Import of products from another EU country insufficient to exhaust trademark rights

In Decision 8758 (23rd December 2009) the Tribunal of Turin held that the import of products from another EU member state is not sufficient to exhaust trademark rights.

The case originated when R&A Bailey & Co and Diageo Italia Spa discovered that Italian company Young Importers Company Spa was selling bottles of Baileys Irish Cream liqueur with the barcode and product code removed or cancelled. In general, parallel importers remove product codes specifically in order to prevent the manufacturer or trademark owner from identifying the unlawful source of the goods (in this case, the goods originated from outside the European Union).

The decision is significant with regard to parallel imports. The court highlighted that even though Young Importers had purchased the bottles already decoded from a European business and not outside the European Union, this was insufficient to exclude its responsibility for parallel imports, since it was unable to prove the first entry of the products into the European Union. As a consequence, Young Importers had unlawfully sold decoded products without knowing the exact origin of those products, thus committing trademark infringement as it could not prove that the rights were exhausted.

For these reasons, a finding was made against Young Importers for infringement and unfair competition to the detriment of R&A Bailey and Diageo Italia Spa (the exclusive Italian distributor for Bailey's products).