Honda Motor Co Ltd & Anor v Neesam & Ors

Consent to parallel resale may be implied from the nature and circumstances of a transaction. Where a manufacturer sells goods to an export trader knowing that the trader will resell them outside the supplying country, consent may extend to onward resale in the purchaser’s domestic market unless the manufacturer imposes an effective restriction.

The burden of proving an alleged restriction, and when it was introduced, rests on the party asserting it. A practice of requiring destination information may operate as a restriction for future consignments. Under Davidoff and Mastercigars, consent must be unequivocal, but it need not be express.

Exhaustion under section 12 of the Trade Marks Act 1994 and article 7.1 of the Trade Marks Directive concerns the specific goods and requires both market placement in the Community and the proprietor’s consent.

Honda Japan and Honda Europe brought trade mark infringement proceedings against KJM Superbikes Ltd and others concerning parallel-imported Honda motorcycles. Following an earlier summary judgment decision by Lewison J, the trial concerned motorcycles sold by Honda Australia to Lime Exports, then sold to KJM, together with a later application concerning motorcycles sourced through Boon Siew Singapore.

The central issue was whether Honda Australia had consented to the motorcycles being placed on the United Kingdom market, either generally or subject to restrictions introduced at a later date. Further issues concerned exhaustion under article 7.1 of the Trade Marks Directive and section 12 of the Trade Marks Act 1994, and whether summary judgment should be entered for Honda concerning the Boon Siew motorcycles.

Honda’s claim failed for the Honda Australia/Lime Exports motorcycles supplied before the relevant restriction was introduced. It succeeded in principle for the consignments supplied in August 2003 and June 2004, subject to KJM’s proposed amendment relying on article 81 of the EC Treaty. Summary judgment was granted for Honda concerning the Boon Siew motorcycles.

1. Implied consent. Honda Australia sold substantial quantities of motorcycles to Lime Exports for export and knew that Lime Exports was a trade purchaser which would resell to businesses outside Australia. That conduct implied consent to resale outside Australia and to onward resale by those purchasers. Consent did not require an express reference to the EEA or the United Kingdom. The approach was consistent with Zino Davidoff SA v A&G Imports Ltd, because the circumstances demonstrated consent rather than mere silence, and with Mastercigars Direct Ltd v Hunters & Frankau Ltd, which confirmed that implied consent could nevertheless be unequivocal.
2. Burden and restriction. KJM’s burden of establishing consent was readily discharged by the nature of the transactions. The burden then rested on Honda to prove any exclusion from that consent and when it took effect. Honda failed to prove a continuing prohibition imposed in 1992. Its own amended case accepted consent for earlier consignments.
3. Destination information. Honda Australia’s practice of asking for the intended destination, introduced in July 2003, constituted a new control over consent. Consent existed where the motorcycles went to the notified destination, but not where they were diverted to another destination. Honda failed to prove that the practice, or any equivalent general prohibition, began in mid-2002.
4. Exhaustion. Article 7.1 and section 12 require the specific goods to have been put on the market in the Community and that placement to have occurred with the proprietor’s consent. Consent to sale in one Community country would not itself exhaust rights in respect of goods placed directly on the United Kingdom market without consent. The specific-goods principle reflected Sebago Inc v GB Unic SA.
5. Boon Siew motorcycles. There was no evidential basis for equating Boon Siew Singapore with Honda Australia or for attributing its consent to Honda Japan. KJM therefore had no real prospect of defending the claim, applying the principles in Davidoff and CPR rule 24.2(a)(ii).

High Court (Chancery Division): Lewison J granted summary judgment against the defendants on several categories of motorcycles but directed a full trial concerning the Honda Australia/Lime Exports motorcycles: [2006] EWHC 1051 (Ch).

Court of Appeal: The defendants’ application for permission to appeal from that decision was refused. In related interlocutory proceedings, the Court of Appeal allowed KJM to use the letters of request procedure for evidence from witnesses in Australia: [2007] EWCA Civ 313.

High Court (Chancery Division): Sir Andrew Park determined the trial issues and granted summary judgment concerning the Boon Siew motorcycles.