturned. The Swedish Court of Appeal held that it was obvious to consumers that the chocolate bars had been repackaged but that the question of whether the retailer or trademark owner had performed the changes was not necessarily clear-cut. Therefore, the exception to Article 7(2) was not applicable. The appellate court stressed that it was for the retailer and not the trademark owner to prove how the repackaged product had been perceived by consumers.

Peter Skoglund, Advokatfirman Delphi & Co, Stockholm