Out-Law News 4 min. read
03 Nov 2022, 2:31 pm
When businesses use other manufacturers' packaging to provide their own products, they must be careful not to give consumers the impression that there is an economic link between them and the trade mark owner, the Court of Justice of the EU (CJEU) has ruled.
The CJEU clarified in a judgment from last week that the likelihood of such a false impression must be assessed on the basis of the indications on the product and on its relabelling, as well as on the basis of the marketing practices of the industry concerned and the level of awareness of these practices among consumers.
According to experts, the ruling may be particularly important for businesses operating in the 'circular economy'. It was issued in a case brought before the CJEU by a Finnish court, after the companies behind the Sodastream brand objected to the refilling of their bottles by the competing company Mysoda.
Both Sodastream and Mysoda sell devices that produce carbonated drinks. The Sodastream products come with a refillable aluminium carbon dioxide cylinder engraved with trade marks Sodastream owns. The Sodastream bottles can be used in Mysoda’s devices. Mysoda receives used Sodastream bottles, refills them with carbon dioxide and then relabels them before they are resold in Finland. Though the repackaged bottles contain Mysoda’s label, the engraved Sodastream trade marks remain visible on the product.
Désirée Fields, trade mark law expert at Pinsent Masons, said: "The judgment provides helpful guidance on a complex topic which involves a delicate balancing of the rights of trade mark owners and resellers. In essence, each case will involve a careful analysis on the facts, taking into account the relevant distribution practices of the industry concerned, as to whether a trade mark owner can prevent the further marketing of its goods which have been relabelled. The most crucial point in deciding whether the right to oppose exists is an assessment of the perception of the relevant consumers, meaning any relabelling must not give consumers the erroneous impression that there is an economic link between the reseller and the trade mark proprietor."
In its ruling, the CJEU said that "the sale of a refillable gas cylinder by the proprietor of the trade marks affixed to it exhausts the rights which the trade mark proprietor derives from the registration of those marks". The trade mark owner’s right to freely dispose of the cylinder was transferred to the buyer. This includes the right to "exchange the bottle or have it refilled at an undertaking of his choice". This also meant that competitors were in principle entitled to refill and exchange empty bottles of the trade mark owner.
At the same time, however, the CJEU emphasised that the trade mark proprietor may oppose the further distribution of its goods by a reseller in individual cases if this gives the consumer the "false impression" that there is an economic link between the trade mark proprietor and the reseller.
The CJEU said this applies in particular if the reseller removes the label with the original trade mark and affixes its own label to this product, but an original trade mark engraved on the product remains visible - as is the case with the recycled Sodastream bottles.
According to the CJEU, in order to assess whether a 'reasonably well-informed and reasonably observant consumer' is given to such a false impression, account must be taken of the 'circumstances surrounding the reseller's activity'. These include the way in which the bottles with the new label are presented to consumers, the conditions of sale and, above all, the practices prevailing in the sector concerned. The overall impression created for the buyer is essential, the CJEU said. Account must also be taken of whether "consumers are used to bottles being refilled by traders other than the proprietor of the original trade mark."
Specifically referring to the case of Mysoda, the CJEU concluded that it can be presumed that "a consumer who directly approaches 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 more easily be able to perceive that there is no link between that economic operator and the trade mark proprietor."
At the same time, however, the CJEU also states that there is a likelihood of confusion on the part of the consumer as regards the relationship between Mysoda and Sodastream, since the consumer has no direct contact with the reseller. This is because neither Sodastream nor Mysoda offer their bottles directly to consumers - both products are only available in the retailers' shops.
The CJEU also highlighted that it is up to the Finnish court, which had referred the case, to assess whether there was a likelihood of confusion in the specific case. However, it could base its decision on the CJEU's guidance. "Trade mark infringement is assessed at a national level and the sector-specific practices concerned may well differ from country to country," said Emily Swithenbank, also a trade mark law expert at Pinsent Masons. "Therefore, refillers and repackagers cannot assume that labelling that is deemed not to give the impression of an economic link in one country will be considered the same in another as practices and consumer awareness of those practices will likely differ. The relabelling will need to be assessed for each country."
In its decision, the CJEU referred, among other things, to its 2011 judgment in the Viking Gas case, which concerned the refilling of gas cylinders. The CJEU stated that this and other rulings were closer to the Sodastream case than the Bristol Myers Squibb ruling from 1996, which the Finnish court referred to in its questions to the CJEU. The Bristol-Myers-Squibb ruling is about parallel imports of repackaged medicines.
Advocate General Giovanni Pitruzzelli had suggested to the CJEU in his opinion that the criteria for repackaging medicines set out in the Bristol Myers Squibb case should also be applied to the present Sodastream case.
"It is noteworthy that the CJEU declined to answer the express question from the referring court as to whether the so-called BMS conditions apply in the context of this case" added Swithenbank. "The BMS conditions are more stringent than the ‘economic link’ test applied by the CJEU and require repackagers to demonstrate a necessity to repackage and to provide advance notice to trade mark owners of their activities. Refillers of gas cylinders in the EU have some certainty now that they do not need to meet those requirements. However, traders of other products in the circular economy or in post-Brexit UK do not and could find themselves facing a challenge that their labelling constitutes trade mark infringement despite giving no impression of an economic link to the trade mark proprietor".