Resellers can use device marks in advertising, rules court

In G-Star BV v Makro Cash and Carry Netherlands BV (Case 02/2554, January 5 2004), the District Court of The Hague has applied case law from the European Court of Justice (ECJ), which referred solely to word marks, and has determined that a reseller has the right to use device marks in addition to word marks when reselling goods that are put on the EU market with the trademark owner's consent.

Dutch company G-Star BV distributes jeans and other casual wear on the Dutch market under the G-STAR trademarks. It holds an exclusive worldwide licence obtained from G-Star Ltd for the development and production of G-Star products.

Makro Cash and Carry Netherlands BV is a reseller of G-Star jeans. In July 2002 Makro advertised G-Star jeans in its leaflets by displaying a picture of a pair of G-Star 'Elwood' jeans in a rectangular frame that also displayed a G-Star label. The design of the label is registered as a Community trademark.

G-Star filed suit against Makro, claiming that its use of the label in its advertising leaflet damaged the reputation of the trademark and therefore G-Star has a legitimate reason to oppose such use within the meaning of Article 13(2) of the Community Trademark Regulation. According to G-Star, Makro should not be allowed to use the label in its leaflets to advertise G-Star jeans, even though the jeans were being put on the EU market with G-Star's consent, meaning that its trademark rights were exhausted. G-Star stated that Makro could only use the device mark in as far as was reasonably necessary to further commercialize the G-Star jeans. It maintained that Makro was only entitled to use the word mark G-STAR.

G-Star based its claim on Article 13(2) of the regulation and the interpretation of the identical Article 7(2) of the Community Trademark Directive issued by the ECJ in Dior v Evora and BMW v Deenik.

The district court held that G-Star's interpretation of Article 13(2) was too narrow. The ECJ did not make a distinction between device and word marks in the Dior v Evora and BMW v Deenik cases. It follows from Dior v Evora that a reseller, who habitually markets articles of the same kind but not necessarily of the same quality as the goods sold directly by the mark owner, is allowed to use the trademark in a way customary in its trade sector to further commercialize the goods. The district court held that in both ECJ cases the criteria applicable to device marks and word marks were the same.

Thus, with regard to prestigious marks, the reseller must (i) not act unfairly in relation to the legitimate interests of the trademark owner, and (ii) endeavour to prevent its advertising from affecting the value of the trademark by detracting from the prestigious image of the goods in question. The trademark owner only has a legitimate reason to oppose the advertising if it can establish that it seriously damages the reputation of the trademark. According to BMW v Deenik, this can occur if the use by the reseller gives rise to the impression that there is a commercial connection between the reseller and the trademark owner. In the matter at hand, the district court found this not to be the case. It further held that Makro's use of the G-Star label in its leaflets was customary in the cash and carry trade sector. G-Star was unable to establish that this use seriously damaged the reputation of the label.

This is one of the first cases in the Netherlands to confirm that, pursuant to Dior v Evora and BMW v Deenik, device and word marks should be treated identically. Whether this was the ECJ's intention remains to be seen but as long as the ECJ does not conclude otherwise the district court's decision gives resellers a certain amount of reassurance when using device marks.

Marga Verwoert, Allen & Overy, Amsterdam