Trademark Act in the UK - Essay Example

"Given that the function of trademarks is to operate as an indication of origin, there is no justification for the law giving a trademark proprietor the right to prevent the parallel importation of its own trademarked goods." Trademark law in the UK is governed by the Trademark Act 1994 (TA), it has concisely defined what a trademark is, what can gain the status of a trademark and the protections afforded to a trademark. One may ask how a trademark falls under the ambit of Intellectual Property because it deals with tangible and marketable products that may be everyday items, i.e. not original concepts or ideas. The answer is that the trademark itself is the protected concept because it distinguishes the goods of one producer from another. An example of a trademark is the Nike tick, which allows the consumer know they are buying Nike products; whilst if one buys a similar product with a picture of a puma on then the individual knows that it is a Puma product. Therefore if another producer started to sell products that had a Nike tick on then it would be a breach of the TA and this producer would be liable for this breach. The concept of trademark law is straightforward when one is dealing with two autonomous producers; however is the case of there being a breach of trademark protections in the case of parallel importing The first question to ask is what is parallel importing Parallel importing is the situation when goods originate from the same producer or set of manufacturing licensees but are sold and produced in different countries. This may lead to a disparity in price, because in say Eastern European Countries the production and sale is a lot cheaper than that of the producer's counterpart in Western Europe. Therefore one has to consider whether the domestic producer can use trademark protections to stop middlemen from buying products from the cheaper nations and import them to sell in competition against the more expensive domestic producer1. Therefore can Trademark law as Cornish argues can be used to protect trademarks in parallel exportation issues; however with much difficulty in an open market: Any intellectual property right may be used at the frontier of the higher-priced country to close off the entry of goods bought by a parallel importer in the lower-priced country, if those rights extend to the distributor's importation and are not regarded as ""exhausted" by the initial marketing abroad, i.e. by so-called ""international exhaustion". Whether the particular intellectual property law, or some other dictate of commercial policy (such as free movement of goods within the E.U.), calls for international exhaustion is a matter which legislative bodies everywhere find extraordinarily difficult to answer, and it is more often left to courts to arrive at a solution.2 Therefore introducing the question whether allowing their to be importation by a middle man who was correctly sold a product, in a country where a product has a cheaper price that that of the destination country, is in fact a breach of trademark law. This is a very difficult point of law because one could argue that yes it is because it is devaluing the product and its reputation in the country of destination, because the market values is devalued by the importation of a cheaper version of the product.3 Yet, on the other hand, on has to consider whether in fact there is a case of a trademark breach because the sale of the product was correctly done through a legitimate manufacturer of the product. If the product was bought legitimately, i.e. the product was made by an approved plant or licensee, then how could it be a breach of trademark law The following section will consider the case law in this area. In the early case of Colgate Palmolive Ltd v Markwell Finance Ltd [1989] RPC 497 it was successfully proven that parallel imports are in fact a breach of trademark law, because it devalues the product, which breaches trademark law. The way that this case argued that parallel importing was in fact a breach of trademark law was by showing that a middleman importing goods without a license, even though it was bought from a legitimate producer in another country, was the same as selling a product without a license because it was not purchased from the domestic producer. However, In the case of Hag II [1990] ECR 1-3711 it was defined that all goods bearing the trademark must originate from a single undertaking that allows the use of the mark and ensures the quality of the good. This decision is quite confusing because if the quality and the appointed person is maintained at production and one is parallel importing there is no breach of trademark law because the production license ensures that this requirement is fulfilled. This leaves to door open for parallel importing to be legitimate. The case of Ideal Standard [1995] FSR 59 changed the focus away from the domestic protection of the goods and using the notion of an appointed person argued that parallel importing is not a breach of trademark law, which is to stop the distortion of competition, in fact as there is a legitimate producer and the notion of freedom of movement of goods then it is perfectly legal as long as produced by a licensee.4 In Bristol Myers Squibb v Paranova, and others [1997] FSR 102 the notion of free movement of goods was taken a step further; whereby the courts adamantly decided that producers of goods could NOT use trademark law to prohibit parallel importation. On the other hand, in Ballantine [1997] ECR - I 6227 however it allowed a door to be left open in the restriction of parallel importing, because it allowed for domestic legislation to be paramount in reference to such issues of trademark law. This left the courts to approve that parallel importation, again, did damage the reputation and standing of a trademark as was the situation in Dior [1998] CMLR 737. The case of Pharmacia & Upjohn v Paranova [1999] ETMR 397 then changed course again that re-branding and re-packaging a good was not a breach of trademark law. So if a brand holds one name in France and then another in the UK, which are both trademarked and an importer buys the French version which is cheaper and re-brands for the UK market then this is fine as long as it is holding the parallel producer's trademark. Therefore leaving the door open for re-legitimizing parallel imports, which makes a lot more sense because in all the goods are produced by the same company just under another name. Is this just not legitimate free movement of goods In the case of Silhouette International Schmied GmbH & Co KG v Hartlauer Handelsgesellschaft mbH [1998] CMLR 953 this approach was upheld by the ECJ because it was considered to be a direct breach of Article 7 of the Trademarks Directive 1988, which prohibited producers from impeding the sale of goods and import/export if the trademark use has been permitted. In the case of parallel importing this permission is present therefore parallel importing is permitted on these grounds. In Davidoff [1999] RPC 63, the courts got round this by arguing that torn off labels in cut price stores damaged the appearance and reputation of the trademark therefore in this case the damage in re-branding and re-selling in a different market was a breach of trademark law. It seems that the concerns of the courts are economic concerns rather than intellectual property right protection, because in a way buying from a cheaper parallel supplier threatens the domestic market.5 This attitude is an overt breach of Article 7 of the Trademarks Directive and the free movement of goods that is a cornerstone of the EEA. In Glaxo v Dowelhurst [2000] FSR 415 the ECJ became hard-lined in not allowing countries to get around Article 7 by laying down that parallel importing could not be prohibited unless the re-branding damaged the substance of the trademark, which would overturn decisions such as Davidoff if they appeared in front of the ECJ. The case of BMW v Deenik [1999] ETMR 339 clarified the position further by setting out that there has to be an overt trademark breach and passing off a product as associated by the trademark which is used by a person that is not approved. Boehringer v Swingward [2002] ETMR 898 reconfirmed Silhouette by arguing that parallel imports could only be prejudicial to a trademark if it damaged the substance of the reputation and there is not presumption of this fact. The most recent case of MasterCigars6 however does illustrate a legitimate breach of trademark law through parallel importing; whereby the producer and/or licensee has not consented to the act of importation when selling the goods to a third party. If it is obvious that the right to resell on a foreign market is not present then there will be a breach because in line with Silhouette and Glaxo there would be a substantive breach of the trademark, because the right of freedom was not part of the contract to re-sell. Therefore recent case law allows the act of parallel importation as long as it upholds and protects the trademark. If there is a possible case of damage to the reputation of the trademark then it can be legitimately be prohibited; however in any other scenario it would be a breach of Article 7 of the Trademarks Directive and the EC principle of freedom of movement of goods. Bibliography Franzosi: "Grey Market - Parallel Importation as a Trademark Violation or an Act of Unfair Competition" [1990] 21 IIC 194 Rasmussen: "The Principle of Exhaustion of Trade Mark Rights Pursuant to Directive 89/104" [1995] EIPR 174 Cornish: "Portcullis for the EEA" [1998] EIPR 172 Hays & Hansen: "Silhouette is not the proper case upon which to decide the parallel importation question" [1998] EIPR 277 Read More