The Gazette 1979

GAZETTE

JANUARY/FEBRUARY 1979

TRADE MARKS IN E.E.C. LAW

PRESENT POSITION

Treaty Provisions

Ireland's accession to the E.E.C. in 1973 brought a

new dimension to our law on trade marks. The Treaty of

Rome contains certain provisions, pertaining to trade

marks, which are of direct applicability.

Article 222 contains one such provision: it states that

the

Treaty I shall in no way prejudice the rules in

Member States governing the system of property owner-

ship. That provision, if taken is isolation, would appear to

guarantee the unfettered assertion of, inter alia, national

conferred trade mark rights. It must, however, be read in

the light of articles 85, 86 and 30-36 of the Treaty.

Agreements or practices having as their object or effect

the erosion of competition in transnational trade within the

common market are prohibited by article 85. Article 86

strikes at the abuse by an undertaking of a dominant

position within the common market or in a substantial

part of it. Finally, articles 30-36 embody general

principles designed to promote the free movement of

goods between member states. Article 36 expressly refers

to industrial property (which includes trade mark rights):

impediments on the export and import of goods my be

imposed for the protection of such property provided,

however, that these shall not "[Constitute] a means of

arbitrary discrimination or a disguised restriction on trade

between Member States."

Case Law

Reconcilliation of the foreging Treaty provisions

which on first view seem to comprise the proverbial "can

of worms"

has been achieved by the Court of Justice in

a number of cases on trade marks.

A central feature of

the Court's approach has been to hold that, while the

Treaty of Rome does not affect the

existence

of national

trade mark rights, the

exercise

of these rights may be

curtailed in order to promote competition and the free

movement of goods between the member states.

A number of illustrations will indicate the approach of

the Court. It has, for example, occasionally been alleged

that agreements on trade mark rights have been used to

divide up or allocate markets. The case of

Sirena

Eda

concerned a mark "Prep", which was registered in Italy

in respect of shaving cream by an American company,

Mark Allen. That company transferred the mark in Italy

to Sirena, which commenced to use the mark in its

trading. The Mark Allen company subsequently

permitted a German enterprise to use the mark.

Sirena sued in an Italian court for infringement when

the German enterprise began to market in Italy a shaving

cream under the "Prep" mark.

The Court of Justice

to which the case was referred

under article 177 ruled in part as follows: "Article 85 is

applicable where the trade mark is invoked to prohibit

imports of products coming from other Member States

and carrying the same trade mark, if the owners of the

trade mark acquired the mark or the right to use it under

agreements between themselves or agreements with third

parties."

55-

Even in the absence of a restrictive agreement or

practice, the exercise of national trade mark rights may be

restrained in order to prevent the abuse of a dominant

postion within the meaning of article 86. In

Sirena

Eda

(noted above), the Court of Justice elaborated on this

possibility: "The owner of a trade mark does not enjoy a

'dominant position' within ... Article 86 of the Treaty

merely because he can prohibit third parties from

marketing products bearing the same trade mark in the

territory of a Member State ... (It) is necessary in

addition that the trade mark owner should have the

power to prevent the maintenance of effective competition

in a considerable part of the market in question ... With

regard to the improper exploitation of a dominant

position, the higher price of the product, although it does

not

per se

constitute sufficient proof, may nevertheless

become so, in view of its size, if it does not seem

objectively justified."

Contention has also arisen where, although again no

restrictive practice or agreement existed, it has been

alleged that trade mark rights have been exercised so as to

derogate from the principle of free movement of goods.

Van Zuylen Fréres

Hag A. G.

is a case in point.

Hag

A. G. was the holder of trade marks in Germany,

Belgium and Luxembourg. The most important element in

these marks — which were registered in respect of coffees

was the term 'Hag'. The marks registered in Belgium

and Luxembourg came, by a series of transactions, into

the hands of the plaintiff.

When Hag A.G. began to deliver its coffees to

Luxembourg under the German Hag trade mark, Van

Zuylen Fréres sued for infringement.

The Court of Justice on a request for a preliminary

ruling, held that "[One] cannot allow the holder of a trade

mark to rely upon the exclusiveness of a trade mark —

which may be the consequence of the territorial limitation

of national legislations —with a view to prohibiting the

marketing in a Member State of goods legally produced in

another Member State under an identical trade mark

having the

same origin".

The Hag case made inroads on the territorial

protection afforded by national trade marks. The con-

finement of the holding in the case to conflicts involving

marks of common origin was, however, confirmed in

the more recent case of

Terrapin

Terronora

Industrie

The plaintiff, an English company, was the

owner of the mark 'Terrapin', registered in the U.K. in

respect of prefabricated houses. The defendant, which

had a German subsidiary, was the owner of the mark

'Terranova'; this mark was registered in Germany in

respect of building materials.

Proceedings ensued when the plaintiff company sought

registration of its 'Terrapin' mark in Germany.

It was held, on a referral to the Court of Justice for a

preliminary ruling, that "IAn] industrial or commercial

property right legally acquired in a Member State may

legally be sued to prevent under the first sentence of

Article 36 of theTreaty the import of products marketed

under a name giving rise to confusion where the rights in

question have been acquired by different and independent

proprietors under different national laws."

This

decision, thus, substantially reverted the balance in favour

of national trade mark systems.

One theme recurs, whtether explicitly or implicitly, in

the foregoing cases; namely, the interplay between

nationally conferred monopoly rights and the European

ideal of a single and competitive market. The Court of

Justice has furnished substantial guidelines. Further

litigation is, however, inevitable, according as the balance

in emphasis swings between the two opposing concepts.