Sun Microsystems Inc v M-Tech Data Ltd & Anor

On a summary judgment application, a claim has a realistic prospect of success only where it carries some degree of conviction. The court must avoid a mini-trial, but may reject unsupported speculation and consider evidence reasonably expected at trial.

Under the harmonised Community exhaustion regime, goods first marketed outside the EEA do not exhaust the proprietor’s trade mark rights. Articles 28 to 30 EC create no additional qualification to those rights. An Article 81 EC defence requires a sufficient connection between restrictive agreements and enforcement of the trade mark.

Sun, proprietor of trade marks comprising or consisting of “Sun”, sought summary judgment against M-Tech and Stephen Lawrence Lichtenstein for infringement arising from M-Tech’s importation and sale of 64 Sun disk drives.

M-Tech argued that Sun had not proved where the drives were first marketed, that enforcement of the marks was contrary to Articles 28 to 30 EC because it partitioned the single market, and that enforcement was connected with distribution agreements contrary to Article 81 EC. The central questions were whether the evidence established first marketing outside the EEA and whether those defences had a real prospect of success.

1. Summary judgment principles. The court applied the principles collected in Pegasus Management Holdings S.C.A. v Ernst & Young [2002] EWHC 2720. A realistic claim carries some degree of conviction and is more than merely arguable. The court must not conduct a mini-trial, but need not accept factual assertions without analysis. It may consider evidence reasonably expected to be available at trial. The caution in Doncaster Pharmaceuticals Group Ltd v Bolton Pharmaceutical Co 100 Ltd [2007] FSR 63 was relevant because the law was developing.
2. Exhaustion. Applying Articles 5 and 7 of First Council Directive 89/104, as interpreted in Joined Cases C-414 to 416/99 Zino Davidoff SA v A & G Imports and Levi Strauss & Co v Tesco Stores and Costco Wholesale UK Ltd [2002] Ch 109, the court held that all 64 drives had first been placed on the market outside the EEA. There was no evidence of Sun’s consent to their subsequent EEA marketing. Consent must unequivocally demonstrate an intention to renounce the trade mark right and cannot be inferred from silence, lack of a warning, or the importer’s ignorance.
3. Articles 28 to 30 EC. The Directive and the Community trade mark Regulation provide a complete harmonisation of the rights conferred by a registered trade mark. The court rejected an additional restriction based on free movement of goods. Later authorities did not subject the harmonised trade mark right to case-by-case review under Articles 28 and 30 EC.
4. Article 81 EC. Even assuming that Sun’s distributor agreements restricted competition, M-Tech had not shown the necessary connection between those agreements and Sun’s enforcement of its marks. The Article 81 EC defence therefore had no real prospect of success.
5. Disposition. Sun was entitled to judgment against M-Tech.