Oracle America Inc v M-Tech Data Ltd & Anor

Trade mark rights harmonised by Articles 5 and 7 of the Trade Mark Directive are not automatically insulated from EU free-movement rules. At summary judgment, it may be enough to show a real prospect that a proprietor’s practices, such as withholding provenance information or aggressively suing parallel traders, amount to measures equivalent to import restrictions and cannot be justified under Article 30 EC or Article 7. The complete-harmonisation principle may be confined to matters actually harmonised. An abuse-of-rights defence is fact-sensitive and may remain arguable. An Article 81 EC defence may also proceed where agreements with authorised distributors are alleged to form part of an overall exclusionary scheme.

Oracle sued M-Tech for trade mark infringement after M-Tech imported 64 disk drives into the United Kingdom. The drives had been first marketed outside the EEA, so Oracle’s trade mark rights were not exhausted.

Kitchin J entered summary judgment for Oracle, holding that M-Tech’s proposed defences based on Articles 28 and 30 EC and Article 81 EC had no real prospect of success. The abuse-of-rights defence had not been argued below. The central question on appeal was whether the pleaded defences were sufficiently arguable to require a trial.

1. Disposition. The court granted permission to appeal, allowed the appeal and set aside the summary judgment. It directed Oracle to apply in the Chancery Division for a case management conference.
2. Summary judgment. On an application for summary judgment, the court proceeded on the assumption that M-Tech would establish at trial the matters pleaded in its defence. The question was whether the defences had a real prospect of success, not whether they would ultimately prevail.
3. Free movement and trade marks. It was properly arguable that Articles 5 and 7 of the Trade Mark Directive had to be interpreted by reference to Articles 28 and 30 EC. The pleaded practices, including withholding provenance information and aggressive proceedings against parallel importers, might constitute measures having equivalent effect to import restrictions. They might also be incapable of justification under Article 30 or Article 7 because they arguably pursued import restriction and protection of profit margins rather than the proper control of first marketing.
4. The principle that Articles 5 and 7 represented complete harmonisation was reasonably arguable to be confined to the aspects of enforcement addressed in the authorities and to pre-empting Member State legislation in harmonised fields. Van Doren v Lifestyle Sports and Sportswear could not be distinguished at the summary judgment stage merely because the domestic evidential rule, rather than Articles 5 and 7 themselves, had given way to the free-movement rules.
5. Abuse of rights. Abuse of rights was fact-sensitive and EU law in this field was developing. The defence could not be excluded at that stage and might provide an alternative way of locating the alleged practices within the Directive.
6. Article 81 EC. The Article 81 defence was also arguable. The agreements with distributors and resellers could not be treated as a complete disconnect from the infringement proceedings where they were alleged to form part of an overall scheme excluding secondary traders. The Court of Justice had not held that Article 81 could not be used in trade mark cases.
7. Any reference to the Court of Justice should ordinarily be considered after trial if the relevant facts were established. The issue was not acte clair and, if the allegations were proved, there was a strong case for a reference because of the wider economic implications.

• Court of Appeal (Civil Division): In Oracle America Inc v M-Tech Data Ltd & Anor [2010] EWCA Civ 997, the court allowed the appeal, set aside summary judgment and directed a case management conference.
• High Court of Justice (Chancery Division): Kitchin J, in Oracle America Inc v M-Tech Data Ltd & Anor [2009] EWHC 2992 (Pat), entered summary judgment for Oracle, holding that the free-movement and Article 81 defences had no real prospect of success.