National rules providing for exhaustion of trade-mark rights in respect of products put on the market outside the European Economic Area ("the EEA") under that mark by the proprietor or with his consent (international exhaustion) are contrary to Community legislation relating to trade marks

The Austrian company Silhouette produces high-quality spectacles and markets them worldwide under the trade mark "Silhouette", registered in Austria and most countries of the world. In Austria, Silhouette supplies spectacles direct to opticians; in other States it sells them through subsidiary companies or distributors. In order to maintain its top-of-the-range image, Silhouette decided not to deliver frames to Hartlauer, on the ground that distribution by that company would be harmful to its high-quality fashion image, since "low prices" are Hartlauer's chief selling point.

In 1995 Silhouette sold 21 000 outmoded spectacle frames in Bulgaria. Hartlauer acquired those frames and launched a press campaign announcing that they were being put on sale in Austria.

Silhouette then brought an action for interim relief before the Landesgericht Steyr to restrain Hartlauer from offering spectacle frames for sale under its trade mark where they had not been put on the market within the EEA.

The action was dismissed by the Landesgericht and, on appeal, by the Oberlandesgericht Linz. Silhouette appealed to the Oberster Gerichtshof which stayed proceedings and referred to the Court of Justice for a preliminary ruling the question, in particular, whether national rules providing for exhaustion of trade-mark rights in respect of products put on the market outside the European Economic Area under that mark by the proprietor or with his consent (international exhaustion) are contrary to Community legislation relating to trade marks. In other words, must the proprietor of a trade mark be able to restrain parallel imports from non-member countries of goods under his mark or may the Member States provide for the proprietor to lose that right once he has marketed them, irrespective of where they were put on the market.

The Court has answered the Oberster Gerichtshof's question in the affirmative, ruling that national rules providing for exhaustion of trade-mark rights in respect of products put on the market outside the EEA under that mark by the proprietor or with his consent (international exhaustion) are contrary to Community legislation relating to trade marks.

The Community legislation relating to trade marks embodies complete harmonisation of the rules relating to the rights conferred by a trade mark, including the rule governing exhaustion of those rights. According to the actual wording of the legislation, exhaustion occurs only where the products have been put on the market in the EEA. The Member States cannot therefore provide in their domestic law for exhaustion of the rights conferred by a trade mark in respect of goods put on the market in non-member countries.

This is the only interpretation which is fully capable of ensuring that the purpose of the Directive is achieved, namely to safeguard the functioning of the internal market. A situation in which some Member States could provide for international exhaustion while others provided for Community exhaustion only would inevitably give rise to barriers to the free movement of goods and the freedom to provide services.

Finally, the Court observes that the Community authorities could always extend the exhaustion provided for by Article 7 to products put on the market in non-member countries by entering into international agreements in that sphere, as was done in the context of the EEA Agreement.

Unofficial document solely for media use, not binding on the Court of Justice. Languages available: all the official languages.

For the full text of this judgment consult our Internet site www.curia.eu.int around 15 hrs on the day judgment is delivered. For further information contact Tom Kennedy (* 352) 4303 3355.