C-192/73

THE COURT

composed of: R. Lecourt, President, A. M. Donner and M. Sørensen, Presidents of Chambers, R. Monaco, J. Mertens de Wilmars, P. Pescatore, H. Kutscher, C. Ó Dálaigh and A. J. Mackenzie Stuart (Rapporteur), Judges,

Advocate-General: H. Mayras Registrar: A. Van Houtte

gives the following

JUDGMENT

Facts

In 1927 Hag AG set up a subsidiary in import Hag products bought by him Belgium, Cafe Hag SA (hereinafter called from Hag AG, Bremen, into 'Hag/Belgium') which was fully Luxembourg. controlled by it, chiefly through the Without allowing him to intervene, the agency of a Dutch subsidiary, NV Koffie Tribunal d'Arrondissement of Luxem Hag. Hag AG's Belgian and bourg by judgment of 14 November Luxembourg trade marks were assigned 1973 adjourned the proceedings and to Hag/Belgium with effect from May requested the Court to give its

bearing the same trade mark as the its Benelux Hag trade marks, as regards goods of the first Member State (A), Belgium and Luxembourg, to the Société when it is established that: en commandite Van Zuylen Frères, (hereinafter called 'VZF'), without — the trade mark at issue was however transferring the business. VZF assigned by the original holder does not itself manufacture decaffeinated within Member State (B) to its coffee but buys it from Hag/Belgium. subsidiary, constituted within That company no longer sells it directly Member State (A), pursuant to but always to wholesalers. agreements which took effect Whilst selling its coffees in Belgium before the coming into force of under the trade mark 'Decofa', Hag AG the Treaty; started in 1972 to deliver its coffees to — this subsidiary, which was Luxembourg retailers under its German sequestrated after the Second

Prior technical or economic link to the hearing, a German merchant between the present holder and applied to intervene in the first action the original holder of the trade with a view to asserting his rights to marks in States (A) and (B)?

2. Would the answer to Question (1) be company to its subsidiary, effected the same if the sale of the goods in within the framework of a group of Member State (A) was made not by companies, in fact amounts to a contract the original holder of the trade mark under private law and therefore an in Member State (B), but by a third agreement within the meaning of Article party, such as an importer, who had 85. Paragraph 1 of the operative part of duly obtained the goods in Member the Judgment in Case 22/71 (Béguelin — State (B) from the original holder?' Rec. 1971, p. 963) does not apply where the link uniting the parent company with its subsidiary is broken. Looked at from the aspect of unity of the market, it II — Procedure matters little under what circumstances the relationship between the parent The judgment referring the matter was company and its subsidiary was registered at the Court on 28 December dissolved. 1973. The Commission concludes that to use Under Article 20 of the Protocol on the the Luxembourg trade mark, acquired Statute of the Court of Justice of the by agreement, for the purpose of European Economic Community written importing direct importations of German observations were submitted on behalf Hag coffee would contravene Article 85. of the Commission of the European If this already applies to direct Communities by its Legal Adviser M. importations by the respondent, then the van Ackere, acting as agent, on behalf of second question of the reference the company Van Zuylen Frères, by becomes pointless. Maîtres Braun, Waelbroeck and Bonn, on If Hag AG indicates on its products that behalf of the company Hag by Maîtres they originate from Bremen, observant Arendt and Collin and on behalf of the consumers can discover that they are Government of the United Kingdom by dealing with Hag products which do not the Treasury Solicitor, acting as agent. have the same origin as VZF products. After hearing the report of the Judge-Rapporteur and the opinion of the The Free Movement of Goods Advocate-General the Court decided to In the Commission's view a decision open the oral procedure without a given by a national court constitutes a preparatory inquiry. 'measure having equivalent effect' within the meaning of Article 30 of the Treaty where it imposes a prohibition upon the III — Summary of the writ­ importation of goods from one Member State to another. ten observations Article 36 permits derogations from the A — Observations of the Commission freedom of movement of goods only to the extent that they are justified for the The Competition Rules purpose of safeguarding rights that are the specific subject matter of industrial According to the Commission it is not a or commercial property. question of when the agreement was It is by reason of his primary marketing entered into but of determining if it right that the holder of a trade mark is could still have a restrictive effect upon legally protected from improper competition after the coming into force manoeuvres by competitors consisting in of the EEC Treaty. the utilization for their benefit of the The Commission considers that the trade mark in question: the protection of transfer of a trade mark by a parent legitimate holders of trade marks is at

this stage assured against infringements. the right itself, since the existence of a If the holder of the trade mark disposes trade mark is guaranteed by Article 36 of his right to use the same by means of of the EEC Treaty. a licensing agreement, as a result of The essential purpose of a trade mark is which he is no longer the sole lawful to indicate the origin of the product. The holder of that trade mark, the product trade mark loses its distinctive character resulting from the industrial or if it is no longer the indication of a commercial activity of the assignee or particular origin and it is therefore assignees of the trade mark are not self-destructive where it indicates more normally products of infringement. than one origin. The free movement of goods within the If the exercise of a trade mark right were Common Market cannot therefore to involve the use of two trade marks on normally have the effect of infringing the one market, the right to the mark would specific object and therefore the very lose its distinctive character and would existence of the trade mark; Case 56 and thus be affected in its very existence. 58/64 Grundig v Commission (Rec. 1966, p. 429) Case 40/70 Sirene v Eda There is no infringement where a third (Rec. 1971, p. 69). party imports products originating with the same establishment as those which Where the holder has acquired a trade the holder sells under his trade mark, mark not under a contract arising from even if these products have not been private law but as a consequence of a marketed abroad by the holder himself measure taken by public authorities, he or by a person economically linked to cannot have rights greater than those

The Competition Rules fundamental right under a trade mark, The exercise of the right to industrial that is to say the indication of the precise property must not be affected by the origin of the product, would reduce the EEC Treaty except to the extent that this right thus acquired to nothing. VZF does not involve the disappearance of examines the 1934/35 agreements

between Hag AG and Hag/Belgium, the appearance of his trade mark in a way transfer of the shares in Hag/Belgium that would enable the public to consequent upon the sequestration and appreciate the different origin of the the disposal of the trade marks of product, would this not amount to Hag/Belgium to VZF, and concludes infringing the very existence of his right that they do not either in isolation or and not only its exercise? together constitute the elements required The situation in the Sirena case was for Article 85. different because the assignment of the An agreement involving a division of the trade marks that took place in 1937 market between the parent company and involved two independent companies its subsidiary would not fall within the whilst the assignment of the Hag trade ambit of Article 85 (1). Decision of the marks in 1934/35 occurred between Commission Christiani and Nielsen (OJ associated companies. Equally, in the

The right of SA whether the criticized exercise of a trade Cafe Hag to prevent imports of products mark right is the subject, the means or from Hag AG, follows from the very existence of its trade mark and is on this the consequence of an agreement. There is no reason to think that the expression ground guaranteed by Article 36 of the 'accord' appearing in paragraph 11 need Treaty. be understood in a sense different from There cannot be any question of that of the word 'entente'. thinking that by reason of the transfer of It is the concerted use of the trade mark the shares in Hag/Belgium by the 'office which is prohibited by the Treaty and des sequestres' to the Van Oevelen not the agreement to transfer which does family, the 1934/35 agreements had no more than render this use possible.

prohibited when it is the object, the VZF also points out that if the transferor means or the consequence of an were obliged to tolerate the importations agreement the effects of which continue on the part of the other party and subsequent to the coming into force of accordingly to modify the external the EEC Treaty.

The Free Movement of Goods Such effects exist, since from the trade marks transferred in 1935 VFZ derives at The Deutsche Grammophon judgment the present time arguments as against (Case 78/70, Rec. 1971, p. 487) involves Hag AG which would be open to it, had the case where one and the same person, the contract of 1935 not existed. These or two persons economically connected, arguments are independent of the are holders of parallel rights in two duration of the contract intended by the Member States.

the same. panied by other agreements restricting competition. Decision 6 February 1973 C — Observations by Hag AG of the Corte d'Appello of Milan, Sirena. Hag AG concludes that a restriction on The Competition Rules competition results from the following facts: According to Hag AG it suffices for the agreements which were concluded prior 1. The trade marks involved in the to the coming into force of the EEC proceedings were acquired by Treaty to continue to have their effects agreement, either arising in 1934/35, at the present time. (Sirena Case, Supra) or at the present time.

2. One of the parties to the agreements legislation and by the convention for the utilizes the trade marks, which are the protection of industrial property. subject of the assignment effected by The derived Hag trade marks acquired these agreements. by the applicant do not have to indicate 3. The trade mark right is exercised the origin of the product as coming from within the framework of an Hag AG of Germany. VZF must take all agreement between undertakings, steps necessary to differentiate the which at the present time produces presentation of these products from effects as regards the ownership in those of Hag AG, in such a way as not these rights which would not exist if to mislead the public. This obligation is the original agreement had been imposed upon it by the EEC Treaty discontinued. where it is indicated in the Preamble (paragraph 5) that the States make it 4. The trade mark right is exercised in their task to guarantee ... fair order to prevent the import of competition. products originating from Germany The products of Hag AG, bearing the bearing the same mark. Hag trade marks, which are well known, This conduct is to be condemned since must be able to move freely within the the unity of the market is one of the Common Market, in conformity with essential objectives of the Treaty and the wording of Articles 30 to 34 of the must have precedence over the EEC Treaty. The existence of the consequences of exercising a national derived trade mark still remains intact. right which tends to thwart it. Its owner can forbid the use of trade The Court therefore cannot but confirm marks which infringe it. the interpretation of Article 85 given in The original product of Hag AG, the Sirena case (supra). originating in Germany, must not be subject to a restriction upon its The Free Movement of Goods importation into other Member States, placed upon it in this way by the Hag AG has itself created all the trade marks involved in this case. In turn, VZF subsequent holder of the trade mark, which does not arise from the existence can only rely upon rights in trade marks of the right to protection, but the which it has itself acquired through their originators, Hag AG. We therefore have utilization of which, under these circumstances amounts to a disguised the original holder of a trade mark and restriction on trade between Member the holder of the trade mark who acquired derived rights and whose States; the Deutsche Grammophon v activities extend to a part of the Metro case (supra). Common Market. The action on the part of an original Hag AG goes on to examine the holder in moving goods properly bearing question how, bearing in mind this the trade mark from his country within situation, the existence and the exercise the EEC across various national frontiers of a trade mark right must be defined. does not concern the existence of the

considers that the reply ought to be the According to the United Kingdom, the same, but that, whatever the reply to the reply to the second question is the same first question, it cannot be possible to because one must ensure respect for the prevent independent third parties from rights of the two parties in the same importing into an EEC country products way, since the so-called doctrine of originating with the defendant Hag. 'exhaustion of rights' (épuisement des droits) is not applicable to registered trade marks. D — Observations of the United If VZF were not allowed to oppose the Kingdom importation into Belgium of products bearing the trade mark in question it The Competition Rules would be deprived of a substantial proportion of the goodwill that this According to the United Kingdom, the trade mark has acquired. national courts ought in the first place to determine whether there is an agreement Oral procedure between undertakings. As regards the 1935 agreement between In the course of the oral procedure of 2 Hag AG and Cafe Hag SA, this was an May 1974, Antoine Braun and Michel agreement between a parent company Waelbroeck appeared for Van Zuylen and its subsidiary which did not amount Frères, Ernest Arendt and Robert Collin to an obstacle to competition and Article appeared for Hag AG, William Aldous 85 would not therefore have applied if for the Government of the United King­ the Treaty had been in force at the time. dom and Michel van Ackere for the Decision of the Commission Christiani Commission of the European Communi­ and Nielsen (aforementioned). Decision ties. of the Commission Kodak (OJ 1970 L Van Zuylen Frères particularly 147/24). emphasized the following arguments: Since the relinquishment of its rights to the trade mark within the Benelux 1. The present case can be constitutes a voluntary abandonment on distinguished from those which the the part of Hag AG, the latter cannot in Court has previously had to deal with and in which it denied to the holder of a equity now again assert its rights. right of industrial property the If on the other hand the agreement falls possibility of taking proceedings with a within the area of application of Article view to asserting his rights. In 85, then this Article nevertheless does not apply because the effects of the — Béguelin v SAGL Import Export agreement ceased before the coming into (aforementioned) there was an force of the Treaty. This cessation had exclusive, distribution agreement been brought about by the Belgian between the Japanese manufacturer legislation under the provisions of which and Béguelin the subsidiary and the trade mark had — Sirena v Eda (aforementioned) there been first placed under sequestration and was an agreement between Mark subsequently sold to VZF. Allen, its German licensee and the Sirena company which had acquired The Free Movement of Goods the Italian trade mark before the war

Treaty. the purpose of preventing the entry of products from Germany into Belgium — even if Article 85 were capable of and an agreement which governs being applied to an agreement of independent parties. assignment of a trade mark ante-dating the Treaty, this could not If there were difficulties as regards the be the case here, bearing in mind that extent of paragraph 11 of the grounds of it is the measures of sequestration judgment in the Sirena case, it is which took place at the end of the necessary to turn to the operative part, Second World war and not the where it is clearly stated that Article 85 agreement of assignment between of the Treaty applies as soon as — by Hag/Belgium and Hag AG that lie at reliance upon trade mark rights — the origin of the 'partitioning-off' importations of products originating in criticized by Hag AG. different Member States, bearing the same trade mark, are prevented on the According to VZF it is by making grounds that their holders had acquired appropriate provisions by way of treaty this trade mark, or the right to use the and not by means of a questionable same, by virtue of agreements between interpretation of provisions aimed at themselves or agreements entered into' quite different hypotheses, that the with third parties. question of free movement of products bearing a confiscated trade mark must Hag AG referred in the first instance to be resolved. the agreement entered into between Van Hag AG stresses in particular the Zuylen Frères and Hag/Belgium. Even if following arguments: this agreement did not have to be taken into account, it is necessary to place on record that VZF has succeeded to the 1. As regards the competition rules rights of Hag/Belgium under the The 1934/35 agreement was at least an agreement of 1934/35 between that

conjunction with this convention, the particular the following arguments: Sirena judgment applies, VZF, the holder The exercise of rights arising from a of the Hag trade mark, preserves its trade mark registered in conformity with contract, preserves its right to oppose the legislation of a Member State does those on its territory infringing it, but it not in itself amount to an infringement is forbidden to use the trade mark for of the competition rules laid down by the purpose of opposing the coming the Treaty. onto the scene of the same trade mark as Vide Case 23/67 Parke Davis v Probel its own, which it had acquired by the (109 Rec. 1968, p. 82) as regards patents. convention which remains in force and It is fundamental that no-one can pass which still governs the rights of the off his goods as those of someone else, parties. without the latter being prejudiced and without the consumer being deceived. 2. As regards the free movement of The rights attaching to trade marks are goods one of the ways and means to arrive at balanced trade and fair competition, A trade mark right, under the classical enshrined in the preamble to the EEC definition, is an absolute right on the Treaty. part of the proprietor to oppose, in the territory where he holds this trade mark, The right to a trade mark cannot the advent of an identical trade mark, prevent the importation of goods even if, as holder of that trade mark, he bearing the same trade mark. It is not himself affixed the same to the product possible to make a distinction between in question in another territory. the existence of trade mark rights and the exercise thereof: trade marks reflect It is Hag AG's thesis that this rigidity the link that within the framework of was gradually softened by national trade exists between the product and the jurisprudence. The Cinzano case (BCH 2 proprietor of the trade mark. They do February 1973) marks the point reached not necessarily establish the origin of the by purely national jurisprudence. product, since a trade mark may be

The agreement between Hag/Belgium With the fusion of the national markets and Hag AG does not, taken by itself, into a single economic area, the fall under Article 85. One must still existence of a trade mark right in one establish whether the exercise of the Member State must adapt itself to the right to the trade mark granted to existence of another right to that trade undertakings in one or more Member mark in another Member State. States falls within the prohibition of that The proliferation of products, possibly Article. As soon as the exercise of this quite different, sold under the same trade mark right aims at arriving at a trade mark within the same economic territorial protection, it gives the area, the Common Market, can only agreement of assignment of the trade create confusion. But the Commission mark an effect that makes it actionable takes the view that such a proliferation within Article 85. would not occur, since the Sirena case For the Commission, it is a case of can only reduce the incentive for balancing three kinds of general interests multiple assignments. represented by the principle of unity of The Advocate-General delivered his the Common Market, the interest of the opinion on 15 May 1974.

VAN ZUYLEN v HAG

Law

1 By judgment dated 31 October 1973, lodged at the Registry on 28 December 1973, the Tribunal d'Arrondissement of Luxembourg has referred to the Court, under Article 177 of the EEC Treaty, two questions for a preliminary ruling, on the interpretation of Articles 5, 30, 36 and 85 of the Treaty, in relation to trade mark law.

8 Nevertheless, it is shown by this very Article, in particular its second sentence, as well as by the context, that whilst the Treaty does not affect the existence of rights recognized by the legislation of a Member State in matters of industrial and commercial property, yet the exercise of these rights may nevertheless, depending on the circumstances, be affected by the prohibitions in the Treaty.

JUDGMENT OF 3. 7. 1974 — CASE 192/73

9 Inasmuch as it provides an exception to one of the fundamental principles of the Common Market, Article 36 in fact only admits derogations from the free movement of goods to the extent that such derogations are justified for the purpose of safeguarding rights that constitute the specific subject matter of this property.

10 Thus the application of the legislation relating to the protection of trade marks at any rate protects the legitimate holder of the trade mark against infringement on the part of persons who lack any legal title.

11 The exercise of a trade mark right tends to contribute to the partitioning off of the markets and thus to affect the free movement of goods between Member States, all the more so since — unlike other rights of industrial and commer­ cial property — it is not subject to limitations in point of time.

12 Accordingly, one cannot allow the holder of a trade mark to rely upon the exclusiveness of a trade mark right — which may be the consequence of the territorial limitation of national legislations — with a view to prohibiting the marketing in a Member State of goods legally produced in another Member State under an identical trade mark having the same origin.

Costs

18 The costs incurred by the Government of the United Kingdom and by the Commission of the European Communities, which have submitted observa­ tions to the Court, are not recoverable, and as these proceedings are, in so far as the parties to the main action are concerned, a step in the action pending before the national court, costs are a matter for that court.

On those grounds,

THE COURT

in answer to the questions referred to it by the Tribunal d'Arrondissement of Luxembourg by judgment of that court dated 31 October 1973, hereby rules:

1. To prohibit the marketing in one Member State of a product legally bearing a trade mark in another Member State for the sole reason that an identical trade mark, having the same origin, exists in the first State, is incompatible with the provisions for the free movement of goods within the Common Market.