EUROPEAN PARLIAMENT
1999
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2004
Committee on Legal Affairs and the Internal Market
PROVISIONAL
2187/2000(COS)
15 February 2001
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DRAFT REPORT
on the problem of the exhaustion of trademark rights
(SEC(1999)2033 – C5-0354/2000 – 2187/2000(COS))
Committee on Legal Affairs and the Internal Market
Rapporteur: Hans-Peter Mayer
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Symbols for procedures
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**I
**II
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***I
***II
***III
Consultation procedure
majority of the votes cast
Cooperation procedure (first reading)
majority of the votes cast
Cooperation procedure (second reading)
majority of the votes cast, to approve the common position
majority of Parliament’s component Members, to reject or amend
the common position
Assent procedure
majority of Parliament’s component Members except in cases
covered by Articles 105, 107, 161 and 300 of the EC Treaty and
Article 7 of the EU Treaty
Codecision procedure (first reading)
majority of the votes cast
Codecision procedure (second reading)
majority of the votes cast, to approve the common position
majority of Parliament’s component Members, to reject or amend
the common position
Codecision procedure (third reading)
majority of the votes cast, to approve the joint text
(The type of procedure depends on the legal basis proposed by the
Commission)
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CONTENTS
Page
PROCEDURAL PAGE .............................................................................................................. 4
MOTION FOR A RESOLUTION ...............................................................................................
EXPLANATORY STATEMENT................................................................................................
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PROCEDURAL PAGE
By letter of 1 December 1999 the Commission submitted to Parliament the Commission staff
working paper on the exhaustion of trade mark rights (SEC(1999)2033 - 2187/2000(COS)).
At the sitting of 7 July 2000 the President of Parliament announced that she had referred this
document to the Committee on Legal Affairs and the Internal Market as the committee
responsible and the Committee on Industry, External Trade, Research and Energy for its
opinion (C5-0354/2000).
At its meeting of 20 March 2000 the Committee on Legal Affairs and the Internal Market had
appointed Hans-Peter Mayer rapporteur.
The committee considered the Commission's staff working paper and the draft report at its
meeting(s) of
At the latter/the last meeting the committee adopted the motion for a resolution by
The following were present for the vote: …, chairman/acting chairman; ... (and ...), vicechairman/vice-chairmen; …, rapporteur; ..., ... (for ...), ... (for ... pursuant to Rule 153(2)), ...
and ... .
The Committee on Industry, External Trade, Research and Energy decided on 12 July 2000
not to deliver an opinion.
The report was tabled on
The deadline for tabling amendments will be indicated in the draft agenda for the relevant
part-session/is ... on ... .
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MOTION FOR A RESOLUTION
European Parliament resolution on the Commission staff working paper on the
exhaustion of trade mark rights (SEC(1999)2033 - C5-0354/2000 - 2187/2000(COS))
The European Parliament,
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having regard to the Commission staff working paper (SEC(1999)2033 - C50354/2000)1,
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having regard to the trade marks Directive of 21 December 19882 and Council
Regulation no. 4094 of 20 December 1993 on the Community trade mark3, and in
particular Article 7 and Article 13 thereof which reads as follows:
"Exhaustion of the rights conferred by a Community trade mark
(1) A Community trade mark shall not entitle the proprietor to prohibit its use in
relation to goods which have been put on the market in the Community under that
trade mark by the proprietor or with his consent.
(2) Paragraph 1 shall not apply where there exist legitimate reasons for the proprietor
to oppose further commercialisation of the goods, especially where the condition of
the goods is changed or impaired after they have been put on the market."
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having regard to Rule 47(1) of its Rules of Procedure,
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having regard to the report of the Committee on Legal Affairs and the Internal Market
(A5-0000/2001),
A.
whereas the principle of national exhaustion originally applied in several Member
States of the European Community,
B.
whereas in 1974 the Court of Justice of the European Communities in respect of these
countries extended national exhaustion to Community-wide exhaustion4 and at an
early stage acknowledged the importance of parallel trade to consumers5,
C.
whereas the transition from national to Community-wide exhaustion led to greater
competition and a reduction in price rises,
1
OJ C
89/104/EEC, OJ L 40, 11.2.1989, p. 1, last amended by Council Decision 92/10/EEC of 10 December 1991, OJ
L 6 of 11.1.1992, p. 35.
3
OJ L 11, 14.1.1994, p. 1, last amended by Council Regulation EC no. 3288/94 of 22 December 1994, OJ L 349,
31.12.1994, p. 83.
4
For the first time in the Judgment of 31.10.1974, Case 16/74, Centrafarm v. Winthrop, ECR 1183. See also the
Judgments in Cases 119/75, 102/77, 3/78 and 1/81.
5
Paragraph 11 of the Judgment in Case 60/74.
2
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D.
whereas in several Member States the principle of international exhaustion applied
before the trade marks directive came into force,
E.
whereas the Silhouette judgment1 interpreted Article 7 of the trade mark Directive as
not allowing any extension of Community exhaustion to international exhaustion in
respect of Member States national trade marks alone,
F.
whereas the transition from Community-wide to international exhaustion would take
account of the realities of a globalised economy and curb patterns of behaviour
seeking to restrict competition,
G.
whereas trade mark legislation must continue to be effective in protecting intellectual
property, but to remove barriers to trade international exhaustion must allow third
parties to use the trade mark exclusively for goods put on the market under that trade
mark with the agreement of the trade mark proprietor, but pirate producers should
continue to be prohibited from using the trade mark,
H.
whereas in the field of design legislation the European Parliament has three times
adopted an approach intended to lead to greater competition and better consumer
prices, in respect of spare parts for cars for example2,
I. Principles
1.
Proclaims its belief in the concept of the social market economy which gives the
consumer a share in economic progress, this share being represented inter alia by
affordable prices for goods and services;
2.
Believes that affordable prices for goods and services are primarily achieved by
competition between various suppliers;
3.
Points out that competition consists on the one hand of competition between suppliers
of different brands (inter-brand competition) and on the other, of competition between
various suppliers of the same brand (intra-brand) competition;
4.
Notes that the main purpose of the trade mark is to ascribe a clear source to a product
or service;
5.
Maintains that trade mark legislation may not be used as a barrier to trade;
1
European Court
European Parliament and Council Directive 98/71/EC of 13 October 1998 on the legal protection of designs, in
particular Article 14 thereof; see also the Resolution of 22 October 1997, Amendment 10, and the Decision of
15.9.1998 on the joint text approved by the Conciliation Committee (Report A4-0315/98). Amended proposal for
a Council Regulation on Community design (COM(1999)310); see also Resolution of 16.6.2000, Amendment
12.
2
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II. Comments in detail
6.
Notes that, despite huge increases in productivity over recent years, the prices of many
branded goods have not fallen;
7.
Notes that parallel imports are economically viable and will therefore occur only
where the retail prices of parallel imports are well below those charged by the trade
mark proprietor himself in the country of destination;
8.
Notes that the following processes may be observed:
Outside the EU traders are at liberty to buy and sell branded goods at prices
determined by them.
Within the EU manufacturers can fix not only their own selling prices but also prices
from the wholesale to the retail stage, using trade mark legislation;
9.
Notes that the ability to set excessive prices within the EU was not one of the aims of
the internal market; believes that partitioning of markets and high prices are not the
purpose of trade mark legislation;
10.
Notes that the NERA study commissioned by the Commission into a transition from
Community to international exhaustion predicted a decline, albeit small in consumer
prices;1
11.
Notes that the Court of Justice has declared parallel imports to be permissible under
competition law if an arrangement would prevent, restrict or distort competition within
the Community and be liable to affect the pattern of trade between Member States2;
12.
Would regard it as surprising and illogical if a course of action which is permissible
under primary legislation (Article 81(1)) were to be ruled out on grounds derived from
secondary legislation (Article 7 of the Trademarks Directive);
13.
Points out that the Court of Justice has clearly stated that trademark legislation may
not be abused to thwart the Community's competition legislation;3
14.
Points out that the introduction of international exhaustion in trademark law would not
affect the exhaustion provisions governing other intellectual property rights;
1
'The economic consequences of the choice of a regime of exhaustion in the area of trademarks' drawn up by
NERA, SJ Berwin & Co, IFF Research, London, 8.2.1999, p.125.
2
Judgment of 28 April 1998, Case C-306/96, Javico AG v. Yves Saint Laurent Parfums SA, Paragraph 1 of the
Judgment.
3
Court of Justice judgment of 30.1.1985, Case 35/83, BAT v. Commission, paragraph 33.
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15.
Notes that in the USA trademark law is primarily intended to protect the consumer
from confusion over the origin of goods; this risk intrinsically does not exist in the
case of parallel imports if the trademark and the products are the same;1 this provision
therefore corresponds to international exhaustion;
16.
Notes that, according to the Commission, after to a recent court decision in Japan, it is
considered that international exhaustion applies in the field of patents and trademarks,
unless, through licences, it is otherwise agreed;2
17.
Notes that the current legal situation regarding internet trade in branded goods is not
clear on the matters of offering for sale, sale, placing on the market or importation;
18.
Considers that a transition to international exhaustion might resolve the trademark
problems arising from internet trading;
III.
The main demand
19.
Advocates, on the grounds of the above considerations and findings, a properly
thought out transition from Community-wide exhaustion to international exhaustion,
and calls on the Commission to submit legislative proposals to this effect;
IV.
Conditions for transition to international exhaustion
20.
Favours, in the event of the introduction of international exhaustion, the retention of
an exemption clause similar to the current Article 7(2) of the trade marks Directive;
21.
Calls on health grounds for exemptions for pharmaceuticals.
1
See for example the judgment in the Société des Produits Nestlé v. Casa Helvetica Case, 982F.2d 633 (1st Cir.
1992).
2
SEK(1999)2033, p. 14.
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EXPLANATORY STATEMENT
1.
The concept of Community-wide exhaustion and its economic consequences
In the current legal situation the legal effect of trademarks granted by the Member States and
the Community trademark are not yet exhausted within the Community if the trademark
proprietor puts his product on the market outside the Community.
Trademark proprietors can therefore bar parallel importers from importing the product into
the Community and thus charge two different prices: a lower price outside the Community
and a higher one within the Community itself.
This differential pricing is not the object of trademark law. The main object of a trade mark is
to make the product distinguishable and known, and to indicate its specific source.
The segmentation of markets at the consumer's expense in the Community cannot be the
objective of trade mark law.
2.
The rapporteur's aims
The rapporteur's aims are to
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stimulate competition and
obtain the best prices for consumers.
The rapporteur considers that international exhaustion (by comparison with Community-wide
exhaustion) would be a great step towards these goals.
3.
Internet trading
Internet trading is a significant new factor.
Consumers can search the Internet to find the best deals throughout the world and prices will
fall. The present exhaustion arrangements could hamper this development.
It is not clear whether an Internet purchase followed by despatch of the product
(corresponding to a parallel import) is permissible under trademark law.
The key question in trade mark law is whether as a result of the act of shipment (from a third
country to the EU), the goods have been placed on the market in the Community or in the
third country. There are arguments for both interpretations. There is no generally accepted
application of trade mark law to Internet purchases.
Of course, if the goods are regarded as being put on the market in the third country, the risks
of damage or disappearance of the goods during the transport operation could be foisted on to
the consumer.
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However, legal security and consumer protection are essential conditions for the
development of Internet trading. Nobody is aware of this more than the members of the
Committee on Legal Affairs, who have debated the serious problems in this field on several
occasions.
5.
Specific problems
The rapporteur is prepared to seek special arrangements in problematic areas.
5.1
Product piracy and the burden of proof
Even with international exhaustion trade mark proprietors can still defend themselves against
counterfeits by simply ascertaining their right to the trade mark. The importer would then
have to demonstrate the route by which he obtained the product from the original
manufacturer. He would be unable to do so if the goods were counterfeit.
Where the pirating of products can be prevented only by reliance by the trade mark proprietor
on other intellectual property rights, the burden of proof, which would normally be onerous
for the rights holder, should be revised in his favour: as in trade mark law, the parallel
importer should be obliged to demonstrate that the goods had not been pirated.
5.2
Pharmaceuticals
Pharmaceuticals are a special case in that the price disparities between different States are
primarily determined by the nature of their respective health systems. It would be unfair if
parallel importers were able to exploit the existence of differing health systems at the expense
of trade mark proprietors. There is also the risk of changes to the pharmaceuticals during
transport and storage which would constitute a hazard to health. The changeover to
international exhaustion would therefore have to be accompanied by a derogation for
pharmaceuticals protected by trade mark law.
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