Case C-379/14, TOP Logistics – from lex mercatoria to lex markatoria? [judgment 2015, ECLI:EU:C:2015:497]

Bacardi is one of the world’s drinks giants. Its products are traded globally. A proportion of its products ends up on the territory of the European Economic Area. Once there, the products are stored in legally-special warehouses until the world’s merchants decide whether to buy, sell, move or just hoard the products. The question in this case is whether a trade mark owner like Bacardi can really control the flow of the goods bearing its trade marks when those goods are just sitting in those special warehouses, and when it is not the legal owner of those goods? The answer in EU law seems to depend on whether the goods have been ‘imported’ because EU trade mark law allows a right holder to prohibit the ‘importing’ of trademarked goods.

Facts
Bacardi is one of the world’s major drinks companies. A proportion of Bacardi’s products end up in the European Economic Area (the EEA). One of the EEA’s key ports is Rotterdam. This Dutch port is home to many, many warehouses.

However, some of the port’s warehouses are rather special. They are governed by legal rules which are very useful to the owners of goods arriving at the port. That is to say, these warehouses function to allow goods to be stored there until the owner has decided what to do with them – normally the finding of a buyer. Once a buyer is found, the goods may be shipped onwards to another port elsewhere in the world, or they could be admitted into the EEA.

TOP Logistics is a firm that runs one of these special warehouses. In fact, its particular warehouse is both a licensed ‘customs warehouse’, and a licensed ‘tax warehouse’. This permits goods to be stored there under a variety of different customs tax and duty regimes – whichever is the most tax efficient for the owner of the goods.

And it is against this backdrop of global trade and tax-efficient warehousing that a dispute arose between Bacardi and TOP Logistics. In 2006, Bacardi requested that TOP Logistics look at, seize and attach various batches of original, non-counterfeit Bacardi goods that were believed to be in TOP Logistics’ warehouse.

An inspection of the attached goods revealed that were indeed batches of Bacardi products in the warehouse. The goods were original and not counterfeit, and they had been stored there at the behest of another Dutch company, Van Caem International.

The company of Van Caem International is a global importer and exporter of luxury branded goods. Its merchants sell imports and exports on to a variety of large and medium sized companies, who, in turn, sell the goods onto their own customers further down the chains of distribution and supply.

Besides finding the Bacardi-trademarked original products which belonged to Van Caem International in the warehouse, the inspection also revealed that the products were being held under a variety of customs procedures.

Namely, some of the trademarked original products had been given a ‘T1′ status, which, once given, meant that they were under the supervision of customs until another destination for the goods had been decided (during this time, the goods are not subject to any import duties or the EU’s commercial policy). Those goods are said to be in a ‘suspensive customs procedure’.

But some of the other Bacardi-trademarked original products in the warehouse were being held under a completely different administrative customs procedure for they had been given ‘Tax Warehouse’ status. Under that status, it is impossible to put the goods onto the market in the Community until there has been an official release for free circulation. Until that time, the goods are in a ‘suspensive duty procedure’.

There was however something significant which had happened to those goods which had been given the Tax Warehouse status. Namely, the goods with the Tax Warehouse status had formerly possessed T1 status. Furthermore, some of the seized bottles of Bacardi were also shown to have had their Bacardi product-codes removed.

Bacardi decided to sue TOP Logistics (and its former corporate incarnation, Mevi) together with the owner of the Bacardi products, the Dutch import-export company of Van Caem International. In essence, Bacardi claimed that despite the decoded Bacardi bottles being in the suspensive duty procedure and the suspensive customs procedure, these bottles had been put onto the market in the European Economic Area without Bacardi’s consent – consequently its trade mark rights had been infringed.

In that context, Bacardi pointed to the First Council Directive 89/104/EEC of 21 December 1988 to approximate the laws of the Member States relating to trade marks (OJ [1989] L40/1).

Article 5 of the Directive, entitled ‘Rights conferred by a trade mark’, is worded as follows:

1. The registered trade mark shall confer on the proprietor exclusive rights therein. The proprietor shall be entitled to prevent all third parties not having his consent from using in the course of trade:
(a) any sign which is identical with the trade mark in relation to goods or services which are identical with those for which the trade mark is registered:
…
3. The following, inter alia, may be prohibited under [paragraph 1]:
…
(b) offering the goods, or putting them on the market or stocking them for these purposes under that sign, or offering or supplying services thereunder;
(c) importing … the goods under the sign:
…’

Various rounds of litigation ensued but TOP Logistics and Van Caem denied liability.

At The Hague Court of Appeal
TOP Logistics and Van Caem relied on the CJEU’s judgment in Case C-405/03, Class International. Although that judgment concerned parallel-traded Acquafresh toothpaste products, it was a judgment in which the CJEU had dealt with not only the importation of original goods into the Community; goods placed under the external transit procedure or the customs warehousing procedure; but also, a trade mark proprietor who was opposing to what was happening in a warehouse.

TOP Logistics and Van Caem understood the principle in Case C-405/03, Class International to be this: if the rules governing the various suspensory procedures have been complied with, then the goods will not be deemed to be on the market in the Community. As a result, companies will not infringe any trade marks. A right holder can only object if they can establish that the goods were imported for the purpose of either offering for sale or actual sale (for either purpose would necessarily entail that the goods were put on the market in the Community).

Applied here, TOP Logistics and Van Caem believed they were in the clear: there had been no breach of procedure, the goods were not on the market, and no liability arose under EU trade mark law.

In response, Bacardi submitted that no attention should be paid to the CJEU’s judgment in Class International. The judgment was distinguishable from the present situation since Class International concerned non-Community goods which were under the supervision of customs – and that was not the situation here.

The Hague Court of Appeal could not decide which party was right. It could see no good reason to use technical customs law to say the goods were in free movement if there was no intention of having the goods traded in the EU. The Hague Court of Appeal wondered why a company would go to all the trouble of releasing the goods into free movement, paying the attendant customs duties, and complying with the various customs formalities, if there was no intention to trade the goods in the EU? Given the fact that in this case, the goods in the Tax Warehouse procedure had previously been under the T1 procedure, could not the inference be drawn that these goods had been imported into the EU for the purposes of putting the goods on the market in the EU?

If that were so, and the goods could be said to have been imported into the EU, then the judges at The Hague Court of Appeal also wondered whether Bacardi could be stopped from relying on EU trade mark law by a different plank of EU IP law. That is to say, the judges at The Hague Court of Appeal accepted that these imported goods were not really affecting the functions of Bacardi’s trade marks in any way. And in such a situation, the CJEU’s case law in Google and Interflora seemed to suggest that the trade mark holder could be prevented from objecting to what was happening to the trademarked goods (Case C-236/08 Google France SARL and Google Inc. v Louis Vuitton Malletier SA, ECLI:EU:C:2010:159; and Case C-323/09, Interflora Inc. ECLI:EU:C:2011:604).

Questions Referred
My unofficial translation of the questions asked by The Hague Court of Appeal reads:

1. In circumstances such as those in the present case in which [non EEA goods] are subsequently placed in a suspensory duty procedure, are they considered to have been ‘imported’ for the purposes of Article 5(3)(c) of Directive 89/104/EEC (codified version Directive 2008/95/EC) so that there is ‘using (of the sign) in the course of trade’ which can be prohibited by the trade mark holder on the basis of Article 5(1) of the Directive?

2. If the answer to Question 1 is in the affirmative, then in circumstances such as those in the present case is it relevant that the mere presence in a Member State of such goods (placed under a suspensory duty procedure in that Member State) neither does nor can adversely affect the functions of the mark so that the holder of the trade mark who invokes national trade marks in that Member State cannot oppose the presence of those goods?