Source: http://www.ipdigit.eu/2011/12/when-viking-gas-refills-kosan-gas-bottles-exhaustion-or-not/comments/
Timestamp: 2019-04-24 00:28:16+00:00

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IPdigITComments for When Viking Gas refills Kosan Gas bottles: exhaustion or not?
Comments for When Viking Gas refills Kosan Gas bottles: exhaustion or not?
Once again, the Court of Justice makes a limitation of the scope of protection of trademark. The trademark must yield to the consumer’s property rights and free competition. This had already been set out in previous ECJ’s case such as Sebago/G-B Unic.
As in its previous cases, the Court’s judgment weighted the interests at stake: the consumer had a legitimate interest in refilling and reusing their composite bottle a large number of times in order to recoup their initial spendings (consumers are charged a higher price for this more technically effective bottle (higher prices than normal). Indeed, to force consumers to return to Kosan in order to refill their gas bottle would restrict competition in the internal market. The Court held that the consumers do not only buy gas, they also buy the bottle, a suitable container for ulterior refilling, weather it be from Kosan or another competitive suppliers. The Court held that since the composite bottle itself was a distinct product, the trademark associated with it was exhausted on the first sale: Kosan could not, in principle, contest the refilling of used composite bottles by Viking; they had an economic value that the consumer could benefit from by refilling it from the distributor of their choice. An opposite judgment would have led to some sort of monopoly from Kosan Gas (the other gas suppliers being prevented from using this more effective gas container), which the ECJ tries to temper as much as possible in its case-law. It would limits free competition (important principles of EU law), and would also limit the consumers from using the more expansive bottles they had bought and paid for. The Court says that a trademark right cannot be used to retain the leads in the economic, such as to obtain an unfair advantage or apply an unjustified price difference. In such case, the ECJ ruled that the trademark exhausts the exclusive rights.
The practice of Viking Gas would be actionable under trademark law in the following circumstances: if there were legitimate reasons to oppose the further commercialization of the Kosan bottles, under Article 7 (2) of the Directive. What does it include?
Although Viking affixed its own branding to the re-filled Kosan bottles to indicate where the re-fills had been obtained, it made no attempt to remove or obscure the Kosan branding from the re-filled bottles. It was considered to be good enough by the ECJ. It was not considered to be confusing for the consumer.
If Viking Gas had taken the name and logo off the bottles for its replace it with it own branding, Kosan would have the argument of “condition’s changement”, which is a legitimate reason for opposing the Viking Gas refill, despite the exhaustion of Kosan’s rights. But at the same time, consumers can be confused about the origin of the refilled gas since both labels appears on the bottles every time consumers proceeded with a refill. Consumers more and more confront to the practice of co-branding, in particular, could interpret the presence of both Kosan and Viking branding on the re-filled Kosan bottles as an indication that the parties are co-operating in some way.
Plus, the fact that Viking refilled the bottles with its own gas constituted a risk of alteration or modification of the product (ie, the bottle). Kosan had a vested interest in having the bottles refilled by its own authorised distributor in order to maintain strict control of the quality of the gas sold, as any defect could have a clear impact on the trademark’s reputation.
I like your rather imaginative and at the same time practical arguments under 2). Good.
1) I think this new case doesn’t add much to the existing case law of the European Court of justice. Indeed, the court is constantly refering to its « well-establish case-law ». Which cases did the court follow ?
First of all, the Court refers to Case C-127/09 Coty Prestige Lancaster group to say that the purpose of the Directive 89/104 is to harmonize national systems and should so be interpreted in that objective.
After that, the Court lays down the principle of exhaustion as laid down in many cases, and inter alia Case C-324/08 Makro Zelfbedieningsgroothandel and Others, according to which the trademark proprietor’ rights are exhausted where the goods have been put on the market in the European Economic Area by the proprietor himself or with his consent.
Then, the Court undertake a balance between the interest of the licensee and the proprietor, on one hand, and the interest of the consumer, on the other hand. The court quotes another decision (C-16/03 Peak Holding) by saying that the sale of the composite bottle allows the proprietor to realise the economic value of the marks relating to those bottles, and that such kind of sales exhausts the exclusive right.
When the Court analyse if there are legitimate reasons which can justify an opposition from the proprietor, it emphasizes, following C-59/08 Copad, that the adverb « especially » only introduces an example of legitimate reasons and so that other reasons can be considered as legitimate pursuant to article 7(2) of the directive. The court finally analyse if the use of the bottle by Viking gaz was giving the impression that there is a commercial connection between them and Kosan gas, which was considered in the case C-558/08 as being another legitimate reason to oppose the use of a good.
In my opinion, all this demonstrates that the court merely follows the existing case law on trade mark exhaustion.
–	If Viking gas didn’t attaches adhesive label bearing its name and the filling station number. In that case there would be counterfeiting because the sign is identical (only the Kosan trademark would appear on the bottle) and the product (gas refilled by Vicking) is an identical good. We are so in the conditions of article 5 (1) of the Directive.
a) The condition of the good is changed or impair : for example if the refilled composite bottle that Vicking gas sell is so worn away that they don’t turn off very well anymore, or if they present other defect.
b) If the adhesive label of Viking gaz covered the whole Kosan Gas Trademark, such as consumers wouldn’t know which gas they are buying or could reasonably think that there is a commercial connection between Viking gas and Kosan gas.
– The exception of article 7 (2) of the directive does not apply because there is no damage to the reputation of Kosan Gas because there is no connection possible between it and Viking Gas. And Kosan Gas could only introduce an action against Viking Gas if the conditions enumerated at article 7 (2) were met.
Fine. Good to start with the previous decisions.
2) In the circumstances which apply to this case, the actions committed by Viking Gas are not sanctioned by the trademark law. The question is whether there are any other circumstances in which the actions undertaken by Viking Gas would indeed be prohibited by that very same law.
A second circumstance under wich Viking Gas could be actionable is the case where the company refills the bottles with actual Kosan Gas. In that case the entire composite bottle would just be a copy of the original composite bottles manufactered by Kosan Gas. Article 5 of Directive 89/104 is to be used again as statement to sanction Viking Gas for their actions.
The same can be said if Viking Gas supposedly refills the bottles with actual Kosan Gas whereas in reality they refill the bottles with Viking Gas. This is actually a case of fraud. If the Gas sold by Viking, wich supposedly is Kosan Gas, appears to be defect, it could ruin the entire reputation of the Kosan Gas mark. (Therefore, as said in the decision, the buyer must be completely aware of the product that he is actually purchasing). This circumstance also fall under Article 7 of the same Directive. A proprietor can prohibit further commercialisation of goods ” where there exist legitimate reasons for the proprietor to oppose further commercialisation of the goods, especially where the condition of the goods is changed or impaired after they have been put on the market “.
To start with and to respond the first question, I do not really think that this particular case adds much to the existing case law on trademark exhaustion; the new aspect it just brings to the table is the fact that the trademark involved in this case is a tridimensional one that protects the shape of the composite bottles.
But from the point of view of the holding of the case and with the object of responding the second answer, the only way that the action of Viking Gas could be actionable is if indeed there is an exhaustion of the trademark as a result of the sale by Kosan Gas of the bottles filled with gas.
In order to see whether there is or not, the Court refers to the Directive 89/104, which comes to homogenize the trademarks aspect at a European level. Over there we find a limit to the rights of proprietor (in this case licensee) given by the trademark as they are confronted to the free movement of goods, principle established all over the European Union. We find it in the article 7, known as exhaustion of the Trademark.
The ECJ comes to determine whether there is or not an exhaustion of the trade mark and as a result if Kosan can prevent Viking from refilling its bottles with gas in the first place; and in the second place whether, even if there was an exhaustion, Kosan could prevent Viking from doing it under the article 7.2 of the Directive, an exception to the exhaustion.
The paragraph 30 and 32 of the judgment are really important in this regard: in the first one the ECJ determines that the bottles are products themselves, as they have got economic value. This leads to latter one even more important because the ECJ had already established that in a previous ruling (C 16/03 Peak Holding) “that a sale which allows the realisation of the economic value of a mark exhausts the exclusive rights conferred by Directive 89/104”, in this case the sale of the confronted composite bottles. This is deeply related with the principle of freedom of movement of goods abovementioned; the Court comes as well to rise the problem of the lack of competence that would be in the market if Kosan Gas is allowed to do as it claims (prevent all the others).
The key paragraph to ascertain whether there is an exhaustion of the Trademark or not is the 35th one; the Court comes to recognize that the sale implies an exhaustion and therefore the private buyers of the bottles can change or refill the bottles.
The remaining question to analyze here is whether the article 7.2 could be applicable and so even if there was an exhaustion, could Kosan prevent others to further commercialization; the ECJ comes to say that there have to be legitimate reasons for that, and gives a little bit of guidance over that matter, even if it states that this question in particular is for the National Courts to decide.
The second paragraph is clearly not correct: if there is exhaustion, then the action of Viking Gas is not actionable. Please work further on your English!
In the Dior/Evora case, Dior claimed that the shape of the bottle of its perfume can be protected by trademark and also by design. Here, the national court asks whether the holder of an exclusive licence for the use of composite gas bottles intended for re-use, may prevent, pursuant to Articles 5 and 7 of Directive 89/104, those bottles, from being exchanged by a third party, on payment, for composite bottles filled with gas which does not come from the holder of that licence. Kosan Gas wants to prevent Viking gas from using its own bottle, the shape of which is protected as a three-dimensional trade mark, and refill it with its own gas. The European Commission considers that the question at stake is essentially a question of ascertaining whether there is, in the main proceedings, a likelihood of confusion in the sense that the consumer may believe that the gas contained in a bottle filled by Viking Gas comes from Kosan Gas or that there is a commercial connection between those undertakings, which it is for the national court to establish.
Viking Gas states that the consumer acquires the composite bottle at the time of the first purchase, which has the consequence that Kosan Gas’ trade mark right is exhausted. I think Viking Gas is right since it affixes its own label on Kosan’s gas bottle. Moreover, the practice of refilling a gas bottle by another dealer is a common thing and consumers are accustomed to it.
The Court ruled that it must be pointed out that the composite bottles, which are intended for re-use a number of times, do not constitute mere packaging of the original product, but have an independent economic value and must be regarded as goods in themselves. The Court guarantees here a protection of the three-dimensional trademark of Kosan Gas.
However, the ECJ adds that allowing Kosan Gas to prevent its bottles from being refilled would unduly reduce competition and would even create a risk of seeing that market close. Consequently, the Court answers the preliminary reference by ruling that the sale of the composite bottle exhausts the rights that the licensee of the right to the trade mark constituted by the shape of the composite bottle and proprietor of the marks affixed to that bottle derives from those marks and transfers to the purchaser the right to use that bottle freely, including the right to exchange it or have it refilled, once the original gas has been consumed, by an undertaking of his choice, that is to say, not only by that licensee and proprietor, but also by one of its competitors.
1) Strictly speaking, there is nothing new with that decision. It only marginally concerns itself with the rules of exhaustion, which are not question per se, but is more a matter of risk of confusion, about which there is no shortage of case law. Still, the specifics involved (i.e. the refilling of recipient) might prove influencial in the future, as surmised by Italy.
2) The exhaustion here is fudamentally due to two things: a) Kosan Gas has put its bottle and its gas onto the European market, and b) the use that Viking Gas makes of it does not harm Kosan.
a) The introduction of the gas on the European market is a given, the introduction of the bottle is almost certainly one as well. Perhaps it would have been possible to imagine a way of making the bottle available to the customers without actually transfering the ownership over them, but rather by allowing temporarily their use. Ultimately, such a system would probably drive the customer away with unnecessary complication (for them, at any rate). Thus we can conclude that both gas and bottle are in the European market, and that any action must now prove that Viking Gas’s use of the bottles present Kosan with legitimate reason to oppose it.
b) Until then I have made no explicit separation between the laws applying to the gas itself, and those applying to the bottle. As indicated in the case, the rules of exhaustion mean that Kosan cannot prevent anyone from reselling its bottles and whatever gas they still contain. Where lies the argument is in the reusing of the trademarked bottles, if another company fills them with gas.
It should first be noted, and indeed the judges did so, that article 7 §2 explicitly puts a change or impairment in the condition of a good among the legitimate reasons for an exception to paragraph 1. If Viking’s label had covered Kosan’s, it might have been enough to decide that the bottle can no longer be traced back to Kosan, which would give them the legitimate reason they were looking for.
On the contrary, the absence of any new label or, broadly speaking, elements that would not allow a normally careful buyer to realize that the gas contained in a reused Kosan bottle did not, in fact, come from Kosan, would constitute a risk for said Kosan. Then, an action would be possible.
The bottle were sold; any normal use of them that shouldn’t involve Kosan’s responsability cannot be prevented by them.
Quite a focused response, I thank you.
1) The existing case law admits exhaustion of trademark rights after a good has been commercialized by the consent of the owner of the right and when there is no danger that the use, or resale will seriously impair on the image of the trademark (ECJ Dior vs. Evora). Exhaustion of trademarks benefits all intermediaries (distributors, resalers…). Indeed, there is a balance to be struck between the interests of the trademark owner and those of the owner of the property right on a specific good. Article 7(2) of Directive 89/104 or Article 13(2) of Regulation 40/94 has been interpreted in such a way that it forbids to modify the product in such a way that it might impair the reputation of the trademark owner. It is thus not forbidden if there is a way for the consumer to know that the third party is not affiliated to the network of the trademark owner: it must be made clear that there is no commercial connection. This has already been set out in the ECJ “BMW” ruling of February 23 of 1999.
In this case, the Court does not diverge from the existing case law but it draws out specific criteria that the court may use in order to determine the presence of an erroneous impression of a commercial connection: the labeling of the good, and the practices of the sector of activity.
2) The practices of Viking gas would have been be actionable under trademark law, if the bottles did not bear any mention of Viking gas’ activities while keeping all the distinctive trademarks of Kogan Gas. In this circumstance, Kogan gas would be able to argue that there is a strong propensity for consumers to think that Viking gas is affiliated to Kogan Gas.
1) For me, the Viking Gas v. Kosan Gas case does not add much to the existing case law on the trademark exhaustion. In this case, Kosan Gas wants to prohibit the commercialisation of its gas bottles protected as verbal and figurative marks. The Court of Justice concludes that articles 5 and 7 of Directive 89/104 do not confer to the holder (Kosan Gas) an exclusive right to control the use of gas bottles after the sale of those bottles. As the bottles have been put on the EU market, the exhaustion rule does apply and the consumer may contact any company of its choice to refill or exchange the bottles.
We saw other cases about trademark exhaustion. The case law of the Court of Justice seems to be constant. In Silhouette v. Hartlauer, the Court excluded the rule of international exhaustion. In Dior v. Evora, the Court decided that when the holder puts the goods on the EU market or gives his consent to do so, a distributor (of discounted products) may use the mark to announce to the public the commercialisation of the products. In the Davidoff case, the Court defined the notion of consent in the sense of Article 7 of the Directive. The Court decided that consent could be implicit. The Van Doren case concerns the question of the burden of proof. The parallel trader has to prove that the goods have been previously put in the EU market. But if the parallel trader shows that there is a real risk of closing national markets, it is the trademark owner that has to prove that there is no consent to sell the goods on the EU market.
2) The practice of Viking Gas would be actionable under trademark law if Kosan Gas would have been able to rely on a proper reason for the purposes of Article 7(2) of Directive.
Article 7(2) of Directive provides that: “the proprietor of a mark may, despite the putting on the market of goods bearing his mark, oppose further commercialisation of those goods where legitimate reasons for such opposition exist and especially where the condition of the goods is changed or impaired after they have been put on the market”. The Court had to examine whether the commercialisation of the bottles refilled by Viking Gas was carried out in such a way as to give the impression that there is a commercial connection between that undertaking and Kosan Gas which would entitle Kosan Gas to oppose that commercialisation. The Court concluded that those bottles were protected under verbal and figurative marks made up of the name and logo of Kosan Gas. The name and logo remained visible in spite of the labelling added by Viking Gas to those bottles. Therefore, the Court ruled that Kosan Gas couldn’t prohibit the commercialization.
I do not think that out of what is said in this case, an element stands out. The only quite interesting remark done by the Court is related to this precise case and will therefore be probably of a quite slight impact. I do refer to the remark concerning composite bottles. The Court notices that for the gas bottles’ market, allowing TM owners to prohibit further use of their product would lead to a complete shutting down of this market. The customer would be stuck to one provider of gas because he once bought the composite bottle labeled with its name.
For the rest, the Court often refers itself to former cases and therefore makes it clear that there’s no will to provide an innovative holding in this precise case.
The practice of Viking gas, i.e. refilling bottles to sell their gas although they bear the name and logo of Kosan Gas, would be actionable if for example, there were elements clearly suggesting a link between those two providers which would be misleading for the customers; or if the quality of the gas sold by Viking gas was as bad as to harm the image of Kosan gas. It is interesting that the Court reads the adverb ‘especially’ in Article 7(2) of the directive as indicating that “alteration or impairment of the condition of goods bearing a mark is given only as an example of what may constitute legitimate reasons”. Still as mentioned by the Court itself, it is an interpretation confirmed by a well established case-law. Nothing new.
Ok, but you could have gone a bit further.
I don’t think that the new decision of the CJEU add much to the existing case on trademark exhaustion because it simply gives the well-established meaning to Art. 5 and 7 of the directive 89/104. in fact, these articles give a complete harmonisation of the rules relating to the rights conferred by a trade mark and define the rights of proprietors of trademarks in the European Union. Art. 7 gives an exception to the exclusive right given by art. 5 if the goods have been put on the market in the European Economic Area (EEA) by the proprietor himself or with his consent. In this case, Kosan gas has produced the composite bottle and so holds the exclusive right for the use in Denmark of the three-dimensional mark constituted by the shape of those bottles and is the proprietor of the word and figurative marks affixed to them. Furthermore, we have to interpret art. 7 of the directive in such a way that the composite bottles, which are intended for re-use a number of times, do not constitute mere packaging of the original product, but have an independent economic value and must be regarded as goods in themselves and so the packaging in itself can exhaust the trademark right. We can finally add that the Court already hold that ”the realisation of the economic value of a mark exhausts the exclusive rights conferred by Directive 89/104” and it’s what happened here : the sale of composite bottles allows the licensee (so Viking Gas) and the proprietor (Kosan gas) to realise the economic value of the marks relating to those bottles.
1) Do you think that this new decision of the CJEU adds much to the existing case law on trademark exhaustion?
As stated by the Court (§ 25), its decision follows the already “well-established case-law”.
The national court asked to the ECJ whether or not the owner of an exclusive licence for the use of a certain protected shape of re-usable gas bottle on which he put its name and logo, may prevent, on basis of articles 5 and 7 of the directive 89/104, a third party to refill said bottles that have been bought and used by consumers, knowing that the third party put, in addition, its own label bearing its name.
The substantial question is then whether or not the right of the holder is exhausted by putting the bottles on the market in the EEA.
The Court answered that “the extinction of the exclusive right results (…) from the putting on the market in EEA by the proprietor himself”; it is a clear renunciation to the exclusive right and constitutes a crucial factor in the extinction of that right. Thereby, the Court followed its own case-law (among others the Coty Prestige Lancaster Group decision of 2010).
We do not think that this decision adds much to the existing case-law of the Court since it seems to only confirm the solution previously stated.
2) In which circumstances would the practice of Viking Gas be actionable under trademark law? Please be as specific as possible.
According to the Court, the trademark protection would be actionable if the holder had proper and legitimate reason to oppose further commercialisation of the good, as stated in article 7 (2) of directive 89/104.
An example of alteration and impairement of the conditions of the good could be for it to bear the label of the third party only, or no new label at all.
That would confuse the consumers and damage the reputation of the initial holder. Indeed, the consumer would not know at the end of the day who is the real producer of the gas contained in the bottle he gets back, and whether or not the two undertakings are commercially linked.
Plus, if the gas is not good enough, the consumer would not know who is responsible.
Thanks, could have been a bit more detailed.
Concerning exhaustion of the trade mark, Kosan Gas considered that the product protected by the trade mark was the gas contained in the containers, so a consumer could resell an unused bottle of gas but they could not reuse the packaging of Kosan’s Gas. Similarly, Viking Gas was not free to reuse Kosan’s bottle for its own product.
The case of Viking Gas is a simple application of Article 7, in fact the gas bottles of Kosan Gas were already sold in the Community and therefore as stated by Article 7 the proprietor is not entitled to prohibit the use of his trademark if the goods have already been put on the market of the Community under that trademark by the proprietor or with his consent.
The court considers that the filling of the gas bottles can not be an act of infringement even if another brand has been added on the gas bottles.
As stated by §2 of Article 7 the proprietor of the Trade mark shall be protected if there exist legitimate reasons for the proprietor to oppose further commercialization of the goods. As pointed out by the court this would be the case if a third party use potentially damaged Kosan’s reputation or created an erroneous impression of a commercial connection with Kosan.
The main focus of this decision is the protection of the consumer, in fact the court wants to protect the consumer from being linked to only one producer of gas which would be the proprietor of the trademark. This would limit the freedom to utilise the purchased bottle and would unduly restrict competition in the downstream market for gas refills.
If there were no consumer involved would the court have justified her decision the same way? As said by the Advocate General in C-119/10 Frisdranken Industrie Winters BV v. Red Bull GmbH, the fact that the refill is done on demand of the consumer does not constitute a use of the trade mark. Therefore we could think that if Viking Gas had refilled the bottles without the intervention of a consumer the court could have conclude that the proprietor had legitimate reasons to oppose further commercialization because the condition of the good was changed after they have been put on the market.
Thanks. Not convinced by your last developments.
In this case, the court says that a balance must be struck between, on the one hand, the interest of the ™ holder to protect his mark and, on the other hand, the interest of the purchaser to enjoy the product as it wishes, so here to refill its gas bottle with gas produced by a different company that the one which produced the bottle.
In the Peak Holding case, the court held that a sale which allows the economic realization of the good exhausts the exclusive right of the ™ holder conferred by the directive. It is the case here according to the court.
The court adds that if the consumers were to be constrained to refill their gas bottles at a specific producer, it would abusively restrain their property right on the bottle.
Moreover, such a restraint would jeopardize the competition on the refilling of the bottle market (downstream market) since the consumer could not choose its supplier.
The court further says that it has to assess the question whether there is a risk of confusion for the consumer, in the sense that he would think there is a connection between Kosan Gas and Viking Gas. The ECJ says that a reasonable purchaser will not be confused ; besides, the label of Viking gas is not affixed ON the label of Kosan Gas but next to it.
It results from the foregoing that Art 5 and 7 of the Directive must be interpreted as meaning that Kosan Gas may not prevent a concurrent to refill Kosan gas bottles of purchasers with gas which does not come from Kosan Gas, unless the ™ holder can prove the existence of the conditions stated in Art 7(2) of the Directive, i.e. “there exist legitimate reasons for the proprietor to oppose further commercialization of the goods, especially where the condition of the goods is changed or impaired after they’ve been put on the market”.
This case shows that the Court adopts an extensive approach of the ™ exhaustion (Art 7(1) Dir.). Moreover, the conditions for the Art 7 §2 to be applied are quite difficult to reach since we could have thought that the circumstances of this case fall within such “modification of the good”.
In the Dior/Evora case for instance, the court held that a ™ holder may still exercise its right (i.e., no exhaustion), when an advertisement strongly affects its reputation.
So the conditions for the exhaustion to apply are quite difficult to reach ; here again, the court had an extensive approach of the exhaustion.
On the basis of the statement of the Court in this case, Viking Gas would have been actionable if some Kosan Gas gas had still been present in the bottle (the court indeed precised that its statement only applies when the gas initially present in the bottle is completely consumed).
It could also have been actionable if Viking Gas had hidden the Konan gas label with its own label ; in this situation, the reasonable consumer could be confused with respect to the connection between VG and KG.
When she issues a preliminary ruling on Article 7 of the Council Directive 89/104 which harmonizes the laws of the Member States relating to trademarks in the case C-46/10 Viking Gas A/S v Kosan Gas A/S, the CJEU follows previous case-law on trademark exhaustion and doesn’t add to much to those cases. In that case the CJEU decided that it isn‘t a problem for the firm Viking Gas to sell gas by refilling composite bottles of gas whose shape is protected by a three-dimensional trademark and whose use is protected by an exclusive license given to another firm which produces gas (Kosan Gas). It’s important to point that Viking Gas only refills bottles that were previously bought by consumers, they are thus the proprietors of the bottles and the name and logo of Kosan Gas protected as word and figurative marks remain on the bottles.
The answer to the question asked to the Court can be summarized by paragraph 42 : « it is apparent from the foregoing that the answer to the questions referred is that Articles 5 and 7 of Directive 89/104 must be interpreted as meaning that the holder of an exclusive licence for the use of composite gas bottles intended for re‑use, the shape of which is protected as a three-dimensional mark and to which the holder has affixed its own name and logo that are registered both as word and figurative marks, may not prevent those bottles, after consumers have purchased them and consumed the gas initially contained in them, from being exchanged by a third party, on payment, for composite bottles filled with gas which does not come from the holder of that licence, unless that holder is able to rely on a proper reason for the purposes of Article 7(2) of Directive 89/104 ».
To answer the question, the CJEU refers to previous existing cases about Article 5 and 7 of the directive.
The first one is Case C-324/08 Makro Zelfbedieningsgroothandel and Others  which asserted that the article 5 confers on the trade mark proprietor exclusive rights which entitle him to prevent any third party from offering goods bearing the mark, putting them on the market or stocking them for these purposes and that an exception to this possibility is incorporated in Article 7(1) of the directive : the trade mark proprietor’s rights are exhausted where the goods have been put on the market in the European Economic Area (EEA) by the proprietor himself or with his consent.
The CJEU also follows Coty Prestige Lancaster Group case-law when it says that the fact that Kosan Gas, the licensee, put its product on the market in the EEA is equivalent to the renunciation of the exclusive right.
This assessment refers also to the Silhouette case we saw during lesson in which there was no exhaustion of the trade mark proprietor’s rights because the good had not been marketed in Europe. The findings of the Case C‑16/03 Peak Holding  were also used when the CJEU says that the fact that the sale of composite bottles allows Kosan Gas to realize the economic value of the marks relating to those bottles and that fact, in itself, exhausts the exclusive right.
Article 7(2) states that article 7(1) “shall not apply where there exist legitimate reasons for the proprietor to oppose further commercialisation of the goods, especially where the condition of the goods is changed or impaired after they have been put on the market”. In the Dior case, we saw that if a publicity alter the public’s perception of the quality of the good, it could be an exception to the exhaustion of the right but it can’t apply here because the Kosan Gas logo is still appearing on the bottles.
The Case C-59/08 Copad  ECR I-3421 which says that legitimate reasons that the proprietor of a mark can invoke to oppose to further commercialization even if the proprietor of a mark put its product on the market, aren’t just the ones given by Article 7 (2), was also cited. In the case Case C‑558/08 Portakabin and Portakabin  ECR I-0000, the Court had already held that a legitimate reason also exists when that use of a third party “is carried out in such a way as to give the impression that there is a commercial connection between the trade mark proprietor and that third party, and in particular that the third party is affiliated to the proprietor’s distribution network or that there is a special relationship between those two persons”. Here, to assess that it is not the case with the use of the bottles by Viking Gas, the CJEU pointed factual elements and refers to a “reasonably well informed and reasonably observant consumer » and to « the practices of the sector ». That’s what the Court adds to the previous case law on the exhaustion of this right.
1)	If the bottle had not been marketed inside EEA (Silhouette case).
2)	If Kosan Gas had given an implied consent which can ‘be inferred from facts and circumstances prior to, simultaneous with or subsequent to the placing of the goods on the market outside the EEA’(Davidoff case).
3)	If the use of the bottles had given the impression that there is a commercial connection between the trade mark proprietor and that third party.
4)	If Viking Gas had withdrawn or hidden the name and the logo of Kosan Gas on the bottle because it alter the condition of the bottles (par. 43 of the case + Dior case). Moreover, it infringes the exclusive license they have on the bottles.
Good summary at the end.

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