Debranding and Rebranding Imported Products Constitutes Trade Mark Infringement

On 25 July 2018, the Court of Justice of the European Union (the “ECJ”) held in case C-129/17, Mitsubishi Shoji Kaisha Ltd & MCFE BV v. Duma Forklifts NV and GSI International BVBA, that the debranding and rebranding by Duma Forklifts NV (“Duma”) and GSI International BVBA (“GSI”) of forklift trucks manufactured by Mitsubishi Shoji Kaiska Ltd (“Mitsubishi”) constituted an infringement of Mitsubishi’s trade mark.

The dispute arose after Duma and GSI, two affiliated companies active in the forklift trucks sector (one having as its main activity the purchase and sale of forklift trucks and the other one specialising in the construction and repair of forklift trucks) proceeded to make parallel imports in the European Economic Area (“EEA”) of forklift trucks bearing the Mitsubishi trade marks (the well-known three-pointed star design). Duma and GSI also brought into (and outside) the EEA forklift trucks on which signs identical to the Mitsubishi trade marks had been removed (debranding) and replaced with Duma’s and GSI’s own signs (rebranding).

Mitsubishi and its authorised manufacturer and distributor in the EEA, MCFE, brought cease and desist proceedings before the Dutch-language Commercial Court of Brussels which rejected their claims. Mitsubishi and MCFE appealed to the Court of Appeal of Brussels (the “Court”). Their claims were twofold. First, they sought the prohibition of the parallel importation of forklift trucks bearing the Mitsubishi trade mark. Second, they argued that debranding Mitsubishi forklift trucks without Mitsubishi’s consent infringed Mitsubishi’s rights as the owner of the trade mark to control the entry on the EEA market of the goods bearing the trade mark and harmed the essential function of the trade mark which is to guarantee to consumers the origin of the product or service, as well as other functions of the mark, such as, in particular, that of guaranteeing the quality of the product, or those of communication, investment and advertising.

With respect to the parallel import into the EEA of forklift trucks bearing the Mitsubishi trade mark, the Court sided with Mitsubishi and MCFE.

By contrast, as regards the trade in debranded and rebranded forklift trucks, the Court stayed the proceedings and referred a request for a preliminary ruling to the ECJ as regards the interpretation of Article 5 of Directive 2008/95/EC of 22 October 2008 to approximate the laws of the EU Member States relating to trade marks (the “Directive”) and Article 9 of Council Regulation 207/2009 of 26 February 2009 on the European Union trade mark (the “Regulation”). These articles provide, in essence, that the owner of a trade mark is entitled to prevent all third parties from using, in the course of trade and without its consent, either an identical sign to its trade mark in relation to identical goods, or an identical or similar sign in relation to identical or similar goods provided that there is a likelihood of confusion. The Court asked if these articles also cover the right to oppose a debranding/rebranding where the goods are intended to be introduced on the EEA market for the first time. The Court furthermore sought to know whether the fact that the goods could still be identified by average consumers as originating from Mitsubishi would alter the answer to the previous question.

The ECJ first noted that Article 5 of the Directive and Article 9 of the Regulation must be interpreted identically since their content is identical. The ECJ also recalled that, to ensure protection of the rights conferred by a trade mark, it is essential that its owner has the possibility to control the entry on the EEA market of all goods bearing that trade mark. The ECJ added that the exclusive rights afforded by these provisions must enable the owner of a trade mark to protect its specific interest and, in particular, ensure that the trade mark fulfils its functions, i.e., that of guaranteeing the origin and quality of the product and those of investment and advertising.

In this respect, the ECJ observed that because the debranded Mitsubishi forklift trucks did not bear the Mitsubishi trade mark when entering the EEA market for the first time, Mitsubishi had been deprived of the benefit of its essential right to control the initial marketing in the EEA of its products.

The ECJ added that debranding and rebranding goods before their first entry on the EEA market affected the functions of the trade mark. First, such practices precluded Mitsubishi from being able to retain customers by virtue of the quality of its goods. Second, because the consumers will know the products before associating them with the relevant trade mark, these practices substantially hinder the trade mark owner’s efforts to acquire a reputation and to use that trade mark to promote sales or as an instrument of commercial strategy. In addition, Mitsubishi had also been robbed of the possibility to obtain, by putting the goods on the EEA market first, the economic value of the product bearing that trade mark and, therefore, of its investment.

Finally, the ECJ clarified that, since the Mitsubishi forklift trucks had been debranded and rebranded with a view to importing them into the EEA market, this practice could qualify as a “use in the course of trade” pursuant to Article 5 of the Directive and Article 9 of the Regulation.

On this basis, the ECJ held that, by debranding and rebranding Mitsubishi’s forklift trucks, Duma and GSI had infringed Mitsubishi’s right to control the first entry on the EEA market of goods bearing its trade mark and adversely affected the functions of Mitsubishi’s trade mark. The ECJ concluded that Mitsubishi was therefore entitled, as owner of the trade mark, to oppose such practices.

Lastly, the ECJ found that its ruling applied regardless of whether the goods could still be identified by relevant average consumers as originating from the trade mark owner on the basis of their outward appearance and model.

By Thibaut D’Hulst and Eléonore Waterkeyn