Parallel imports

Parallel imports are the importation and resale, outside the distribution network organised by the proprietor of the trade mark, of genuine goods bearing that trade mark. Their lawfulness depends on the rule of exhaustion of rights, laid down in Article L. 713-4 of the French Intellectual Property Code, Article 15 of Regulation (EU) 2017/1001 and Article 15 of Directive (EU) 2015/2436: the proprietor cannot prohibit the use of the trade mark in relation to goods put on the market in the European Economic Area under that trade mark by the proprietor or with its consent.

Regional exhaustion

Exhaustion is confined to the European Economic Area. The Court of Justice of the European Union holds that Member States may not provide for international exhaustion, so that the proprietor may oppose the importation into the Union of genuine goods it has put on the market outside that area. Conversely, goods put on the market in one Member State circulate freely throughout the Union. Consent to marketing in the European Economic Area must be unequivocal, and it is not presumed from the mere fact that the proprietor sold the goods outside that area without an express reservation.

The burden of proof

A parallel importer relying on exhaustion must in principle prove that the goods were put on the market in the European Economic Area by the proprietor or with its consent. The Court of Justice of the European Union nonetheless reverses that burden where its application would create a real risk of partitioning national markets, in particular where the proprietor operates an exclusive distribution system and disclosure of the source of supply would allow that source to be cut off. The proprietor must then establish that the goods were initially put on the market outside the area, before the importer has to prove subsequent consent.

Legitimate reasons to oppose further dealings

Even once exhausted, the right revives where legitimate reasons justify the proprietor in opposing further commercialisation, in particular where the condition of the goods is changed or impaired after they have been put on the market. The most extensive case law concerns the repackaging of medicinal products and healthcare products, permitted under strict conditions laid down by the Court of Justice of the European Union: repackaging must be necessary to access the market, must not affect the product, must identify the repackager, must not harm the reputation of the trade mark, and the proprietor must be given prior notice. Damage to the image of luxury goods through degrading resale conditions may also amount to a legitimate reason. Contractual restrictions on parallel imports are, in addition, assessed under competition law.

Key points

Genuine goods put on the market in the European Economic Area with the proprietor’s consent circulate freely, whereas those put on the market elsewhere may be stopped at the borders of the Union. Proof of first marketing lies on the importer, unless there is a risk of market partitioning. The origin of batches should be traced, rights should be expressly reserved on sales outside the area, and it should be checked that the goods have not been altered or repackaged.

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This glossary entry is general in scope and does not constitute legal advice.

Dhenne Avocats is a patent litigation firm. Matters outside that field, such as trade marks, designs, copyright and IT contracts, are handled by practitioners the firm works with regularly, and by the firm itself when they arise in a patent dispute.

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