Trade Order Non Exhausted Later Elevation Performance

The European Court of Justice (ECJ) ruled yesterday, inwards Case C-16/03 Peak Holding AB v Axolin-Elinor AB on when goods for sale are dependent land to exhaustion of merchandise rate rights ("first sale" doctrine, every bit it's known inwards the US).

Peak Holding, who ain the PEAK PERFORMANCE merchandise mark, granted an associated company, Peak Performance Production (PPP) the correct to utilization it; PPP so made in addition to sold PEAK PERFORMANCE wearable in addition to accessories inwards Sweden. Another Swedish company, Factory Outlet, sold wearable that consisted mainly of branded goods which were parallel imports or reimports. In 2000 Factory Outlet marketed a consignment of 25,000 PEAK PERFORMANCE garments, having advertised them inwards the press at one-half price. Those clothes, which had been manufactured for PPP exterior the European Economic Area (EEA), were originally imported into the EEA for sale to end consumers inwards a Danish store run yesteryear i of PPP's sis companies; the clothe sold yesteryear Factory Outlet were those that remained unsold yesteryear the Danish store. Peak Holding claimed that Factory Outlet was infringing its merchandise rate in addition to sued for damages, injunctive relief in addition to delivery upwards of the unsold clothe for destruction. The trial courtroom dismissed the application, taking the thought that the goods had inwards fact been marketed yesteryear argue of beingness made available to consumers inwards the Danish store in addition to that the rights conferred yesteryear the merchandise mark, in i lawsuit exhausted yesteryear offering the goods for sale, could non travel restored. Peak Holding appealed, next which the next questions were pose to the ECJ for a preliminary ruling:

1. Are goods to travel regarded every bit having been pose on the marketplace position yesteryear virtue of the fact that the proprietor of the merchandise mark:

(a) has imported them into the mutual marketplace position in addition to paid import duty on them, amongst the intention that they travel sold there?

(b) has offered them for sale inwards the merchandise rate proprietor’s ain shops or those of a related society inside the mutual marketplace position simply a sale of the goods has non taken place?

2. If goods induce got been pose on the marketplace position nether i of the inwards a higher house alternatives in addition to exhaustion of the merchandise rate rights thereby occurs without at that topographic point having been a sale of the goods, tin dismiss a merchandise rate proprietor interrupt exhaustion yesteryear returning the goods to a warehouse?

3. Are goods to travel regarded every bit having been pose on the marketplace position yesteryear virtue of the fact that they induce got been sold yesteryear the merchandise rate proprietor to approximately other society inwards the internal market, if, upon the sale, the merchandise rate proprietor imposed a restriction on the buyer nether which he was non entitled to resell the goods inwards the mutual market?

4. Is the reply to inquiry three affected if the merchandise rate proprietor, upon selling the consignment to which the goods belonged, gave the buyer permission to resell a pocket-sized purpose of the goods inwards the mutual marketplace position simply did non specify the private goods to which that permission applied?

The ECJ ruled:

1. Article 7(1) must travel interpreted every bit pregnant that goods bearing a merchandise rate cannot travel regarded every bit having been pose on the marketplace position inwards the European Economic Area where the proprietor of the merchandise rate has imported them into the European Economic Area amongst a thought to selling them at that topographic point or where he has offered them for sale to consumers inwards the European Economic Area, inwards his ain shops or those of an associated company, without genuinely selling them.

2. In circumstances such every bit those of the top dog proceedings, the stipulation, inwards a contract of sale concluded betwixt the proprietor of the merchandise rate in addition to an operator established inwards the European Economic Area, of a prohibition on reselling inwards the European Economic Area does non hateful that at that topographic point is no putting on the marketplace position inwards the European Economic Area inside the pregnant of Article 7(1) in addition to hence does non forestall the exhaustion of the proprietor’s exclusive rights inwards the lawsuit of resale inwards the European Economic Area inwards breach of the prohibition.

thinks this is a jolly skillful ruling which effectively dovetails merchandise rate exhaustion doctrine amongst the mutual police concept of the "invitation to treat" inwards the formation of contracts. He has explained to Merpel, who was getting a chip agitated, that the ECJ was non pussyfooting when it didn't reply the instant in addition to 4th questions: it didn't involve to reply them, inwards the low-cal of its answers to questions 1 in addition to 3.

More on pinnacle functioning here, here and here
Twin peaks here
Peke functioning here