05 Jul 2019

In Mitsubishi Shoji Kaisha Ltd & Or v Duma Forklifts NV & Or[1], a preliminary ruling was requested on the interpretation of Article 5 of Directive 2008/95/EC ("Directive") and Article 9 of Regulation No. 207/2009 ("Regulation") in relation to trade mark proceedings between the parties.

In July 2018, the the Court of Justice of the European Union ("CJEU") ruled in favour of trade mark proprietors being allowed to oppose the action of third parties from marketing the proprietor's goods for the first time within the European Economic Area ("EEA") after first removing the proprietor's signs, modifying the product and then reaffixing their own signs.

The parties

Mitsubishi Shoji Kaisha Ltd ("Mitsubishi") is a multinational automotive manufacturer and owner of, among others:

  • the European Union ("EU") word mark MITSUBISHI (number 118042)
  • the EU figurative mark, which appears in the form of three red diamonds arranged in triangular formation (number 117713)
  • the Benelux mark MITSUBISHI (number 93812)
  • the Benelux figurative mark of the same diamond design (number 92755).

Mitsubishi Caterpillar Forklift Europe BV ("MCFE") is exclusively authorised to manufacture and place on the EEA market forklift trucks supplied under the Mitsubishi mark.

Duma Forklifts NV ("Duma") specialises in the sale and purchase of new and second hand forklift trucks, along with the sale of forklift trucks under the names "GSI", "GS" and "Duma". It was previously an official dealer of Mitsubishi forklift trucks in Belgium but its distribution rights had been terminated by the manufacturer.

G.S. International BVBA ("GSI") is affiliated with Duma and specialises in the wholesale import and export on the world market of forklift trucks it has constructed, repaired and adapted to applicable European standards. The trucks are given their own serial number and delivered to Duma.

Background

From November 2009, Duma and GSI had acquired MITSUBISHI-branded trucks from outside of the EEA, from a company within the Mitsubishi group. These were then placed in a customs warehouse prior to their sale into the EEA. While in the warehouse, all of the MITSUBISHI marks were removed and modifications were made to the trucks to render them compliant with European standards. Identification plates and serial numbers were also removed and replaced with Duma's own details and signage.

Mitsubishi sought protection under Article 5 of the Directive contending that (1) Duma's actions infringed its rights as trade mark owner, particularly the right of proprietor to be first to place on the market in the EEA goods bearing its marks and (2) such actions by Duma harmed the trade mark's functions of indicating origin and quality along with investment and advertising. It declared that, despite the removal of the marks, the trucks still remained recognisable to consumers.

Duma and GSI submitted that they were entitled to affix their own signs to the products as they had made modifications in order to make the trucks compliant with EU regulations.

Referral to the CJEU

The infringement proceedings before the Brussels Commercial Court were stayed and the following questions were referred to the CJEU for a preliminary ruling:

  • Do Article 5 of the Directive and Article 9 of the Regulation cover the right of the trade mark proprietor to oppose the removal, by a third party, without the consent of the trade mark proprietor, of all signs identical to the trade marks which had been applied to the goods (debranding), in the case where the goods concerned have never previously been traded within the EEA, such as goods placed in a customs warehouse, and where the removal by the third party occurs with a view to importing or placing those goods on the market within the EEA?
  • Does it make any different to the answer to the above question whether the importation of those goods or their placing on the market within the EEA occurs under its own distinctive sign applied by the third party (rebranding)?
  • Does it make any difference to the answers to above questions whether the goods thus imported or placed on the market are, on the basis of their outward appearance or model, still identified by the relevant average consumer as originating from the trade-mark proprietor?

The CJEU's ruling

Prior to the ruling by the CJEU, the opinion of Campos Sánchez-Bordona, the Advocate-General ("AG") was delivered in April 2018 to the effect that such debranding did not constitute trade mark infringement. If anything, the opinion of the AG was that the activities by Duma amounted to acts of unfair competition. In doing so, the AG distinguished the facts of this case from those in Portakabin v Primakabin[2] because in the earlier case the defendant's advertising material still made reference to the PORTAKABIN brand.

The AG pointed out that national decisions in the UK and Germany had held previously that, where there had been the complete debranding of a mark, infringement proceedings could not be brought. In contrast, in order to make debranding treated as an act of infringement under French law, this had to be so stated in an express provision of national law.

Nevertheless, the CJEU took the unusual step of not following the AG's opinion. Instead the CJEU ruled that:

  • Mitsubishi was deprived of its essential right to control the initial marketing of the goods bearing the mark in the EEA because the marks were removed from goods for which the mark was registered, before they were entered into the EEA market
  • The affixing of new signs to the goods adversely affected the function of the mark, because:
    • such actions undermined the essential function of the trade mark
    • where the goods remain recognisable to the relevant consumers, despite the removal of the original mark and affixing of the new one, the effects of such harm caused by the removal of the essential function would likely be accelerated
    • such actions deny the proprietor of the mark from retaining customers and acquire a positive reputation due to the quality of the goods and any relevant investment and advertising.
  • The removal and replacement of the mark and the placement on the market in the EEA without the consent of the proprietor was contrary to the objective of ensuring undistorted competition
  • The actions of Duma and GSI constituted use in the course of trade because their actions were carried out with a view to the exercise of commercial activity and for economic advantage.

It was also observed that the fact that it was of no relevance that the removal of the signs and affixing the new signs took place while the goods were still placed under the customs warehousing procedure, because the actions were carried out for the purpose of placing the goods on the market in the EEA despite how, under European customs legislation, debranding in a customs warehouse is expressly permitted.

Consequently, it was found that the answer to the questions referred to the Court of Justice must be interpreted as meaning that the trade mark proprietor was entitled to oppose such actions, under Article 5 of the Directive and Article 9 of the Regulation.

Comment

This decision strengthens the rights of EU trade mark proprietors in that debranding has been held to be capable of being an unlawful act made in the course of trade.

However, the CJEU's decision has been widely criticised as being a step too far and introducing uncertainty where such had not previously existed. Some commentators have also pointed out that Mitisubishi would probably have been able to rely upon the laws controlling unfair competition and did not need to proceed by way of trade mark infringement.

Moreover, there are a number of ramifications which might now flow from CJEU's ruling. For example, queries arise as to whether courts can now continue the common practice of simply requiring defendants to obliterate marks from the goods about which the proprietor complains rather than destroy the goods in their entirety, if obliteration (i.e. debranding) might itself still amount to an infringement. 

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[1] C-129/17 Mitsubishi Shoji Kaisha Ltd and Mitsubishi Caterpillar Forklift Europe BV v Duma Forklifts NV and G.S. International BVBA

[2] C-558/08