A recent case in the UK Intellectual Property and Enterprise Court has confirmed a further scenario in which trade mark owners can oppose the resale of their goods by unauthorised resellers.
In this article, we take a look at the case of Nomination di Antonio e Paolo Gensini SNC and Anor v Sebastian Brealey and Victoria Brealey (t/a JSC Jewellery), and set out some tips for both brand owners and resellers to keep in mind when considering the resale of branded products.
What’s the law at the moment?
Due to the principles of free movement, trade mark owners are generally not entitled to oppose the resale of their genuine branded products within the EU, once they have been placed on the market. One exception to this is if they can show that they have ’legitimate reasons’ for opposing the further resale. It is this provision that often catches out unwary resellers, who may not be aware of the conditions for legitimate reselling.
What are ‘legitimate reasons’ for challenging the resale of goods?
Various cases have set out a number of tests and scenarios for determining when goods can legitimately be resold. The case of Bristol-Myers Squibb v Paranova was concerned with the right or otherwise of a pharmaceutical company to control the sale of its products where they had been repackaged by an importer. The Court of Justice of the European Union (CJEU) ruled that the trade mark owner may legitimately oppose such sales unless:
- enforcing the trade mark would contribute to the artificial partitioning of the market between member states;
- repackaging cannot affect the original condition of the product;
- the new packaging clearly states who repackaged the product and the name of the manufacturer;
- the presentation of the repackaged product is not liable to damage the reputation of the trade mark and of its owner; and
- the importer gives notice to the trade mark owner before the repackaged product is put on sale.
Later, in the case of Copad SA v Christian Dior Couture SA, the CJEU considered whether Christian Dior could oppose the resale of luxury goods that were being resold in a way that would damage the reputation and allure of the brand. The Court held that damage done to the reputation of a trade mark may, in principle, be a legitimate reason to allow the owner 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.
The Court’s decision in the recent Nomination case
This latest case of Nomination di Antonio e Paolo Gensini SNC and Anor v Sebastian Brealey and Victoria Brealey (t/a JSC Jewellery) considered whether the trade mark owner, Nomination di Antonio e Paolo Gensini, could oppose the resale of the individual links that had been taken from a genuine link charm bracelet, under the “legitimate reasons” proviso.
The defendant, JSC Jewellery, purchased genuine NOMINATION link bracelets from within the EAA, disassembled them, and resold the individual links in a blister pack, along with a JSC Jewellery (i.e. non-genuine) charm. The claimants argued that they had legitimate reasons to oppose this practice on the following grounds:
- their own authorised retailers were not permitted to sell the individual links in this way;
- the products were not being sold in high quality packaging, thereby damaging the reputation of the NOMINATION brand;
- the defendant’s customers did not benefit from NOMINATION guarantee;
- the defendant did not always identify who had done the repackaging; and
- the repackaging risked damaging the condition of the links.
The claimants succeeded in proving legitimate reasons to oppose the resale of the individual links, on the basis that the packaging they were being resold in was not of high quality, thereby damaging the reputation of the NOMINATION trade mark.
What does this mean for trade mark owners and resellers?
This case is further confirmation that the right to resell branded goods is not unqualified. The decision will be welcomed by brand owners, particularly owners of luxury brands, as a further example of circumstances in which they may be able to oppose the resale of their goods. It also helpfully gives some further confirmation of what may or may not be considered “legitimate reasons” for opposing resale.
It is of note that the claimant did not succeed in arguing that its own authorised retailers were not permitted to sell the individual links, as it did not include such a restriction in its distribution agreements, and did not challenge authorised retailers who did sell the links individually. Ultimately this did not affect the outcome of the case, but it is an important reminder to ensure that your distribution agreements contain appropriate, and competition law compliant, restrictions in relation to the resale of your goods.
For resellers, this case is a good reminder of the need to stay within the law when reselling genuine goods, and ensuring you are not doing anything that would constitute a legitimate reason for the relevant trade mark owner to challenge your reselling.