Trademark exhaustion, unfair competition and consumer interests: a recent ruling

A recently published Athens Court of Appeal judgment (4304/2012) provides an interesting example of the interplay between the areas of trademark, unfair competition and consumer protection law.

Japanese watch manufacturing company Seiko initiated injunction proceedings before the Greek courts against a Greek company that imported Seiko watches into Greece without being Seiko’s licensee, representative, agent or distributor, and apparently without Seiko’s consent to the import of its products into the European Economic Area (EEA). Seiko also claimed unfair competition infringement.

The court acknowledged the reputation of Seiko's distinctive sign and trademark and held that it should be protected as a well-known trademark against the erosion of its reputation. Further, the court ruled that Seiko’s trademark rights were clearly infringed and could not be considered to be exhausted since the products in question were first put on the market with Seiko’s consent in Venezuela. However, such consent did not cover their parallel import into the EEA. The serial numbers of the watches proved to be key evidence for the ruling, as Seiko was able to furnish the court with documentation "tracing" the marketing of the watches through the serial numbers. Accordingly, the import violated Seiko's trademark rights. This part of the ruling demonstrates the importance of a rights holder's ability to trace the commercial route of its products bearing the trademark within the framework of court proceedings for parallel imports, despite the fact that the onus of proof of trademark exhaustion lies with the parallel importer.

Seiko’s rights to control and prohibit parallel imports via its trademark and under the conditions set out by EU and Greek trademark law are also protected under Greek unfair competition law. In this line of reasoning, the Athens Court of Appeal ruled that the Greek importer not only infringed Seiko’s trademark rights, but also acted contrary to established honest commercial practices, free riding on both Seiko's reputed distinctive signs and its economic and business investments.

Moreover, since the infringer provided consumers with a one-year international service product guarantee, while the watches circulating within the EEA come with a two-year guarantee, the court ruled that consumers would be misled into believing that the international guarantee was in fact the European guarantee provided by Seiko and would also deduce the existence of a commercial relationship between the Greek importer and Seiko. Therefore, the court focused not only on the protection of the trademark owner’s rights and the likelihood of confusion, but also on the enhanced protection of consumers by indirectly acknowledging their right to purchase and use authentic products with the same characteristics and guarantees as those intended for circulation in the EEA.

George Moukas, senior associate of Ballas, Pelecanos & Associates LPC acted for Seiko in these proceedings.