Bacardi case a breeze? Trade marks and duty suspension arrangements

Bacardi case a breeze? Trade marks and duty suspension arrangements

Can a trade mark proprietor use its trade marks to prohibit a third party from placing goods covered by that mark under the duty suspension arrangement after having introduced them, without the proprietor’s consent into the EEA? Adam Rendle, senior associate, and Catherine Ferrity, associate, at Taylor Wessing, comment on TOP Logistics and BV and Van Caem International BV v Bacardi: C-379/14

What is the background to this case?

In 2006, several shipments of Bacardi products were transported to the Netherlands from a non-EU state at the request of the distributor, Van Caem. These goods were then stored with TOP Logistics in the port of Rotterdam.

The goods were placed under a customs suspension arrangement for external transit or customs warehousing, and given T1 goods status which is a tax arrangement applied to the production, processing, holding and movement of products. Some of the goods were then released for free circulation into the EEA under a separate excise duty suspension agreement and were placed in a tax warehouse, the import duties having been paid.

Bacardi launched proceedings against TOP Logistics and Van Caem in 2008 on the basis that the shipments of goods had been brought into the EEA without its permission (ie they were grey goods) and therefore infringed its Benelux trade marks.

The Hague Court of Appeal ruled that as long as the goods had T1 status they were not infringing Bacardi’s trade marks. However, it sought a preliminary ruling from the Court of Justice of the European Union (CJEU) in relation to whether the marks were infringed once the goods at issue had been placed under the separate duty suspension arrangement. This applies to goods such as alcoholic beverages and tobacco when the goods are imported but payment of excise duty on them is suspended. The import duties had been paid but, because the goods were still under the duty suspension arrangement, excise duties had not been paid and the goods could not have been released for consumption.

What was the court asked to address?

The CJEU was asked, in essence, whether a trade mark proprietor can use its trade marks to prohibit a third party from placing goods covered by that mark under the duty suspension arrangement after having introduced them, without the consent of the proprietor, into the EEA and having released them for free circulation.

What are the challenges of preventing a third party from importing goods bearing a registered mark?

There are a number of stages involved in goods passing into and through the EU, and courts are still identifying at which of those stages a proprietor can enforce its trade marks. The CJEU had previously held that goods placed under a suspensive customs arrangement in the EU, such as when they are in external transit between two third countries, do not infringe EU trade marks even when they are in that arrangement without the proprietor’s consent.

The goods in this case had left the suspensive customs arrangement and the question was whether the trade marks were being used by the importer and/or the warehouse keeper in the course of trade in a way that could have an adverse effect on the functions of the trade mark even when excise duties had not been paid and they could not be sold to the public.

What did the court decide?

The Court held that art 5 of the trade marks directive (Council Directive 89/104/EEC) then in force must be interpreted as meaning that the proprietor of a trade mark registered in one or more member states may oppose a third party placing goods bearing that trade mark under the duty suspension arrangement after they have been introduced into the EEA and released for free circulation without the consent of that proprietor.

The CJEU reasoned that, while placing trade marked goods under a suspensive customs arrangement cannot, in themselves, infringe the rights of the trade mark holder (because in this case the import duties had been paid and the goods had been released into circulation), the goods had clearly been imported within the meaning of art 5(3)(c). Further, as those goods consisted of alcoholic beverages, art 5(1) of the excise duty directive then in force (Council Directive 92/12/EEC), which states that where a product has been placed under a Community customs procedure on entry into the territory, ‘importation shall be deemed to take place when [the product] leaves the Community customs procedure’, also applied to show that the goods had been imported.

It followed from the wording of art 5(3) of the trade marks directive that the proprietor of the trade mark is not obliged to wait for release of the goods to exercise its rights and it can oppose certain acts committed without its consent prior to the release of the goods for consumption, including the importation of those goods and their storage for the purpose of putting them on the market.

Although in importing and storing the goods TOP Logistics and Van Caem were not using the trade mark in the course of dealings with consumers, the terms ‘using’ and ‘in the course of trade’ cannot be interpreted as only referring to immediate relationships between a trader and a consumer. Otherwise the acts of import and of stocking would not qualify as ‘using’ and could not be prohibited even though the EU legislature has expressly identified them as such.

The importation and storage of trade marked goods by an entity such as Van Caem is clearly use of the trade mark in the course of trade, as this is a commercial activity with a view to economic advantage. However, the CJEU held that the warehousing services provided by TOP Logistics did not constitute use of the signs in question.

How might this affect future disputes?

The CJEU has re-emphasised that it is essential for a proprietor of a trade mark registered in one or more EU states to be able to control the initial marketing in the EEA of goods bearing that mark.

This judgment makes the position surrounding the status of goods that are placed under a suspension customs arrangement and then subsequently released for circulation much clearer and should make it easier for trade mark owners to enforce their rights against companies involved with such activities.

What action should rights holders take in light of this decision?

Rights holders should feel emboldened to be able to take action against goods not yet released onto the market for public consumption, assisting them in blocking parallel imports much closer to their source. Of course, this judgment is only relevant to those trade mark proprietors whose goods are subject to excise duty, such as those in the tobacco and alcohol industries.

Interviewed by Nicola Laver.

This article is republished with kind permission of WIPIT’s sister site, Lexis®PSL IP & IT. For a free trial click here.

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