AG advises on Schweppes trademark exhaustion dispute
Advocate General Paolo Mengozzi of the Court of Justice of the European Union (CJEU) has outlined what he believes are the criteria that determine whether Schweppes can oppose the importation into Spain of Schweppes-branded goods from the UK.
Schweppes is the owner of the mark ‘Schweppes’ in Spain and has an exclusive right to exploit the mark in the country.
Back in 2014, Schweppes began infringement proceedings against distribution company Red Paralela for importing into Spain and marketing bottles of tonic water bearing the mark ‘Schweppes’ from the UK.
The mark ‘Schweppes’ is owned by Coca-Cola in the UK.
Schweppes argued that the sale of this tonic water is unlawful because the bottles were put on the market by Coca-Cola, which has no connection with Schweppes.
“It maintains that, given the fact that the signs and goods at issue are identical, consumers will be unable to identify the commercial origin of those bottles,” said a press release published today, September 12, from the CJEU.
Red Paralela claimed that the exhaustion of the trademark rights resulted from tacit consent and that there were “undeniable legal and economic links” between Coca-Cola and Schweppes in the exploitation of ‘Schweppes’ as a universal mark.
Commercial Court number eight, of Barcelona, Spain, referred a question of trademark exhaustion to the court.
It asked the court to “ascertain whether or not EU law precludes Schweppes from invoking the exclusive right that it enjoys under Spanish law to oppose the importation into and/or marketing in Spain of ‘Schweppes’ goods which come from the UK”.
According to Mengozzi, EU law precludes reliance on an exclusive right if, given the economic links between their respective proprietors, it’s clear that the marks are under unitary control.
The AG added that the proprietors of parallel marks which arise from the fragmentation of a single mark may be regarded as economically linked then they “coordinate their commercial policies with a view to exercising joint control over the use of their respective marks”.
But for the right to be exhausted, “such unitary control of the mark must allow the entities which exercise that control the possibility of determining directly or indirectly the goods to which the mark may be affixed and of controlling their quality”.
In principle, it is for the parallel importer (Red Paralela) to prove that there is existing coordination between Schweppes and Coca-Cola such as might give rise to unitary control.
The decision now falls to the national court to determine whether the conditions for the exhaustion of Schweppes’ right have been met with regard to the bottles of tonic water.
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