The matter at hand

Harman is a manufacturer of speakers and headphones and proprietor of EU trade marks for JBL and HARMAN. AB traded in Harman’s products on the Polish market, which were purchased from a supplier other than the distributor authorised by Harman in respect of that market.

Harman brought an action before the Sąd Okręgowy w Warszawie (Regional Court, Warsaw, Poland), the referring court, seeking to prohibit AB, in general, from commercializing speakers and earphones bearing its marks, insofar as these had not been put on the market in the EEA by Harman or with its consent. In its defence, AB relied on the principle of the exhaustion, invoking the assurance received from its supplier that those products had been placed on the market in the EEA by Harman or with its consent.

The referring court observed that the marking systems used by Harman were insufficient for the destination market of each of its products to be identified. In order to determine with certainty whether a given product was destined for the EEA market, it was necessary to have recourse to a database belonging to Harman, as suppliers are considered to be unlikely to be willing to share their supply sources.

Apparently inclined to award an injunction, the referring court raises a question on the effect of an operative part that would prohibit the sale of and allow for the seizure of ‘products which have not previously been placed on the market within EEA by the proprietor of the EU trade mark or with its consent’. Such an order in the infringement action would, in combination with Polish rules of civil procedure, cause for the defendant, in the context of the enforcement procedures, to be confronted with a number of legal obstacles to the possibility of successfully contesting the measures ordered and to have only limited procedural guarantees.

Therefore, in the opinion of the referring court, there was a risk that the judicial protection of the free movement of goods would be restricted due to the envisioned formulation of the operative part of the decision. It therefore raised a question to the ECJ on whether EU law precludes such a judicial practice.

The judgment of the ECJ

First, upon reformulating the question referred to it, the ECJ concludes that that question should be understood as comprising of different parts (paragraph 36), the first of which relates to the exhaustion of trade mark rights and to the requirements flowing from the protection of the free movement of goods.

In this context the ECJ considers that a “fair balance [must be ensured] between the fundamental interests” of the exclusive right of the trade mark proprietor to prevent any third party from importing and trading in goods bearing its mark on the one hand, as well as that of the free movement of goods within the internal market on the other (paragraph 41). As a consequence, the ECJ concludes that “a trader against whom an infringement action is brought by the proprietor of an EU trade mark has the right, for the purposes of its defence, to allege and prove that the products bearing that mark, referred to in the infringement action, were put on the market in the EEA by that proprietor or with its consent. […] that trader must also be able to benefit from a reversal, in its favour, of the burden of proof where the conditions laid down in that regard by the Court of Justice are met.” (paragraph 52).

The ECJ then continues to address the obligation, for the Member States, first, to establish the legal remedies necessary to ensure effective judicial protection in an area covered by EU law and, second, to guarantee the conditions for a fair hearing, in accordance with Article 47 of the CharterCharter of Fundamental Rights of the European Union [2000/C 364/01]. In this regard, it is held that “it is necessary to examine whether, at the enforcement stage, the limited legal remedies and procedural guarantees that are available to the defendant, under national law, fail to meet the requirements of effective judicial protection imposed by EU law and therefore the unity and effectiveness of that law” (paragraph 59).

Having regard to the principle of procedural autonomy afforded to Member States, the ECJ considers that “EU law cannot preclude a judicial practice according to which the operative part of a decision upholding an action for infringement of an EU trade mark is drafted in general terms, provided that the defendant enjoys the effective judicial protection of the rights that it derives from Articles 34 and 36 TFEUTreaty on the Functioning of the European Union and Article 15(1) of Trade Mark Regulation 2017” (paragraph 70).

Upon guaranteeing this ‘effective judicial protection’, “if the national court is required to designate, in the operative part of its decisions upholding an action for infringement of an EU trade mark, by means of a general formulation, the products which were not previously placed on the market in the EEA by the proprietor or with its consent, the defendant should benefit, at the enforcement stage, from all the guarantees of a fair hearing for the purposes of being able effectively to contest the existence of an infringement or threat of an infringement of the exclusive rights of the trade mark proprietor and to challenge the seizure of those items of products in respect of which the trade mark proprietor’s exclusive rights have been exhausted and which may therefore freely circulate within the EEA” (paragraph 71).

As an encore, the ECJ provides some additional considerations regarding the reversal of the burden of proof, as first interpreted by it in Van Doren / Lifestyle (C-244/00). The ECJ notes that if, without access to Harman’s database, it is not objectively possible in the enforcement stage for the defendant to demonstrate that the products it purchased had been placed on the market in the EEA by Harman or with its consent, it may be necessary, “even in a case where no exclusive distribution is established, for the competent enforcement authority […] to reverse the burden of proof, to the extent that that authority or court finds, depending on the specific circumstances relating to the marketing of the products concerned, that the rule on the burden of proof, […], is liable to allow the trade mark proprietor to partition national markets and thus assist the maintenance of price differences between Member States” (paragraph 72).