Art. 7(2): legitimate reasons
Retailers not entitled to sell individual base links 43. The first reason pleaded by Nomination was that retailers were instructed not to sell individual Nomination base links. I have found that this to be incorrect on the evidence; it is a reiteration of Nomination’s argument on lack of consent. JSC products not sold in high quality packaging 44.The second reason concerned packaging. Each bracelet sold by Nomination goes out to a retailer with packaging which separately accompanies the bracelet. The retailer puts the bracelet into the packaging for supply to consumers. I was shown an example of a sturdy and elegantly designed cardboard box with Nomination’s name and logo prominently on the front and back. Inside the box there is a foam support in which the bracelet is contained. The evidence indicated that the bracelet and support are wrapped in yellow tissue paper. The box contains a leaflet which includes a guarantee. The box is presented in a similarly elegant cardboard bag, closed by a ribbon. I agree with Mr Pearson that the impression given by Nomination’s packaging is that its contents are of high quality. 45.As I have said, JSC supplied Nomination base links to their customers either in a small blister pack or in a small transparent plastic bag. No one could say that JSC’s packaging conveys an impression of quality. 46.A potential difficulty for Nomination was the packaging sometimes used by their retailers for the sale of individual links. I was shown a Nomination base link in a transparent plastic bag as supplied by one of Nomination’s authorised retailers. However, a customer going to an authorised Nomination retailer to buy an extra base link has already bought or been given a Nomination bracelet. The image of quality has already been conveyed by the bracelet’s packaging. 47.JSC’s customers may never have received a Nomination bracelet. In fact JSC’s advertising promotes the idea of using a Nomination base link as an additional part of JSC’s ‘Italian charm bracelet’. So far as packaging is concerned, these customers would associate Nomination’s product only with either a small blister pack or a small plastic bag. 48.Mr Sinai pointed out that non-authorised traders other than JSC have supplied Nomination’s base links in simple packaging and Nomination have not sought to stop such sales. I agree that Nomination have been relaxed about policing its rights. But that does not neutralise the rights if they exist. 49.Both counsel again sought to draw an analogy with the law explained by the CJEU. This time the analogy was with the Court’s judgments on repackaging. 50.Bristol-Myers Squibb v Paranova A/S, Joined Cases C-457, 429 and 436/93, EU:C:1996:282, [2003] Ch 75 was concerned with the right or otherwise of a pharmaceutical company to restrain the sale of its products where they have been repackaged by an importer. The CJEU ruled that pursuant to art.7(2) the trade mark owner may legitimately oppose such sales unless (1) enforcing the trade mark would contribute to the artificial partitioning of the market between member states, (2) repackaging cannot affect the original condition of the product, (3) the new packaging clearly states who repackaged the product and the name of the manufacturer, (4) the presentation of the repackaged product is not liable to damage the reputation of the trade mark and of its owner and (5) the importer gives notice to the trade mark owner before the repackaged product is put on sale, see paragraph 3 of the final ruling of the Court. These have been referred to as the five ‘BMS conditions’. In this part of their case Nomination relied on the fourth. 51.The CJEU reconsidered the five conditions in the two subsequent judgments it gave in the Boehringer repackaging litigation. The second of these was Boehringer Ingelheim KG v Swingward Ltd, Case C-348/04, EU:C:2007:249, [2007] ETMR 71 (‘Boehringer II’). The Court said: “[43] Accordingly, a repackaged pharmaceutical product could be presented inappropriately and, therefore, damage the trade mark's reputation in particular where the carton or label, while not being defective, of poor quality or untidy, are such as to affect the trade mark's value by detracting from the image of reliability and quality attaching to such a product and the confidence it is capable of inspiring in the public concerned (see, to that effect, Bristol-Myers Squibb at [76]; and Case C-337/95 Parfums Christian Dior SA v Evora BV [1997] E.C.R. I-6013 at [45]).” 52.The Court’s reference to Dior shows that a trade mark owner’s right to object to its goods being poorly presented is not confined to the repackaging of pharmaceuticals. In Dior the trade mark owner, a perfume house, objected to the marketing of parallel imports of its products on the ground that the advertising used was liable to damage the luxurious and prestigious nature of the trade marks. The Court held that where the reseller uses modes of advertising which are customary in his trade sector, the trade mark owner could not rely on art.7(2) unless the reseller’s advertising seriously damages the reputation of the trade mark (see [46]).53.In a subsequent Dior case, Copad SA v Christian Dior Couture SA, Case C-59/08, EU:C:2009:260, [2009] FSR 22, the CJEU reiterated (at [55]): “… damage done to the reputation of a trade mark may, in principle, be a legitimate reason, within the meaning of art.7(2) of the Directive, allowing the proprietor of the mark to oppose further commercialisation of luxury goods which have been put on the market in the EEA by him or with his consent …” 54.On this occasion there was no requirement of serious damage. The Court of Justice has been inconsistent about this, see Dansac A/S v Salts Healthcare Ltd [2019] EWHC 104 (Ch) at [46]-[48]. 55.In Boehringer II the Court held that it was for the parallel importer to prove that the presentation of the repackaged product was not liable to damage the reputation of the trade mark and of its proprietor, but added this (at [54): “Where the importer furnishes such initial evidence that the latter condition has been fulfilled, it will then be for the proprietor of the trade mark, who is best placed to assess whether the repackaging is liable to damage his reputation and that of the trade mark, to prove that they have been damaged.” 56.I do not believe that the present case turns on a shifting burden of proof. I must reach a view as to whether it is likely that JSC’s packaging will damage the reputation of the Trade Marks and thereby Nomination. I think it is likely. I am satisfied that the elegant packaging of Nomination’s bracelets will convey an image of luxury to purchasers and that this increases the reputation of the Trade Marks. The receipt of Nomination’s products in a small blister pack or polythene bag is likely to damage that reputation. 57.Nomination sought to bolster their case under this head by evidence from Mr Brown that their retailers were carefully selected. No doubt they are selected but Mr Brown’s cross-examination indicated that the selection may or may not turn out well. Ms Priestman said that she did not undergo any due diligence measures from Nomination before her business became an authorised Nomination retailer. She was not even asked to sign a written agreement. JSC’s customers do not benefit from the guarantee 58.The third reason was that those who purchase Nomination base links from JSC will not benefit from Nomination’s guarantee. I was told that the written guarantee supplied in the Nomination box is stamped on the date of sale and that the guarantee must be presented if the product requires repair. JSC’s customers would not receive the guarantee and it was argued that this was a further legitimate reason to oppose the sale of Nomination base links by JSC. 59.However, it was not made clear on the evidence whether the guarantee made any practical difference to a customer who returned a faulty Nomination link and sought to rely on their usual consumer rights. JSC did not always identify who had done the repackaging 60.For Nomination’s fourth reason Mr Pearson sought to rely on BMS condition (3). Where JSC supplied a Nomination base link in a plastic bag, on the bag was a label which clearly stated that the product had been manufactured by Nomination, Italy, and repackaged by JSC Jewellery UK. If the base link was supplied in a blister pack there was no such label. In such cases, Mr Pearson said, there was a breach of BMS (3). 61.I am not satisfied that BMS (3) applies to goods other than repackaged pharmaceuticals or products of an equally sensitive nature. It would be important to be able to trace all stages of supply of pharmaceuticals in the event of, say, a health scare. There is no such sensitivity attached to the sale of bracelets. BMS (3) was not mentioned by the Court of Justice in the Dior cases. The repackaging risked damaging the condition of the links 62.The last of Nomination’s proposed legitimate grounds under art.7(2) came from BMS condition (2). In Boehringer II the Court held that the parallel importer bore the burden of proof to show that there was no damage caused to the condition of the goods due to the repackaging, but (at [54]): “… it is sufficient that the parallel importer furnishes evidence that leads to the reasonable presumption that that condition has been fulfilled.” 63.Pharmaceuticals are liable to be damaged by poor repackaging, caused by exposure to damp or heat or physical impact, more liable than bracelet base links anyway. I was given no sound reason to believe that the blister packs or polythene bags used by JSC would expose the links to damage in circumstances where Nomination’s packaging would not have done.