Court of Justice: Removal of trademarks results in trademark infringement
20 August 2018
Intellectual property rights
In a recent judgment, the Court of Justice of the European Union (Court of Justice) ruled that a trademark proprietor can oppose against a third party that removes the proprietor’s trademarks from its products. This also applies when the trademarks have been removed outside the European Union (EU), namely in a customs warehouse, and when a third party adds its own trademarks on the products. The Court of Justice rules that the removal of a trademark can result in ‘use’ of a trademark, which is an exclusive right of a trademark proprietor. In this judgment, the Court of Justice stretches the definition of use of a trademark.
The judgment that we discuss in this update can be found here.
What preceded the case?
The Belgian company Duma has bought forklift trucks from the well-known brand Mitsubishi outside of the EU. Before Duma imported and offered for sale the forklift trucks in the EU, Duma removed all Mitsubishi trademarks from the forklift trucks in a customs warehouse. Furthermore, Duma applied its own trademarks on the forklift trucks, after which Duma then imported and offered for sale the forklift trucks in the EU. Hence, the imported and offered for sale forklift trucks do not contain any Mitsubishi trademarks. Instead, the forklift trucks contained only trademarks from Duma itself.
Mitsubishi was not amused and decided to summon Duma to appear before a Belgian court. Mitsubishi claimed that Duma infringes the Mitsubishi trademarks by removing them.
What about it again?
Trademark law protects a trademark proprietor against third parties who use trademarks in the course of trade without the consent of the proprietor. Typical acts of use that the proprietor can oppose, are applying a trademark to a product and having products with the trademark in stock.
The question of whether the removal of a trademark, so-called ‘debranding’, is also an act of use in the sense of trademark law, is – from a legal point of view – a difficult one. After all, that party does not make real ‘use’ of the trademark, now that the trademarks are no longer visible to the public after removal.
The ruling of the Court of Justice
First of all, the Court of Justice rules that the debranding prevents the proprietor of the trademark to put its products for the first time in the EU and thus obtaining the return of investment, whereas that is one of the core functions of trademark law. In addition, despite the removal of the trademarks, the public continues to regard the forklift trucks as Mitsubishi forklift trucks. It appears the Court of Justice implies that the goodwill of a trademark is not only connected to the trademark, but also to the products itself on which the trademark is applied.
Furthermore, it follows from previous case law of the Court of Justice that the use of a trademark requires an active act. In this case that Court of Justice rules that the debranding is an active act because of the fact that an economic advantage is sought with the removal of the trademarks.
On the basis of these arguments, the Court of Justice considers that the removal of marks is regarded as use of a trademark and thus constitutes a trademark infringement.
Although we question the legal substantiation of the present judgment, we do understand the outcome of the ruling. Mitsubishi invests a lot of time, effort and money in the development of its products. The trademark rights give Mitsubishi the opportunity to obtain a return on investment. Duma tries to circumvent that right by removing the Mitsubishi trademarks outside the EU and thus not actively using the Mitsubishi trademarks in the EU. Duma thought that this trick would keep them out of the hands of Mitsubishi. The Court of Justice has now put a stop to this.
In this judgment, the Court of Justice has stretched the definition of trademark use. This judgment strengthens the position of the trademark proprietor and gives the trademark proprietor tools to better protect the value of his trademarks.
If you would like to know more about the protection of your trademarks, our Ploum IP team will be happy to assist.