C-58/80

JUDGMENT OF 22. 1. 1981 — CASE 58/80

another Member State by the actual imported goods may be prohibited if proprietor of the right or with his the conditions on which they are sold consent. constitutes an infringement of the Hence judicial authorities of a marketing usages considered proper Member State may not prohibit, on and fair in the Member State of the basis of a copyright or of a trade importation. mark, the marketing on the territory However, the actual fact of the import- of that State of a product to which ation of goods which have been one of those rights applies if that lawfully marketed in another Member product has been lawfully marketed State cannot be considered as an on the territory of another Member improper or unfair act since that State by the proprietor of such rights description may be attached only to or with his consent. offer or exposure for sale on the basis of circumstances distinct from the 2. Community law does not in principle importation itself. have the effect of preventing the application in a Member State to 3. It is impossible in any circumstances goods imported from other Member for agreements between individuals States of the provisions on marketing to derogate from the mandatory in force in the State of importation. It provisions of the Treaty on the free follows that the marketing of movement of goods.

In Case 58/80

REFERENCE to the Court under Article 177 of the EEC Treaty by the Højesteret [Supreme Court of Denmark], for a preliminary ruling in the action pending before that court between

DANSK SUPERMARKED A / S , having its registered office in Århus,

Advocate General: F. Capotorti Registrar: H. A. Rühl, Principal Administrator

gives the following

JUDGMENT

Facts and Issues

The facts of the case, the course of and crown including the date, 1978, and the procedure and the observations the words "Imerco Fiftieth Anniversary". submitted under Article 20 of the Protocol on the Statute on the Court of The motifs were selected and suggested Justice of the EEC may be summarized by Imerco which provided Broadhurst as follows: with photographs and engravings of Danish castles; the final designs were carried out by Broadhurst on the basis of those illustrations. I — Facts and written procedure Imerco had intended that these services should be marketed, in Denmark, solely by its shareholders and had provided A/S Imerco, a Danish limited company publicity for it on a very large scale. whose shareholders are hardware merchants and also its customers, Imerco prescribed for Broadhurst very operates as a wholesale hardware stringent quality standards in the manu- merchant and has its registered office facture of the services; as a result at the in Glostrup, Copenhagen. Imerco end of the production-run there were celebrated its 50th anniversary in 1978 approximately 1 000 odd lots of sub- and in this connexion ordered from standard services which could not be James Broadhurst & Sons Ltd, a china accepted. In order to prevent the manufacturer established in the United marketing of such services in Denmark Kingdom, a number of china services Imerco agreed with Broadhurst that the decorated with Danish castles and latter might sell them itself but not in the bearing on the reverse side an inscription Scandinavian countries. Broadhurst in

In the judgment of the Sø- og Handels- By an order of 14 February 1978 the ret it was declared that the actions of Højesteret stayed the proceedings and Dansk Supermarked were in breach of under Article 177 of the EEC Treaty the Danish Law No 297 of 14 June 1974 requested the Court of Justice to deliver on marketing, and in particular Articles 1 a preliminary ruling on the following and 5 thereof, which provide as follows: question : — Do the provisions of the EEC Treaty — Article 1: The Law shall apply to or measures in implementation industrial and commercial trans- thereof preclude the application to actions in the private sector and to the case of the Danish laws on comparable transactions in the public copyright, trade marks and sector. In such transactions no marketing? conduct shall be permitted which is contrary to approved marketing usage. The order of the Højesteret was received at the Court Registry on 18 February 1980. — Article 5: Traders shall not employ commercial identification marks or In accordance with Article 20 of the other distinctive signs which do not Protocol on the Statute of the Court of belong to them or employ their own Justice of the EEC written observations distinctive signs in such a way as to were lodged on 27 March 1980 by cause confusion with the marks of Dansk Supermarked A/S, the appellant other undertakings. in the main action, represented by

DANSK SUPERMARKED v IMERCO

JUDGMENT OF 22. 1. 1981 — CASE 58/80

DANSK SUPERMARKED v IMERCO

consent of the author. The case-law of consent is impossible within the the Court of Justice makes it quite clear Community just as it is impossible within that it is impossible to rely upon trade a Member State. marks, patents or exclusive rights to sound recordings in order to prohibit the marketing in one Member State of products sold in another Member State with the consent of the proprietor of the right. That case-law, which draws a (c) Even if it were assumed for the sake distinction between the existence and the of argument that the application of the exercise of the right, is based chiefly on name of the undertaking "Imerco" to the principle that the lawful distribution the pieces of the substandard services of tne protected product leads to the could be considered as constituting a exhaustion of the entitlement to exercise trade mark of that undertaking it would the right of industrial and commercial have to be stated that Article 36 of the property in the products distributed EEC Treaty does not permit a trade mark within the common market. A product to be used to prevent the importation of lawfully placed on the market in one products marketed in another Member Member State is considered to be offered State with the consent of the proprietor for sale in all Member States. of the mark; this conclusion is established clearly by the case-law of the Court.

JUDGMENT OF 22. 1. 1981 — CASE 58/80

not permitted to rely on his trade mark of goods which have been lawfully to prevent the free movement of one or placed on the market in another Member other quality within the Community. State. That is particularly true in this case since differences in quality are by no means unusual in the production of china services. It is irrelevant that the seller is thus able to benefit from the publicity campaign of the other undertaking; such a situation is by no means unusual. The purpose of Article 5 of the Danish Law is rather to (d) The concept of "protection of protect the commercial reputation of a industrial and commercial property" competitor. In this connexion it must be appearing in Article 36 of the Treaty stated that the marketing of the sub- may be interpreted as covering measures standard services does not harm Imerco's intended to prevent practices involving reputation: Imerco itself permitted the unfair competition. Prohibitions or sale of the substandard services in the restrictions based on the rules relating to United Kingdom and generally speaking unfair competition must however be the marketing of a substandard service is "justified" within the meaning of that not liable to harm the good name of the provision, that is to say they must be producer. necessary to protect the commer- cial activity in question. The specific objective in preventing unfair compe- tition is to protect competitors against The desire to avoid the competition of unfair practices and to shield consumers another trader who is capable of from fraud. It is necessary to have regard attracting customers and diverting them to that specific objective but the extent of from the undertakings which are the protection must remain so far as members of Imerco does not come possible compatible with the require- within the specific objective of the ments of the free movement of goods; provisions intended to prevent unfair furthermore the measure must not competition. constitute a means of arbitrary discrim- ination or a disguised restriction on trade between Member States. The Community provisions on competition

(b) It is for the national court to assess State; Article 3 (b) does not permit an whether the question of the validity in exemption by category where, as in this relation to Article 85 of the Treaty of the case, the contracting parties make it agreement between Broadhurst and difficult for intermediaries or consumers Imerco has any effect as regards an to obtain the goods to which the appraisal of the conduct of Dansk Super- contract relates from other dealers within marked. the common market. The agreement in question accordingly cannot qualify for the exemption laid down in Article 1 (1) The contract between Imerco and of Regulation No 67/67. Broadhurst does not constitute an exclusive distribution agreement; in any case it is for the national court to settle the validity of that agreement. In this Conclusions connexion it must be stated that an agreement containing a prohibition on exports is caught by Article 85 (1) of the The following answer should be given to Treaty if it contains an appreciable the question submitted by the Højesteret: restriction of competition and is capable of producing an appreciable effect on trade between Member States; in order to decide whether this is so it is It is incompatible with the provisions of necessary to place the agreement within the EEC Treaty on the free movement of its true context and to take into goods (Article 30 et seq.) for an under- consideration all matters of fact and of taking, in reliance on copyright, the right law; in particular it is necessary to to a trade mark or the provisions relating appraise the position which the parties to to marketing, to be able to prevent in the agreement enjoy on the market in one Member State the marketing of question, the nature and quantity of the goods which have been placed on the products concerned and the number of market with its consent in another parties to, and the economic and legal Member State. context of, the agreement.

Dansk Supermarked claimed in particular The Commission expressed the view that that the rules of the Treaty on the free the conditions for a lawful derogation movement of goods within the common from the prohibition of quantitative market precluded the application of the restrictions contained in Article 30 of the Danish legislation on copyright, trade Treaty were not fulfilled in the main marks and marketing and that Imerco action. had been unable to advance any grounds sufficient to justify a derogation from The Danish Government remarked that it those rules. was impossible for goods which have been imported in parallel to be accorded on the Danish market a position more Imerco on the other contended that the favourable than that of domestic goods application of the principle of the free with regard to compliance with the movement of goods was not necessarily requirements of the law on marketing; incompatible with certain provisions of furthermore a requirement that certain national law, in particular those against goods, in particular substandard goods, unfair competition; the reply or the should be marked in a specified way Court to the question submitted should need not necessarily be considered as a be that the provisions of the EEC Treaty quantitative restriction on imports or a and the measures in implementation measure having an equivalent effect. thereof do not preclude the application These two problems in essence fall of the national laws on copyright, trade within the jurisdiction of the national marks and marketing since such court. application does not always entail The Advocate General delivered his infringements of the provisions of the opinion at the sitting on 20 November Treaty on the free movement of goods. 1980.

4 Dansk Supermarked refused to withdraw the services from sale despite the protests of Imerco and the latter then instituted proceedings before the Byret [court of first instance] Århus and obtained a provisional injunction dated 22 June 1978 prohibiting Dansk Supermarked from selling the services in question.

5 By a judgment of 19 March 1979 the Sø- og Handelsret i København, [Maritime and Commercial Court, Copenhagen] upheld that injunction, considering that Dansk Supermarked's actions were in breach of approved commercial usage and infringed Articles 1 and 5 of Law No 297 of 14 June 1974 on marketing (Lov om Markedsføring). The court did not consider it necessary to decide whether there had been any infringement of the national provisions on copyright and trade marks as was further contended by Imerco. With regard to the provisions of Community law, namely Articles 30 and 85 of the EEC Treaty and Regulation (EEC) No 67/67 of the Commission of 22 March 1967 (Official Journal, English Special Edition 1967, p. 10), upon which Dansk Supermarked relied in its defence, the court

JUDGMENT OF 22. 1. 1981 — CASE 58/80

did not take them into consideration since it took the view that the injunction against Dansk Supermarked was not of such a nature as to constitute an obstacle to the free movement of goods between Member States of the Community.

6 Dansk Supermarked appealed against that judgment to the Højesteret claiming that the said provisions of Community law precluded the application of the Danish law on marketing under which the Sø- og Han- delsret had prohibited the marketing of the services in question. In order to settle this point the Højesteret submitted the following question to the Court of Justice :

The legislation on the protection of copyright and trade marks

10 The national provisions on the protection of copyright and trade marks have been relied upon by Imerco on the basis on the one hand of the creative work entailed by the design and production of the service and on the other of the affixing of its name to that service.

1 1 In this matter it is sufficient to refer to the settled case-law of the Court as it has been set out in particular in the judgment of 22 June 1976 (Terrapin (Overseas) Ltd, Case 119/75 [1976] ECR 1039). It may be recalled that the effect of the provisions of the Treaty on the free movement of goods and in particular of Article 39, is to prohibit between Member States quantitative restrictions on imports and all measures having equivalent effect. However, according to Article 36 that provision does not preclude prohibitions or restrictions on imports justified on grounds of the protection of industrial and commercial property. Nevertheless it is clear from that article, in particular the second sentence, as well as from 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 those rights may none the less, depending on the circumstances, be restricted by the prohibitions of the Treaty. Inasmuch as it provides an exception to one of the fundamental principles of the common market, Article 36 in fact admits exceptions to the free movement of goods only to the extent to which such exceptions are justified for the purpose of safe- guarding rights which constitute the specific subject-matter of that property. The exclusive right guaranteed by the legislation on industrial and commercial property is exhausted when a product has been lawfully distributed on the market in another Member State by the actual proprietor of the right or with his consent.

15 In order to reply to that question it must first of all be remarked that Community law does not in principle have the effect of preventing the application in a Member State to goods imported from other Member States of the provisions on marketing in force in the State of importation. It follows that the marketing of imported goods may be prohibited if the conditions on which they are sold constitutes an infringement of the marketing usages considered proper and fair in the Member State of importation.

DANSK SUPERMARKED v IMERCO

16 It must nevertheless be emphasized, as the Court of Justice has stressed in another context in its judgment of 25 November 1971 (Béguelin, Case 22/71, [1971] ECR 949), that the actual fact of the importation of goods which have been lawfully marketed in another Member State cannot be considered as an improper or unfair act since that description may be attached only to offer or exposure for sale on the basis of circumstances distinct from the importation itself.

17 It must furthermore be remarked that it is impossible in any circumstances for agreements between individuals to derogate from the mandatory provisions of the Treaty on the free movement of goods. It follows that an agreement involving a prohibition on the importation into a Member State of goods lawfully marketed in another Member State may not be relied upon or taken into consideration in order to classify the marketing of such goods as an improper or unfair commercial practice.

18 The second part of the reply to the question submitted must thus be that Article 30 of the Treaty must be interpreted as meaning:

THE COURT (Second Chamber),

in answer to the question referred to it by the Højesteret by order of that court dated 14 February 1980, herebyrules:

1. Articles 30 and 36 of the EEC Treaty must be interpreted to mean that the judicial authorities of a Member State may not prohibit, on the basis of a copyright or of a trade mark, the marketing on the territory of that State of a product to which one of those rights applies if that product has been lawfully marketed on the territory of another Member State by the proprietor of such rights or with his consent.

2. Article 30 of the EEC Treaty must be interpreted as meaning:

That the importation into a Member State of goods lawfully marketed in another Member State cannot as such be classified as an improper or unfair commercial practice, without prejudice however to the possible application of legislation of the State of importation against such practices on the ground of the circumstances or methods of offering such goods for sale as distinct from the actual fact of importation; and

DANSK SUPERMARKED v IMERCO

Mr President, is an organization for the wholesale Members of the Court, purchase of hardware goods whose shareholders retail such goods through- out Denmark, ordered a number of 1. The Court of Justice has had many china services from a Britsh manu- occasions on which to deliver rulings facturer, Broadhurst. The services in regarding the limits within which qiuestion were intended to mark the exceptions to the principle of the free lftieth anniversary of Imerco and they movement of goods may be made on the were accordingly to be decorated in basis of industrial or intellectual property conformity with the instructions and rights or through the need to curb patterns supplied by that company and to practices involving unfair competition. include on the reverse side inter alia the The principal issue which this case raises words "Imerco Fiftieth Anniversary". is of that kind even although the case Imerco intended to sell those products in p resents another aspect which arises rom the Community rules protecting Denmark exclusively through its own members. However, since about 1 000 freedom of competition. services were not fully in accordance with the stringent quality standards laid First of all I shall summarize the facts. In down by it, Imerco permitted the manu- 1978 a Danish company, Imerco, which facturer to market those services in the

1 — Translated from the Italian.