De-branding grey goods - does it avoid infringement?

De-branding grey goods - does it avoid infringement?

The Court of Justice of the European Union (CJEU) has held that the de-branding of products, without consent and for the purpose of importing or trading those products in the European Economic Area (EEA), is an infringement of the trade mark owner’s rights. This ruling confirms that parallel importers  cannot circumvent a trade mark owner’s exclusive right to control the initial marketing of their trade-marked goods in the EEA by de-branding them, even if the trade marks are not used to advertise the goods. Trade mark owners will welcome this decision as an additional tool in controlling unauthorised, grey market goods, including in the online trade.

What had happened in the case?

The rule is that a trade mark owner can prevent the import of its products into the EEA if it has not given its consent to those imports. Such unauthorised imports are commonly referred to as ‘grey’ imports. The defendant in this case, Duma Forklifts NV, purchased forklift trucks belonging to the Claimant, Mitsubishi Shoji Kaisha, outside the EEA. It then placed the forklift trucks in a customs warehousing procedure where it removed all MITSUBISHI trade marks and added its own and replaced the identification plates and serial numbers with its own signs before importing them into the EEA.

Mitsubishi commenced trade mark infringement proceedings in the Commercial Court in Brussels, arguing that the removal of its trade marks infringed its proprietary rights as owner of the marks. It argued that the re-branding:

  • Interfered with its right to control the first placing of the goods bearing its mark on the market in the EEA;
  • Harmed the essential function of its trade marks to indicate origin and quality; and
  • Damaged its investment and advertising in the trade marks.

At first instance the Belgian court rejected these arguments, but Mitsubishi appealed to the Belgian Court of Appeal, which made a reference to the CJEU. The CJEU ruled that the defendant’s removal of the MITSUBISHI trade marks deprived Mitsubishi of its proprietary right to control the initial marketing of the goods bearing its marks in the EEA, which “by its very nature” undermined the essential function of the mark.

It also agreed that the removal of Mitsubishi’s trade marks without authorisation (and subsequent affixation of new signs on the goods in preparation for marketing those goods) adversely affected Mitsubishi’s investment and advertising, as well as the mark’s function of indicating origin. This function could be harmed irrespective of whether the average consumer could identify that the goods originated from the trade mark owner.    

Finally, the CJEU also emphasised that the rebranding of goods prior to their first exposure to the EEA market was contrary to the objective of ensuring undistorted competition.

Implications of the case

The case makes it clear that traders cannot circumvent rules on grey market imports by removing the relevant trade marks from the products: the unauthorised sale of grey market goods, even after re-branding, could still constitute trade mark infringement.  As we wait to find out whether Brexit will bring new rules on EEA, national and international exhaustion of rights, trade mark owners will welcome the confirmation of this basic point.

Case: C-129/17 Mitsubishi Shoji Kaisha Ltd v Duma Forklifts NV 25/07/18

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