Further to our blog post on January 11 on Case C-291/16; Schweppes SA v Red Paralela SL in relation to the preliminary ruling of the Court of Justice of 20 December 2017, Class 46 has received a note from David Gómez and Morgan Schaaf, the lawyers acting for Schweppes, that seeks to bring additional clarification to the legal question of trade mark exhaustion, as it was referred to the Court of Justice by the Spanish judges of the Juzgado de lo Mercantil No 8 of Barcelona. We are pleased to publish their note in full below:

The said judgment refers to the exhaustion of trade mark rights. It particularly deals with a case where the trade mark rights belong to different owners as they were split in past voluntarily transactions between different group of companies. That said, in the present matter the Schweppes® trade mark belongs to Coca-Cola in the United Kingdom (as owner of a UK trade mark registered at the Intellectual Property Office); and the same trade mark belongs to Schweppes in Spain (as owner of a Spanish trade mark registered at the Spanish Patents and Trademarks Office). In this respect, it is important to highlight that the trademark Schweppes® is not registered as a European trade mark at the EUIPO. Thus, in such circumstances, the CJEU analyses in what conditions the exhaustion of trade mark rights apply in a case where the Schweppes® tonic produced by Coca-Cola in the United Kingdom is imported into Spain by third parties, where the exclusive rights do not belong to Coca-Cola but to Schweppes.

The CJEU states that EU law does not preclude the proprietor of a national trade mark from opposing the import of identical goods bearing the same trademark originating in another Member State, in which that mark is owned by a third party, except when following that assignment, the owner, either acting alone or maintaining its coordinated trade mark strategy with that third party, has actively and deliberately continued to promote the appearance or image of a single global trade mark, thereby generating or increasing confusion on the part of the public concerned as to the commercial origin of goods bearing that mark.

Additionally, the CJEU states that the proprietor can oppose to the importation of the referred products, provided that there are no economic links between him and the third party, in the way that they coordinate their commercial policies or reach an agreement in order to exercise joint control over the use of those marks, so that it is possible for them to determine, directly or indirectly, the goods to which the trade mark is affixed and to control the quality of those goods.

At all events, the CJEU has not decided if in the Schweppes case the doctrine of exhaustion of trade mark rights has to be applied or not, since the ultimate decision on whether the Schweppes Group can oppose to the commercialization in Spain of Schweppes® products manufactured in the UK by Coca-Cola depends exclusively on the national courts and the appraisal of evidence on a case-by-case basis, in view of the evidence submitted by the parties in the proceedings before them, as regards whether or not (i) there is an economic link between Coca-Cola and Schweppes International; (ii) they coordinate their commercial policies; or (iii) have agreed to exercise a joint control over the use of those marks.

David Gómez and Morgan Schaaf, Baylos, Madrid

This case is now back before the Spanish courts. As it clearly deserves the utmost attention, Class 46 will continue to follow its development and we will provide further updates in due course.

For further reading, the case has also been examined in the case law review published by the EUIPO in the January 2018 edition of Alicante News.