Author
Johanna Göbel

Johanna Göbel, LL.M.

Senior Associate

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Author
Johanna Göbel

Johanna Göbel, LL.M.

Senior Associate

Read More

20 December 2022

Brands Update - December 2022 – 4 of 6 Insights

ECJ on the exhaustion of the right conferred by a trade mark in the case of reuse or refilling of goods - Soda-Club (CO2) and SodaStream

With a recent decision on the resale of refilled and relabeled carbon dioxide bottles (judgment of October 27, 2022, Case C-197/21), the ECJ clarifies the exceptions to the principle of exhaustion of trade mark rights and establishes criteria for the relabeling of trademarked goods. A trade mark owner can only oppose the reuse or relabeling of his goods if consumers are given the false impression of an economic link between the trade mark owner and the reseller.

The reference for a preliminary ruling from the Finnish Court of Economic Affairs was based on a trade mark dispute between two manufacturers of carbonation devices, which are used to prepare carbonated beverages from tap water. The plaintiff, SodaStream, manufactures and markets such carbonation devices and the associated carbon dioxide bottles in Finland under its EU trade marks SODASTREAM and SODA CLUB. The bottles are intended to be reused or refilled. Defendant MySoda also sells carbonation equipment and carbon dioxide bottles, the latter of which are compatible with SodaStream equipment. Some of SodaStream's emptied carbon dioxide bottles returned by consumers reach defendant MySoda through distributors. The latter refills the bottles with carbon dioxide and replaces the original label with its own before reselling the bottles in Finland. However, the plaintiff's original SODA CLUB and SODA STREAM trade marks engraved on the neck of the bottles remain visible. 

With the four questions referred for a preliminary ruling, the Finnish court essentially wants to know whether and, if so, under what conditions a trade mark owner who has placed goods on the market in a Member State bearing his trade mark and which are intended to be reused or refilled several times may oppose such a practice. In the interest of the free movement of goods, the trade mark owner’s right to oppose the further distribution of goods bearing his trade mark is not unlimited: Once the goods have been put on the market in the European Economic Area by him or with his consent, he can no longer prohibit the (further) use of his EU trade mark. However, exceptions to this so-called principle of exhaustion exist for justified reasons, especially where the condition of the goods is changed or impaired (Art. 15 (2) UMV). 

In connection with parallel imports of repackaged pharmaceuticals, the ECJ had already established criteria for the existence of legitimate reasons in this particular context in its Bristol-Myers Squibb decision (judgment of July 11, 1996, Cases C-427/93, C-429/93 and C-436/93), such as, in particular, the necessity of the repackaging for placing the product in question on the market in another Member State. Not only were the first two questions referred by the Finnish court explicitly aimed at this necessity criterion, but the Advocate General also wanted to apply it in the present case. It is noteworthy that the ECJ does not deal in detail with the applicability of this criterion in its judgment, but instead refers back to the Viking Gas decision on the refilling of gas cylinders (judgment of July 14, 2011, Case C 46/10), which comes closer to the case at hand. In that ruling, the Court had affirmed the existence of a legitimate reason also in the case that the use of the trade mark creates the impression of an economic link between the trade mark owner and the third party who continues to use the trade mark after refilling. 

It follows for the case at hand: If the consumer gains the false impression of the existence of an economic connection between the trade mark owner and a reseller, the trade mark owner has a legitimate reason to oppose the further distribution of the goods bearing his trade mark by a reseller. This is particularly true if, as is the case here, the reseller removes the trade mark owner's label and affixes his own, but the original trade mark engraved on the goods remains visible. 

The ECJ goes on to state that the question of whether a mistaken impression is created with regard to the economic link between the trade mark owners and the reseller must be assessed comprehensively on the basis of the indications on the product and on its relabeling, as well as on the basis of the distribution practices of the industry in question and the degree of awareness of those practices among consumers. Whether this is the case in the present case must be determined by the national court. In any event, the Court suggests that a consumer who approaches directly an economic operator other than the proprietor of the original trade mark in order to have an empty bottle refilled or to exchange it for a refilled bottle will be more easily able to perceive that there is no link between the latter and the trade mark proprietor. However, since in the present case neither the plaintiff nor the defendant offers their bottles directly to the consumer, the likelihood of confusion, ie, the mistaken impression of an economic link, could arise in his mind with respect to the relationship between the reseller and the trade mark owner.

Practice tip

In its reasoning, the Court does not follow the strict requirements of the case law on parallel imports of repackaged medicinal products. Accordingly, whether relabeling appears necessary to ensure third party access to the market for carbonated refills is not decisive. Instead, the ECJ focuses on whether consumers are given the false impression that there are economic links between the trade mark owner and the reseller. This assessment is a question of the individual case and depends to a large extent on the design of the new label and the sales practices in the relevant sector. In any case, it must be considered whether the new label is clear and unambiguous with regard to the brand owner who manufactured the product and the reseller who ensures the refill. Also relevant is whether consumers are accustomed to having the product refilled by economic operators other than the brand owner. Ultimately, it remains to be seen how the national courts will give life to the Court's criteria, in particular also with regard to different country- or sector-specific distribution practices.

In this series

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