Trade mark rights extend to the de- and rebranding of products to which the mark has been applied

C-129/17

Mitsubishi

Trade marks: Scope of protection

25 Jul 2018

The matter at hand

Mitsubishi is the proprietor of various trade marks with validity in the EU for MITSUBISHI. The fork lift trucks Mitsubishi manufactures and sells bear these trade marks.

Between 2004 and 2009 Duma and GSI, both Belgian companies, were involved in the parallel import into the EU of fork lift trucks that had been brought onto the market by Mitsubishi outside of the EER whilst bearing the aforementioned marks. From 2009 onwards, Duma and GSI would, upon import into the EU, have the trucks placed under customs suspension arrangements. While the trucks were held under these arrangements, Duma and GSI removed all the trade marks from them, replaced these signs with other signs and made the necessary physical modifications to the trucks, to render them compliant with EU standards.

Once aware hereof, Mitsubishi initiated proceedings to end the de- and rebranding of the fork lift trucks. Considering that the ECJ had not yet ruled whether the practice of de- and rebranding of trade marks constituted use of such marks to which the proprietor could object, the Brussels Court of Appeal referred to the ECJ for a preliminary ruling.

The judgment of the ECJ

The ECJ first provides a useful overview of its case law on the functions of the trade mark (paragraphs 31 to 39), before considering that, unlike the cases that gave rise to those judgments, the goods concerned in the case in the main proceedings do not bear the marks at issue when they are imported into the EU. It nonetheless comes to the conclusion that these functions are also harmed (and infringement is consequently made) in the event of debranded and rebranded goods.

The ECJ first (and, arguably, foremost) considers that “the removal of signs identical to the mark prevents the goods for which that mark is registered from bearing that mark the first time that they are placed on the market in the EEA and, hence, deprives the proprietor of that trade mark of the benefit of the essential right to control the initial marketing in the EEA of goods bearing that mark” (paragraph 42).

Commentary

The ECJ does not provide any further explanation as to how the importing of a good that does not bear a trade mark can harm the right of the proprietor of that mark to control the initial marketing of goods bearing that mark. This makes it difficult to understand how the ECJ has come to this conclusion. Upon intensive study of the judgment, it however seems that the ECJ intends to state that the trade mark proprietor has the right to control the initial marketing in the EEA of goods that were initially placed on the market by the proprietor, bearing that mark.

If this is true, then this is a very important consideration: Trade mark legislation typically only creates a bond between the trade mark and its proprietor, in the sense that goods bearing that trade mark must (in one way or another) originate from the proprietor of that mark. In this finding however, the ECJ seems to work on the assumption that trade mark law also creates a bond between the good and the trade mark proprietor, in the sense that the good that was brought onto the market bearing the mark, must remain recognizable as (in one way or another) originating from the proprietor of that mark.

This understanding of the judgment is confirmed (albeit never explicit) in the further considerations of the ECJ, for one as many of these considerations seem to be working on the assumption of this bond between good and trade mark proprietor.

This fundamental extension of trade mark law creates a whole array of new complications, at least in theory. For example: what does this mean for the implementation and use of branded raw materials and parts? Can they be integrated into the final product, without making reference to the trade mark? And what should happen to the in-good-faith trader of debranded goods? It seems harsh to confront this trader with claims, based on the fact that he traded in goods that, without his knowledge, were once bearing a trade mark.

The ECJ considers that rebranding also adversely affects the functions of the mark, for effectively the same reason (paragraph 43 and 44).

As to the circumstance that the trucks themselves are not visually altered after the de- and rebranding, and by consequence may still be recognized as originating from Mitsubishi, the ECJ finds that “while the essential function of the mark may be harmed irrespective of that fact, that fact is likely to accentuate the effects of such harm” (paragraph 45). In other words: for the re- and debranding to be infringing, it is not required that the public is able to recognize the goods as goods that are identical to goods bearing the invoked mark.

In particular to the rebranding, the ECJ holds that this practice adversely affects the function of advertisement of the trade marks previously affixed on the goods. The result that the consumers will already know those goods before being able to associate them with the originally placed trade marks, is “likely substantially to impede the use of that mark, by the proprietor, in order to acquire a reputation likely to attract and retain consumers, and to serve as a factor in sales promotion or as an instrument of commercial strategy” and “precludes the trade mark proprietor from being able to retain customers by virtue of the quality of its goods“ (paragraph 46).

The function of investment is affected by the de- and rebranding as well, for “such actions deprive the proprietor the possibility of obtaining, by putting the goods on the EEA market first, the economic value of the product bearing that mark and therefore, of its investment” (paragraph 46).

The practice of de- and rebranding products intended to be imported and marketed into the EEA involves active conduct by a third party, that is being carried out in the exercise of a commercial activity for economic advantage. Therefore, the ECJ concludes, such practice – which is held contrary to the objective of ensuring undistorted competition – constitutes use of the trade marks in the course of a trade, to which the trade mark proprietor can object.

Applied to the facts of the case, the ECJ determines that it makes no difference that the de- and rebranding took place when the goods were still placed under customs suspension arrangements, given that these operations were carried out for the purpose of importing and placing of those goods in the EEA (evidenced by the alterations to the fork lift trucks in compliance with EU standards).