How to draft clauses which protect the supplier against parallel imports

1. How to draft clauses which protect the supplier against parallel imports Torino (Italy) – June 12, 2010 Avv. Marco Venturello

2. THE ISSUE TO BE DISCUSSED The role of consent according to the legislation and the jurisprudence consequently how to draft clauses which protect the supplier against parallel imports ? Avv. Marco Venturello

3. THE FIELDS OF LAW INVOLVED • IP law: in this presentation limited to trademark law • Contract law • Antitrust law • Unfair competition law Avv. Marco Venturello

4. THE MOST COMMON TYPES OF CONTRACT • Sale contracts • Distribution contracts (both exclusive and selective) • Licensing contracts • Franchising contracts Avv. Marco Venturello

5. THE CONSEQUENCES OF THE BREACH OF CONTRACT • Contractual liability • Trademark infringement • Act of unfair competition Avv. Marco Venturello

6. THE GEOGRAPHIC AREAS • Contract with relevance in the EEA (European Economic Area): the principle of exhaustion has been extended to the European Economic Area (EEA), which in addition to the European Union also includes Norway, Iceland and Liechtenstein. • Contract with relevance outside the EEA Avv. Marco Venturello

7. AGREEMENT ON TRADE - RELATED ASPECTS OF IP RIGHTS (TRIPs) Part I — General Provisions and Basic Principles Article 6 Exhaustion For the purposes of dispute settlement under this Agreement, subject to the provisions of Articles 3 and 4 nothing in this Agreement shall be used to address the issue of the exhaustion of intellectual property rights. Avv. Marco Venturello

8. Regulation (EC) No 207/09, of 26 February 2009, on the Community Trade Mark • Article 13 • Exhaustion of the rights conferred by a Community trade mark • A Community trade mark shall not entitle the proprietor to prohibit its use in relation to goods which have been put on the market in the Community under that trade mark by the proprietor or with his consent. • 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 the goods is changed or impaired after they have been put on the market. Avv. Marco Venturello

9. Regulation (EC) No 207/09, of 26 February 2009, on the Community Trade Mark • Article 22 • Licensing • […] • 2. The proprietor of a Community 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: • (a) its duration; • (b) the form covered by the registration in which the trade mark may be used; • (c) the scope of the goods or services for which the license is granted; • (d) the territory in which the trade mark may be affixed; or • (e) the quality of the goods manufactured or of the services provided by the licensee. Avv. Marco Venturello

10. Directive 2008/95/EC, to Approximate the Laws of the Member States Relating to Trade Marks • Article 7 • Exhaustion of the rights conferred by a trade mark • 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 Community under that trade mark by the proprietor or with his consent. • 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 the goods is changed or impaired after they have been put on the market. Avv. Marco Venturello

11. Directive 2008/95/EC, to Approximate the Laws of the Member States Relating to Trade Marks • Article 8 • Licensing • […] • 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 (a) its duration; (b) the form covered by the registration in which the trade mark may be used; (c) the scope of the goods or services for which the licence is granted; (d) the territory in which the trade mark may be affixed; or (e) the quality of the goods manufactured or of the services provided by the licensee. Avv. Marco Venturello

12. Italian Code of Industrial Property Leg.D. no. 30 of February 10, 2005 • Article 5 • Exhaustion of rights • The exclusive rights granted under this Code to the holder of a right of industrial property expire when the products protected by a right of industrial property have been placed on the market by the holder or with his consent in the territory of the Country or in the territory of a Member State of the European Union or of the European Economic Area. Avv. Marco Venturello

13. Italian Code of Industrial Property Leg.D. no. 30 of February 10, 2005 • However, the above mentioned limitation of the holder’s rights does not apply to trademarks when legitimate reasons exist for the holder to oppose the further marketing of the products, in particular when the status of the same has been modified or altered after the introduction thereof on the market. • […] Avv. Marco Venturello

14. Italian Code of Industrial Property Leg.D. no. 30 of February 10, 2005 • Article 23 • Assignment of a trademark • […] • […] • The holder of a trademark may invoke the right to exclusive use, conferred by that trademark against a licensee who violates the provisions of the license agreement as to duration, the manner of use of the trademark, the nature of the products or services for which the license has been granted, the territory within which the trademark may be used or the quality of the products manufactured and of the services rendered by the licensee. • […] Avv. Marco Venturello

15. ECJ (European Court of Justice) Exhaustion of the Rights on TMs • Javico: judgment of the Court, April 28, 1998, Case no. C-306/96; • Silhouette International: judgment of the Court, July 16, 1998, Case no. C-355/96; • Sebago: judgment of the Court, July 1, 1999, Case no. C-173/98; • Zino Davidoff: judgment of the Court, November 20, 2001, Case no. C-414/99 and 416/99; • Van Doren: judgment of the Court, April 8, 2003, Case no. C-244/00; • Peak Holding: judgment of the Court, November 30, 2004, Case no. C-16/03; • Dior/Copad: judgment of the Court, April 23, 2009, Case no. C-59/08; • Diesel: judgment of the Court, October 15, 2009, Case no. C-324/08 Avv. Marco Venturello

16. Javico: judgment of the Court, April 28, 1998, Case no. C-306/96 1. Article 85(1) of the EC Treaty precludes a supplier established in a Member State of the Community from imposing on a distributor established in another Member State to which the supplier entrusts the distribution of his products in a territory outside the Community a prohibition of making any sales in any territory other than the contractual territory, including the territory of the Community, either by direct marketing or by re-exportation from the contractual territory, if that prohibition has the effect of preventing, restricting or distorting competition within the Community and is liable to affect the pattern of trade between Member States. This might be the case where the Community market in the products in question is characterised by an oligopolistic structure or by an appreciable difference between the prices charged for the contractual product within the Community and those charged outside the Community and where, in view of the position occupied by the supplier of the products at issue and the extent of the supplier's production and sales in the Member States, the prohibition entails a risk that it might have an appreciable effect on the pattern of trade between Member States such as to undermine attainment of the objectives of the common market. Avv. Marco Venturello

17. Javico: judgment of the Court, April 28, 1998, Case no. C-306/96 2.   Provisions intended to prevent a distributor from selling directly in the Community and re-exporting to the Community contractual products which the distributor has undertaken to sell in non-member countries do not escape the prohibition laid down in Article 85(1) of the Treaty on the ground that the Community supplier of the products concerned distributes those products within the Community through a selective distribution network covered by an exemption decision under Article 85(3) of the Treaty. Avv. Marco Venturello

18. Silhouette: judgment of the Court, July 16, 1998, Case no. C-355/96 39. National rules providing for exhaustion of trade-mark rights in respect of products put on the market outside the EEA under that mark by the proprietor or with its consent are contrary to Article 7(1) of First Council Directive 89/104/EEC of 21 December 1988 to approximate the laws of the Member States relating to trade marks, as amended by the Agreement on the European Economic Area of 2 May 1992. 40. Article 7(1) of Directive 89/104 cannot be interpreted as meaning that the proprietor of a trade mark is entitled, on the basis of that provision alone, to obtain an order restraining a third party from using his trade mark for products which have been put on the market outside the European Economic Area under that mark by the proprietor or with his consent. Avv. Marco Venturello

19. Sebago: judgment of the Court, July 1, 1999, Case no. C-173/98 Article 7(1) of the First Council Directive 89/104/EEC of 21 December 1988 to approximate the laws of the Member States relating to trade marks, as amended by the Agreement on the European Economic Area of 2 May 1992, must be interpreted as meaning that: - the rights conferred by the trade mark are exhausted only if the products have been put on the market in the Community (in the European Economic Area since the Agreement on the European Economic Area entered into force) and that provision does not leave it open to the Member States to provide in their domestic law for exhaustion of the rights conferred by the trade mark in respect of products put on the market in non-member countries; - for there to be consent within the meaning of Article 7(1) of that directive, such consent must relate to each individual item of the product in respect of which exhaustion is pleaded. Avv. Marco Venturello

20. Zino Davidoff: judgment of the Court, November 20, 2001, Case no. C-414/99 and 416/99 1.  On a proper construction of Article 7(1) of First Council Directive 89/104/EEC of 21 December 1988 to approximate the laws of the Member States relating to trade marks, as amended by the Agreement on the European Economic Area of 2 May 1992, the consent of a trade mark proprietor to the marketing within the European Economic Area of products bearing that mark which have previously been placed on the market outside the European Economic Area by that proprietor or with his consent may be implied, where it follows from facts and circumstances prior to, simultaneous with or subsequent to the placing of the goods on the market outside the European Economic Area which, in the view of the national court, unequivocally demonstrate that the proprietor has renounced his right to oppose placing of the goods on the market within the European Economic Area. Avv. Marco Venturello

21. Zino Davidoff: judgment of the Court, November 20, 2001, Case no. C-414/99 and 416/99 2.  Implied consent cannot be inferred: - from the fact that the proprietor of the trade mark has not communicated to all subsequent purchasers of the goods placed on the market outside the European Economic Area his opposition to marketing within the European Economic Area; - from the fact that the goods carry no warning of a prohibition of their being placed on the market within the European Economic Area; - from the fact that the trade mark proprietor has transferred the ownership of the products bearing the trade mark without imposing any contractual reservations and that, according to the law governing the contract, the property right transferred includes, in the absence of such reservations, an unlimited right of resale or, at the very least, a right to market the goods subsequently within the European Economic Area. Avv. Marco Venturello

22. Zino Davidoff: judgment of the Court, November 20, 2001, Case no. C-414/99 and 416/99 3. With regard to exhaustion of the trade mark proprietor's exclusive right, it is not relevant: - that the importer of goods bearing the trade mark is not aware that the proprietor objects to their being placed on the market in the European Economic Area or sold there by traders other than authorised retailers, or   - that the authorised retailers and wholesalers have not imposed on their own purchasers contractual reservations setting out such opposition, even though they have been informed of it by the trade mark proprietor. Avv. Marco Venturello

23. Van Doren: judgment of the Court, April 8, 2003, Case no. C-244/00 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 existence of 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 First Council Directive 89/104/EEC of 21 December 1988 to approximate the laws of the Member States relating to trade marks, as amended by the Agreement on the European Economic Area of 2 May 1992. 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. Avv. Marco Venturello

24. Van Doren: judgment of the Court, April 8, 2003, Case no. C-244/00 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 European Economic Area 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 European Economic Area 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 European Economic Area. Avv. Marco Venturello

25. Peak Holding: judgment of the Court, November 30, 2004, Case no. C-16/03 Article 7(1) of First Council Directive 89/104/EEC of 21 December 1988 to approximate the laws of the Member States relating to trade marks, as amended by the Agreement on the European Economic Area of 2 May 1992, 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. Avv. Marco Venturello

26. Peak Holding: judgment of the Court, November 30, 2004, Case no. C-16/03 In circumstances such as those of the main proceedings, 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) of Directive 89/104, as amended by the Agreement on the European Economic Area, 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. Avv. Marco Venturello

27. Dior/Copad: judgment of the Court, April 23, 2009, Case no. C-59/08 1. Article 8(2) of First Council Directive 89/104/EEC of 21 December 1988 to approximate the laws of the Member States relating to trade marks, as amended by the Agreement on the European Economic Area of 2 May 1992, is to be interpreted as meaning that the proprietor of a trade mark can invoke the rights conferred by that trade mark against a licensee who contravenes a provision in a licence agreement prohibiting, on grounds of the trade mark’s prestige, sales to discount stores of goods such as the ones at issue in the main proceedings, provided it has been established that that contravention, by reason of the situation prevailing in the case in the main proceedings, damages the allure and prestigious image which bestows on those goods an aura of luxury. Avv. Marco Venturello

28. Dior/Copad: judgment of the Court, April 23, 2009, Case no. C-59/08 2. Article 7(1) of Directive 89/104, as amended by the Agreement on the European Economic Area, is to be interpreted as meaning that a licensee who puts goods bearing a trade mark on the market in disregard of a provision in a licence agreement does so without the consent of the proprietor of the trade mark where it is established that the provision in question is included in those listed in Article 8(2) of that Directive. 3. Where a licensee puts luxury goods on the market in contravention of a provision in a licence agreement but must nevertheless be considered to have done so with the consent of the proprietor of the trade mark, the proprietor of the trade mark can rely on such a provision to oppose a resale of those goods on the basis of Article 7(2) of Directive 89/104, as amended by the Agreement on the European Economic Area, only if it can be established that, taking into account the particular circumstances of the case, such resale damages the reputation of the trade mark. Avv. Marco Venturello

29. Diesel: judgment of the Court, October 15, 2009, Case no. C-324/08 Article 7(1) of First Council Directive 89/104/EEC of 21 December 1988 to approximate the laws of the Member States relating to trade marks, as amended by the Agreement on the European Economic Area of 2 May 1992, must be interpreted as meaning that the consent of the proprietor of a trade mark to the marketing of goods bearing that mark carried out directly in the European Economic Area by a third party who has no economic link to that proprietor may be implied, in so far as such consent is to be inferred from facts and circumstances prior to, simultaneous with or subsequent to the placing of the goods on the market in that area which, in the view of the national court, unequivocally demonstrate that the proprietor has renounced his exclusive rights. Avv. Marco Venturello

30. ECJ (European Court of Justice) repackaging/rebranding/relabelling of original trademarked goods • Bristol–Myers Squibb/Paranova: July 11, 1996, Case no. C-427-429- 436/93; • Ballantine: November 11, 1997, Case no. C-349/95; • Upjohn/Paranova: October 12, 1999, Case no. C-379/97; • Merck/Paranova: April 23, 2002, Case no. C-443/99; • Boehringer: April 26, 2007, Case no. C-348/04; • The Wellcome Foundation/Paranova: December 22, 2008, Case no. C- 276/05 Avv. Marco Venturello

31. ECJ (European Court of Justice) use of trade mark in advertising • Dior/Evora: judgment of the Court, November 4, 1997, Case no. C- 337/95 Avv. Marco Venturello

32. ECJ (European Court of Justice) refusal to or reduction of supply • GlaxoSmithKline: judgment of the Court, September 16, 2008, Case no. C-468/06 and C-478/06; • Bayer (Adalat): judgment of the Court, January 6, 2004, Case no. C-2/01 and C-3/01 Avv. Marco Venturello

33. EFTA Court of Justice and Exhaustion of the Rights on TMs • L’Orèal: judgment of the Court, July 8, 2008, Case no. E-9/07 e 10/07 Avv. Marco Venturello

34. Italian Supreme Court and Exhaustion of the Rights on TMs • Corte di Cassazione, December 21, 2007, n. 27081; • Corte di Cassazione, December 13, 1999, n. 13916; • Corte di Cassazione, November 18, 1998, n. 11603; • Corte di Cassazione, July 30, 1996, n. 6887 Avv. Marco Venturello

35. Italian Courts and Exhaustion of the Rights on TMs • Tribunale di Roma, November 28, 2008; • Tribunale di Milano, November 4, 2008; • Tribunale di Napoli, June 22, 2007; • Tribunale di Roma, June 4, 2008; • Tribunale di Firenze, September 1, 2006; • Tribunale di Torino, April 4, 2006; • Tribunale di Torino, January 16, 2004 Avv. Marco Venturello

36. Avv. Marco Venturello (with the contribution of Dott.ssa Valentina Marenco) Via Vittorio Amedeo II n. 17, Torino, Italy Tel. 011 5185831 Fax 011 5185850 E-mail marco.venturello@sleuresis.it Internet web site www.sleuresis.it Avv. Marco Venturello