Goods bearing a registered trade mark will often command a premium in the marketplace. However, the sale price of those goods may differ between countries. For example, goods sold in the Far East, and to a lesser extent the USA, usually retail for less than they do in Europe.
Any attempt by a business to exploit these differences will need to be considered with caution. European law states that goods subject to a registered trade mark cannot be purchased from outside the European Economic Area (EEA) and imported for sale within it unless the brand owner has consented to the import and sale of those specific goods in the EEA.
Where goods subject to a registered trade mark are made available for sale within the EEA by the brand owner or with its consent, it is deemed that the brand owner's rights are "exhausted" and that those specific goods should thereafter be allowed to move freely between the EEA member states.
The recent Mastercigars case1 has brought the issue of goods imported from outside the EEA into focus. In that case, the Court of Appeal has held that, whilst the brand owner's consent must be "unequivocal", it can be implied from its conduct in some circumstances.
The reality is that an importer will usually know the origin of any goods it purchases and whether or not the brand owner has given its consent for those goods to be imported into the EEA. However, the Mastercigars case has introduced an element of uncertainty, which importers may look to exploit in order to "imply" a brand owner's consent. This creates a potential risk for resellers because they are not necessarily aware of the circumstances surrounding the import of the goods in question.
If the brand owner has not given its consent then the importation of those goods and subsequent resale would infringe the brand owner's trade mark rights. In those circumstances the brand owner has a number of remedies available to it, including seeking an injunction to prevent further sales from being made and damages or an account of profits in respect of sales made up to that point. These remedies are available against the importer as the primary infringer and any reseller. Ignorance on the part of the reseller as to the origin of the goods or whether the brand owner's consent was obtained is no defence.
Whilst it is thought that the Mastercigars case was decided on very specific facts which may not be replicated in many other cases, the case does give an example of circumstances which can lead to a finding of implied consent and therefore, to be safe, resellers purchasing from importers should do all that they can to identify that express consent has been given and brand owners should be extra vigilant in their control and supervision of their distribution network so as not to be deemed to have given any form of implied consent to a distributor which undermines their trade mark protection.
Footnotes
1. Mastercigars Direct V Hunters & Frankau Limited
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
