Unambiguous evidence of consent required for parallel imports

In Quiksilver Pty Ltd v Charles Robertson (Developments) Limited, trading as Trago Mills (Case HC03C01823), the High Court of England and Wales has affirmed that parallel importers of goods bearing a registered trademark must provide evidence of unambiguous consent by the mark owner to the placing of its goods on the market in the European Economic Area (EEA).

Surfwear company Quiksilver Pty Ltd issued proceedings against Charles Robertson (Developments) Limited, a retailer based in Cornwall, England that trades under the name Trago Mills, after it discovered that Trago was selling Quiksilver-branded garments originating from a consignment sold by Quiksilver's Turkish licensee, Palimar, to the central Asian markets only. These garments had been imported (following a default by the Russian entity purchasing them) by the company financing the transaction, Maritime Finance Corporation, without consent into the EEA. Trago argued that Palimar had consented to the garments being put on the market by Maritime Finance and that Quiksilver was bound by that consent. Further, Trago argued that in the absence of express written restrictions to the contrary, Maritime Finance was entitled to realize the value of its security upon default without recourse to Palimar and Quiksilver.

Following the European Court of Justice's ruling in Zino Davidoff v A & G Imports, it is settled law that a trademark owner's right to prohibit use of its mark in relation to particular goods is only exhausted when it has put those goods onto the market, or expressly or impliedly consented to their sale by a third party, in the EEA. The test is whether consent is "so expressed that an intention to renounce [the] rights is unequivocally demonstrated". The burden of proof is on the parallel importer to demonstrate that the goods were marketed in the EEA by the trademark owner (or with its consent).

In the case at hand, the central issue was whether Quiksilver (by Palimar's actions) had consented to the garments being put on the market in the EEA. Having abandoned its position on express consent, Trago argued that there was implied consent and relied on several key factors:

• Palimar's website and literature referred to Quiksilver;
  
  
• Maritime Finance corresponded with Palimar about the transaction from a Spanish trading address (ie, within the EEA); and
  
  
• the obvious market to ship the goods to from Turkey (if the Russian company defaulted) was Europe.

Further, Trago argued that Quiksilver was estopped from complaining about Trago's dealings in the garments in the EEA because it had allegedly failed to assert its trademark rights against Maritime Finance.

The High Court followed the approach adopted in Davidoff and ruled that Trago had failed to unequivocally demonstrate that Quiksilver (by Palimar's actions) had given its consent to the importation of the garments into the EEA. Specifically, Maritime Finance, as the holder of the security, effectively stepped into the shoes of the original purchaser. It reiterated that consent cannot be inferred "merely from the fact that the goods have been sold under a contract which [does] not contain any restrictions upon where the goods might ultimately be resold".

Following Davidoff the law relating to the issue of consent to the placing of goods on the market in the EEA appears clear. It is for the parallel importer to provide evidence of unambiguous consent by the trademark proprietor to the placing of the goods on the market in the EEA. Mere silence on the part of the brand owner is not sufficient to evidence consent.

Joel Smith and Victoria Noy, Herbert Smith, London