Case No. IP-2017-000209

JSC’s argument 30.Mr Sinai submitted that when Nomination sold the base bracelets it realised the economic value of its Trade Marks and could not thereafter prevent anyone in the subsequent line of ownership from using the Trade Marks in relation to the bracelets, whether marketed as a whole or in separate links. This submission was derived from the judgment of the European Court of Justice in Peak Holding AB v Axolin-Elinor AB, Case C-163/03, EU:C:2004:759, [2005] Ch 261. The case concerned the act necessary for goods to be ‘put on the market’ within the meaning of art.7 of the Trade Mark Directive. The CJEU confirmed that if such an act were done, such that the goods were put on the market by the trade mark proprietor or with his consent, the proprietor’s trade mark rights were exhausted at that point: “[40] A sale which allows the proprietor to realise the economic value of his trade mark exhausts the exclusive rights conferred by the Directive, more particularly the right to prohibit the acquiring third party from reselling the goods.” 31.Mr Sinai said that Nomination were not entitled to distinguish between putting a bracelet of 13 or 18 links on the market and putting each link individually on the market. Either way, there was exhaustion under art.7 of the Trade Mark Directive and s12 of the 1994 Act once a bracelet had been sold. 32.This was all the more true, he said, because the evidence revealed that Nomination had consented to its retailers selling individual links to customers. There was no evidence about express agreement having been directed to the particular bracelets that JSC had dismantled, but Nomination must have contemplated the possibility that this could happen to those bracelets since its policy was not to object to the dismantling of base bracelets and sale of the individual links. Therefore the exhaustion of Nomination’s trade mark rights upon the sale of its bracelets to retailers in the EEA, specifically to those which had gone on to supply JSC, extended to subsequent sale of individual links just as much as to subsequent sale of intact bracelets. The evidence on Nomination’s attitude to sales of individual base links 33.In cross-examination Mr Gensini confirmed that Nomination has imposed no contractual restriction on retailers supplied with Nomination’s bracelets preventing the sale of individual base links taken from those bracelets. The initial stance taken by both Mr Gensini and Mr Brown was that retailers were orally made to understand that they were only entitled to sell a single base link to a customer who expressed the wish to enlarge a Nomination bracelet. Yet both had to concede that even when retailers had sold individual base links without any limitation on their use, including sales which must have been drawn to Nomination’s attention by the pleadings and evidence in this case, Nomination had not approached the relevant retailers to complain or otherwise to enforce the alleged oral understanding. Ms Priestman, the proprietor of an authorised Nomination retailer, gave unchallenged evidence that she sold individual Nomination base links and that restrictions on such sales agreed with Nomination did not include any restraint on selling single base links. 34.Letters were sent from time to time by Nomination to retailers of its products about lack of compliance with Nomination’s guidelines for the sale of its products but these did not include any warning against the sale of individual base links. 35.I find that Nomination’s retail customers, including those which supplied JSC with the entire bracelets which were later disassembled by JSC and those which supplied single base links to JSC, reasonably assumed that they could sell single base links if asked to do so. Nomination did not express any restriction on sales of individual links at the relevant time and probably did not consider that there was a need for such a restriction. Whether Nomination’s attitude constituted consent 36.However, this did not close down Nomination’s argument on lack of consent under art.7(1). Mr Pearson submitted that since there had been no express consent to the sale of individual links under the Trade Mark, JSC must rely on implied consent and meet the requirements set out by the CJEU in Zino Davidoff SA v A & G Imports Ltd, Joined Cases C-414 to 416/99, EU:C:2001:617, [2002] Ch 109. 37.Davidoff was about dealers had who obtained goods bearing one of the trade marks in issue outside the EEA and sold them, still bearing the trade mark, within the EEA. There had been no express consent by the trade mark proprietors to sales in the EEA. The CJEU considered the circumstances under which such consent may be implied. This was the ruling at the conclusion of the judgment: “1. On a proper construction of 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, as amended by the Agreement on the European Economic Area of 2 May 1992, the consent of a trade mark proprietor to the marketing within the European Economic Area of products bearing that mark which have previously been placed on the market outside the European Economic Area by that proprietor or with his consent may be implied, where it follows from facts and circumstances prior to, simultaneous with or subsequent to the placing of the goods on the market outside the European Economic Area which, in the view of the national court, unequivocally demonstrate that the proprietor has renounced his right to oppose placing of the goods on the market within the European Economic Area. 2.Implied consent cannot be inferred (i) from the fact that the proprietor of the trade mark has not communicated to all subsequent purchasers of the goods placed on the market outside the European Economic Area his opposition to marketing within the European Economic Area; (ii) from the fact that the goods carry no warning of a prohibition of their being placed on the market within the European Economic Area, or (iii) from the fact that the trade mark proprietor has transferred the ownership of the products bearing the trade mark without imposing any contractual reservations and that, according to the law governing the contract, the property right transferred includes, in the absence of such reservations, an unlimited right of resale or, at the very least, a right to market the goods subsequently within the European Economic Area. 3.With regard to exhaustion of the trade mark proprietor's exclusive right, it is not relevant (i) that the importer of goods bearing the trade mark is not aware that the proprietor objects to their being placed on the market in the European Economic Area or sold there by traders other than authorised retailers, or (ii) that the authorised retailers and wholesalers have not imposed on their own purchasers contractual reservations setting out such opposition, even though they have been informed of it by the trade mark proprietor.” 38.If Nomination is correct in drawing an analogy with Davidoff, the question in the present case would be whether JSC has unequivocally demonstrated that Nomination renounced its right to oppose the placing of the base links on the market individually. 39.I must also consider the judgment of the European Court in Sebago Inc v GB Unic SA, Case C173/98, EU:C:1999:347, [2000] Ch 558. In that case the importer argued that the trade mark proprietor had earlier consented to the same type of goods being marketed in the EEA under the trade mark and by implication had consented to all goods of that type being sold in the EEA under its mark. The European Court rejected the argument, saying this at the conclusion of its final ruling: “… for there to be consent within the meaning of article 7(1) of that Directive, such consent must relate to each individual item of the product in respect of which exhaustion is pleaded.” 40.The analogy between Davidoff and the present case is not exact. Firstly, a central question in Davidoff was whether EU trade mark law should apply international exhaustion or European exhaustion. The effect of international exhaustion would have been that where there has been marketing anywhere in the world of a product under the trade mark by the trade mark proprietor or with his consent, the trade mark rights are exhausted. The alternative was European exhaustion: marketing in the EEA was required. There was evidence and argument before the European Court in Davidoff about the policy of the European legislature when the relevant provisions were enacted, sometimes styled the ‘Fortress Europe’ policy. The present case has no similar territorial aspect to it. Sales of both the bracelets and the single links were all in the EEA. 41.Secondly, as appears from paragraphs 2 and 3 of the ruling of the Court of Justice in Davidoff (quoted above), the judgment went ahead on the unchallenged assumption that the trade mark proprietors were opposed to the marketing of their goods in the EEA under the trade mark, although they had not expressly communicated their opposition. In the present case I doubt that Nomination had reached any decided view about the sale of their individual base links under the Trade Marks at the relevant time, although I accept that Nomination’s position has now changed. 42.Looking at this as a matter of general principle, it is not clear to me why Nomination should have a sound basis for objecting to the onward sale under the Trade Marks of links taken from their bracelets unless there are legitimate reasons for doing so, in which case art.7(2) applies. Nomination can certainly not object to their bracelets being disassembled by purchasers. There would be nothing misleading, of itself, about a purchaser of a Nomination bracelet stating on eBay that a link taken from such a bracelet is a Nomination link. However, for the reasons to which I now turn, it is enough for me to decide the present case by reference to art.7(2).