Supreme Court confirms trade mark owner can control first marketing of goods in EEA

Supreme Court confirms trade mark owner can control first marketing of goods in EEA

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Author: Sarah Livestro

In its judgment in Oracle v M-Tech, the Supreme Court confirmed that a trade mark owner can control the first marketing of its goods in the EEA without infringing European laws on the free movement of goods

M-Tech had imported Oracle's trade mark protected goods into the UK, having purchased them in the United States.

Both parties accepted that these were goods that had not previously been put onto the EEA market with Oracle's consent. So, under the Trade Mark Directive, M-Tech had infringed Oracle's trade marks by using them in circumstances where Oracle's exclusive rights to control the first marketing of the goods in the EEA were not exhausted.

Oracle therefore applied for, and obtained, summary judgment against M-Tech for damages for the infringement of its trade mark.

M-Tech appealed.

It argued that the right of a trade mark owner to control when goods are first placed on the EEA market was subject to an implied limitation, based on the free movement provisions of the Treaty on the Functioning of the European Union, which prevented the owner of the mark exercising its right in a way that had the object or effect of dividing up the EEA market.

According to M-Tech, Oracle had refused to tell unauthorised distributors whether its trade mark rights in respect of any particular product had been exhausted. So (unauthorised) distributors were unable to distinguish between legal and illegal Oracle products. This meant they were put off selling them at all, because to do so exposed them to the risk of trade mark enforcement actions by Oracle.

M-Tech argued that Oracle could not use its first marketing rights under the Trade Mark Directive to restrict the free movement of goods in this way.

M-Tech's appeal was upheld by the Court of Appeal. Oracle then appealed to the Supreme Court, which upheld Oracle's appeal.

It said the Trade Mark Directive was a harmonising measure, which fully incorporated the Treaty provisions on free movement. So M-Tech could not argue that Oracle's rights under the Directive were subject to any further limitation based on Treaty free movement principles.

The Treaty provisions on free movement were simply not engaged, as Oracle was seeking only to enforce its right to control the first marketing of the goods in the EEA, not to exercise rights over goods already on the EEA market.

And as Oracle's rights under the Trade Mark Directive were not the 'subject, means or result' of an anti-competitive agreement or concerted practice, the Treaty rules on anti-competitive agreements did not apply either.

This case is largely good news for brand owners, as it confirms their right to control the first marketing of their trade mark protected goods in the EEA.

Interestingly, though, the Court left open the question of whether failure to supply dealers with information about whether particular goods had already been placed on the EEA market with the mark owner's consent would deter legitimate parallel trade and so could infringe the Treaty provisions on free movement.