Mastercigars Direct Ltd v Hunters & Frankau Ltd & Ors

In a parallel-import trade mark dispute, consent to marketing goods in the EEA may be implied only in exceptional circumstances. The facts must unequivocally demonstrate that the proprietor renounced its right to control the first marketing of the goods in the EEA. Silence, absence of an export warning, or an unrestricted transfer of ownership is insufficient.

Goods brought into the Community under customs control are imported for trade mark purposes where they were introduced for the purpose of being put on the EEA market. A trade mark proprietor bears the burden of proving counterfeit goods and infringement. Where counterfeit allegations depend on unilateral sampling and experiments, the evidence must be obtained under a sufficiently rigorous and fair protocol.

MasterCigars Direct Ltd imported a consignment of Cuban cigars purchased from an official Cuban retail outlet. HM Customs and Excise detained the consignment after Hunters & Frankau Ltd alleged that it contained counterfeit goods. Corporacion Habanos SA brought Part 20 proceedings alleging infringement of its trade marks through parallel importation and counterfeit goods.

The principal issues were whether HSA had consented to the marketing of the cigars in the EEA, whether the detained goods had been imported for trade mark purposes, whether the consignment contained counterfeits, and whether negative declarations should be granted despite related condemnation proceedings.

1. Declarations and procedural issue. The condemnation proceedings were civil proceedings under the Customs and Excise Management Act 1979. Their adjournment enabled the High Court to determine the counterfeiting issue, so the negative declarations served a useful purpose and were not an abuse of process.
2. Importation. Applying Class International BV v Unilever NV C-405/03, physical introduction under customs control is not necessarily importing. The relevant question is whether the goods were introduced for the purpose of putting them on the EEA market. This consignment was intended for sale in the United Kingdom and was therefore imported for trade mark purposes.
3. Consent. Under section 12(1) of the Trade Marks Act 1994 and the First Council Directive 89/104, the burden was on MDL to prove consent. Following Zino Davidoff v A&G Imports Ltd C-414/99, consent could be implied only where the circumstances unequivocally demonstrated renunciation of the proprietor’s EEA rights. The $25,000 retail limit, sales by separate Cuban companies, and customs processing did not establish such renunciation. HSA had not consented to the historic consignments or the consignment in issue.
4. Economic linkage. The Cuban retail outlets were separate legal entities and were not economically linked to HSA within the relevant European jurisprudence. The cigars were not purchased from HSA.
5. Counterfeiting. HSA bore the burden of proving that goods or packaging were counterfeit when imported. The sampling process was unilateral, procedurally irregular and affected by unexplained discrepancies in seals, box counts and records. The experiments were therefore unreliable and unfair. On the evidence, no counterfeit goods had been imported.
6. Disposition. The counterfeit case failed. The parallel-import claim succeeded, and HSA was entitled to injunctive relief. The final form of order was reserved.