[co-author: Nikolaus Von Bargen]

In its case “beauty for less”, for which the judgement was released earlier this year, the Federal Supreme Court (FSC) ruled that a trademark owner cannot oppose resale advertising with the argument that the advertising is unusual in the industry sector.

Background

The plaintiff is a licensee of several European Union trademarks claiming protection for perfumery goods, among others. The defendant is a reseller of perfumes and cosmetics, including original goods bearing the respective trademarks.

The defendant sent its goods in special cartons with trademarks printed on them – including marks under which the defendant distributes products.

The plaintiff challenges that packaging, stating that its trademark rights are not exhausted, since (a) the trademarks on the carton would not necessarily refer to a specific product inside it under that trademark and (b) the packaging would affect the reputation of their trademarks, since it is unusual in the industry sector.

Decision

The FSC rejected the plaintiff´s arguments, based on exhaustion of its trademark rights, initially pointing out that the exhaustion of trademark rights after authorized introduction of the goods into the internal market would also include the right of announcement. Resellers would therefore be allowed to use the trademark for the purpose of advertising the goods. However, it would also follow from the wording “for the goods” that the use of the exhausted trademark must refer to specific original products.

The court assessed that the defendant would have made that reference by selling original products relating to all the trademarks appearing on the packaging in its online shop. Thus no harm would be caused if a given product was not in a specific carton despite its respective trademark appearing on the carton.

The printing of the trademarks on the carton would not affect the plaintiff’s legitimate interests. It would be unreasonable to conclude, in this case, that there is a threat of reputational damage solely from the fact that a form of advertising is unusual in the reseller’s sector. What does matter is the particular form of the advertising, which the court found would be not an issue here.

Comment

This decision increases the ambiguity that prevails in dealing with exhausted trademark rights for branded products. The plaintiff drew its conclusion from the CJEU case law “Dior/Evora” which found that unusual advertising endangers the good reputation of its trademarks. However, the FSC rejects this criterion here, which makes it difficult to forecast the chances of success of actions against resale advertising.

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