Intellectual Property Law – IP Law – Trade Mark – Trade Mark Infringement – Trademarks – Exhaustion of Rights
In the case of Honda Motor Co Ltd and another v David Silver Spares Ltd [2010,], David Silver Spares (the defendant), the defendant got it wrong and did not put forward a defence of exhaustion of rights, and therefore failed to succeed in their claim against Honda.
Honda brought proceedings against the defendant because they were dealing in Honda motorcycle parts which had not been put on the market in the European Economic Area (EEA) by Honda or with its consent. The defendant made an application to the court for the claim to be struck out or for summary judgement on the ground that the claim was entirely speculative and lacking in particularity. Consideration was given to Article 5(1) of the Directive and to the issue surrounding who the onus was on to raise the defence of exhaustion of rights under Article 7 of the Trade Marks Directive (EEC) 89/104 (“Directive”).
Under Article 5 of the Directive: '(1) The registered trade mark shall confer on the proprietor exclusive rights therein. The proprietor shall be entitled to prevent all third parties not having his consent from using in the course of trade: (a) any sign which is identical with the trade mark in relation to goods or services which are identical with those for which the trade mark is registered…'. Article 7 of the Directive provides, so far as material: '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.'
Section 9 of the Trade Marks Act 1994 (which implements the Directive) states that: '(1) The proprietor of a registered trade mark has exclusive rights in the trade mark which are infringed by use of the trade mark in the United Kingdom without his consent. The acts amounting to infringement, if done without the consent of the proprietor, are specified in section 10.' Section 12 of the Act provides, so far as material: '(1) A registered trade mark is not infringed by the use of the trade mark in relation to goods which have been put on the market in the European Economic Area under that trade mark by the proprietor or with his consent.'
The application was dismissed. The courts held that:-
· It was trite law that Articles 5 to 7 of the Directive harmonised the rules relating to the rights conferred by a trade mark and accordingly defined the rights of proprietors of trade marks in the Community or EEA. The rules on exhaustion of rights’ state that where the trade mark owner puts goods on the market within the EU, the owner’s rights are exhausted.
· Where the trade mark owner puts goods on the market outside the EEA, the owner might still be able to assert such trade mark rights to prevent importation of those goods into the EEA without consent. For there to be consent within the meaning of Article 7(1) of the Directive, such consent had to relate to each individual item of the goods in respect of which exhaustion of rights was pleaded.
· It was trite law that consent had to be expressed positively and it was for the person trading/ alleging consent to prove it, and NOT for the trade mark owner to demonstrate lack of consent. The burden was on the defendant to raise a defence of exhaustion of rights under Article 7(1) of the Directive. It was only where the defendant had succeeded in establishing that a real risk of partitioning of national markets existed that the burden of proof would be reversed.
· In this case, the defendant did not even begin to prove that the claim lacked any reasonable basis and/or had no real prospect of succeeding such that it should be struck out or summarily dismissed. The points argued by the defendant only pointed to the fact that the defendant might have a defence to the claim or to parts of the claim based on the exhaustion of Honda's rights (but the case was not about exhaustion of rights).
· Therefore, it was not necessary for Honda to plead or prove that motorcycle parts offered for sale by the defendant under Honda trade marks were first placed on the market by the claimants or with its consent outside the EEA, as the case did not concern exhaustion of rights. It was sufficient for the claimant to contend on reasonable grounds that the defendant had used its trade marks within the EEA in relation to goods for which they were registered and that the claimants had not consented to such use. The burden was therefore on the defendant, to put forward if it chose to do so, the defence of exhaustion of rights under Article 7(1) of the Directive.
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© RT COOPERS, 2010. This Briefing Note does not provide a comprehensive or complete statement of the law relating to the issues discussed nor does it constitute legal advice. It is intended only to highlight general issues. Specialist legal advice should always be sought in relation to particular circumstances.
