R v Peak

Date

30 November 2004

Legislation

Directive 89/104/EEC, Article 7(1)
Trade Marks Act 1994 s12(1)

Keywords

trade mark exhaustion; consent of proprietor

Counsel

G. Gozzo, K. Azelius, M. Palm

Solicitors

Unknown

Judge

V. Skouris, President, P. Jann, C.W.A. Timmermans, A. Rosas and R. Silva de Lapuerta, Presidents of Chambers, C. Gulmann (Rapporteur), J.-P. Puissochet, R. Schintgen and J.N. Cunha Rodrigues, Judges.

Court

European Court of Justice

Reported

[2005] Ch 261

Summary

Article 7(1) of the Trade Marks Directive states that "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" (this article is implemented in the UK as s.12(1) of the Trade Marks Act 1994).

Peak Holding was the proprietor of the Danish trade mark PEAK PERFORMANCE and licensed a subsidiary Peak Performance Production to produce clothing bearing the trade mark. The issue arose in infringement proceedings whether Article 7(1) of the Directive meant that goods bearing a trade mark are regarded as being put on the market where the proprietor has simply imported them into the EEA with a view to selling them, or where he has offered them for sale to consumers but without actually selling them.

Decision

The ECJ concluded that:

• The wording in Article 7(1) alone does not set out any relevant criteria;
• A sale which allows the proprietor to 'realise the economic value of his trade mark' exhausts the exclusive rights and in particular the right to prohibit an acquiring third party from reselling the goods;
• However, where a proprietor imports goods with a view to selling them in the EEA or offers them for sale in the EEA he does not put them on the market within the meaning of Article 7(1);
• The act of offering goods for sale does not transfer to third parties the right to dispose of the goods bearing the trade mark and does not allow the proprietor to realise the economic value of the mark. Even when offering for sale, the proprietor retains his interest in maintaining complete control over the trade mark in order, in particular, to maintain quality.

This judgment is consistent with the English contract law approach of an 'invitation to treat' when goods are, for example, displayed in a shop window. Its consequence is that the first transfer for value of trade marked goods arguably means that the rights of the proprietor are then exhausted, but that prior to that first transfer the proprietor maintains complete control.