WRITTEN QUESTION P-0737/98

by Werner Langen (PPE) to the Commission

(2 March 1998)

Subject: EU trade mark directive

The EU's trade mark directive creates special legal protection for the producers of branded articles, permitting them to keep the prices of their products artificially high. This rule seems very questionable in commercial law, since it places the protection of branded article producers above international conventions and agreements. This restricts the free movement of goods and acts against the interests of the consumer, who must ultimately pay the inflated price.

In view of the above:

1. In the Commission's view, what are the consequences for competition and consumer policy of the restriction of free movement of goods as a result of the transposition of the EU trade mark directive in 1995, and how does it justify the de facto dominance of the interests of branded goods producers over those of free world trade and the consumer?

2. What information does the Commission possess about the extent to which the EU trade mark directive prevents the import of branded products at lower prices, and what effects has the directive had since its entry into force on the level of sales prices for branded articles on international markets?

3. What information does the Commission possess about the practical application of the trade mark directive in the Member States of the European Union, and can it confirm that a court in Belgium, for example, has condemned as an abuse of the directive its application for the purpose of preventing parallel imports?

Supplementary answer

given by Mr Monti on behalf of the Commission

(2 June 1998)

Further to its answer of 8 April 1998,(1) the Commission is now able to supply the following information.

1. Council Directive 89/104/EC of 21 December 1988(2) introduced the principle of the Community exhaustion of trade mark rights. According to this principle, once a product protected by a trade mark has been put on the market in the Community by the proprietor or with his consent, the rights conferred by the mark can no longer be invoked to restrict the free movement of that product within the internal market. This rule does not therefore apply to parallel imports from countries outside the Community. The provision on Community exhaustion was included at the request of Parliament. Although in the initial proposal the Commission had opted for international exhaustion, Parliament wanted Community exhaustion only to be included. Current international economic relations being what they are, Community exhaustion is likely to have certain advantages for consumers, depending on the product. In particular, it can guarantee the sustained quality of the products moving around the internal market and ensure continuity of after-sales service. Furthermore, the trade mark Directive has had the effect of heightening competition between producers within the internal market. In order to gain a full picture of the situation and at the request of several Member States, the Commission has decided to have an extensive economic study carried out on the consequences of the choice which was made in the trade mark Directive with regard to exhaustion. This study will be commissioned as soon as possible. Moreover, the principle of Community exhaustion is compatible with the rules of international law and it must be recognised that at present, none of the Community's main trading partners or its Member States apply the principle of the international exhaustion of industrial property rights.

2. The Directive has had the effect, through the provision on Community exhaustion and in the Member States which previously applied international exhaustion, of restricting parallel imports from non-member countries in cases where the trade mark proprietors decided to invoke their rights to restrict or prevent such imports. A small number of businesses which specialise in the parallel importation of consumer goods from the United States, for example, informed the Commission that they had been confronted with demands from trade mark proprietors opposing such imports from non-EU countries. The Commission does not know the exact figures involved. The consequences of the choice made in the trade mark Directive in favour of Community exhaustion, and its effects on parallel import flows, will be assessed in detail on the basis of the above-mentioned economic study.

3. No trade mark law in the Member States any longer lays down the principle of international exhaustion. However, it must be noted that a number of national courts have requested preliminary rulings from the Court of Justice on Article 7 of the Directive, asking whether this provision prohibits the application of international exhaustion or not (Cases C-355/96 Silhouette, C-370/97 Ralph Lauren and C-4/98 Calvin Klein). The queries relate to whether trade mark rights can be invoked by proprietors against parallel imports from non-EU countries. In the Silhouette case, the Advocate-General's conclusions were submitted recently and confirm the Commission's interpretation that the relevant provision of the Directive constitutes a total harmonisation measure which no longer allows Member States to lay down the principle of international exhaustion in their national legislation.

(1) OJ C 304 2.10.1998, S. 153.

(2) OJ L 40, 11.2.1989.