C-9/93

IHT INTERNATIONALE HEIZTECHNIK v IDEAL STANDARD

OPINION OF ADVOCATE GENERAL GULMANN delivered on 9 February 1994 *

Mr President, marketing of sanitary ware and heating Members of the Court, installations. Part of the production of heat­ ing installations was concentrated in France, whence they were exported to the rest of Europe, particularly to Italy and Spain. In 1975-76 the group encountered economic difficulties in the field of heating installations and it was therefore decided to terminate the 1. The Oberlandesgericht Düsseldorf has group's operations in that sector. These oper­ referred to the Court for a preliminary rul­ ations have not subsequently been resumed. ing the question whether Articles 30 and 36 of the EEC Treaty (now the EC Treaty) pre­ vent the proprietor of a trade mark in a Member State from opposing the importa­ tion from another Member State of goods bearing an identical trade mark where the importation is effected by a subsidiary com­ 3. American Standard's German subsidiary pany of the proprietor of the identical trade Ideal-Standard GmbH has since 1951 been mark in the other Member State and where using the trade name 'Ideal Standard' and is the said proprietor has acquired the trade the proprietor of the German trade mark mark by agreement from a company affili­ 'Ideal Standard' which in 1976 was registered ated to the undertaking opposing the impor­ with priority as from 1972 for heating instal­ tation. lations and sanitary ware inter alia. In accor­ dance with the decision taken within the group Ideal-Standard GmbH has since 1976 traded in sanitary ware only.

Nouvelle Ideal Standard, owned by the an action for infringement of trade mark Société Générale de Fonderie (hereinafter 5 against IHT claiming an order forbidding referred to as 'SGF') and the de Dietrich IHT from marketing in Germany heating company and from 1979 by SGF alone. The installations under the trade mark 'Ideal management agreement was terminated in Standard'and from using that description in 1980. However, SGF wished to continue advertisements, price-lists and the like. The operations in the heating installation sector Landgericht Düsseldorf found for Ideal- and to market the products in question Standard GmbH . An appeal was entered under the trade mark 'Ideal Standard'. For against that judgment before the Oberlan­ that reason Ideal-Standard SA, by agreement desgericht Düsseldorf, which has referred the of 6 July 1984, assigned its production facil­ following question to the Court for a pre­ ities in the heating installation sector and its liminary ruling: trade mark for such installations to SGF. 1 SGF is part of the French group Nord Est and subsequently assigned the trade mark to another company within the group, namely Compagnie Internationale du Chauffage 2 (hereinafter referred to as 'CICh'). Ideal- Standard SA still owns the trade mark for sanitary ware.

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B — Summary of the most important ques- whilst Ideal-Standard GmbH and the Ger­ tions raised by the case man and United Kingdom Governments contend that that of commercial and indus­ trial rights must carry most weight.

6. The parties to the main proceedings, the United Kingdom and German Governments and the Commission submitted observations 9. In the observations submitted, the point in the case. of departure is taken as the judgment of the 6 Court in Case C-10/89 HAG II, in which the Court interpreted Articles 30 and 36 of the Treaty in a situation in which a trade­ mark right was divided amongst various pro­ prietors following expropriation. There the balance between the two conflicting interests came down in favour of protection of indus­ 7. In the observations submitted to the trial and commercial property rights. The Court it is assumed that the provision in Court decided that in such a situation any German trade-mark law authorizing prohibi­ proprietor of a trade mark could oppose the tion of marketing of goods is a provision importation, into a Member State in which covered by Article 30 of the Treaty, which he owned the trade mark, of goods produced prohibits quantitative restrictions on exports by the other proprietor. In doing so the and measures having equivalent effect in Court modified the decision it had given in trade between Member States, and that the the judgment in Case 192/73 HAG I. 7 decisive question is therefore whether that provision can be justified by reference to Article 36 of the Treaty, which lists a series of grounds on which such prohibitions and restrictions may be justified, including that of industrial and commercial property rights.

10. There are three main factors entailed in assignment, which concerns the direct rela­ forming an opinion on the question referred tionship between an assignor and an to the Court. In the first place that of the assignee, as to which see Section H . My sur­ importance to be attached to the assignor's vey of the case-law of the Court in Section consent to the assignee's marketing his prod­ D will show that the Court has hitherto ucts under the trade mark assigned, in the decided such questions on the basis of Art­ second place the importance of the specific icle 85 of the Treaty, which prohibits all subject-matter of the trade mark regarded in agreements between undertakings which the light of its essential function, and in the may affect trade between Member States and third place the importance to be attached to which have as their object or effect the pre­ the fact that the legal relationship between vention, restriction or distortion of competi­ the two parties is also covered, at least tion within the common market. potentially, by Article 85 of the Treaty. In addition it will be necessary to form an opin­ ion on a series of other questions.

The observations submitted to the Court all agree that Article 85 of the Treaty may, I have decided to give my Opinion the fol­ according to the circumstances, be applicable lowing structure. to an agreement for the assignment of a trade mark. However, no doubts are expressed in the observations that Articles 30 and 36 of the Treaty are also applicable in the direct relationship between an assignor and an assignee. That point of view also forms the 11. It is necessary, for two reasons, to con­ basis of the wording of the question, which sider whether Articles 30 and 36 of the relates only to Articles 30 and 36 of the Treaty are applicable at all. Treaty, by the court of reference.

14. My survey of the case-law of the Court in Section D will lead me to consider whether the principles established by the It will emerge that there is some difficulty in Court as regards common origin and exhaus­ striking a balance. If it is lawful under the tion contain the solution to the problem Treaty to bring about a situation in relation raised here. As will be seen from Sections E to assignments of trade marks in which the and F, that cannot be accepted. parties, by means of actions for infringement of trade marks, may prevent the importation into their respective areas of goods lawfully produced and marketed under the trade mark by the other party, that will introduce a serious obstacle to free movement of goods and with it a partitioning of the internal mar­ 15. Instead, an answer to the question ket. If such a prohibition of importation is referred to the Court will depend on a bal­ contrary to the Treaty, a proprietor of paral­ ancing of basic considerations against one lel trade marks in several Member States who another. Before forming a view with regard wishes to undertake a separate assignment to such a balance I thought it appropriate on for certain Member States must accept that the one hand to give an account of the basic that will seriously affect the trade mark's features of trade-mark law, in Section G, and capacity to guarantee to consumers that the on the other hand to consider the signific­ goods have been produced under the control ance of the fact that in France the trade of a single undertaking with responsibility mark was assigned, not by Ideal-Standard for the quality of the product. GmbH , which wishes to oppose importation into Germany, but by that company's affili­ ated French company (see Section H ).

It is primarily a matter of a series of circum­ stances concerning the conduct of the Amer­ ican Standard group, namely that the group does not itself produce heating installations, that in France the group has made a partial 20. The Council issued a first direc­ assignment of the trade mark and thereby tive, 89/104/EEC of 21 December 1988 to accepted that an assignee may use the mark approximate the laws of the Member States 9 for heating installations at the same time as relating to trade marks. The directive does the group's use of the mark for sanitary ware not undertake full-scale approximation of and that the group, according to IHT, has the laws of the Member States, but is limited accepted that SGF and subsequently CICh to those national provisions which most have marketed heating installations in other directly affect the functioning of the internal 10 Member States for a number of years (see market. The directive was to be imple­ Section N , point a). mented by the Member States only by 31 1 December 1992 1and is therefore not appli­ cable ratione temporis to the circumstances of 12 this case. The Council has also adopted Regulation (EC) No 40/94 of 20 Decem­ 13 ber 1993 on the Community trade mark. As the regulation was issued only after the procedure before the Court in this case, the

8 — See inter alia the judgment in Case 35/87 Thetford and It has further been claimed that a prohibition Another v Fiamma and Others [1988] ECR 3585. of importation may conflict with Articles 30 9 — OJ 1989 L 40, p. 1.

and 36 of the Treaty simply because sanitary 10 — See the third recital to the directive. 11 — See Council decision of 19 December 1991, OJ 1992 L 6 ware and heating installations are not like p. 35. products such as may give rise to confusion 12 — Cf. the judgment of the Court in Case C-317/91 Deutsche Renault [1993] ECR I-6227 at paragraph 14. (see Section N , point b). 13 — OJ 1994 L 11, p . 1.

23. The German Government put forward similar arguments in its observations to the 21. The German Government contends that Court in the HAG II case, and in his Opin­ it is possible to decide this case on the basis ion Advocate General Jacobs expressed his 17 of the provisions of the trade mark directive. view on them. I can entirely agree with It relies in this respect on the purpose of the what he said there, which has been adopted provisions of Article 5(1) in conjunction in essentials by the Commission in this case: with Article 7. Article 7 of the directive is in line with the Court's case-law as regards exhaustion, but cannot be regarded as settling exhaustively the question of when the proprietor of a trade mark loses his exclusive right. Most of the conflicts between intellectual property rights are due not to discrepancies between 22. According to the government, Article 7 national laws but solely to the territoriality covers all the cases in which there is exhaus­ of national law. The directive in no way lim­ tion of the rights linked to trade marks, its that territoriality and accordingly does namely where the goods are marketed by the not solve the resultant problems. National 15 proprietor himself or with his consent. An laws which give the proprietor of a trade extension of the field of application of that mark the right to oppose importation from provision to cover also cases of assignment another Member State must therefore con­ would mean that the limits laid down in the tinue to be evaluated in the light of Art­ provision would be exceeded to such an icles 30 and 36 of the Treaty. That idea must extent that in practice it would be rendered

also have been behind the Court's reasoning, marks must be solved on the basis of when, in HAG II, it based its answer to the Articles 30 and 36 of the Treaty. question referred to it on its view with regard to the provisions of the Treaty.

D — The case-law of the Court

b. The regulation on the Community trade mark.

27. The following survey of the most impor­ tant judgments of the Court in the field of intellectual property rights will make it pos­ sible to place these problems in the correct 24. The Commission has stated that the reg­ context. The first is a distinction between ulation on the Community trade mark will cases in which an intellectual property right not solve problems which, like this one, are in a Member State is infringed by a parallel connected with the territorial nature of trade importation by an independent third party marks, since the regulation assumes that the and cases in which an intellectual property existing national trade marks will continue to right is infringed by direct sale by the pro­ exist side by side with the Community mark. prietor of the parallel right in another Mem­ ber State.

25. IHT has referred to the fact that a Com­ 28. In a series of cases the Court has given munity trade mark, according to Article 7 of its views on parallel imports effected by inde- the proposal for a regulation, now Article 8 pendent third persons; these are above all the of the regulation, will be excluded from reg­ judgments of the Court in Cases 78/70 istration when there are already correspond­ Deutsche Grammaphon, 18 which concerned ing national marks, unless there is a general a right similar to copyright, 15/74 Centra- agreement to relinquish the national mark farm v Sterling Drug, 19 relating to patents, and create a Community mark. According to 2 16/74 Centrafarm v Winthrop, 0 on trade IHT it must follow that proprietors of paral­ marks, and 144/81 Keurkoop v Nancy Kean lel national trade marks must avoid subdivi­ Gifts, 21 on models and designs. sion at national level.

to oppose parallel imports effected by an been put on the market in a Member State in independent third party is a measure covered which the intellectual property right in ques­ by Article 30 of the Treaty. The extent to tion does not enjoy corresponding protec­ which such a provision is lawful therefore tion (see the judgment of the Court in 22 depends on whether it is justified under Case 187/80 Merck v Stephar and Exler). Article 36 of the Treaty on grounds of the On the other hand there is no exhaustion protection of industrial and commercial simply because marketing in another Mem­ property. In its judgments the Court has bal­ ber State is lawful, where the marketing can­ anced considerations of free movement of not be ascribed to the proprietor of the trade goods against those of the protection of mark (see the Court's judgment in intellectual property rights by laying down Case 341/87 EMI Electrola v Patricia 23 the following two principles: Im- und Export).

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cific subject-matter of the industrial and exclusive parallel right in the same manner as commercial property. The judgment con­ when the rights have arisen independently of cerned trade marks and the Court declared one another. that the proprietor of a trade mark could legitimately oppose the importation of simi­ lar products when the products bore either a similar mark or one which could be mistaken 31 for it.

31 — See, as regards the interpretation of the conceptsof similar 33 — [1982] ECR 2015. That case concerned an agreement for goods and trade marks likely to lead to confusion, the judg­ assignment in respect of Germany of plant-breeders' rights ment in Case C-317/91 Deutsche Renault AG v Audi AG for certain products and the exclusive right to deal in such [1993] ECR I-6227. products in Germany. The Court found that an open exclu­ The proprietors of independent trade marks may choose to sive licence, that is, a licence concerning only the contrac­ enter into so-called'delimitation agreements' seeking to tual relationship between the proprietor and the licensee, delimit, in the mutual interests of the parties, the spheres regard being had to the specific nature of the products in within which their respective trade marks may be used so as question, was not in itself incompatible with Article 85(1) to avoid confusion or conflict. Such agreements may con­ of the Treaty. On the other hand, as regards exclusive flict with Article 85 of the Treaty in so far as they have the licences granting absolute territorial protection in favour of aim of dividing up the market or restricting competition in a licensee with a view to controlling and preventing parallel other ways (see judgment in Case 35/83BAT v Commission imports by third parties, the Court declared that in accor­ [1985] ECR 363). dance with its consistent case-law that was incompatible with Article 85 of the Treaty. 32 — [1985] ECR 2281.

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lawful inter partes to agree to territorial pro­ E — The principle of common origin tection.

42. That decision was confirmed in an obiter dictum in Case 119/75 Terrapin v Terranova. 40. As mentioned, the case before the Court The Court stated in that judgment that the belongs to the last-mentioned group of cases proprietor of an industrial or commercial and as may be seen this will be the first time property right cannot rely on that right to the Court has been called upon to deal with prevent the importation of a product which such a case on the basis of Articles 30 and 36 has lawfully been marketed in another Mem­ of the Treaty. I shall first of all consider ber State, '... when the right relied on is the whether the principles with regard to com­ result of the subdivision, either by voluntary mon origin and exhaustion hold the solution act or as a result of public constraint, of a to the question now referred to the Court. 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 34 — See in particular Commission Regulation (EEC) No the same origin is already undermined by the 2349/84 of 23 July 1984 on the application of Article 85(3) of the Treaty to certain categories of patent licensing agree­ subdivision of the original right' (my empha­ ments (OJ 1984 L 219, p . 15) and Commission Regulation (EEC) No 4087/88 on the application of Article 85(3) of sis). the Treaty to certain categories of franchise agreements (OJ 1988 L 359, p. 46). 35 — [1971] ECR 7. 36 — [1976] ECR 811. 37 — Agreements concluded between undertakings which, being owned by parent company and subsidiary, belong to the same group will not be covered by Article 85 in the event of the undertakings' forming an economic unit within which the subsidiary has no real freedom to determine its course of action on the market and where the agreements or practices are concerned merely with the internal allocation 43. As I mentioned, the Court's decision in of tasks as between the undertakings (see the judgments in Cases 15/74 Centrafarm v Sterling Drug [1974] ECR 1147 HAG I was amended by its decision in and 16/74 Centrafarm v Winthrop [1974] ECR 1183). HAG II, which was based on the same

In the first place the limited scope of the Court's answer in HAG II can scarcely be ascribed to anything other than a desire to restrict its decision to what was necessary in 39 the specific case before it. In the second place, as I mentioned, the Court's statement 44. As may be seen from the operative part in Terrapin v Terranova was merely an obiter of the judgments quoted, the Court formu­ dictum, inasmuch as the case concerned lated its ruling in HAG I as a general state­ trade-mark rights which had arisen indepen­ ment with regard to the situation in which dently of one another and may therefore be trade marks have the same origin, whilst in regarded as a subsequent attempt to justify HAG II it expressly restricted its decision to the decision in HAG I, which had been the case in which a trade mark has been sub­ 4 severely criticized. 0 In the third place the divided by expropriation. It may be added Court's arguments in HAG II amount in my that in HAG II the Court did not mention, view to saying that no importance can be much less expressly discuss, its declaration in attached to the fact, in itself, that trade marks Terrapin v Terranova, which linked the prin­ have a common origin.

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may be found that parallel trade marks have confusion, which are manufactured and mar­ a common origin. The common origin is not keted by an undertaking which is economi­ in itself an argument for a conclusion either cally and legally independent of the aforesaid way. A refusal to attach any importance to trade-mark proprietor' (paragraph 15). the principle of common origin in deciding a case does not however amount to saying that parallel rights which originally had the same proprietor but have afterwards been subdi­ vided must always be regarded as if they had been created independently of one another. A specific decision must be taken as to 47. In this case it is undisputed that between whether the rights have been subdivided in the companies in the American Standard such a way as to mean that they are subse­ Group on the one hand and SGF, CICh and quently to be treated as rights which have IHT on the other there is no form of eco­ arisen independently of one another. An nomic or legal dependence which extends assessment of the basic reasons which may beyond the contract of assignment itself and be put forward as arguments for possible might lead to exhaustion of the mark. solutions will be decisive.

48. The decisive factor for an application of F — The exhaustion principle the exhaustion principle is therefore whether a product is put on the market in another Member State with the consent of the trade­ mark proprietor.

50. IHT and the Commission contend that been brought into circulation in another assignment of a trade mark confers a consent Member State with the proprietor's consent, which has the effect of exhausting the exclu­ pre-supposes that there is consent for the sive right, but they describe the consent marketing of 'genuine' goods in the sense somewhat differently. IHT claims that there that they must be goods produced by the is mutual consent between the assignor and proprietor of the trade mark himself or the assignee to accept exportation from the under his control. The exhaustion principle other's territory. The Commission contends is not applicable in a situation in which that a contractual assignment is the expres­ trade-mark proprietors in various Member sion of indirect consent for goods provided States each market their own products and in with the mark assigned to be marketed both which there is no form of legal or economic 41 in the country concerned and in the rest of link between them. the Community. With consent to the assign­ ment, therefore, control over the goods is, according to IHT and the Commission, relinquished.

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assignment and the consent to marketing 55. Trade marks differ from other intellec­ implied thereby. tual property rights inter alia inasmuch as in principle they are unlimited in time. That was emphasized by the Court in HAG I in which it stated: '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 53. It is not impossible that in a situation in industrial and commercial property — it is which the subdivision of trade-mark rights not subject to limitations in point of time' has been voluntary, such special consider­ (paragraph 11). ations will apply as to justify reaching a dif­ ferent conclusion from that in HAG II. When the Court decided HAG II as it did, and thereby accepted serious restrictions to free movement of goods, that was because it was necessary in order to protect the specific a. The subject-matter and function of the subject-matter of the trade mark in the light rights of its essential function. The specific subject- matter and function of trade marks must therefore in this case too form the basis for deciding the case.

56. In its judgment in HAG II the Court repeated, clarified and developed its case-law with regard to trade marks,emphasizing the essential significance to be attached to the G — Trade-mark rights protection of trade marks for fair competi­ tion, without which an open market econ­ omy cannot operate. The Court declared that trade-mark rights 'are ... an essential element in the system of undistorted competition which the Treaty seeks to establish and maintain' (paragraph 13).

58. The most important of the general rights of the proprietor of a trade mark are his 'right to use that trade mark for the purpose of putting a product into circulation for the b. The assignability of trade marks first time'. By this means he receives protec­ tion 'against competitors wishing to take advantage of the status and reputation of the trade mark by selling products illegally bear­ ing that mark' (paragraph 14). That right constitutes the 'specific subject-matter' of the trade-mark right and its protection may therefore justify an encroachment upon free movement of goods. 60. The proprietor of a trade mark may inter alia make use of his exclusive right by trans­ ferring the use of the mark to a licensee. According to Article 8 of the trade mark directive, 'a trade mark may be licensed for 59. The Court further declared in HAG II some or all of the goods or services for that 'in order to determine the exact scope of which it is registered and for the whole or this right exclusively conferred on the owner of the trade mark, regard must be had to the essential function of the trade mark, which is to guarantee the identity of the origin of the 43 — This was expressed as follows by Advocate General Jacobs in his Opinion in HAG II: 'whereas patents reward the cre­ marked product to the consumer or ultimate ativity of the inventor and thus stimulate scientific progress, trade marks reward the manufacturer who consistently pro­ user by enabling him without any possibility duces high-quality goods and they thus stimulate economic of confusion to distinguish that product progress. Without trade-mark protection there would be littleincentive for manufacturers to develop new products from products which have another origin' or to maintain the quality of existing ones. Trade marks are able to achieve that effect because they act as a guarantee, to (paragraph 14). The capacity of the trade­ the consumer, that all goods bearing a particular mark have mark right to represent for consumers a link been produced by, or under control of, the same manufac­ turer and are therefore likely to be of similar quality... between origin and quality is sometimes A trade mark can only fulfil that role if it is exclusive. Once the proprietor is forced to share the mark with a competi­ described as a distinguishing function. The tor, he loses control over the goodwill associated with the application of the mark makes it possible for mark. The reputation of his own goods will be harmed if the competitor sells inferior goods. From the consumer's the proprietor to allow the consumer con­ point of view, equally undesirable consequences will ensue, because the clarity of the signal transmitted by the trade sciously to distinguish between his goods mark will be impaired. The consumer will be confused and misled.' (Paragraphs 18 and 19). and those of his competitors.

44 — See Article 17(1) of the regulation, which provides: 'A 64. Finally, in some countries a trade mark Community trade mark may be transferred, separately from any transfer of the undertaking, in respect of some or may be assigned only for all the goods for all of the goods or services for which it is registered.' which protection has been obtained. In other 45 — See Article 1(2) of the regulation, which provides: 'A Com­ munity trade mark shall have a unitary character. It shall countries there are no such restrictions and have equal effect throughout the Community: it shall not in yet others the right of partial assignment be registered, transferred or surrendered or be the subject of a decision revoking the rights of the proprietor or declar­ is restricted only in so far as it might result ing it invalid, nor shall its use be prohibited, save in respect of the whole Community. This principle shall apply unless in misleading the consumer. otherwise provided in this regulation.'

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ation here is that in France the trade mark words, make no difference that that transac­ was assigned not by Ideal-Standard GmbH , tion is not effected by the proprietor himself which is seeking to oppose importation into but by a company within the same group. Germany, but by the latter's French affiliate.

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geographical territory rely upon his trade­ compelled to share the market with a com­ mark rights as against products manufac­ petitor, but that is what he has consented to tured by the other proprietor. and he must bear the consequences of his choice. In such a situation it is not necessary, in order to protect the trade mark's essential function, to allocate a protected territory within the Community. 71. IHT claims that it would be an exagger­ ation of the importance of the function of the trade mark as a guarantee of the prod­ uct's origin and quality to accept that it con­ stitutes an obstruction to free movement of goods in the situation now before the Court. According to the Commission the consumer- IHT has stated that the primary purpose of a protection aspect is sufficiently safeguarded trade mark is to protect the proprietor even if the trade-mark proprietor loses his against competitors who may take wrongful exclusive right upon assignment. The Com­ advantage of his reputation, whilst the func­ mission argues, in the same way as IHT, that tion of a guarantee for consumers is rather the primary purpose of the trade-mark right the corollary of that purpose. The proprietor is not to protect consumers. It is meant of the mark may relinquish control of the rather to guarantee to the proprietor of the quality of the product, which is linked to the trade mark that the products bearing the guarantee function, for example in connec­ mark are manufactured under his control tion with the conclusion of a licence agree­ and that he is therefore responsible for their ment, which, according to IHT, frequently quality, which thus has consequences for happens in practice, or when a trade mark is consumers. That is demonstrated inter alia assigned without restriction. by the fact that the proprietor is free to choose whether or not to use his mark when he markets goods.

fil the function of guaranteeing that the means that the mark will no longer be able product has been manufactured under the to fulfil completely its distinguishing func­ control of one specific undertaking which tion. Thus that applies in connection with is responsible for the quality of the prod­ licence agreements. It follows from the uct, since goods produced either by the exhaustion principle that a licensor must assignor or by the assignee may be put accept that on his market he will have to on sale on the same market; compete with goods produced by the lic­ ensee and imported in parallel by third per­ sons. Ideal-Standard GmbH and the German and United Kingdom Governments stress that in such a situation the products are being marketed by an undertaking which is — that the proprietor of the mark has no subject to the trade-mark proprietor's con­ influence on what products the assignee trol. But exhaustion does not depend on puts on the market and may risk taking whether in the licence agreement the licensor the blame for poor quality of the goods has ensured that the licensee will maintain a for which he has no responsibility; given quality of the goods. The licensor's opportunity to lay down requirements as to quality is sufficient. If the licensor omits to lay down such requirements as to quality, he must take the consequences of his choice. It is not the distinguishing function as such — that consumers are no longer in a posi­ which is protected, but the trade-mark pro­ tion, without risk of confusion, to distin­ prietor's opportunity to preserve it. guish the goods from goods of different origin.

78. In a situation in which a trade mark has been subdivided as the result of an event on which the proprietor of the mark has had no influence, it is clear that the interests of the 81. If the Court were to decide that a conse­ proprietor carry great weight. It was possibly quence of a separate assignment of the mark in order to stress this point that the Court was that the proprietor lost his exclusive emphasized in HAG II the 'absence of any right, the trader concerned would have to consent on the part of the proprietor' to put­ consider whether that drawback could be ting similar products into circulation in offset by the consideration received. The another Member State (paragraph 15; my trade-mark proprietor would have to take 47 emphasis). account where necessary of the following consequences.

He would only to a limited extent be able to Member States in which it is protected. Such protect himself against the assignee's damag- a judgment will therefore de facto have the ing the reputation of the trade mark by sell­ effect of limiting his opportunities to assign ing products of an inferior quality, that is, to the mark. the extent to which he had the opportunity to exercise a form of control by his choice of the undertaking to which the mark was to be assigned and his opportunity to include in the contract of assignment conditions for 48 re-purchase. However, it cannot be 85. Against this background Ideal-Standard assumed that the assignor of the mark can, as GmbH and the German and United King­ the Commission claims, retain his control of dom Governments have advanced a series of the quality of the products by including in arguments based on the principle of the free the contract of assignment conditions for assignability of trade marks. They may be revocation with a view to guaranteeing the summarized as follows: maintenance of a minimum quality. As the Commission itself has recognized, an agree­ ment to that effect would in fact be a licence agreement. The United Kingdom Govern­ ment in particular has pointed out that from a practical business point of view it is unre­ alistic to imagine that the assignee of a trade Trade marks continue to be national and thus mark would accept continued control by the geographically partitioned, so that they may assignor. The contract of assignment is have different proprietors in different Mem­ chosen precisely so as to effect a complete ber States. It is a question of property rights assignment of the rights connected with the regulated independently of one another by mark. the laws of the individual Member States, which the Treaty states that it seeks to pro­ tect. The possibility of freely assigning a mark is a basic entitlement in the case of a trade-mark right and forms part of the spe­ cific subject-matter of the mark. If the pro­ 84. The consequences described for the prietor of a mark loses his exclusive right by trade-mark proprietor of such a judgment assignment, that basic entitlement will apply would therefore be serious. It is not imposs­ only in theory. In actual fact identical trade ible that he may nevertheless choose to marks protected in various Member States undertake a separate assignment. But there is can accordingly only be sold in their scarcely any doubt that in practice he will entirety. normally choose either not to assign the mark at all or to assign it entire for all the

87. There are various reasons why it is not 91. A separate assignment for certain Mem­ possible to speak of an essential restriction of ber States would mean that on the internal the rights of the proprietor. market there were goods bearing the same trade mark but produced by different propri­ etors. The internal market is a market with­ out internal frontiers in which not only goods but also consumers may move freely, and a market in which advertisements for the 88. As mentioned, the field of application of relevant products are spreading ever more the restriction is a narrow one. The propri­ widely beyond the borders of the national etor can still opt for a separate assignment if markets. he thinks that that is an economically accept­ able solution, even if he will not be in a posi­ tion to protect the mark on his own market. And he still has the possibility of concluding a full assignment — which, as already men­ tioned, will normally be the most appropri­ ate solution. 92. Moreover even if Articles 30 and 36 were to be interpreted as meaning that the assignor retains his exclusive right and may therefore by means of an import ban protect the trade mark's distinguishing function on 89. Moreover it has not been suggested in his own market, the separate assignment will this case that the possibility of concluding a weaken that function as regards the con­ separate assignment constitutes a very signi­ sumer who chooses to avail himself of his ficant part, economically or otherwise, of the right to freedom of movement and subse- rights which a trade mark confers upon its quendy seeks out the same branded goods in proprietor. No arguments have been various Member States. It was perhaps with advanced, for example, in support of the that in mind that the Court declared in Ter- view that in the period between the delivery rapin v Terranova that 'the basic function of of the Court's judgments in HAG I and the trade mark to guarantee to consumers HAG II there were serious drawbacks for that the product has the same origin is traders who had to accommodate themselves already undermined by the subdivision of to the fact that a separate assignment would the original right' (paragraph 6). lead to a loss of their exclusive right in the Member States in which the right is retained.

93. Contrary to the United Kingdom Gov­ ernment's contention, I do not think that restrictions on a trade-mark proprietor's 96. However, as has been said, it is not suf­ opportunity to subdivide his mark will be ficient to assess the problem in this case in contrary to the Community's interests. It is the light of the interests of the trade-mark not without significance in this connection proprietor. It is appropriate to investigate that the proprietor is simply placed in the how far consideration of the consumer's same position as would be legally binding interest in being able to establish the origin of for him if his mark were a Community trade the branded product can in itself be the basis mark with the legal effects referred to in the for protection of the proprietor's exclusive 49 Regulation on the Community trade mark, right. that is, that the mark may be assigned only in its entirety for the whole Community ter­ ritory.

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OPINION OF MR GULMANN — CASE C-9/93

therefore has, as already described, a signi­ chooses to adapt the quality of his goods to ficant interest in protecting the capacity of the different national markets, it will moreover mark to make it possible for consumers follow from the exhaustion principle that without risk of confusion to distinguish the such goods may move freely between the product from those having a different origin. markets in question. The so-called quality guarantee is only an expectation on the part of consumers that products bearing a certain mark are manufactured by the same pro­ ducer and thus have the same quality as other goods bearing it.

50 — See paragraph 18 of the Opinion, in which, inter alia, The fact that protection of the trade-mark Advocate General Jacobs stated: 'The guarantee of quality offered by a trade mark is not of course absolute, for the proprietor's exclusive right and thus his right manufacturer is at liberty to vary the quality; however, he does so at his own risk and he — and not his competitors to oppose the marketing of goods bearing — will suffer the consequences if he allows the quality to the same mark does not in itself safeguard decline. Thus, although trade marks do not provide any form of legal guarantee of quality — the absence of which the consumer — and is therefore hard to jus­ may have misled some to underestimate their existence — they do in economic terms provide such a guarantee, tify independently on that ground — may be which is acted upon daily by consumers.' seen finally from the fact that the proprietor,

I-2818

IHT INTERNATIONALE HEIZTECHNIK v IDEAL STANDARD

as far as can be seen, is not required in any of marks which are misleading for consum­ the Member States to take action against ers. As the Commission points out, con­ competitors' unauthorized use of the mark sumers will also be protected by means of 53 with a view to preventing consumers from legislation on unfair competition. being misled.

51 tection of consumers. In any case, in cer the protection of the consumer but only of tain Member States there are provisions in an assessment of whether it is necessary to the national legislation on trade marks which protect the trade-mark proprietor's interest take account independently of the interests of consumers inasmuch as they give the authorities of the Member States the oppor 52 — There may for example be rules prohibiting the assignment tunity to take action against a use of trade of a mark for only a part of the products for which it is

animals. However, the measures necessary to achieve this right and trade marks and partly rules on marketing dealing must be such as may properly be adopted in the field of inter alia with consumer protection. With regard to the lat health control, and must not constitute a misuse of the rules ter category of rules the Court ruled that 'the importation concerning industrial and commercial property. Moreover, into a Member Sute of goods lawfully marketed in another the specific considerations underlying the protection of Member State cannot as such be classified as an improper or industrial and commercial property are distinct from the unfair commercial practice, without prejudice however to considerations underlying the protection of the public and the possible application of legislation of the State of impor any responsibilities which that may imply.

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OPINION OF MR GULMANN — CASE C-9/93

in the mark's performing its essential func­ 104. The German Government has con­ tion of enabling consumers to distinguish the tended, in arguing for a negative answer to product from those of a different origin the question that the assignee, in the Member without risk of confusion. States in which the assignor continues to own the mark, will obtain rights similar to those of a licensee of the mark. The German Gov­ ernment points to the fact that the assignee will be able to take advantage of the as­ signor's investment in maintaining the status and reputation of the mark, without having provided any consideration and without 102. A trade-mark proprietor who con­ being subject to the normal duties of a cludes a separate assignment for certain licensee with regard to the quality of the Member States has voluntarily relinquished goods in question. the right to be the only one to market on Community territory products bearing the mark in question. In doing so he has in any case weakened the mark's distinguishing function for the consumer who travels across national borders, and his interest in being able to conclude a separate assignment for certain Member States whilst preserving the exclusive right to market within his own ter­ ritory is not sufficiently compelling to justify In this connection it only needs to be stated in itself a partitioning of national markets that, as already mentioned, the proprietor of contrary to one of the most essential pur­ a trade mark must, in concluding a contract poses of the Treaty — the merging of the of assignment, which includes the fixing of national markets into a single market. the consideration, take account of the legal effects of such a contract in the light of Community law, and correspondingly such effects must also be assumed to be included in the assignee's expectations.

'here are circumstances in which it might be practical to distinguish between conflicting trade marks by means of additional mark­ ings, but that such circumstances constitute the exception rather than the rule. I doubt 108. The Court stated in HAG II that 'each whether that method would ever be effective of the trade-mark proprietors must be able in the case of identical trade marks used for to oppose the importation and marketing, in identical products. Above all, it must be the Member State in which the trade mark stressed that it is not a panacea to all the belongs to him, of goods originating from problems posed by trade mark conflicts, as the other proprietor' (paragraph 19). The the Court seemed to imply in HAG I' (Para­ German Government has pointed out that graph 45). with that statement the Court omitted to attach importance to the fact that the assignee obtained the expropriated right in full knowledge of the fact that outside his territory it belonged to a third party. The government's view is that, seen from the assignee's point of view, there is no decisive 106. In support of an affirmative answer to difference between situations in which a the question, IHT has claimed that it is a trade mark is acquired after it has previously question of the assignment of a right which is been expropriated and those in which there exhausted, since in consequence of the has been no such prior expropriation, and exhaustion principle Ideal-Standard GmbH those situations should therefore be treated could not, before the assignment of the mark in the same way. The German Government in 1984, avail itself of its trade-mark rights thinks it may be deduced from that that the against products marketed in Community original proprietor of a trade mark must be territory under the 'Ideal Standard' mark and treated in the same way, whether it is a mat­ that the voluntary subdivision of the mark ter of expropriation or of assignment. must be regarded in Community law as a continuation of that previous legal situation.

111. The arguments advanced regarding the 113. Ideal-Standard GmbH and the German legal situation of the assignee therefore count and United Kingdom Governments contend neither for nor against a result according to that it is not necessary to interpret Article 30 which a trade-mark proprietor who con­ and 36 to the effect that an import ban in a cludes a separate assignment for certain situation like that before the Court is con­ Member States cannot oppose the assignee's trary to the Treaty, since the rules of compe­ marketing of products in the Member States tition law offer sufficient protection against in which the mark is retained. On the other contracts for the assignment of trade marks hand from the Court's statement in HAG II leading to partitioning of the market con­ arguments may be deduced to the effect that trary to the aims of the Treaty. But at the in such a situation the assignee must corre­ same time it is claimed that there is nothing spondingly accept the assignor's marketing in the order for reference which gives any in his territory. grounds for assuming that the assignment in this case conflicts with Article 85 of the Treaty. IHT states that any subdivision by agreement of trade marks and the exercise of the national trade-mark rights prolonging such subdivision constitute an agreement restricting competition contrary to Article 85 112. The question referred to the Court con­ but does not seem to have based on that any cerns only the assignor's opportunity to arguments concerning the interpretation of oppose the importation of products manu­ Articles 30 and 36.

115. This case concerns the direct relation­ ship between two parties to an agreement. It 118. If an agreement expressly or by impli­ follows from the survey of the Court's case- cation contains a ban on the parties' market­ law in Section D that a proprietor may not ing products in one another's territory, the rely on his trade-mark rights under national possibility of prohibiting, on the basis of the law when the exercise of such rights is the agreement, importation into the protected subject, the means or the consequence of an territory by an action for breach of contract agreement prohibited under Article 85. It is will depend upon a decision as to the legality therefore possible that the legality in a situa­ of that condition under Article 85 of the tion such as this of imposing an import ban Treaty. If the condition in the contract is on the basis of national trade-mark law may legal under Article 85, the import prohibi­ depend also on an assessment of the legality tion may be imposed as a direct consequence of the assignment under Article 85 of the 55 of the breach of contract. If on the other Treaty. hand the condition conflicts with Article 85, it cannot be enforced by an action either for breach of contract or for infringement of trade mark.

116. In that light it is appropriate to con­ sider to what extent Article 85 is relevant for an assessment of the legality of an assign­ 119. However, it is also necessary in this ment. connection to decide whether Article 85 has any significance for a 'pure' contract of assignment of a trade mark, that is, an agree­ ment intended simply to make it possible for

120. It is possible for a pure contract of sep­ 123. It may also be maintained that the par­ arate assignment of parallel marks under titioning of the market does not spring from national law to be supplemented by a declar­ the assignment which has been entered into atory rule to the effect that the parties may but only from an exercise of national trade­ not market goods bearing the mark on one mark rights. Where the agreement cannot another's territory. In such a case one party form the basis of an action for breach of may base his right on the contract with a contract, it is not the agreement as such view to preventing the other party's export­ which partitions the market. The partitioning ing to his territory. In that situation the effect of the agreement arises only when the party's chance of using his trade-mark rights owners of parallel rights choose to make use with a view to enforcing the contract con­ of their rights under national law to prevent cluded must depend on the legality of the importation by means of actions for agreement under Article 85 in the same way infringement. as when the agreement expressly or by implication contains an export ban.

125. That is the basis on which the argument the extent to which it may be interpreted or by Ideal-Standard GmbH and the German supplemented in such a way as to prohibit and United Kingdom Governments that direct sale in one another's territory and to Article 85 gives sufficient protection against the extent to which the condition of the partitioning of the internal market contrary agreement thus laid down is not considered to the aims of the Treaty should be assessed. on closer examination as conflicting with Article 85(1) or has received a specific exemption under Article 85(3). The advan­ tage of such a basis is that it requires the par­ ties to make clear in their relationship what their rights are on one point. That is appro­ priate as regards both the relationship 126. That idea pre-supposes that Article 85 between the parties and the correct operation may be used to test the legality of all agree­ of the internal market. ments for separate assignment of trade marks. As I have said, that supposition is not necessarily correct.

127. However, what is decisive is that that 129. Against that background importance idea may be rejected even if it were to be cannot be attached to the existence of Art­ accepted that Article 85 may be used to test icle 85 as an argument against interpreting also pure contracts of assignment which are Articles 30 and 36 to the effect that they pre­ neutral under national law. vent import prohibitions laid down by means of actions for infringement of trade mark in cases such as the one before us.

The Court declared that 'if the combination of assignments to different users of national trade marks protecting the same product has the result of re-enacting impenetrable fron­ The Court first declared that Article 30 of tiers between the Member States, such prac­ the Treaty was not applicable, as importation tice may well affect trade between States and from a third country was involved. The distort competition in the common market' Court next stated that for Article 85 to apply (paragraph 10). The Court continued by to a case of agreements no longer in force it referring to the possibility that agreements was sufficient that such agreements con­ concerning the use of national rights in tinued to produce their effects after they had respect of the same trade mark might be formally ceased to be in force. The Court effected in such conditions as not to lead to then declared that 'An agreement is only partitioning of the market and concluded regarded as continuing to produce its effects that 'Article 85 ... is applicable to the extent if from the behaviour of the persons con­ to which trade-mark rights are invoked so as cerned there may be inferred the existence of to prevent imports of products which origi­ elements of concerted practice and of coordi­ nate in different Member States, which bear nation peculiar to the agreement and produc­ the same trade mark by virtue of the fact that ing the same result as that envisaged by the the proprietors have assigned it, or the right agreement. This is not so when the said to use it, whether by agreements between effects do not exceed those flowing from the themselves or by agreements with third par­ mere exercise of the national trade-mark ties' (paragraph 11). rights' (Paragraphs 31 and 32).

petition. Conversely it cannot be deduced means of an action for infringement of trade from the Court's judgment in EMI Records mark, the export to his market by the v CBS United Kingdom that a pure agree­ assignee of goods bearing the mark, the pro­ ment for the assignment of a mark may prietor will be all the more precluded from never be contrary to Article 85. It is not opposing parallel imports. impossible that the Court decided that case on the basis of a specific assessment that the territorial protection acquired as a result of the contract was compatible with the com­ mon market, inter alia because there was no question of a partitioning but simply of an insulation of that market. 136. If the Court finds that Articles 30 and 36 do not prevent the assignor from opposing, by an action for infringement of trade mark, exportation to his market by the assignee of the mark, the question arises whether the same result applies as far as par­ L — The trade-mark proprietor's opportu- allel imports are concerned. When it is con­ sidered that in a given case the result will nity to prevent parallel importation undoubtedly be based on considerations of protecting the specific subject-matter of the mark seen in the light of the mark's essential function and that such considerations natu­ rally also apply in relation to parallel imports, Articles 30 and 36 will not prevent an import ban in the case of parallel imports 134. Most of the cases referred to the Court either. Such a result will therefore lead to a in the field of intellectual property rights complete partitioning of national markets. have originated in an attempt by the propri­ etor of an exclusive right to prevent parallel imports, that is, importation of goods by undertakings which have bought the goods in another Member State where they had already been marketed by the person M — Resume entitled.

— the assignor is not reduced to a situation in which he must accept that the distin­ guishing function of the trade mark can­ — if it is accepted that separate assignments not be completely upheld; may, by means of actions for infringe­ ment of trade mark, lead to territorial protection, which in principle may apply without limitation of time, they will imply an essential obstruction to free movement of goods and a consequent partitioning of the internal market con­ — the possibility for the trade-mark propri­ trary to the aims of the Treaty. etor to conclude separate assignments will de facto be restricted, but is scarcely an essential part of the rights linked to his mark, inter alia because the propri­ etor of a mark must be expected to take into account in all circumstances the fact N — Whether there are special circum- that a separate assignment means that the stances in this case such as may be of impor- distinguishing function of the mark is tance for its assessment under Community weakened as regards the consumer who law travels across national borders within a single market;

139. The court of reference has only — a full assignment for all the Member requested the Court to interpret Articles 30 States in which the mark is protected and 36 with regard to a decision on the

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IHT INTERNATIONALE HEIZTECHNIK v IDEAL STANDARD

140. IHT claims that the cumulative effect of various circumstances means that in this case an import prohibition will constitute a mis­ use of rights and will therefore be incompat­ — the contract of assignment related to the ible with Community law. IHT refers in this whole field of heating, including the respect to the Court's judgment in Keurkoop goodwill and including therefore custom­ v Nancy Kean Gifts, according to which ers outside France, since at the time the 'Article 36 is intended to emphasize that the assignment was concluded heating instal­ reconciliation between the requirements of lations bearing the 'Ideal Standard' mark the free movement of goods and the respect were already exported to other Member to which industrial and commercial property States and no form of restrictions on rights are entitled must be achieved in such a exportation was envisaged in the agree­ way that protection is ensured for the legiti­ ment; mate exercise, in the form of prohibitions of imports which are "justified" within the meaning of that article, of the rights con­ 57 — Case 144/81 [1982] ECR 2853 at paragraph 24. IHT has ferred by national legislation, but is refused, also referred to Advocate General Tesauro's Opinion deliv­ on the other hand, in respect of any ered on 9 June 1993 in Case C-317/91 Deutsche Renault v Audi [1993] ECR 1-6227, which refers in point 7 to the improper exercise of the same rights which is paragraph quoted above.

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OPINION OF MR GULMANN — CASE C-9/93

— since 1976, that is, for more than 15 eration paid in that case would have been years, SGF and then CICh have been considerably more; manufacturing heating installations in France under the 'Ideal Standard' mark and exporting them to other Member States, namely Italy, Spain, the Benelux countries and Greece and, since 1988, Germany; and

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IHT INTERNATIONALE HEIZTECHNIK v IDEAL STANDARD

were brought in Germany and Italy pre­ zation in German trade mark legislation to cisely after the Court's decision in impose a prohibition on IHT's marketing of HAG II. heating installations in circumstances such as these is not compatible with Community law. They point out that the American Stan­ dard group in Germany opposes marketing of heating installations under the 'Ideal Stan­ dard' mark even though the group itself does not manufacture heating installations, 'even 143. All these circumstances are in my view though the group has concluded a partial relevant in connection with an interpretation assignment of the trade mark in France and of the assignment entered into between has thereby accepted that an assignee may Ideal-Standard SA and SGF .It is possible use the mark for heating installations simul­ that the agreement must be interpreted as taneously with the group's use of the mark actually involving a subdivision of the trade for sanitary ware and even though the group mark for the whole Community territory has not taken any action in other Member since it allows SGF to export heating instal­ States as regards the sale of heating installa­ lations to the other Member States. It is tions bearing the mark. possible that for the interpretation of the con­ tract importance may be attached to the action of the American Standard group thereafter and it is also possibly significant for understanding the agreement that the Court had delivered the HAG I judgment in the period before the agreement was con­ cluded and that that judgment might have My observations on that are as follows. led undertakings to expect that they would be unable to rely in any circumstances on a trade mark to prohibit the marketing of goods bearing an identical mark where the marks had the same origin.

a part of the products for which it was reg­ 149. If the Court does not find that an istered such as to make German legislation assignment of a trade mark in one Member incompatible with Community law. It can­ State means that the proprietor loses his not be a consequence of Community law exclusive right in the Member States in that the proprietor of a trade mark is which it is retained, the fact that an under­ required to dispose of his mark in the same taking takes advantage of its opportunity in way in all Member States. Nor can it be a pursuance of a country's legislation in order consequence of Community law that the fact to make only a partial assignment of its mark that the proprietor chooses to dispose of the cannot lead to such a result either. mark in different ways is in itself regarded as such a serious matter that it involves extend­ ing to the whole Community the legal effects of the arrangements which he makes in one Member State. The German courts cannot, in other words, be obliged under Community law to regard the fact that the American Standard group has expressly accepted in 150. Finally, as regards the question of the France, by means of the partial assignment, extent to which it may be incompatible with the simultaneous use of the trade mark for Articles 30 and 36 to prohibit marketing of heating installations as meaning that in Ger­ products on the basis of a trade mark which many the group cannot oppose such simulta­ is not in use, that is irrelevant in this case neous use. because, as will be apparent in the next sec­ tion, it is common ground that Ideal- Standard GmbH does not use its mark for heating installations, but does use it for san­ itary ware, as it is claimed that heating instal­ lations and sanitary ware are similar goods.

153. Ideal-Standard GmbH claims that the company's products are frequently confused with the products marketed in Germany by IHT under the trade mark 'Ideal Standard'. IHT contends that in view of the technical and economic developments which have taken place there is no longer such a connec 152. The reasons why this problem arises are tion between heating and sanitation that any 63 not very clear. It is quite correct that Ideal- confusion can arise. The Commission con Standard GmbH markets only sanitary ware, tends that it is necessary to give a strict inter but according to the evidence in the case that pretation to the concepts of similar products company continues to own the 'Ideal Stan and of risk of confusion so as to ensure that dard' trade mark for heating installations

. . IDEAL STANDARD' . thought it necessary to go into the question 63 — IHT in its observations submitted to the Court disputes the whether sanitary ware and heating installa statement in the judgment of the Landgericht Düsseldorf that there have been a number of cases of actual confusion or that the American Standard group's operations in heat ing installations, which ceased more than 15 years ago, con tinue to be known. Next IHT mentions that after the Sec ond World War an almost total separation took place at the 60 — The Oberlandesgericht Düsseldorf explained in its order for production stage between the heating and sanitary sectors reference that the German mark was registered for heating and that that separation had to a large extent repercussions installations, steam hearing, refrigerating, drying, ventilat on the retail trade and installation businesses.

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OPINION OF MR GULMANN — CASE C-9/93

free movement of goods is not obstructed second sentence of Article 36 of the Treaty further than is necessary for the protection to the effect that restrictions on trade must of the mark. Both the Commission and IHT not constitute a means of arbitrary discrimi­ think that in this connection essential signif­ nation or a disguised restriction on trade icance must be attached to the fact that a between Member States. 65

French company in the same group did not think there were problems involved in assigning the mark for heating installations in France and retaining it for sanitary ware.

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IHT INTERNATIONALE HEIZTECHNIK v IDEAL STANDARD

Conclusion

On the basis of the foregoing considerations I shall propose that the Court should answer the question which has been referred to it as follows:

Articles 30 and 36 of the EEC Treaty preclude national legislation from allowing an undertaking which is the proprietor of a trade mark in a Member State to oppose the importation from another Member State of similar products lawfully bearing in the latter State a mark which is identical or may be confused with the protected mark, where the mark under which the disputed products are imported originally belonged to a company affiliated to the undertaking which is opposing the impor­ tation and was acquired by the new proprietor by means of a contract concluded with the affiliated company.

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