Exhaustion, economic links and "unitary control" - the AG's opinion in the Schweppes trade mark reference

The post below was first published on our Intellectual Property blog

Trade mark rights may still be exhausted even if goods are imported bearing identical trade marks (having been applied in another EU Member State (MS) by a separate entity) where, given the economic links between the trade mark holder and the entity applying the trade mark in the exporting MS, it is clear that the marks are under "unitary control" and that the proprietor of the mark in the importing MS has the possibility of determining directly or indirectly the goods to which the trade mark in the exporting State may be affixed and of controlling their quality.

This was the Opinion of Advocate General Mengozzi (delivered on 12 September 2017), in Case C‑291/16 Schweppes SA v Red Paralela SL, referred to the CJEU by the Commercial Court of Barcelona.  Schweppes SA, the Spanish subsidiary of the Orangina Schweppes Group, opposed the importation into and/or marketing in Spain (where it owns the trade mark SCHWEPPES) of Schweppes branded tonic water which had come from the United Kingdom, where that mark had been applied by and is owned by Coca-Cola.

Exhaustion of rights is an area mentioned as requiring immediate consideration in the recent Commission paper on the future of IPRs in Europe post-Brexit (see our blog posting on this here).  Once outside the EU the EU-wide exhaustion rules would not apply to marks applied in the UK, but it is possible that the UK courts might consider applying international exhaustion principles in their place, barring any other provision on exhaustion enacted by the UK Government in advance of the UK's withdrawal from the EU.

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