Rules on parallel imports clarified

In the dispute between Norwegian companies Orientdeli AS and Viet Thai Mat AS over the marketing and sale of rice under the trademark ROYAL UMBRELLA, the Borgating Appellate Court has enjoined Orientdeli from importing, marketing or selling rice bearing the mark (Case 09-079484ASK-BORG/04, June 17 2009).

 

Under the doctrine of the exhaustion of trademark rights, once a trademarked product has been put on the market by the trademark owner or with its consent, the latter cannot prevent the further commercialization of that product.

 

Viet Thai is the sole proprietor of the trademark ROYAL UMBRELLA in Norway. The dispute arose when Orientdeli imported a batch of Royal Umbrella rice into Norway. Viet Thai claimed that it had the exclusive right to sell rice under the ROYAL UMBRELLA mark in Norway. Orientdeli disagreed, arguing that the rights in the mark had been exhausted. In particular, Orientdeli submitted that the producer of Royal Umbrella rice in Thailand, CP Intertrade Co Ltd (which also owners the mark in a number of countries), had sold the Royal Umbrella rice to Saigon Food AB, which is the sole distributor of Royal Umbrella rice in Sweden. Orientdeli believed that it was free to import the rice into Norway, since the product had already been put on the market in Sweden - and, therefore, within the European Union. However, the batch of rice in question had been bought by Saigon Food from CP Intertrade in Thailand, then shipped to Rotterdam and later to Oslo.

 

Recent developments give a clear indication that Norway now follows the EU approach in applying the doctrine of regional exhaustion of trademark rights, as opposed to international exhaustion. In Redken (Case E-9/07 and E-10/07), which emanated from the Norwegian courts, the European Free Trade Association (EFTA) Court held that trademark rights are exhausted as soon as the goods are placed on the market within the European Economic Area (EEA) or the European Union (for further details please see "EFTA Court issues rare trademark decision").

 

Therefore, the main issue in this case was whether the rice had been put on the market within the EEA or the European Union. By extension, the issue was whether a mere agreement between two parties (here, Saigon Food and Orientdeli) within the European Union is sufficient for the trademark rights to be exhausted, or whether a qualified act (eg, completed import procedures at an EU point of entry) was necessary. Viet Thai argued for the latter view and stressed that the fact that the product was in transit within the European Union was insufficient. Viet Thai further argued that a product is put on the market only when it is generally available for sale in the EEA or the European Union.

 

The court agreed with Viet Thai, holding that the goods were only in transit in Rotterdam and did not clear Customs until arriving in Oslo. Therefore, the trademark rights were not exhausted and Orientdeli had infringed Viet Thai’s rights under Article 7(1) of the EU Trademarks Directive (2008/95/EC).

 

The court thus issued an interlocutory injunction - an ordinary oral hearing is to be held in the near future. The decision is of interest since it follows the approach taken by the EFTA Court in Redken and clarifies the rules on parallel imports.