Sun Microsystems Inc v Amtec Computer Corporation Ltd

In parallel-import trade mark cases, the trader bears the burden of establishing that goods were put on the EEA market by, or with the consent of, the proprietor. Lack of knowledge and reasonable investigation do not constitute defences to infringement. The national court nevertheless retains a discretion over remedies. An injunction should be proportionate and may be qualified where an unqualified order would risk preventing legitimate trade, while preserving the proprietor’s substantive remedies if infringement is later established. An inquiry need not be confined to the goods which triggered the claim where the evidence indicates wider infringement.

Sun sought judgment in default or summary judgment against Amtec for infringement of registered trade marks arising from parallel imports of Sun servers first placed on the market in Israel. Amtec accepted infringement, but disputed the scope of the inquiry into damages or profits and the form of future injunctive relief.

The central issues were whether the inquiry should be confined to ten servers obtained through a particular supplier, and whether the injunction should be qualified to permit dealings where Amtec had made reasonable inquiries but Sun had not confirmed that the goods lacked EEA exhaustion.

1. Liability and consent. Amtec infringed because it could not show that the servers had been put on the UK or EEA market by Sun or with Sun’s consent. Under Zino Davidoff SA v A&G Imports Ltd; Levi Strauss & Co v Tesco Stores Ltd and Levi Strauss & Co v Costco Wholesale UK Ltd [2002] Ch 109, consent has a uniform Community-law meaning and ordinarily must be express, although implied consent is not excluded in all circumstances. Silence is insufficient. The trader bears the burden of proving consent. Lack of knowledge and reasonable steps to investigate do not provide a defence.
2. Past infringements. The inquiry was not confined to the ten servers identified through Caltech. Evidence concerning other Sun products supplied to Amtec indicated a real risk of further infringement, and the mistaken reliance on EU origin was capable of affecting other suppliers. Sun was entitled to orders identifying further past infringements and could elect between damages and an account of profits after disclosure in the inquiry: Island Records Ltd v Tring International PLC [1995] FSR 560.
3. Future relief. The court retained a discretion to frame proportionate relief. The strict rules governing consent did not require an unqualified injunction. A qualified injunction was appropriate where Sun could search its databases and Amtec could provide serial numbers and product details. The injunction was provisionally to permit dealing where Amtec had supplied the information, Sun had not responded within the specified period, and Amtec did not know or believe that the goods lacked Sun’s consent. Amtec would remain liable for damages or an account if infringement was later established.
4. The qualification did not create a compulsory licence or undermine the burden of proving consent. Sun retained ordinary remedies and liberty to apply to modify the injunction. The same basic approach applied to new and second-hand products. The injunction should be confined to infringement arising from goods not put on the EEA market by, or with the consent of, Sun.