In this contribution, we build upon Legal Circular No. 12/2009, in which we addressed the issue of the so-called exhaustion of rights to intangible assets. From the perspective of internet traders, the exhaustion of rights in trade marks plays a primary role, as the vast majority of goods offered are in practice marked with a trade mark. The institute of exhaustion of rights to a trade mark means, in simplified terms, that if the proprietor of a trade mark places a particular product on the market within the EEA, his rights to the trade mark are exhausted in relation to that product. If the institute of exhaustion of rights to a trade mark did not exist, the proprietor of the trade mark (most frequently the manufacturer) could fully control all sales or other transfers of ownership of goods bearing that mark (he would fully control the entire distribution system).

Also in view of the relatively general definition of this institute in legal regulations and in view of the efforts of some manufacturers to enforce so-called selective distribution channels, this issue has repeatedly been the subject of decisions by the Court of Justice of the EU, formerly the European Court of Justice (hereinafter “CJEU”). Particularly contentious is the precise scope of the authorisation of a seller of goods to use the trade mark in question in connection with the promotion of the goods offered. We shall address certain decisions of the CJEU in this legal circular.

In the judgment in Parfums Christian Dior SA and Parfums Christian Dior BV v Evora BV (C-337/95), the CJEU expressly confirmed that a retailer has the freedom to use a trade mark (trade mark) to draw public attention to the further commercialisation of those goods, whilst the proprietor of the trade mark may prevent him from doing so only where, having regard to the specific circumstances of the case, it is established that the use of the trade mark for that purpose seriously damages the reputation of the trade mark.

However, in the judgment in L’Oréal SA (C-487/07) and in the judgment in the joined cases (C-236/08 to C-238/08), the CJEU repeatedly held that in certain cases the proprietor of a trade mark is entitled to prohibit the use by a third party of a sign identical to the trade mark. Specifically, these are situations where such use is capable of affecting one of the functions of the trade mark. Conversely, the proprietor of the trade mark cannot prevent the use of a sign identical to the trade mark if such use is not capable of affecting any of the functions of that mark.

In the abovementioned judgment in the joined cases C-236/08 to C-238/08, the CJEU held that the use of a trade mark as a keyword is not capable of affecting the advertising function of the trade mark. The reason for this conclusion of the Court was that if an internet user enters the name of the trade mark as a search word, the home and advertising website of the proprietor of that trade mark will appear on the list of natural (organic) search results, usually in one of the first positions of that list. In other words, the use of a keyword by a trader does not exclude the proprietor of the trade mark from the search results. The CJEU also stated that the question whether the use of a trade mark as a keyword is capable of affecting the function of the trade mark to indicate origin depends primarily on whether such use creates the impression of the existence of an economic link between the trader and the proprietor of the trade mark.

Furthermore, the CJEU specified that interference with (the function of indicating origin of) a trade mark occurs where the advertisement of the seller does not enable a normally informed and reasonably attentive internet user (or enables him only with difficulty) to ascertain whether the products or services to which the advertisement relates originate from the proprietor of the trade mark or from an undertaking economically linked to him, or, conversely, from a third party. This conclusion was confirmed by the CJEU also in the judgment in BergSpechte (C-278/08).

The question of the advertising function in relation to possible interference with rights to trade marks was further specified by the CJEU in the judgment in Portakabin Ltd, Portakabin BV v Primakabin BV (C-558/08). In this judgment, the Court again confirmed that the proprietor of a trade mark is not entitled to prohibit an advertiser from advertising, by means of a sign which is identical with or similar to that trade mark (and which that advertiser has selected as a keyword without the consent of that proprietor), the resale of goods manufactured by that proprietor and placed on the market in the European Economic Area by that proprietor or with his consent.

In conclusion, it may therefore be stated that a trader should be able to use, when promoting a particular product in respect of which exhaustion of rights to the trade mark has occurred (in the territory of the EEA), that trade mark or a similar sign (without the consent of the proprietor of the trade mark). However, this authorisation of the trader is not unlimited; in particular, such promotion should not create the impression that there is a certain economic link between the manufacturer and the trader (if such link does not objectively exist).

Josef Aujezdský, Advocate

Law Firm Mašek, Kočí, Aujezdský www.e-Advokacie.cz – on-line legal advisory

This text was originally prepared by the law firm Mašek, Kočí, Aujezdský in cooperation with the Association for Electronic Commerce (APEK) as Legal Circular No. 09/2018 intended for members of that association.

This text was translated from Czech to English using an AI translator.