CIPIL: Exhaustion Without Exasperation, 15 March 2014 Double Identity, Origin Function and International Exhaustion Prof. Dr. Martin Senftleben VU University Amsterdam Bird & Bird, The Hague

Introduction

Art. 5(1)(a) TMD …to prevent all third parties not having his consent from using in the course of trade: a) any sign which is identical with the trade mark in relation to goods or services which are identical with those for which the trade mark is registered;…

Really absolute? ECJ, 12 November 2002, case C-206/01, Arsenal/Reed ‘It follows that the exclusive right under Article 5(1)(a) of the Directive was conferred in order to enable the trade mark proprietor to protect his specific interests as proprietor, that is, to ensure that the trade mark can fulfil its functions.’ (para. 51)

Traditional focus on origin function ECJ, 12 November 2002, case C-206/01, Arsenal/Reed ‘The exercise of that right must therefore be reserved to cases in which a third party's use of the sign affects or is liable to affect the functions of the trade mark, in particular its essential function of guaranteeing to consumers the origin of the goods.’ (para. 51)

Identity identical signs identical goods or services adverse effect on one of the protected trademark functions

CJEU, June 18, 2009, case C-487/07, L’Oréal/Bellure ‘These functions include not only the essential function of the trade mark, which is to guarantee to consumers the origin of the goods or services, but also its other functions, in particular that of guaranteeing the quality of the goods or services in question and those of communication, investment or advertising.’ (para. 58) recognition of further protected functions, in particular goodwill functions

Critique: imbalanced system advertising quality control exclusive link with a sign creation of a brand image Art. 5(1) TMD (mandatory) consumer protection only a few specific exceptions Art. 5(2) TMD (optional) protection of investment flexible ‘due cause’ defense

Commission Proposal

Art. 10(2)(a) Draft TMD …to prevent all third parties not having his consent from using in the course of trade any sign in relation to goods or services where: a) the sign which is identical with the trade mark and is used in relation to goods or services which are identical with those for which the trade mark is registered and where such use affects or is liable to affect the function of the trade mark to guarantee to consumers the origin of the goods or services;…

APRAM, p. 7 Instead of providing legal certainty, this provision generates great uncertainty and further limits the protection of trade marks. Such a provision would result in the recognition of international exhaustion (which is in contradiction with articles 15 of the Directive and 13 of the Regulation under which exhaustion of rights is limited to the territory of the Union). Indeed, in the case of parallel imports, the owner of the trade mark will no longer be able to prevent such parallel imports as the function of origin will not be affected.

INTA, p. 15-16 INTA opposes these provisions, which could cause uncertainty in a number of situations including: […] Parallel import cases where original goods have been sold with the consent of the trademark owner only outside the EU […] Trademark owners could no longer enforce their rights against such goods entering the EU and circulating within the EU, since the origin function in these cases is not affected (as the goods stem from the trademark owner).

International exhaustion?

Essential origin function ECJ, 12 November 2002, case C-206/01, Arsenal/Reed ‘The exercise of that right must therefore be reserved to cases in which a third party's use of the sign affects or is liable to affect the functions of the trade mark, in particular its essential function of guaranteeing to consumers the origin of the goods.’ (para. 51)

So did we always have international exhaustion without ever realizing it?

And even if Commission Proposal is rejected… we are now aware that the origin function is not affected in case of parallel imports from outside the EEA but it is also difficult to see why other protected functions would be adversely affected… …so will we have international exhaustion anyway (what we already had before but never realized?)

Or do genuine goods from outside the EEA differ from genuine goods within the EEA?

More realistic scenario

Art. 15(1) Draft TMD ‘The trade mark shall not entitle the proprietor to prohibit its use in relation to goods which have been put on the market in the [European Economic Area] under that trade mark by the proprietor or with his consent.’ CJEU will understand that regional exhaustion is intended proposed new EU legislation leaves no doubt about that

But then…

Adoption of Commission Proposal preferable …to prevent all third parties not having his consent from using in the course of trade any sign in relation to goods or services where: a) the sign which is identical with the trade mark and is used in relation to goods or services which are identical with those for which the trade mark is registered and where such use affects or is liable to affect the function of the trade mark to guarantee to consumers the origin of the goods or services;…

Clear and balanced division of tasks advertising quality control exclusive link with a sign creation of a brand image Art. 5(1) TMD protection against confusion only a few specific exceptions Art. 5(2) TMD protection against dilution flexible ‘due cause’ defence

contact: m.r.f.senftleben@vu.nl The end. Thank you! For publications, search for ‘senftleben’ on www.ssrn.com. contact: m.r.f.senftleben@vu.nl