C-119/75

In Case 119/75

Reference to the Court under Article 177 of the EEC Treaty by the Bundesgerichtshof (Federal Court of Justice) for a preliminary ruling in the action pending before that court between

TERRAPIN (OVERSEAS) Ltd., of Bletchley, Buckinghamshire (England)

and

TERRANOVA INDUSTRIE C. A. KAPFERER & CO., of Freihung, Oberpfalz (Federal Republic of Germany),

on the interpretation of the provisions of the EEC Treaty on the free movement of goods and in particular Articles 30 and 36 thereof with regard to trade-mark law,

Facts

The facts, the procedure and the Terrapin (Overseas) Ltd. (hereinafter observations submitted under Article 20 referred to as 'Terrapin'), whose registered of the Protocol on the Statute of the office is in England, manufactures and Court of Justice of the EEC may be sells prefabricated houses which it summarized as follows: markets under the trade-mark Terrapin'. These are generally two-storey buildings which are assembled on site from I — Facts and written procedure prefabricated components. In addition it Terranova Industrie C. A. Kapferer & Co. also applies the name Terrapin' to units (hereinafter referred to as 'Terranova') has made up of such components and manufactured and marketed for 75 years intended for the buildings in question. prepared plaster for façades. It is the proprietor of the following trade-marks In the Federal Republic of Germany registered at the German patents office: Terrapin carries on business activities No 151654 word-mark Terra'; No itself as well as through its subsidiary 202309 word/device-mark Terra' with an company 'Terrapin-Systembau Nord- emblem; No 455061 word-mark Terra europa GmbH', which has its registered Fabrikate'; No 359464 word/device-mark office in Cologne. 'terranova' composed of a name and an emblem and No 431118 'Terranova' with Terrapin applied in 1961 to have the a particular arrangement of letters. These word-mark Terrapin' entered in the marks are registered in respect of a range register kept by the German patents of building materials and auxiliary office. By decision dated 28 December building materials. In the trade-marks 1962 the latter rejected an opposition by register the objects of the company are Terranova on the ground that the given as 'Manufacture of dry prepared trade-marks 'Terra' and 'Terranova' on plaster, construction work and trade in the one hand and the trade-mark building materials'. Terrapin' were not similar.

On appeal by Terranova, the landesgericht considered that there was Bundespatentgericht (Federal Patent no connexion between the branches to Court) by order dated 3 February 1967 which the products manufactured and annulled the decision of the patents marketed by the parties belonged, nor office and prohibited the registration of serious risk of confusion between the the trade-mark Terrapin'. The products trade-marks. The proceedings before the marketed under the trade-marks Cologne courts were stayed until the 'Terrapin' and 'Terranova' were said to be action pending in Munich was decided. similar and the trade-mark Terrapin' gave rise to a risk of confusion with the After a long hearing the action by trade-marks Terra and 'Terranova'. Terranova before the Landgericht München was dismissed as unfounded by Following this order by the judgment of 27 November 1972.

It Oberlandesgericht München dated 11 restrained Terrapin from using in the July 1968 and 27 November 1969, these territory of the Federal Republic of companies were prohibited from placing Germany the name Terrapin' as a the word Terrapin' on certain trade-mark or company name and components intended for the ordered it to make good all damage construction of prefabricated buildings suffered or likely to be suffered by and from marketing products so Terranova. described.

houses. This action was dismissed as that an undertaking established in inadmissible on the grounds of lack of Member State A, by using its commercial territorial jurisdiction on the part of the name and trade-mark rights existing court before which it was brought. there, should prevent the import of similar goods of an undertaking On appeal by Terrapin, the Ober established in Member State B if these landesgericht Köln (Cologne Higher goods have been lawfully given a Regional Court), by judgment dated 19 distinguishing name which may be September 1969 rejected the objection of confused with the commercial name and lack of territorial jurisdiction and sent trade-mark which are protected in State the case back to the Landgericht With A for the undertaking established there, regard to the substance the Ober- if there are no relations between the two

The order of the Bundesgerichtshof was Article 30 of the EEC Treaty in principle registered in the Court Registry on prohibits measures having an effect 5 December 1975. equivalent to quantitative restrictions on imports between Member States; the In accordance with Article 20 of the exercise of a right based on national law Protocol on the Statute of the Court of to prohibit the marketing of certain Justice of the EEC written observations products is, according to the case-law of were submitted on 9 February 1976 by the Court, contrary to the rules on the the Government of the Kingdom of free movement of goods within the Belgium, on 12 February by the common market. It thus constitutes a Commission of the European measure having an equivalent effect Communities, on 16 February by within the meaning of Article 30. Terranova, on 18 February by the Government of the Kingdom of the Article 36 recognizes as exceptions to the Netherlands, on 19 February by the prohibition on measures having an effect Government of the Kingdom of equivalent to quantitative restrictions Denmark, on 20 February by the only restrictions on imports 'justified' on Government of the French Republic, on grounds of the protection of industrial 23 February by Terrapin and by the and commercial property. In this respect Government of the United Kingdom of it appears from the case-law of the Court

JUDGMENT OF 22. 6. 1976 - CASE 119/75

against infringement on the part of likewise involves the component Terra' persons without any legal tide. The constitutes arbitrary discrimination. In purpose of the trade-mark is on the one fact Terranova is in no way seeking to hand to prevent persons or undertakings prevent confusion as to the origin of its which are not entitled to it from using it own products with those of Terrapin, but and thus creating confusion as to the to extend its trade by acquiring a general origin of products and on the other hand agency for Terrapin; this objective to ensure that the legitimate proprietor certainly does not come within the aims only to prevent an error as to the specific object of the trade-mark right. origin and does not use his rights to The fact that Terranova fears no achieve aims alien to the true objective of confusion by people in the trade the right to the trade-mark or regarding the origin of prefabricated commercial name. The second sentence buildings produced by Terrapin is shown of Article 36 gives two examples of by the fact that it would accept the restrictions on imports which are not trade-mark in question being used by justified since they do not serve the Terrapin if it could obtain from the latter specific objective of the right to the general agency for Germany or be industrial property: arbitrary discrimi­ given a licence; Terranova is thus guilty nation and disguised restriction on trade of a disguised restriction on trade between Member States. between Member States.

In this respect it is right to observe in The manner in which the question has the present case that there is no serious been put by the Bundesgerichtshof to the risk of confusion between on the one Court does not properly reflect the hand the commercial name and the right principles of Community law applying to

the case Terranova v Terrapin. In order identical word, assuming that the to decide whether the restrictions on products in question are not identical import accord with Article 36 it does not but at most belong to a related, sector matter whether under national law the of products; products are similar and whether there is — for the holder of a trade-mark to a risk of confusion between different pursue his action, in the names but only whether under circumstances mentioned in the Community law restrictions on import previous paragraph, when he is ready are justified, that is to say necessary, or to accept the alleged risk of whether one of the hypotheses referred confusion if, as consideration for to in the second sentence of Article 36 is giving up his objections, he were to fulfilled. receive an interest, in his own country, in the trade of the foreign It is for the Court of Justice to develop undertaking. the principles to be applied in deciding the question as to the conditions within The order of reference envisages two the meaning of Article 36 of the EEC alternative solutions reflecting the two Treaty under which restrictions on extreme views confronting one another. import based on national laws of There are however intermediate industrial property may be justified or solutions.

This view avoids the use of several trade-marks and the risk of serious obstacles being created commercial names involving as a to the free movement of goods within component a word contained in its the Community by too wide an own trade-mark or company name interpretation by the national courts of and is a name current in the sector in the concepts of 'similar products' and question, to prevent another 'risk of confusion'. undertaking, established in another Member State, from using a The Court of Justice in the present case trade-mark or commercial name is concerned for the first time with the involving as a component an problem arising from a conflict between

confusion between appellations and signs commercial names not having the coming under the jurisdiction of same origin and being under the different Member States but not having a jurisdiction of different Member common origin may be settled in States, the prohibition of a accordance with the principles of commercial name because of a Community law. remote possibility of confusion is contrary to the principle of Thus in accordance with the case-law of Community law according to which the Reichsgericht (Imperial Court) it all persons and firms have the right would be possible in the present case to freely to carry out commercial find that there is no risk of confusion or activities throughout the whole that in any event this risk should be common market assuming that the accepted by reason of the fundamental use of the commercial name in principle of freedom of economic question is not inspired by unfair activities in the common market as a reasons; whole. — When considering the question whether there is risk of confusion of The very diverse interpretation in the the trade-marks or appellations at context of the Community of the issue it is proper to bear in mind in concept of risk of confusion in addition to national law (for example, trade-mark law makes harmonization by the question of the similarity of the the national courts in this sphere products and the risk of confusion) urgently necessary. the provisions of Community law resulting from Article 36 of the A solution by way of analogy could be Treaty (for example, the concepts of taken from the English principle of arbitrary discrimination, disguised 'honest concurrent use' according to restriction on trade between Member which the use of identical or very similar States and interference with the trade-marks long used in neighbouring specific object of the property right territories by their respective proprietors in question); and which by coming into conflict at a — If on considering the above- late stage have created a risk of confusion mentioned points the court before which did not exist at the beginning, which the matter is pending

does not reach the conclusion that preliminary ruling and as a result the the restriction on the import of legal questions which the Court of products from Member State B is Justice has to decide. unjustified and consequently infringes Article 36, it is necessary to Thus the case envisaged by the order of consider whether the court before reference of an undertaking established which the main action is pending in Member State A 'preventing' imports should require distinguishing does not apply to the action of the additions and, if so, of what kind. proprietor of the trade-mark but to the Such additions, in accordance with prohibition by the national authorities on the principles of Community law the undertaking established in Member would exclude all risk of confusion State B from importing into Member between the two appellations. State A similar products under a trade-mark giving rise to confusion.

These include the similarity of of case involves different considerations the products marketed by the two from the cases which the Court of undertakings and the risk of confusion Justice has hitherto decided. The between the marks used by them. grounds in the order of reference permit the assumption that the Bundesge Nor can the Court of Justice pronounce richtshof has used the occasion which on the question whether and, if so, how the main action offered it to give the the fact of upholding national rights to Court of Justice the opportunity of the trade-mark or to the company name clarifying its case-law to the effect that at may, as a result of the protection least in the sphere covered by the accorded to them by the interpretation of preliminary question the existence of the concepts of 'similarity of the national rights to protection is not products' and of 'the risk of confusion' in affected by the provisions of Community the national statutory and case-law, affect

1047.

JUDGMENT OF 22. 6. 1976 - CASE 119/75

In contrast to the cases which it has the complete achievement of free previously had to deal with, the Court of movement of goods in the Community. Justice in the present case has for the first time to consider the case of 'normal' In this context it is proper to observe infringement of the right to a that the absence of a common origin trade-mark; it is a question in particular gives much stronger substance to the of the protection of rights to a right of the proprietor of the trade-mark trade-mark and company name in a to identify his products than in the case Member State against the import and where the proprietor of a single marketing of similar products put on to trade-mark has himself duplicated or the market in question by a third person dismembered it. under a name giving rise to confusion. By protecting the proprietor of the The achievement of the objectives of trade-mark against such an act the Article 30 of the EEC Treaty on the one national courts simply fulfil the purpose hand and the maintenance of national of the specific protection of the industrial property rights on the other trade-mark; the restrictions on import are subject to the principle of which arise in this context are 'justified' proportionality and the prohibition under Article 36 of the Treaty by the against excessive measures in relation to protection of industrial property. The the objective aimed at. The assumption national laws on trade-marks and other must not therefore be made that the signs are inspired by the idea of principle of free movement of goods protection against mistakes as to the within the common market necessarily origin of products both in the interests of prevails over the interests of proprietors the proprietor of the trade-mark and of trade-marks and the interests of consumers. This protection must always consumers.

the national laws on industrial property: same country by several undertakings. the scope of Article 30 of the Treaty does Competition in the common market not extend to the essence, that is to say would be distorted. Case-law which the specific objective, of industrial favoured the free movement of goods at property and in particular the national the expense of the protection of right to the trade-mark. competition would not be in accordance with the EEC Treaty: the two objectives Another way of approaching the problem are of equal standing and must be is to determine, on the basis of a balance reconciled. between interests protected by the law of trade-marks, the conditions under which Moreover Terrapin is not in any way the principle of free movement of goods prevented from importing its products conflicts with the protection of national into the Federal Republic of Germany trade-marks granted by Member State or, and marketing them there, but only from from another aspect, the conditions using a name giving rise to confusion. under which the national rights to Article 30 of the Treaty aims at ensuring trade-marks and company names prevent the free movement of goods; it does not

TERRAPIN v TERRANOVA

The facts which are at the origin of the case where the trade-mark right is split main action come under the sphere in up as a result of assignment or a licence. which the case-law of the Court of The Court of Justice has likewise Justice has already recognized that recognized that in the absence of reliance on the national protection of the concerted action between undertakings trade-mark is permitted and justified by products originating from proprietors Article 36 of the Treaty; case-law between whom there is no legal, financial, technical or economic link restricting further the scope of this provision would give rise to serious and may be sold in the same territory on the insurmountable objections. ground that the trade-marks covering them had the same origin; this doctrine It is right therefore to reply in the however cannot be extended to the case affirmative to the question put by the of trade-marks which have been Bundesgerichtshof. independent from the beginning. There

JUDGMENT OF 22. 6. 1976 - CASE 119/75

To deprive the identification' of products or services individual proprietor of the trade-mark of competing on the market to enable the the right to prevent the import of public to recognize the products and to products originating from an undertaking trace the qualities or defects to the with which he has no legal or economic undertaking from which they come. For link and which have been lawfully the trade-mark to play its part among provided in another Member State with these means of identification it is an identical trade-mark or a trade-mark essential for the law to guarantee to the capable of giving rise to confusion would public that only those products very seriously jeopardize the function of originating from the proprietor of the distinguishing, that is to say the very trade-mark should be sold under such raison d'être of the trade-mark right.

the commercial name. guarantees proprietors of a trade-mark but also serious disturbance in the The question put by the Bundes functioning of the market. gerichtshof should therefore be answered in the affirmative. The requirements of legal certainty, the protection of the public and natural The Government of the Federal Republic justice make it necessary to maintain the of Germany stresses that the question of right of the proprietor to take action risk of confusion is not the subject of the against those who infringe his reference for a preliminary ruling made trade-marks. to the Court of Justice; moreoever it is

producers in the market. The protection of products marked by an undertaking which national laws afford the established in Member State B.

In any event the right given to the Nor does this power exceed the scope of undertaking established in Member State this right: it has regard to the principle A to prevent, in the circumstances of proportionality in respect of the referred to in the reference for a number of cases and their importance for preliminary ruling, the import of the law on the protection of trade-marks, products marked by undertaking B, from the point of view of the proprietor assuming that Article 30 can be applied of the right to the mark and from the to it, is justified within the meaning of point of view of consumers, in respect of Article 36 on grounds of the protection the duration of the protection granted of industrial and commercial property. and in respect of the harmonious economic development of the Com­ The principle of the free movement of munity; finally it is indispensable since goods, the achievement of which is the the same objective cannot be attained by reason for prohibition by Article 30 of other means which are less of a measures having an effect equivalent to hindrance to trade.

quantitative restrictions on imports, is certainly one of the fundamental It thus arises from the existence and the principles of the Treaty; the rights which specific objective of the right to the mark the national law of Member States and is as a result justified within the accords holders of industrial property meaning of the first sentence of Article rights are however compatible with this 36 of the Treaty on grounds of the principle in so far as they relate to 'the protection of industrial and commercial existence' of these rights and constitute property; nor does it constitute a means 'the specific object' of them. In the of arbitrary discrimination or a disguised

prevail over a radical measure which would affect the existence of national As regards the content of the trade-mark rights. right the problem from the legal point of view is whether the trade-mark right In its reply the Court of Justice should involves the right of preventing any use not go beyond the assessment of the facts of the trade-mark in the territory in and questions of law by the question and in particular the putting Bundesgerichtshof to which the into circulation of the marked product or following reply might be given. whether it is limited to the right to prevent the application of the trade-mark The provisions on the free movement of in that territory. The Court of Justice has goods (Articles 30 and 36 of the EEC already recognized that the use of the Treaty) must be interpreted as meaning trade-mark right does not necessarily that an undertaking established in constitute a disguised restriction to free Member State A, by using its commercial movement; this interpretation must be name and trade-mark rights existing maintained subject to the query whether there, may prevent the import of similar this title must exist in the country where goods coming from an undertaking the trade-mark has been applied or in established in Member State B if those that where the product so-marked has goods have been lawfully provided in been put into circulation. The first Member State B with a name to which, interpretation cannot be accepted: to although the undertaking established in exclude from this scope of infringement State B is the proprietor of the the import of a product to which a trade-mark or commercial name, trade-mark has been lawfully applied nevertheless is capable of giving rise to abroad, but without the consent of the confusion in Member State A with the proprietor of the trade-mark in the

undermining the competitive function of The Government of Ireland takes the the trade-mark and its function as a view that the question referred to the guarantee to the consumer. Court should be answered as follows:

The interests of the unity of the common 'It is compatible with the provisions market could prevail and the relating to the free movement of goods co-existence of trade-marks be (Articles 30 and 36 of the EEC Treaty) recognized if their proprietor is one and that an undertaking established in the same or if there are between different Member State A, by using its commercial proprietors an economic link of such a name and trade-mark rights existing kind as to permit proper control of the there, should prevent the import of characteristics of the product. In the similar goods of an undertaking absence of such a link free movement is established in Member State B if these likely to harm industrialists and traders goods have been lawfully given a for whom the trade-mark is a means for distinguishing name which may be penetrating the markets and also to confused with the commercial name and bewilder consumers. trade-mark which are protected in State A for the undertaking established there, To hold that the lawful application of a if there are no relations between the two trade-mark in one of the countries of the undertakings, if their national trade-mark Community would stultify an action for rights arose autonomously and infringement in the others would lead in independently of one another (no practice to the destruction of trade-mark common origin) and at the present time law. Such a system would encourage there exist no economic or legal relations fraud both within the common market of any kind other than those and without; if the trade-mark no longer appertaining to trade-marks between the conferred satisfactory protection it would undertakings. lead to progressive disenchantment and to recourse to the simple protection of The legislation of Member States relating the action for unfair competition (passing to the rights of proprietors of

trade-marks has as its purpose not merely The essence of the exclusive right to a the creation of rights in relation to trade-mark is according to the case-law trade-marks but also the protection of of the Court the fact that the trade-mark the public. This end has been achieved shows the origin of the product so that by granting exclusive rights to the proprietor is in a position to protect trade-mark proprietors and prohibiting against third persons the economic the use of trade-marks likely to deceive position which he has achieved by reason or cause confusion.

is used. In the present case the exercise has given to Article 36, the rules on the of trade-mark rights by Terranova does free movement of goods do not prevent this. not in any way restrict Terrapin from importing into the Federal Republic of Germany prefabricated buildings, but To accord absolute priority to the unity only from using the word Terrapin' in of the market would unwarrantably relation to them. prejudice the interests of proprietors of trade-marks and consumers, which would not be a reasonable way of achieving the The facts of the present case do not free movement of goods and the unity of disclose abuse of rights recognized by the the market. On the contrary, the Treaty, or any acts contrary to the foreseeable result of adopting such a objectives of the Treaty. On the other tenet would be to distort competition hand an answer to the question raised and mislead the public. which would restrict the exercise of Terranova's rights would be contrary to The exercise of trade-mark rights could those objects.

The

The question whether two given It is equally in the public interest that Member States should remain entitled to trade-marks are confusable in Germany is a matter which can only be decided by exercise full control over corporate and the German courts. The question of business names, and that entreprises discrimination or disguised restriction should retain the ability to take action at within the meaning of the last sentence civil law against other enterprises which of Article 36 can arise only if the pass themselves off as having their legal German law is inherently discriminatory identity. These rights are necessary and against non-German nationals, an issue wholly compatible with Articles 30 and which has not been raised in this 36. The only restraints on the public law reference to the Court of Justice. powers and rights should be that they are exercised without discrimination on

The Commission of the European trade-marks. This applies not so much Communities after referring to the facts the principle of priority as that of 'honest in the main action, the basic points of concurrent use' which in certain the question put by the Bundes circumstances allows the co-existence gerichtshof, the relevant provisions of within the same legal system of German law on trade-marks and trade-marks which are identical or give company names and the case-law of the rise to confusion. Court of Justice regarding industrial and commercial property rights, stresses that However, the existence of such a rule, Article 36 of the Treaty, in so far as it uniformly applied in a national legal derogates from the prohibition on system, is one thing; to make it quantitative restrictions on imports and obligatory in nine different national legal measures having equivalent effect systems by means of Community law is contained in Article 30, allows only such another. restrictions on the free movement of goods as are justified by the protection of To settle the question raised by the order the rights which constitute the specific of reference it is necessary to refer to object of commercial and industrial Article 36 of the Treaty.

When this function of the trade-mark is not The principle of the unity of the prejudiced or when the circumstances common market is fully vindicated if prevent its being ensured, the Court proprietors of trade-marks which are logically refuses to take into account the identical or capable of being confused argument on the territorial nature of the but which do not have the same origin protection and asserts the precedence of are denied the power of prohibiting the the principle of free movement of goods. import of products legally bearing the contested mark in another Member State. In the light of this case-law it is In this case the limitation of national necessary to answer affirmatively the rights to the trade-mark is compensated question whether Article 36 justifices the by the extension of the economic scope imposition, to protect the specific made available to proprietors of objective of a trade-mark, of a restriction trade-marks which are identical or give on the free movement of goods when the rise to confusion. proprietor of a trade-mark not having the same origin claims to prevent the import An example of this type of solution is from another Member State of goods to offered by the British law on which in such State a trade-mark capable

of being confused with its own trademark In any event the right to the trade-mark has been lawfully applied. In such a and the right to the company name are situtation the conditions which have led exclusive rights having largely the Court in previous judgments not to comparable protective functions. The apply the derogation in Article 36 are national provisions on the protection of not fulfilled. It is right and necessary to commercial names or rights to the accord decisive importance to the company name are subject to the same function of distinction and indication of criteria of assessment as those which the origin which constitutes the specific Court has laid down in respect of other objective of the trade-mark. Proprietors industrial and commercial property of trade-marks giving rise to confusion rights and in particular the trade-mark would be justified in observing that they right. Since the problem is to determine have built up quite independently the whether the restriction on free clientele interested in the products movement of goods is justified by the bearing their trade-mark; consumers for need to guarantee the existence or the their part are entitled not to be misled as specific objective of the exclusive right, to the origin of the goods. These and since rights as close to one another interests, directly associated with the as the right to the company name and function of the trade-mark, should the trade-mark right are involved, such prevail over the interests of the assessment can only lead to a uniform Community in the free movement of conclusion when the trade-marks, as in

exist side by side. This fact emphasizes particular that the products manufactured the necessity of creating a trade-mark law and marketed by the parties to the main valid for the whole of the common action are similar and that their company market. names and their trade-marks 'Terra' and 'Terranova' on the one hand and The Court has likewise to answer the Terrapin' on the other give rise to question whether having regard to the confusion. The question arises whether circumstances of the case the provisions this concept is in fact in accord with of the Treaty on the free movement of Community law; in particular grave goods prevent the exercise of rights reservations must be expressed to the pertaining to the company name. notion that the principles of the right to a trade-mark and the right to a company The action of Terranova based on its name in relation to risks of confusion rights to its company name is important and similarity of products are defined of itself only if the provisions on the free exclusively in terms of the laws of movement of goods prevent the exercise Member States. The risk of confusion of its right to the trade-mark; since in and similarity of products are the view of the Commission this is not fundamental concepts involved in the so consideration of the action based on right to a trade-mark and the right to a the right to the company name does not company name; they are the very essence appear necessary. of such rights.

JUDGMENT OF 22. 6. 1976 - CASE 119/75

Community law. There can be no always obtain or do so to a lesser extent. question of applying without reservation national laws which might differ Community law for its part protects considerably inter se: this would be rights to trade-marks and to company failing to guarantee rights protected in names in so far as their specific objective accordance with the objectives and legal requires it; there is nothing to say that principles of the common market and such wide protection as that provided by hazarding the uniform application of German law is essential in this respect.

It is true that it is not for the Court to consider whether company names or It is right therefore to reply to the trade-marks must or must not be question raised by the Bundesgerichtshof regarded in practice as causing confusion to the effect that the provisions of the but it must define the principles EEC Treaty on the free movement of governing such consideration. goods (Articles 30 and 36) do not prevent the exercise of the right to the In this context it is necessary to consider trade-mark and the right to the company that the question whether trade-mark name in the case the facts of which the rights give rise to confusion or relate to Bundesgerichtshof has set out; it is similar products acquires a new however appropriate to observe that the dimension at the Community level.

trade-mark rights. rights.

2 It appears from the order of reference that the plaintiff in the main action, the respondent to the appeal, is the proprietor in the Federal Republic of Germany of the trade-marks 'Terra', 'Terra Fabrikate' and 'Terranova', registered at the German patents office, the last of these names being simultaneously used as a commercial name. The plaintiff manufactures and markets finished plaster for façades and other construction materials under these names. The defendant in the main action and appellant in the appeal is an English company specializing in the production of prefabricated houses

JUDGMENT OF 22. 6. 1976 - CASE 119/75

4 Although this finding has been questioned during the oral procedure the Court does not have to rule on this point since no question has been put to it with regard to the matter. It is right however to stress that the answer given below does not prejudge the question whether an allegation by one undertaking as to the similarity of products originating in different Member States and the risk of confusion of trade-marks or commercial names legally protected in these States may perhaps involve the application of Community law with regard in particular to the second sentence of Article 36 of the Treaty. It is for the court of first instance, after considering the similarity of the products and the risk of confusion, to enquire further in the context of this last provision whether the exercise in a particular case of industrial and commercial property rights may or may not constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States. It is for the national court in this respect to ascertain in particular whether the rights in question are in fact exercised by the proprietor with the same strictness whatever the national origin of any possible infringer.

TERRAPIN v TERRANOVA

6 It follows from the above that the proprietor of an industrial or commercial property right protected by the law of a Member State cannot rely on that law to prevent the importation of a product which has lawfully been marketed in another Member State by the proprietor himself or with his consent. It is the same when the right relied on is the result of the subdivision, either by voluntary act or as a result of public constraint, of a trade-mark right which originally belonged to one and the same proprietor. In these cases the basic function of the trade-mark to guarantee to consumers that the product has the same origin is already undermined by the subdivision of the original right. Even where the rights in question belong to different proprietors the protection given to industrial and commercial property by national law may not be relied on when the exercise of those rights is the purpose, the means or the result of an agreement prohibited by the Treaty. In all these cases the effect of invoking the territorial nature of national laws protecting industrial and commercial property is to legitimize the insulation of national markets without this partitioning within the common market being justified by the protection of a legitimate interest on the part of the proprietor of the trade-mark or business name.

7 On the other hand in the present state of Community law an industrial or commercial property right legally acquired in a Member State may legally be used to prevent under the first sentence of Article 36 of the Treaty the import of products marketed under a name giving rise to confusion where the rights in question have been acquired by different and independent proprietors under different national laws. If in such a case the principle of the free movement of goods were to prevail over the protection given by the respective national laws, the specific objective of industrial and commercial

On those grounds,

THE COURT

in answer to the questions referred to it by the Bundesgerichtshof by order of that court dated 31 October 1975, hereby rules:

It is compatible with the provisions of the EEC Treaty relating to the free movement of goods for an undertaking established in a Member State, by virtue of a right to a trade-mark and a right to

TERRAPIN v TERRANOVA

a commercial name which are protected by the legislation of that State, to prevent the importation of products of an undertaking established in another Member State and bearing by virtue of the legislation of that State a name giving rise to confusion with the trade-mark and commercial name of the first undertaking, provided that there are no agreements restricting competition and no legal or economic ties between the undertakings and that their respective rights have arisen independently of one another.

Mr President, or later confronted with this problem. Members of the Court, They have attempted to resolve it in different ways either by means of The problem caused by conflicts arising provisions of positive law or leaving it to from the co-existence within the the courts to do so. common market of the principle of free movement of goods with the territorial At the Community level work has been nature of the national tides protecting going on for some years to create a industrial and commercial property in 'European' system of patents and one or more Member States, and in trade-marks. This shows that the particular the trade-mark right, has establishment of such a system is appeared only gradually with the inseparable from the achievement of the interpenetration of markets. All the objectives of the Treaty. But unlike the authorities, anxious to abolish distortions concept of public policy and public so caused, have found themselves sooner health that of the protection of industrial

I — Translated from the French.