Can a trade mark proprietor stop a third party from placing goods covered by the trade mark under a duty suspension arrangement, having introduced them into the EEA without the proprietor's consent?

The Court of Justice of the European Union (CJEU) has ruled in favour of Bacardi holding that it was entitled to stop its trade marked goods from being placed under a duty suspension arrangement by a third party [1].

In 2006, several shipments of Bacardi products were transported to the Netherlands from outside the EU at the request of the distributor, Van Caem. These goods were then stored with Top Logistics in a warehouse in Rotterdam. They were given a T1 status (i.e. goods that have been imported into the EU and the duty and VAT has not been paid in full). Some of the goods were then released for free circulation into the European Economic Area (EEA) under a separate duty suspension agreement and were placed in a tax warehouse.

Bacardi had not consented to the goods being imported into the EEA. It sued Van Caem and Top Logistics in the Rotterdam District Court, arguing that releasing products under a duty suspension arrangement without its consent constituted trade mark infringement.

Bacardi succeeded at first instance. On appeal, the Hague Court of Appeal ruled that, as long as the Bacardi bottles had the status of T1 goods, there was no infringement of Bacardi's trade marks. However, it applied to the CJEU for a preliminary ruling on the relationship between a duty suspension arrangement and Article 5 of the Trade Marks Directive [2]. Article 5 entitles a trade mark proprietor to prevent the sale and distribution of their products "in the course of trade" and The Hague Court asked whether goods placed under a duty suspension arrangement are considered to be in the "course of trade".

The CJEU ruled that to limit a trade mark proprietor's ability to prevent the distribution of products under a duty suspension arrangement would adversely affect the function of the mark, namely to identify the undertaking from which the goods originate and under whose control the initial placing on the market is organised. Accordingly, in the words of the CJEU: "The proprietor of a trade mark registered in one or more Member States may oppose a third party placing goods bearing that trade mark under the duty suspension arrangement after they have been introduced into the EEA and released for free circulation without the consent of that proprietor".

Van Caem's actions, in importing the goods into the EU without Bacardi's consent, detaining them in a tax warehouse until the import duties were paid and releasing them for consumption constituted trade mark infringement. However, Top Logistics, in providing a warehouse service, was not infringing Bacardi's trade marks under the Trade Marks Directive.