C-244/00

VAN DOREN + Q

OPINION OF ADVOCATE GENERAL STIX-HACKL delivered on 18 June 2002 1

I — Introduction covered directly by the directive, but which is closely connected with it, namely the allocation of the burden of proof in national law in connection with an instance of parallel importation. The national court — the German Bundesgerichtshof (Federal Court of Justice) — essentially 1. The exhaustion of intellectual property asks whether it is compatible with rights — in this case rights conferred by a Articles 28 EC and 30 EC for a national trade mark — prevents the owner of those rule on proof to place on a person against rights from opposing the further marketing whom proceedings arc brought for trade- of trade-marked goods where they have mark infringement the burden of proving been put on the market by him or with his that the conditions for exhaustion have consent. Article 7(1) of Directive been satisfied, that is to say that the goods 89/104/EEC 2(hereinafter: 'the directive') have been put on the market in the EEA by provides for the Community-wide — now the trade-mark owner or with his consent. EEA-wide — exhaustion of rights con- ferred by a trade mark. As is well known, the interpretation of this provision has already been the subject-matter of several judgments of the Court 3which have clari- fied the harmonisation of national laws on this issue in particular.

4. In a system of territorially limited exhaustion — that is to say EEA-wide 6. Article 5 of the directive provides (in so exhaustion — the place at which the goods far as is relevant): bearing the trade mark were put on the market for the first time is of particular importance. Where it is not disputed that these goods were put on the market by the trade-mark owner or with his consent, exhaustion of the rights conferred by the trade mark depends on whether the trade- 'Rights conferred by a trade mark mark owner has consented to their being put on the market in the EEA. In such circumstances, the question of exhaustion logically arises only where the goods con- cerned have been put on the market for the first time outside the EEA. 1. The registered trade mark shall confer on the proprietor exclusive rights therein. The proprietor shall be entitled to prevent all third parties not having his consent from using in the course of trade:

5. The place at which the goods are first put on the market is therefore decisive in so (a) any sign which is identical with the far as, if they have been put on the market trade mark in relation to goods or in the EEA by the trade-mark owner or services which are identical with those with his consent, the rights conferred by the for which the trade mark is registered; trade mark must be regarded as already exhausted pursuant to Article 7(1) of the directive, whereas, if they are put on the market outside the EEA, exhaustion dep- ends in addition on whether the trade-mark owner has consented to the marketing of the goods in the EEA.

'(1) Trade mark protection under Para- 'The trade mark shall not entitle the graph 4 shall confer on the trade-mark proprietor to prohibit its use in relation to owner an exclusive right. goods which have been put on the market in the Community under that trade mark by the proprietor or with his consent.' 5 — BGBl. I 1994, 3082 (1995, 156).

I - 3055

OPINION OF MRS STIX-HACKL — CASE C-244/00

(2) Third parties shall not, without the 4. using the sign on business papers or in consent of the trade-mark owner, in the advertising. course of trade

5

1. use a sign which is identical with the trade mark in relation to goods or services which are identical with those for which the trade mark enjoys protection.

marketed worldwide. They have no par- 16. The claimant brought proceedings ticular characteristic which would enable against the defendants before the German them to be recognised as having been courts. It sought an injunction, an order for allocated to a specific sales territory. disclosure of information concerning acts committed since 1 January 1995, and a declaration of liability for damages as from 1 January 1995. It maintained that the articles distributed by the first defendant were products which had originally been put on the market in the USA, and that their distribution in Germany and other EU 13. Under the dealership agreement of Member States had not been authorised by 1 May 1995, van Doren + Q. GmbH the trade-mark owner. (hereinafter: 'the claimant') in Cologne, a clothes wholesaler and retailer, has exclus- ive distribution rights in respect of STUSSY Inc.'s products in Germany. STUSSY Inc. authorised the claimant to bring legal proceedings in its own name to obtain injunctions against, and claim damages from, third parties for infringement of the trade mark. 17. The defendants opposed the action and argued that the rights conferred by the trade mark in respect of the goods in question were exhausted. The defendants claim that they sourced the goods in the EEA where they had been put on the market by the trade-mark owner or with 14. According to the claimant, there is in his consent. The clothing purchased from each country of the EEA only one exclusive the first defendant as a test purchase in distributor (general importer) for 'Stüssy' October 1996 had been acquired by the articles and that distributor is contractually first defendant in the EEA from an inter- bound not to sell the goods to intermedi- mediary who, the defendants assumed, had aries for resale outside his contractual purchased it from an authorised dealer. territory.

23. The national court refers to the Court's judgments in Silhouette and Sebago, 6 according to which there is exhaustion of the right conferred by a trade mark within 21. The claimant appealed on a point of the meaning of Article 7(1) of the directive, law to the Bundesgerichtshof. as amended by the EEA Agreement, where the goods have been put on the market in the EEA under that mark by the trade-mark owner or with his consent, but not where they were first put on the market outside the EEA. 22. The Bundesgerichtshof considers that the resolution of the dispute turns on the interpretation of Articles 28 EC and 30 EC and therefore stayed proceedings and referred the following question to the Court for a preliminary ruling by order of 11 May 2000: 24. According to the national court, the factual conditions for exhaustion of the trade-mark right, which is a defence under Paragraph 24(1) of the Markengesetz, must in principle be proved by the defendants, Are Articles 28 EC and 30 EC to be according to the general principle that each interpreted as meaning that they permit party to proceedings must prove the exist- the application of national legislation under ence of the conditions for the rule on which which an infringer against whom proceed- he relies. ings are brought on the basis of a trade mark for marketing original goods, and who claims that the trade-mark right has 6 — Cited in footnote 3.

I - 3058

VAN DOREN + Q

I - 3059

OPINION OF MRS STIX-HACKL — CASE C-244/00

making his suppliers reveal the previous required to prove that the conditions for supplier or identify other links in the exhaustion are satisfied, if, prima facie, the distribution chain. Even if he were able to goods could have been put on the market trace the distribution channel back to the only outside the EEA. manufacturer, and even to show that the goods were put on the market in the EEA with the consent of the person entitled, it is precisely that fact which might cause his supply source to dry up for the future.

IV — Legal assessment

29. Under these circumstances there is a 31.1 would like to state, first of all, that the danger that the trade-mark owner will use present case should not give grounds for the trade mark to partition national mar- questioning the territorial scope of the kets. principle of exhaustion, that is to say EEA-wide exhaustion. I will initially con- sider the reasons of substantive law which the national court gave for its conclusions regarding the requirements of proof. I will then examine the limits on the national power to lay down rules of proof which may arise under Community law.

30. Therefore, the question arises as to whether or not Article 28 EC requires that there be an exception to the general rule that the full burden of pleading and proving the factual conditions for exhaustion of the right conferred by a trade mark lies with the defendant. The Bundesgerichtshof con- A — The premiss of EEA-wide exhaustion siders that a possible solution might be to impose that burden on the defendant only if the manufacturer has first used such means as can reasonably be expected of him to distinguish goods which have been put on 32. I have already pointed out above 7 that the market in the EEA by him or with his in a system of territorially limited exhaus- consent from goods which have been put tion — in this case EEA-wide exhaus- on the market outside the EEA. Where it can be taken that the manufacturer does act in such a way, the defendant trader is 7 — See paragraph 4 et seq. above.

37. The French Government also refers to the limits on the Member States' pro- cedural autonomy. The Court has consist- ently held 10 that in the absence of relevant 34. The Commission, the German Govern- Community rules it is for the Member ment and the French Government submit that it is for the Member States to solve 9 — In this respect, it refers to Case 130/79 Express Diary Foods problems relating to proof by adopting [1980] ECR 1887, paragraph 12, and Joined Cases 205/82 their own procedural rules. to 215/82 Deutsche Milchkontor and Others [198.1] ECR 2633, paragraphs 17 and 19. 10 — The French Government relers in particular to Case 33/76 Rewe [1976] ECR 1 9 8 9 ; Case 199/82 San Giorgio [1983] ECR 3595; Case C - 2 0 8 / 9 0 Emmott [1991] ECR I - 4269; 8 — The question therefore docs not arise in the case of and Joined Cases C - 3 1 / 9 1 to C - 44/91 Lageder, and Others international exhaustion. [1993] ECR I - 1 7 6 1 .

I - 3061

OPINION OF MRS STIX-HACKL — CASE C-244/00

States to lay down the judicial procedures owner must, in the course of proceedings, intended to ensure the protection of the plead and prove that there has been no such rights which individuals derive from the disposition. The latter is an imposed, legal direct effect of Community law; in this fiction of consent, which gives rise directly respect regard must be had to the principle to the statutory consequences of exhaustion of non-discrimination 11 and of effective- and deprives the trade-mark owner of any ness. 12 right of disposition. What is appropriate for interpreting Article 5(1) of the directive does not therefore provide a basis for interpreting Article 7(1) of the directive.

VAN DOREN + Q

Member States — which has been har- setz, and thus also between Articles 5(1) monised by the directive — is nevertheless and 7(1) of the directive. Hitherto it was unmistakable. At the level of Community unclear whether, in the context of an action law too the transition from substantive law for trade-mark infringement under national to the law of evidence, and thus to pro- law, the consent of the trade-mark owner cedural law, is fluid. This is evident in to distribute goods in the EEA constitutes a particular in Davidoff 13 in which the Court negative test which has to be satisfied, itself clearly laid down a rule on proof reflecting the expression 'not having his under which 'it is for the trader alleging consent' in Article 5(1) of the directive, 15 consent to prove it and not for the trade or a defence pleaded by the defendant mark proprietor to demonstrate its under Article 7(1) of the directive. 16 On absence'. 14 the basis of the — national — principle that each person must prove the existence of the conditions for application of a rule on which he relies, the first view results in a duty on the trade-mark owner to set out and prove such matters, whereas the second view results in a duty on the alleged infringer to do so. In the order for reference 42. The national court, which is supported the Bundesgerichtshof has clearly decided by the Commission in ;this respect, also that the second view is correct. bases the rule on proof to which it refers on a particular understanding of substantive law, namely that exhaustion under Article 7(1) of the directive and — at national level — Paragraph 24(1) of the Markengesetz constitutes a defence for the alleged infringer. Therefore, before con- sidering the question referred for a pre- liminary ruling, I feel compelled to examine the understanding of substantive law which is taken as the basis for this rule on proof. 44. Consequently, the allocation of the burden of proof under national law turns on the interpretation of substantive law. However, since 'Articles 5 to 7 of the

Directive must be construed as embodying national allocation of the burden of a complete harmonisation of the rules proof — on which the Court now has to relating to the rights conferred by a trade give judgment — ultimately arises from an mark 17 and 'the Directive cannot be inter- interpretation of national legislation imple- preted as leaving it open to the Member menting the directive. According to that States to provide in their domestic law for interpretation, it is for the defendant to exhaustion of the rights conferred by a prove that the conditions for the exhaus- trade mark in respect of products put on tion provided for in Article 7 of the the market in non-member countries', 18 directive — in particular the existence of the national allocation of the burden of consent — have been satisfied. The plain- proof ultimately turns on the interpretation tiff, on the other hand, does not have to of Articles 5 and 7 of the directive. prove that his trade mark is being used without his consent.

I - 3064

VAN DOREN + Q

consent" from importing goods bearing the does not do justice to the function of the mark. Article 7(1) contains an exception to principle of exhaustion, which is to strike a that rule in that it provides that the trade balance between free movement of goods 2 mark proprietor's rights are exhausted and intellectual property rights. 3 It should where goods have been put on the market be borne in mind that the principle of in the EEA by the proprietor or "with his exhaustion was developed by the case-law consent"' (emphasis added). 21 If Article 5 in order to strike such a balance, and of the directive contains a rule whereby the therefore exhaustion — from the point of trade-mark owner's rights include the right view of the primary law which is decisive in inter alia to prohibit imports of goods this case — is more in the nature of the bearing the relevant trade mark — except system's inherent limitation on intellectual in the case of his consent 22 — Article 7 of property rights in order to safeguard the the directive, which ultimately restricts this free movement of goods, a freedom which right to the right to control distribution has equal status from the point of view of within the EEA on one occasion only, Community law. constitutes an exception to the first-men­ tioned principle, which is clearly in the defendant's favour.

I - 3065

OPINION OF MRS STIX-HACKL — CASE C-244/00

51. As further grounds for its view that the free — subject to the limits laid down by absence of consent referred to in Article 5(1) Community law — to apply their own of the directive cannot represent a negative principles governing allocation of the test, the national court states that absence burden of proof. Therefore, my previous of consent relates to the unlawfulness remarks concerning the interpretation of indicated by the fulfilment of the objective the relevant substantive Community law by requirement, namely the use of the trade the Bundesgerichtshof do not call in ques- mark by a third party. This argument tion the utility of an answer given by the should also be examined. Where original Court. They are merely made to assist the goods are on the market in the EEA, the Court should it choose not to adopt this unlawfulness of the use of the mark results, interpretation in accordance with my con- in the light of the balance struck by the cerns. principle of exhaustion, not from the marketing of these goods in the EEA but rather from their crossing the external borders of the EEA without the consent of the trade-mark owner. Such an argument would essentially amount to a presumption of unlawfulness, which I do not consider to be problem-free in view of the balance, required by primary law, between free C — The relevant test movement of goods and intellectual prop- erty rights.

54. On the assumption that the Member States are competent to allocate the burden of proving the existence of consent in actions for trade-mark infringement, the 52. In view of the findings in the order for Bundesgerichtshof essentially asks whether reference, which are thus at least debatable, such an allocation is compatible with it is evident that the national court has primary law. expressed, albeit indirectly, a view on the relationship between Articles 5 and 7 of the directive by basing the allocation of the burden of proof under national principles on a particular interpretation of the sub- stantive implementing provisions of Ger- man law. 1. Submissions of the parties

56. The French Government clearly con- curred with this view at the hearing. The French Government refers to Davidoff 27 and states that it made a limited exception 59. However, it is uncertain whether, as the to the principle of the Member States' French Government claims, Davidoff 29 procedural autonomy and laid down a is to be construed as meaning that the principle on the allocation of the burden Court admitted a limited exemption to the of proof at paragraph 54 thereof. This is principle of the Member States' procedural justified in view of the particularly close autonomy by laying down, at paragraph link between the procedural issue of the 54, a principle on the allocation of the allocation of the burden of proof and the burden of proof in Community law. substantive issue of the type of consent in a particular case. Therefore, it must be con- cluded that the allocation of the burden of proof is covered by Article 7(1) of the directive. 60. That this is so might be indicated by the 25 — Joined Cases C-427/93, C-429/93 and C-436/93 Bristol- fact that different national rules on allo- Myers Squibb and Others [1996] ECR I-3457, paragraphs 25 and 27. 26 — C a s e C-349/95 Loendersloot [1997] ECR I-6227, para- graph 18. 28 — See paragraph 40 above. 27 — Cited in footnote 3. 29 — Cited i n footnote .1.

I - 3067

OPINION OF MRS STIX-HACKL — CASE C-244/00

62. However, at paragraph 58 the Court 65. Consequently, I am disinclined to inter- finds that a rule of national law would not pret the statement at paragraph 54 of Davidoff as a principle governing the allocation of the burden of proof in Com- 30 — Silhouette (paragraph 24) and Davidoff (paragraph 42), munity law. I interpret it as merely a limit both cited in footnote 3. on the relevant national rules.

I - 3068

VAN DOREN + Q

66. It must be concluded from the fore- having an effect equivalent to a quanti- going that although in principle the direc- tative restriction on imports within the tive does not cover matters of proof, limits meaning of Article 28 EC. on national principles governing the allo- cation of the burden of proof may arise from its provisions. Therefore, the prin- ciples of procedural law in question must be examined by reference to primary law, having due regard to the directive's sub- stantive provisions. Article 28 EC serves to safeguard the free movement of goods. 68. The trade-mark owner could use such a Under Article 30 EC impairment of this rule to partition national markets even if basic freedom can be justified in particular his goods had been put on the market in the where it serves to protect industrial and EEA by him or with his consent. However, commercial property. Against this back- trade mark rights are not intended to allow ground, the directive must be regarded as a their owners to partition national markets concrete expression of Article 30 EC, and and thus promote the retention of price interpreted in the same way as it, applying differences which may exist between the case-law cited by the Commission. 31 Member States. 32

provided for in Article 28 EC is impaired Article 30 EC, since a reversal of the where national rules of the kind in question burden of proof would have a substantial are applied without restriction. A restric- adverse effect on the exercise of trade-mark tion on the free movement of goods results rights by their owner. from the fact that a defendant in proceed- ings against a trade-mark owner may possibly lose the suit because of the dif- ficulties involved in adducing proof, even though the trade-mark owner has put the goods on the market in the EEA himself or through third parties authorised by him. However, such a restriction cannot be justified by overriding requirements of 73. The Commission submits that national public interest 33 or the protection of indus- rules on the allocation of the burden of trial and commercial property within the proof should be appraised in the light of the meaning of Article 30 EC. directive and distinguishes two situations. On the one hand, the application of trade mark law should not enable trade-mark owners to partition national markets and thus encourage the maintenance of any price differences between Member States. 35 On the other, it follows from the interpretation of the provisions relating to the free movement of goods that it is not 71. On the other hand, the French Govern- compatible with Article 30 EC to compel a ment doubts that the rule of national law in parallel importer to adduce evidence with question constitutes a measure having an documents to which he does not have effect equivalent to a quantitative restric- access, when the administration or the tion on imports within the meaning of courts find that the evidence can be pro- Article 28 EC as in Dassonville. 34 The duced by other means. 36 cause of the market partitioning referred to by the national court is to be found instead in the organisation of distribution systems for trade-marked goods.

77. It is common ground that a rule of the kind in question, whereby the entire burden of proving exhaustion falls on a trader sued 75. In accordance with the principle of by a trade-mark owner, places the trader in national procedural autonomy, the a dilemma because he is faced with the Member States and their courts have the decision of either (a) losing the case even right to lay down rules on proof in the where the trade-mark owner has put the exercise of that autonomy. This also applies goods bearing the trade mark on the to trade-mark matters since the regulation market in the EEA himself or through a contains no relevant provisions of pro- third party authorised by him or (b) cedural law. 37 However, these national furnishing the relevant evidence by naming provisions are subject to limits resulting his supplier or any previous suppliers and from substantive Community law. thereby revealing his supply source with the result that the trade-mark owner thus identifies the gap in his distribution system and can take appropriate measures to block the source of the parallel importer against whom he has brought proceedings. (a) Article 28 EC

rightly pointed out that the defendant is burden of proving exhaustion falls on a presented with the choice of furnishing trader sued by a trade-mark owner for evidence and losing his supply source for trade-mark infringement, can be justified the future or losing the case, even where the under Article 30 EC and the relevant goods concerned have been put on the provisions of secondary law. market in the EEA by the trade-mark owner or with his consent. This enables the trade-mark owner to partition national markets even within the EEA in order to retain price differences. However, accord- ing to the case-law of the Court, trade mark 81. It is, however, clear from the case-law rights 'are not intended to allow their cited by the Commission 41 that 'there owners to partition national markets and would... be no justification under thus promote the retention of price dif- Article 36 [now Article 30 EC] for com- ferences which may exist between Member pelling [the parallel importer to produce States.' 40 evidence] with the help of documents to which he does not have access, when the administration, or as the case may be, the court, finds that the evidence can be pro- duced by other means.' 42

79. Consequently, a national rule of the type in question cannot be reconciled with Article 28 EC if it enables the trade-mark owner to partition national markets and 82. Therefore, Article 30 EC cannot be thus to promote the retention of price used to justify a national rule of the kind in differences between Member States. question, which may have an indirect and potential effect as an import and export restriction in accordance with the Dasson- ville formula, where such a rule requires a defendant parallel importer to provide evidence which he cannot reasonably be expected to produce or which is impossible (b) Article 30 EC and Articles 5 and 7 of for him to produce. The French Govern- the directive ment fails to appreciate this fact in its submissions.

1. Submissions of the parties 84. On the other hand, Davidoff 43 made it clear that it would be incompatible with Articles 5 and 7 of the directive for national law to lay down a rule which was tanta- mount to deemed consent and thus ulti- mately precluded the trade-mark owner from exercising his right to put goods on 86. The defendants, echoing the order for the market in the EEA for the first time. 44 reference in that respect, propose that a duty be placed on the trade-mark owner to take reasonable steps to exhaust the possi- bilities which he has to differentiate between goods which have been put on the market in the EEA by him or with his consent and those which have been mar- keted outside that area. The trade-mark owner can reasonably be expected to fulfil 85. However, it is also clear from the such a duty. balancing function exercised by the prin- ciple of exhaustion, 45 as now laid down by Article 7 of the directive, that the exercise of intellectual property rights may not exceed what is necessary to safeguard those rights — and ultimately, therefore, a national rule should not permit the exercise 87. The German Government also endorses this proposal by the national court. Mark- ing the goods clearly and comprehensibly 43 — Cited in footnote 3. would make it easier for distributers to 44 — Loc. cit., paragraph 58. See, to this effect, also paragraph 59 et seq. above. determine whether or not the right con- 45 — See paragraph 49 and footnote 23 above. ferred by the trade mark has been

I-3073

OPINION OF MRS STIX-HACKL — CASE C-244/00

91. The need to modify national rules on evidence such as those in question stems 88. On the other hand, the French Govern- from their incompatibility with Articles 28 ment submitted at the hearing that it EC and 30 EC, read in conjunction with considers the national court's suggestion Articles 5 and 7 of the directive. to be unsuitable. It its view this would amount to a reversal of the burden of proof which would be detrimental to the required balancing of interests because it would be to the disadvantage of the trade-mark owner only. 92. As already indicated, 46 I, like the German Government, do not conclude that Davidoff 47 laid down a Community rule on the allocation of the burden of proof at paragraphs 54 and 58 of the judgment. I consider that the Court merely stated a 89. The Commission stated that it was in requirement arising from substantive law, principle in favour of placing the trade- namely that a rule is inadmissible if it mark owner under a duty of cooperation, would be equivalent to deemed consent. 48 but only in so far as is necessary to remove the risk of market partitioning and to avert an unreasonable burden on the defendant to produce evidence.

93. The Court interpreted consent as a renunciation of the exclusive right con-

46 — See paragraph 65 above. 90. In both situations it is for the national 47 — Cited in footnote 3. court to decide in a particular case what 48 — See, to this effect, paragraph 84 above.

I - 3074

VAN DOREN + Q

95. It is for national law to define this duty 97. Although a national obligation to mark in greater detail because, on account of trade-marked goods, as repeatedly pro- Member States' basic autonomy in matters posed in this context, makes it easier to of procedure, the limits resulting in par- prove where the goods were first put on the ticular from the directive do not completely market, it provides no definitive infor- remove their discretion and establish man- mation as to whether or not the trade-mark datory requirements. owner has granted consent for those goods to be placed on the market in the EEA for 49 — Cited in footnote 3, paragraph 4 1 . the first time. It would at least go some way 50 — Cited in footnote 3, paragraph 45. to dividing the burden of proof but would 51 — Cited in footnote 3, paragraph 58. not — contrary to the view of the French 52 — See paragraph 76 et seq. above. Government — be tantamount to deemed

I - 3075

OPINION OF MRS STIX-HACKL — CASE C-244/00

100. It must be held that the imposition of a duty of cooperation on the trade-mark owner — either in the form of an indi- cation on the goods or a duty to plead and prove the relevant facts — would make it 99. One solution would be to require the possible to re-establish the compatibility of trade-mark owner to prove that his dis- a national rule on proof of the kind in question with Articles 28 EC and 30 EC and Articles 5 and 7 of the directive. The 53 — Save where it contains a relevant proviso. See, to this effect, the comments in Davidoff, cited in footnote 3, duty of cooperation may, however, not paragraph 56: 'Likewise, implied consent cannot be inferred from the fact that a trade mark proprietor has exceed what is necessary to avert the risk of not communicated his opposition to marketing within the EEA or from the fact that the goods do not carry any market partitioning, on the one hand, warning that it is prohibited to place them on the market and/or the unreasonableness of the duty within the EEA'. on the defendant to adduce evidence, on 54 — Furthermore, the detachability and/or durability of mark- ings is probably also an issue in this connection. the other.

I - 3076

VAN DOREN + Q

V — Conclusion

101. I therefore propose that the Court should answer the question referred by the Bundesgerichtshof as follows:

Article 28 EC and Article 30 EC and Article 7(1) of First Council Directive 89/104/EEC of 21 December 1988 to approximate the laws of the Member States relating to trade marks are to be interpreted as in principle not precluding the application of national rules on the burden of proving exhaustion under Article 7 of Directive 89/104/EEC.