Unauthorized parallel imports illegal in Hungary for the time being

The Supreme Court has upheld a first instance decision and has ruled that the unauthorized parallel importation of genuine Levi's 501 branded jeans into Hungary by the Hungarian affiliate of a multinational hypermarket chain infringed Levi Strauss Hungary Kft's trademark rights (Pf.IV.24823/2001).

Levi Strauss Hungary, the exclusive Hungarian distributor of Levi's branded products, filed the trademark infringement lawsuit against the hypermarket chain in 1998 following the interception by Hungarian customs of a consignment of genuine Levi's 501 branded jeans. The Metropolitan Court found in favour of Levi Strauss Hungary and the Supreme Court has now upheld that judgment.

The Supreme Court confirmed the principle of the exhaustion of trademark rights introduced by the Trademark Act 1997, holding that a trademark owner can oppose the unauthorized importation of original trademarked goods into Hungary. The Supreme Court found that as the defendant, in this case, could not prove that it obtained the trademark holder's consent, the parallel importation of the original goods qualified as trademark infringement.

The Supreme Court rejected the defendant's argument that, due to the customs seizure, the goods had not actually been imported. The court clarified that bringing goods within Hungary's customs area also qualifies as trademark use within the meaning of the Trademark Act.

The defendant contended that it was not aware of the importation of the goods because the defendant's parent company sent the goods as excess stock without any order being placed by the defendant. The court confirmed that liability for trademark infringement is not affected by the infringer's awareness or good faith and rejected the defendant's argument. Likewise, the defendant unsuccessfully tried to shift the liability for infringement on to its forwarding agent, who requested the customs clearance of the goods.

The Supreme Court also rejected the defendant's procedural claims and reiterated that even though Levi Strauss Hungary was neither the holder nor a registered user of the trademarks, it had certified its right to bring the action by way of an assignment declaration in which the trademark holder, Levi Strauss & Co, had transferred certain trademark enforcement rights.

The Supreme Court's judgment is based on the national exhaustion of trademark rights. It should be noted, however, that as of Hungary's accession to the European Union on May 1 2004, trademark holders will no longer be able to rely on their Hungarian trademarks to prevent the parallel importation into Hungary of their trademarked goods, where the goods have been put on the market by the trademark holder or with its consent anywhere in the European Economic Area.

Péter Sipos, Martonyi és Kajtár Baker & McKenzie, Budapest