Trademark licensing and assignment
Parallel imports
Luigi Mansani
University of Parma
Licenses
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Art. 21 TRIPs
Art. 8 EC Directive 89/104
Art. 21 TRIPs
Members may determine conditions on
licensing and assignment of trademarks, it
being understood that the compulsory
licensing of trademarks shall not be
permitted and that the owner of a
registered trademark shall have the right to
assign the trademark with or without the
transfer of the business to which the
trademark belongs.
Art. 8 EC Directive 89/104
1. A trade mark may be licensed for some or all the
goods or services for which it is registered and
for the whole or part of the Member State
concerned. A license may be exclusive or nonexclusive.
2.The proprietor of a trade mark may invoke the
rights conferred by that trade mark against a
licensee who contravenes any provision in his
licensing contract with regard to:
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its duration
the form covered by the registration in which the
trademark may be used
the scope of the goods or services for which the
licence is granted
the territory in which the trademark may be
affixed
the quality of the goods manufactured or the
services provided by the licensee
Is it necessary a quality control by
the licensor on the licensee’s
products or services?
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Art. 15 TML (I)
§ 11.1.1 WZG (D)
§ 35 TML (S); § 36 TML (DK, SF,N)
Sec. 28 TM Act (UK)
E, GR, F, B, NL, LUX
Sec. 5 Lanham Act (USA)
Ideal-Standard (ECJ June 22, 1994, C-9/93)
37. As it was held in HAG II: "For the trade mark to be able to
fulfil [its] role, it must offer a guarantee that all goods bearing
it have been produced under the control of a single
undertaking which is accountable for their quality" (paragraph
13). In all the cases mentioned, control was in the hands of a
single body: the group of companies in the case of products
put into circulation by a subsidiary; the manufacturer in the
case of products marketed by the distributor; the licensor in
the case of products marketed by a licensee. In the case of a
licence, the licensor can control the quality of the licensee' s
products by including in the contract clauses requiring the
licensee to comply with his instructions and giving him the
possibility of verifying such compliance. The origin which the
trade mark is intended to guarantee is the same: it is not
defined by reference to the manufacturer but by reference to
the point of control of manufacture.
38. It must further be stressed that the decisive factor is the
possibility of control over the quality of goods, not the actual
exercise of that control. Accordingly, a national law allowing the
licensor to oppose importation of the licensee' s products on
grounds of poor quality would be precluded as contrary to
Articles 30 and 36: if the licensor tolerates the manufacture of
poor quality products, despite having contractual means of
preventing it, he must bear the responsibility. Similarly if the
manufacture of products is decentralized within a group of
companies and the subsidiaries in each of the Member States
manufacture products whose quality is geared to the
particularities of each national market, a national law which
enabled one subsidiary of the group to oppose the marketing in
the territory of that State of products manufactured by an
affiliated company on grounds of those quality differences would
also be precluded. Articles 30 and 36 require the group to bear
the consequences of its choice.
Assignment
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No provisions in the EC Directive
89/104
TRIPs: Freedom to transfer the
trademark with or without the
transfer of the related business
Art. 17 EC Regulation 40/94
Art. 17 (Transfer)
1. A CTM may be transferred, separately from any
transfer of the undertaking, in respect of some or
all the goods or services for which it is registered.
(…)
4. Where it is clear from the transfer documents that
because of the transfer the CTM is likely to
mislead the public concerning the nature, quality
or geographical origin of the goods or services in
respect of which it is registered , the Office shall
not register the transfer unless the successor
agrees to limit the registration of the CTM to goods
or services in respect of which it is not likely to
mislead.
Ideal-Standard
40. (If) the trade mark has been assigned, for one or
several Member States only, to an undertaking which
has no economic link with the assignor, (…)
41. (t)hat situation must be clearly distinguished from
the case where the imported products come from a
licensee (…): a contract of assignment by itself, that is
in the absence of any economic link, does not give the
assignor any means of controlling the quality of
products which are marketed by the assignee and to
which the latter has affixed the trade mark.
Parallel imports
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Exhaustion of IPR
First sale doctrine
Origin function of trademarks
Art. 7.1 EC Directive 89/104
Art. 13.1 EC Regulation 40/94
Art. 7 EC Directive 89/104
(Art. 13 EC Regulation 40/94)
1.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 EU 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 goods is changed or
impaired after they have been put on the market.
Paranova (ECJ July 11, 1996, C-427/93)
40. Article 7 of the directive, like Article 36 of the
Treaty, is intended to reconcile the
fundamental interest in protecting trade mark
rights with the fundamental interest in the free
movement of goods within the common
market, so that those two provisions, which
pursue the same result, must be interpreted in
the same way.
Paranova
42. The Court' s case-law shows that Article 36 allows derogations
from the fundamental principle of the free movement of goods
within the common market only in so far as such derogations are
justified in order to safeguard the rights which constitute the
specific subject-matter of the industrial and commercial property in
question.
43. Trade mark rights, the Court has held, constitute an essential
element in the system of undistorted competition which the Treaty
is intended to establish. In such a system, undertakings must be
able to attract and retain customers by the quality of their products
or services, which is possible only thanks to the existence of
distinctive signs allowing them to be identified. For the trade mark
to be able to fulfil that function, it must constitute a guarantee that
all products which bear it have been manufactured under the
control of a single undertaking to which responsibility for their
quality may be attributed.
44. Thus, as the Court has recognised on many occasions,
the specific subject-matter of a trade mark is in particular to
guarantee to the owner that he has the exclusive right to
use that trade mark for the purpose of putting a product on
the market for the first time and therefore to protect him
against competitors wishing to take advantage of the status
and reputation of the trade mark by selling products bearing
it illegally.
45. It follows that, as mentioned above, the owner of a trade
mark protected by the legislation of a Member State cannot
rely on that legislation in order to oppose the importation or
marketing of a product which was put on the market in
another Member State by him or with his consent.
Repackaging of original
trademarked goods
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Repackaging (Bristol Myers/Paranova)
Rebranding (Upjohn/Paranova)
Relabelling (Ballantine)
Use of the trade mark in advertising
(Dior)
Interpretation of art. 7.2 EC Directive (Paranova)
Article 7(2) of Directive 89/104 must be interpreted as meaning
that the trade mark owner may legitimately oppose the further
marketing of a pharmaceutical product where the importer has
repackaged the product and reaffixed the trade mark unless:
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reliance on trade mark rights by the owner would contribute to
the artificial partitioning of the markets between Member States;
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the repackaging cannot affect the original condition of the
product inside the packaging;
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the new packaging clearly states who repackaged the product
and the name of the manufacturer;
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the presentation of the repackaged product is not such as to be
liable to damage the reputation of the trade mark;
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the importer gives notice to the trade mark owner before the
repackaged product is put on sale, and, on demand, supplies
him with a specimen of the repackaged product.
Rebranding
(Pharmacia & Upjohn/Paranova)
37. There is no objective difference between
reaffixing a trade mark after repackaging and
replacing the original trade mark by another
which is capable of justifying the condition of
artificial partitioning being applied differently in
each of those cases.
Protection of the reputation of the
trademark in relabelling
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Ballantine: “A third party who relabels
the product must ensure that the
reputation of the trade mark - and
hence of its owner - does not suffer
from an inappropriate presentation of
the relabelled product. The national
court must take into account in
particular the interest in protecting the
luxury image and the considerable
reputation they enjoy”.
Protection of the reputation of the
trademark in advertising
Dior: “The reseller must endeavour to
prevent his advertising from affecting
the value of the trade mark by detracting
from the allure and prestigious image of
the goods and from their aura of luxury,
(as it happens where) the use of the
trade mark in the reseller's advertising
seriously damages the reputation of the
trade mark”.
International vs. EU exhaustion
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Directive - Proposal (1980):
whereas 8
Regulation - Proposal (1980):
official notes on art. 11
Opinion of the Economic and Social
Committee (1981)
Opinion of the Parliament (1983)
Directive - Proposal (1984)
EU exhaustion: Silhouette
26. The Directive cannot be interpreted as leaving it open to
the Member States to provide in their domestic law for
exhaustion of the rights conferred by a trade mark in respect
of products put on the market in non-member countries.
27. This, moreover, is the only interpretation which is fully
capable of ensuring that the purpose of the Directive is
achieved, namely to safeguard the functioning of the internal
market. A situation in which some Member States could
provide for international exhaustion while others provided for
Community exhaustion only would inevitably give rise to
barriers to the free movement of goods and the freedom to
provide services.
EU exhaustion: Sebago
18. The national court is asking essentially whether there is
consent within the meaning of Article 7 of the Directive where
the trade-mark proprietor has consented to the marketing in
the EEA of goods which are identical or similar to those in
respect of which exhaustion is claimed or if, on the other hand,
consent must relate to each individual item of the product in
respect of which exhaustion is claimed.
19. The rights conferred by the trade mark are exhausted only in
respect of the individual items of the product which have been
put on the market with the proprietor's consent in the territory
there defined. The proprietor may continue to prohibit the use
of the mark in pursuance of the right conferred on him by the
Directive in regard to individual items of that product which
have been put on the market in that territory without his
consent.
EU exhaustion: ECJ in Davidoff
Question referred by the UK High Court of Justice
to the ECJ:
- determine the circumstances in which exhaustion
occurs and more specifically, to clarify the concept of
"consent".
ECJ’s Decision on 10 Nov. 2001:
The Court considered that consent constitutes the
decisive factor in the extinction of the exclusive right
of the proprietor to prevent imports.
ECJ in Davidoff
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Consent must be expressed in such a way that an
intention to renounce those rights is unequivocally
demonstrated. This intention will normally be
gathered from an express statement of consent.
Nevertheless, it may in some cases be inferred
from facts and circumstances prior to,
simultaneous with or subsequent to the placing of
the goods on the market outside the EEA which
unequivocally demonstrate that the proprietor has
renounced his rights.
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Consent must be expressed positively; the factors
taken into consideration in finding implied consent
must unequivocally demonstrate that the trade mark
proprietor has renounced any intention to enforce his
exclusive rights. It follows that it is not for the trade
mark proprietor to demonstrate absence of consent,
but rather for the trader alleging consent to prove it.
Conclusion of ECJ in Davidoff
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Implied consent to the marketing within the EEA of
goods put on the market outside that area cannot be
inferred from the mere silence of the trade mark
proprietor. Furthermore, implied consent cannot be
inferred from the fact that contractual reservations were
not imposed at the time of the transfer of ownership of
the goods bearing the mark, or from the fact that the
trade mark proprietor has not communicated his
opposition to marketing within the EEA or from the fact
that the goods carry no warning of a prohibition on their
being placed on the market within the EEA.
Merck / Paranova
re-labeling (C-433/99 - 2002)
17. The national court states that Austrian
consumers are not accustomed to being offered
pharmaceutical products which have clearly been
put on the market in another State, where a different
language is used. It states that it is perfectly
conceivable that a significant number of consumers
would regard such a product with the same suspicion
as products with untidy or poor-quality packaging.
Even attaching labels, in particular in the case before
it, would scarcely mitigate that suspicion. If it were to
emerge that a significant proportion of consumers
would in fact be suspicious in that way, it would be
entirely possible, in the view of the national court, to
consider that prohibition of the repackaging would
contribute to artificial partitioning of the markets.
Merck / Paranova
Replacement packaging of pharmaceutical
products is objectively necessary within
the meaning of the Court's case-law if,
without such repackaging, effective
access to the market concerned, or to a
substantial part of that market, must be
considered to be hindered as the result of
strong resistance from a significant
proportion of consumers to relabelled
pharmaceutical products.
Boehringer
Repackaging (C-143/00 – 2002)
Replacement packaging of
pharmaceutical products is objectively
necessary within the meaning of the
Court's case-law if, without such
repackaging, effective access to the
market concerned, or to a substantial part
of that market, must be considered to be
hindered as the result of strong
resistance from a significant proportion of
consumers to relabelled pharmaceutical
products.
Boehringer
advance notice
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61. According to the Court's case-law, a parallel
importer which repackages a trade-marked
pharmaceutical product must give prior notice to the
trade mark proprietor that the repackaged product is
being put on sale (see Hoffmann-La Roche, paragraph
12). At the request of the trade mark proprietor, the
importer must also supply it with a sample of the
repackaged product before it goes on sale. That
requirement enables the proprietor to check that the
repackaging is not carried out in such a way as directly
or indirectly to affect the original condition of the
product and that the presentation after repackaging is
not such as to damage the reputation of the trade
mark. It also affords the trade mark proprietor a better
possibility of protecting himself against counterfeiting
(see Bristol-Myers Squibb and Others, paragraph 78).
Boehringer
advance notice
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62. The purpose of the requirements set
out in the preceding paragraph is to
safeguard the legitimate interests of trade
mark proprietors. As the claimants point
out, satisfying those requirements
scarcely poses any real practical
problems for parallel importers provided
that the proprietors react within a
reasonable time to the notice. Adequate
functioning of the notice system
presupposes that the interested parties
make sincere efforts to respect each
other's legitimate interests.
Boehringer
advance notice
A parallel importer must, in any event, in order to be
entitled to repackage trade-marked pharmaceutical
products, fulfil the requirement of prior notice. If the
parallel importer does not satisfy that requirement, the
trade mark proprietor may oppose the marketing of
the repackaged pharmaceutical product. It is
incumbent on the parallel importer himself to give
notice to the trade mark proprietor of the intended
repackaging. In the event of dispute, it is for the
national court to assess, in the light of all the relevant
circumstances, whether the proprietor had a
reasonable time to react to the intended repackaging.
Van Doren
(C-244/00 – 2003)
burden of proof
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Van Doren has exclusive distribution rights in
respect of Stussy Inc.'s products in Germany.
Lifestyle markets in Germany Stussy articles
which it has not acquired from Van Doren.
Van Doren brought proceedings against Lifestyle
before the German courts. It maintained that the
articles distributed by Lifestyle were products
which had originally been put on the market in
the United States, and that their distribution in the
Federal Republic of Germany and other Member
States had not been authorised by the trade
mark proprietor. .
Van Doren
burden of proof
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Lifestyle contended that those claims should
be dismissed, arguing that the rights
conferred by the trade mark in respect of the
goods in question were exhausted. The
clothing purchased from Lifestyle as a test
purchase had been acquired by it in the EEA
from an intermediary who, Lifestyle
assumed, had purchased it from an
authorised distributor.
Lifestyle submitted that it was not required to
name the suppliers until such time as Van
Doren proved the imperviousness of its
distribution system.
Van Doren
burden of proof
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Under German law, the exhaustion of the
trade mark right constitutes a plea in
defence for a third party against whom
the trade mark proprietor brings an
action, so that the conditions for such
exhaustion must, as a rule, be proved by
the third party who relies on it. Such a
rule of evidence is consistent with
Community law and, in particular, with
Articles 5 and 7 of the Directive.
Van Doren
burden of proof
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However, the requirements deriving from the
protection of the free movement of goods
enshrined, inter alia, in Articles 28 EC and 30
EC may mean that that rule of evidence
needs to be qualified. This must be so where
that rule would allow the proprietor of the
trade mark to partition national markets and
thus assist the maintenance of price
differences which may exist between
Member States. As the referring court
observes, there is a real risk of partitioning of
markets, for example, in situations where, as
in the main proceedings, the trade mark
proprietor markets his products in the EEA
using an exclusive distribution system.
Van Doren
burden of proof
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If the third party were required to adduce
evidence of the place where the goods
were first put on the market by the trade
mark proprietor or with his consent, the
trade mark proprietor could obstruct the
marketing of the goods purchased and
prevent the third party from obtaining
supplies in future from a member of the
exclusive distribution network of the
proprietor in the EEA, in the event that
the third party was able to establish that
he had obtained his supplies from that
member.
Van Doren
burden of proof
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Accordingly, where a third party against whom
proceedings have been brought succeeds in
establishing that there is a real risk of
partitioning of national markets if he himself
bears the burden of proving that the goods
were placed on the market in the EEA by the
proprietor of the trade mark or with his consent,
it is for the proprietor of the trade mark to
establish that the products were initially placed
on the market outside the EEA by him or with
his consent. If such evidence is adduced, it is
for the third party to prove the consent of the
trade mark proprietor to subsequent marketing
of the products in the EEA
Van Doren:
conclusion
A rule of evidence according to which
exhaustion of the trade mark right
constitutes a plea in defence for a third
party against whom the trade mark
proprietor brings an action, so that the
conditions for such exhaustion must, as a
rule, be proved by the third party who relies
on it, is consistent with Community law and,
in particular, with Articles 5 and 7 of the
Directive. However, the requirements
deriving from the protection of the free
movement of goods, enshrined, inter alia, in
Articles 28 EC and 30 EC may mean that
this rule of evidence needs to be qualified.
Van Doren:
conclusion
Accordingly, where a third party succeeds in
establishing that there is a real risk of
partitioning of national markets if he himself
bears that burden of proof, particularly where
the trade mark proprietor markets his products
in the EEA using an exclusive distribution
system, it is for the proprietor of the trade mark
to establish that the products were initially
placed on the market outside the EEA by him
or with his consent. If such evidence is
adduced, it is for the third party to prove the
consent of the trade mark proprietor to
subsequent marketing of the products in the
EEA
Peak Holding
(C-16/03 – 2004)
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Where the proprietor imports his goods
with a view to selling them in the EEA or
offers them for sale in the EEA, he does
not put them on the market within the
meaning of Article 7(1) of the Directive.
Such acts do not transfer to third parties
the right to dispose of the goods bearing
the trade mark. They do not allow the
proprietor to realise the economic value of
the trade mark. Even after such acts, the
proprietor retains his interest in
maintaining complete control over the
goods bearing his trade mark, in order in
particular to ensure their quality.
Peak Holding
(C-16/03 – 2004)
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Moreover, it should be noted that Article
5(3)(b) and (c) of the Directive, relating to
the content of the proprietor’s exclusive
rights, distinguishes inter alia between
offering the goods, putting them on the
market, stocking them for those purposes
and importing them. The wording of that
provision therefore also confirms that
importing the goods or offering them for
sale in the EEA cannot be equated to
putting them on the market there
Peak Holding
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Putting on the market in the EEA by the
proprietor presupposes a sale of the goods
by him in the EEA. In the event of such a
sale, Article 7(1) of the Directive does not
make exhaustion of the rights conferred by
the trade mark subject in addition to the
proprietor’s consent to further marketing of
the goods in the EEA.
Peak Holding
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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
Peak Holding
– Article 7(1) must be interpreted as meaning
that goods bearing a trade mark cannot be
regarded as having been put on the market in
the European Economic Area where the
proprietor of the trade mark has imported
them into the European Economic Area with a
view to selling them there or where he has
offered them for sale to consumers in the
European Economic Area, in his own shops
or those of an associated company, without
actually selling them.
Peak Holding
– The stipulation, in a contract of sale
concluded between the proprietor of the trade
mark and an operator established in the
European Economic Area, of a prohibition on
reselling in the European Economic Area does
not mean that there is no putting on the
market in the European Economic Area within
the meaning of Article 7(1), and thus does not
preclude the exhaustion of the proprietor’s
exclusive rights in the event of resale in the
European Economic Area in breach of the
prohibition.
For International exhaustion
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Opinion of Mr. Jacobs (Silhouette)
EFTA Court, Dec. 3, 1997 (MAG)
UK High Court, May 18, 1999
(Davidoff)
NL, DK, CH (Chanel), JAP (Parker),
CAN, Indonesia, SAF, AUS, NZ,
Mercosur
TRIPs - GATT?
Economic reasons (NERA report)
Parallel imports in U.S.A.
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Third Restatement of the Law of
Unfair Competition (1995);
Trademark Counterfeiting Act
(1984)
Sec. 42 Lanham Act; Sec. 526 Tariff
Act
The protection against deception
The need of sufficient information in
U.S.A. (and in Europe: Revlon)
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Trademark licensing and assignment Parallel imports