Exhaustion of trademark rights

Under French practice, a trademark owner is not entitled to prohibit its use in relation to goods which have been put on the market in the European Economic Community or the European Economic Area (EEA) under that mark by said owner or with his consent. However, the owner can oppose any further acts of marketing if he shows legitimate reasons, especially where the condition of the goods has been subsequently changed or impaired.

On March 26, 2008, the French High Court rejected the exhaustion of trademark rights in the event of resale of the products within the EEA, in breach of contractual provisions. That contract bound the purchaser to remove the mark HUGO BOSS before selling clothing at a reduced price. The purchaser however sold articles to retailers without removing said mark which were then sold to second retailers.

The trademark owner initiated a counterfeit action against the purchaser and the chain retailers. The latter invoked the exhaustion of the trademark rights, (i) the products having been put in the market within the EEA with the consent of the trademark owner and (ii) the existence of stipulations in a contract to which retailers were not parties being unlikely to impeach the resale of the products.

The Court rightly rejected the argument relating to the exhaustion of the trademark rights as the trademark owner had given consent to the sale of products under the HUGO BOSS trademark. Therefore no right was granted to the purchaser concerning the use of the litigious trademark.

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