CJEU clarifies TM ‘course of trade’ in counterfeit case
The Court of Justice of the European Union (CJEU) has today clarified the meaning of ‘course of trade’ when counterfeit goods are imported and then exported, spelling bad news for individuals importing fake goods for the benefit of a third party.
In a decision involving ball bearings, the CJEU provided guidance on whether remuneration and trade for another person plays any role in assessing ‘course of trade’ within the meaning of article 5(1) of the Trade Marks Directive.
Under the article, a trademark owner is entitled to prohibit any third party from making use of an identical sign or a sign which could cause a risk of confusion in the ‘course of trade’.
Background
Back in 2011, a Finland-based individual (anonymised to B by the court) received a batch of ball bearings, which are used as spare parts in generators and motors, from China. The bearings featured the international word mark INA, which is owned by anonymised Company A, but were counterfeit.
A few weeks later, B handed the bearings over to a third party for export to Russia, in exchange for a carton of cigarettes and a bottle of cognac.
Finland subsequently opened criminal proceedings against B, claiming that he had infringed Company A’s trademark through the import and export of the counterfeit goods.
B disputed the accusation and the Court of First Instance in Helsinki dismissed the charge, finding that B couldn’t have known that the goods were counterfeit and didn’t commit an intentional IP offence.
However, because the ball bearings were counterfeit and their import had infringed Company A’s trademark, the court ordered B not to continue his actions and to pay compensation and damages.
On appeal, the case eventually found its way up to the Supreme Court of Finland, which referred four questions to the CJEU.
Combined, the four questions asked whether a person must be regarded as making use of the trademark in the course of trade where they aren’t carrying out a commercial activity on a professional basis, but they do put the products into circulation and keep the trademark infringing products from a third country.
Course of trade
The CJEU said that the question of whether the conditions laid down in article 5(1) are satisfied must be determined solely on the basis of objective factors.
In the present case, the ball bearings, which are generally used in heavy industry, weighed a total of 710 kg, according to the court.
“Thus, since these products, having regard to their nature and their volume, are clearly not intended for private use, the operations relating thereto must be considered to be part of a commercial activity,” said the CJEU, before adding that the referring court would need to verify this.
The CJEU went on to add that a person who provides his address for the dispatch of the goods after customs clearance and then releases them for free circulation, carries out an import, under article 5(3)(c). Activities under this article can be prohibited by the trademark owner.
According to the court, the ownership of the products on which the mark is affixed (in this case where B was acting in the economic interest of a third party) is irrelevant for the purpose of establishing usage in the course of trade.
“The fact that a person imported and put into free circulation such products is sufficient to find that he acted in the course of trade without it being necessary to examine the further treatment of these products, in particular if they have been stored by the importer or placed on the market in the EU or exported to third countries,” added the court.
Finally, the CJEU concluded that the nature of the remuneration which the importer received in return for his activity is also irrelevant to the issue of whether something took place in the ‘course of trade’.
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