ECJ Decision in Zino Davidoff/Levi Strauss

Background

In the 1998 Silhouette case, the European Court of Justice ("ECJ") decided that it was not open to individual EU States to decide that trade mark owners were unable to prevent the parallel importation of genuine branded goods originally sold outside the EU. However, parallel importers hoped that the English law doctrine of "implied consent" meant that in many cases trade mark rights could not be used to prevent retailers from importing such goods and that the decision in Silhouette could thereby be circumvented. In 1999, Laddie J suggested in Zino Davidoff (an English High Court case) that implied consent arguments were available and went on to refer a number of questions to the ECJ concerning this issue. Pumfrey J referred further questions in a hearing that came before him as part of the ongoing Levi Strauss/Tesco litigation.

We reported in April that the Advocate General's Opinion in the Zino Davidoff case had failed to provide clarity as to the ability of a trader to parallel import branded goods from outside the EU, such that both the parallel importers and the brand owners were claiming victory in its wake. The ECJ decision has gone a long way to redressing this uncertainty.

Unlike the Advocate General, the ECJ tackled the meaning of consent head-on. Whilst the Advocate General's Opinion had suggested that this issue be bounced back to the national Courts of the Member States, the ECJ stressed the importance of providing national Courts with a uniform interpretation of consent. Whilst stating that consent could be implied in certain circumstances, the ECJ explained that this would only be the case where the parallel importer could prove that the trade mark owner had unequivocally demonstrated that he had renounced his right to oppose the placing of the goods on the market for the first time in the EEA.

The ECJ went on clearly to set out circumstances where implied consent could not be inferred, including where the trade mark proprietor has been silent as to his consent to parallel importation into the EEA, that the goods do not carry a prohibition on importation into the EEA, and where no contractual restrictions have been placed on the purchaser of the goods or purchasers further down the chain limiting their ability to resell into the EEA.

Given the highly contentious political backdrop to these cases, it is somewhat surprising that the ECJ has chosen not to follow the Advocate General. Whilst rejecting the proposition put forward by the French government that consent always has to be express, it is very difficult to envisage circumstances which demonstrate unequivocally that the brand owner has impliedly consented to the parallel importation. This is particularly so given that the ECJ has firmly placed the burden of proving such consent on the shoulders of the parallel importer.

It will now fall to the politicians to decide whether or not any changes should be made to the regime. As it currently stands, eight Member States (including the UK) are known to be in favour of a regime of international exhaustion and five are believed to be against (leaving three undecided). Whilst the Commission in June 2000 decided not to propose a change to the Community-wide exhaustion regime, those Member States in favour of international exhaustion are likely to continue to push for change.