The case of Oracle America is applicable where businesses have been found to import goods from different jurisdictions for the purpose of reselling them within the European Union. The case concerned a computer hardware supplier who purchased disk drives from a computer system manufacturer for the purpose of importing them. The decision in this case set a precedent regarding parallel imports.
The label ‘parallel import’ refers to the practice in international trade where a business’s imports branded goods into a country and selling them without the consent of the trade mark holder. The goods, also known as grey market goods, are not fake or counterfeit rather they are genuine goods which were (1) purchased in another jurisdiction and (2) not intended to be sold in the destination jurisdiction.
An important decision in this area was laid down by the UK Supreme Court in Oracle America Inc v M-Tech Data Limited [2012]. In this case the Supreme Court overruled the Court of Appeal and adopted a tough line against parallel importers, a position which was welcomed by brand owners.
Oracle is a manufacturer of computer systems hardware and software, including those sold under the brand SUN. M-Tech is a UK based computer hardware supplier that purchased a number of SUN disk drives in the US for import into the UK with a view to reselling them. Oracle did not sell the specific model disk drive in the European Union, and certainly did not consent to the sale of the disk drives in the European Union.
Oracle sought summary judgment against M-Tech for trademark infringement under article 5.1(a) of the EU Trade Marks Directive. Summary judgment was sought on the basis that M-Tech did not have a realistic prospect of defending the claim. Oracle argued that its exclusive rights to import the trademarked product under article 7.1, which would have prevented the use of a trademark claim where Oracle had introduced or consented to the introduction of the goods into the EU, had not been exhausted.
Although M-Tech did not have a realistic prospect of defending the trademark claim, it raised two defences in response. The first was based on the so-called Euro-defences - that the enforcement of the trademark infringement would be contrary to the free movement and anti-competition provisions upon which the EU is based. The second defence claimed that the effect of enforcing the Oracle’s trademark rights would be an abuse of M-Tech’s rights.
At first instance, the Euro-defences argument was rejected. However the Court of Appeal allowed M-Tech’s appeal on the basis that there was a genuine possibility that the Trade Marks Directive must be in interpreted in line with the free movement and anti-competitive provisions in the Treaty. It also found that the abuse of rights defence might succeed. In effect, the Court of Appeal held that case was not suitable for summary judgment.
The Supreme Court disagreed. Lord Sumpton dismissed M-Tech’s claim stating that it was not enough to simply establish a breach of the Treaty; it must also show that the breach in question provided it with a defence to the trade mark infringement action. The Court found that article 5 of the Directive was not ‘qualified by any proviso relating to free movement of goods’. Furthermore, the Supreme rejected the need for a preliminary reference to the European Court of Justice.
If the option of obtaining summary judgement had not been available where M-Tech had no real prospect of defending the trade mark infringement claim, brand owners would have to assess the merits of taking an infringement claim against the costs of such proceedings.
The decision reaffirms the status of the European Union as “fortress Europe” when it comes to competing businesses wishing to import products from abroad into the European Union. It remains an infringement of trade mark rights to purchase goods of a trade mark owner in another country or jurisdiction, and seek to import them into the UK for sale. Parallel imports in this regard are outlawed.
There are however limited circumstances where goods of another business are able to be imported in parallel into the UK from abroad.
Our solicitors have acted for parallel importers and trade mark owners alike to advise in respect of what the law permits and what it does not. For specialist advice regarding trademark infringement and disputes in respect of parallel imports contact Leigh Ellis or call us on +44 20 7353 1770.