Exhaustion of the rights conferred by Community trade mark is regulated by CTR which states that:
Exhaustion of the rights conferred by a Community trade mark
1. A Community trade mark shall not entitle the proprietor to prohibit its use in relation to goods which have been put on the market in the Community under that trade mark by the proprietor or with his consent.
2. Paragraph 1 shall not apply where there exist legitimate reasons for the proprietor to oppose further commercialization of the goods, especially where the condition of the goods is changed or impaired after they have been put on the market
.
The expression ‘put on the market’ in the CTR has been introduced into the Regulation as result of Article 7(1) of the Directive[1], it constitutes a decisive factor in the extinction of the exclusive right of the proprietor of the trade mark laid down in Article 5 of that directive (see Case C-244/00 Van Doren + Q [2003] ECR I-3051, paragraph 34).
Following the judgment of the ECJ in the case of Peak Holding C-16/03 it is established that the phrase must be given a uniform interpretation in the Community legal order (see, by analogy, Zino Davidoff and Levi Strauss, paragraphs 41 to 43).
The wording alone of Article 7(1) of the Directive does not make it possible to determine whether goods imported into the EEA or offered for sale in the EEA by the proprietor of the trade mark are to be regarded as having been ‘put on the market’ in the EEA within the meaning of that provision. The interpretation of the provision in question must therefore be sought with regard to the scheme and objectives of the Directive. Article 5 of the Directive confers on the trademark proprietor exclusive rights which entitle him inter alia to prevent any third party from importing goods bearing the mark, offering the goods, or putting them on the market or stocking them for these purposes. Article 7(1) contains an exception to that rule, in that it provides that the trade mark proprietor’s rights are exhausted where the goods have been put on the market in the EEA by him or with his consent (see Zino Davidoff and Levi Strauss, paragraph 40, and Van Doren + Q, paragraph 33). The same provision appears in article 13 par. 1 CTR.
The Directive is intended in particular to ensure that the proprietor has the exclusive right to use the trademark for the purpose of putting the goods bearing it on the market for the first time (see, inter alia, Joined Cases C-427/93, C-429/93 and C-436/93 Bristol –Myers Squibb and Others [1996] ECR I-3457, paragraphs 31, 40 and 44). Nor the Directive neither CTR intend to expand the right for subsequent transactions.
It is out of a question that the CTR and the Directive are intended to make possible the further marketing of an individual item of a product bearing a trade mark without the proprietor of the trade mark being able to oppose that (see Case C-63/97 BMW [1999] ECR I-905, paragraph 57, and Sebago and Maison Dubois, paragraph 20).
In the case of Peak Holding C-16/03 Axolin-Elinor, the Swedish Government and the Commission submitted an opinion stating that a failure to comply with a prohibition on resale corresponds to a breach of contract, not an infringement of intellectual property rights. The legal effect of exhaustion as regards third parties is thus not left at the disposal of the contracting parties, whatever effects the agreement is supposed to have as regards the obligations. Any other interpretation would be contrary to the purpose of Article 7(1) of the Directive.
In the above mentioned ruling the Court concluded that exhaustion occurs solely by virtue of the putting on the market in the EEA by the proprietor. Any stipulation, in the act of sale effecting the first putting on the market in the EEA, of territorial restrictions on the right to resell the goods concerns only the relations between the parties to that act. It cannot preclude the exhaustion provided for by the Directive and CTR.
[1] First Council Directive 89/104/EEC of 21 December 1988 to approximate the laws of the Member States relating to trade marks Official Journal L 040 , 11/02/1989 P. 0001 – 0007, subsequently amended
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