Supreme Court issues final ruling in parallel importation case

Lithuania

 The Supreme Court of Lithuania has issued its final ruling in Coty Prestige Lancaster Group GmbH v Baltijos didmena UAB (March 6 2012), holding that claimant Coty Prestige Lancaster Group GmbH could prohibit defendant Baltijos didmena UAB from selling trademarked goods that had been imported into the Lithuanian and EU markets by a party other than the claimant and/or without the claimant’s consent. The court stressed that the claimant:

  • had not given authorisation to the defendant to offer, distribute and/or import products under the trademark JOOP!; and/or
  • had not renounced its rights to oppose the placing of the goods (which had previously been placed on the US market) on the EU market.

In 2008 the claimant purchased a bottle of eau de toilette under the trademark JOOP! in a store belonging to the defendant’s cosmetics retail network. According to the information displayed on the bottle and packaging, the eau de toilette was intended for the US market.

The claimant filed a court action under Article 38 of the Law on Trademarks of the Republic of Lithuania. Article 38 provides that the proprietor of a registered mark has an exclusive right to prevent third parties not having its consent from using, in the course of trade, any sign identical to the registered mark in relation to goods and/or services which are identical to those for which the mark is registered.

The claimant based the court action on its Community trademarks JOOP! (Registration 002786713) and JOOP (Registration 002786408), which cover goods in Class 3 of the Nice Classification, including perfumery and eau de toilette. The defendant argued that it had purchased the goods in the European Union; therefore, its actions were not infringing, as the trademark owner had exhausted its trademark rights.  

The Vilnius District Court and the Appeal Court dismissed the defendant’s arguments and upheld the claim.

The defendant filed a cassation appeal based on the following grounds:

  • The decisions of the Vilnius District Court and the Appeal Court were groundless and should be annulled. The order to prohibit the defendant from selling the goods in the future was unlawful. Following these decisions, the assessment of the legitimacy of the defendant’s actions was transferred to the bailiff (who executed the courts’ decisions), thereby gratuitously denying the defendant the possibility of arguing its case in the court.
  • The lower courts erred in holding that there was a sufficient risk that actions which infringed the claimant’s exclusive IP rights and could cause damage to the claimant would continue to be carried out in the future. The parallel trade cannot be considered as a risk to the trademark proprietor’s interests, unless there is a real risk that specific infringements will be carried out.
  • The lower courts did not assess the evidence provided by the defendant to demonstrate that:
    • the defendant, exercising the right of free movement of goods, purchased the eau de toilette in the European Union; and
    • the claimant’s exclusive rights were thus exhausted.

The Supreme Court held that:

  • The onus of proving that the claimant had exhausted its rights was on the defendant. However, the latter failed to prove that it had purchased the JOOP!-branded goods with the trademark proprietor’s consent.
  • There was a sufficient risk that the infringing actions would continue in the future and there was a potential risk of damage to the claimant. Therefore, the order to prohibit the sale of the infringing goods in the future was justified and lawful.
  • When purchasing the goods, the defendant, being a circumspect and sensible party, had a responsibility to ensure that they had been placed on the EU market with the trademark proprietor’s consent.

Based on the foregoing, the Supreme Court dismissed the cassation appeal.

Ausra Pakenienen and Giedre Domkute, AAA Baltic Service Company-Law Firm, Vilnius

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