Oracle America Inc v M-Tech Data Limited

A trade mark proprietor may control the first marketing in the EEA of genuine branded goods previously marketed outside the EEA. Articles 5 and 7 of the Trade Mark Directive form an exhaustive code which already reconciles trade mark protection with the free movement of goods.

Conduct which may unlawfully obstruct trade or restrict competition does not suspend an otherwise lawful trade mark right unless the necessary legal connection exists. Collateral misconduct is therefore no defence to infringement. Enforcement of the right to control first EEA marketing is not abusive because it accords with the purpose of the directive.

Oracle America Inc, then known as Sun Microsystems, owned Community and United Kingdom trade marks for computer hardware. M-Tech Data Ltd imported genuine Sun disk drives from outside the EEA and marketed them in the United Kingdom without Sun's consent.

Kitchin J granted Sun summary judgment for infringement, an inquiry as to damages and an injunction. The Court of Appeal, [2010] EWCA Civ 997, allowed M-Tech's appeal and set that order aside.

M-Tech contended that Sun could not enforce its marks because its conduct partitioned the EEA market contrary to the free-movement provisions, was connected with restrictive distribution agreements contrary to article 101, and amounted to an abuse of rights. The central issue was whether any of those matters afforded a legally arguable defence to enforcement of Sun's unexhausted trade mark rights.

1. Appeal allowed unanimously. Lord Sumption, with whom Lord Walker, Lord Clarke, Lord Reed and Lord Carnwath agreed, held that M-Tech's pleaded case disclosed no defence in EU law. Kitchin J's order granting summary judgment was restored.

2. Articles 5 and 7 of the Trade Mark Directive constitute an exhaustive statement of a proprietor's rights. Harmonising EU legislation supersedes the general application of articles 34 to 36 of the Treaty on the Functioning of the European Union within its field. The directive must be construed consistently with the Treaty, but articles 5 and 7 already embody the required reconciliation between free movement and protection of industrial and commercial property.

3. Where goods have not previously been marketed in the EEA by or with the proprietor's consent, articles 5 and 7.1 confer an unqualified right to control their first EEA marketing. Exercising that right governs entry into the EEA market and does not impede movement between member states. The different principles governing further commercialisation under article 7.2 apply only after goods have entered lawful circulation in the EEA.

4. The alleged withholding of provenance information was collateral to the right being enforced. A proprietor does not lose an otherwise lawful trade mark right merely because it also engages in conduct which may unlawfully eliminate independent resellers. The law may restrain the unlawful conduct, but it does not suspend the proprietor's rights against all infringers. Any separate claim concerning business prevented by the withholding policy was irrelevant to liability for the infringements committed.

5. Article 101 did not provide a defence. An intellectual property right may be affected where its exercise is the subject, means or result of a restrictive agreement or concerted practice. Neither the marks nor the enforcement of the right to control first EEA marketing had the required connection with the alleged restrictions in Sun's distribution agreements.

6. There was no abuse of rights. Sun's enforcement satisfied both the terms and the purpose of articles 5 and 7.1, whose object included enabling the proprietor to control first EEA marketing. The possibility that exercising that right facilitated other conduct affecting resellers did not make the enforcement abusive.

7. The governing EU principles were clear, consistent and sufficient to decide the case. No reference to the Court of Justice was required.

1. United Kingdom Supreme Court: Allowed Sun's appeal unanimously and restored Kitchin J's order.

2. Court of Appeal: In [2010] EWCA Civ 997, allowed M-Tech's appeal and set aside the order for summary judgment.

3. High Court: Kitchin J granted Sun summary judgment, ordered an inquiry as to damages and granted an injunction restraining further infringement.