As of yesterday, the Court of Justice has issued another ruling regarding the exhaustion of trademark rights in cases involving the resale of the original product.
The judgment stems from a preliminary ruling requested by a Finnish court in the context of a dispute between “SodaStream” and MySoda Oy regarding an alleged infringement of the SODASTREAM and SODA-CLUB trademarks.
SodaStream is an international company that manufactures and sells carbonation devices that allow consumers to make sparkling water and flavored carbonated beverages using tap water. In Finland, SodaStream markets these machines with a refillable carbon dioxide cylinder, which it also sells separately. The SODASTREAM and SODA-CLUB trademarks are engraved on the labeling and on the aluminum body of those cylinders.
MySoda, a company domiciled in Finland, sells in Finland carbon dioxide cylinders originally manufactured and marketed by SodaStream, which are intended to be reused and refilled numerous times. MySoda, after receiving, through distributors, SodaStream carbon dioxide cylinders that consumers have returned empty, refills those cylinders, removes the label bearing the original brand name, and replaces it with its own labels, which feature the MySoda logo, leaving the original brand name engraved on the body of the cylinders visible.
The preliminary ruling sought to determine whether the owner of a trademark who has marketed products bearing that trademark in a Member State—products that are intended to be reused and refilled numerous times—has the right to oppose the subsequent marketing of those products, in that Member State, by a reseller who has refilled them and replaced the label bearing the original trademark with another label, while still leaving the original trademark visible on the products in question.
Based on existing case law, it was clear that the sale of a refillable gas cylinder by the owner of the trademarks appearing on it exhausts the exclusive rights, such that competitors may refill and exchange the empty cylinders. However, replacing one set of labels with another may be subject to penalties when the conditions under which the product is marketed undermine the legitimate interests of the trademark owner.
When interpreting that exception to the exhaustion of trademark rights, the Court of Justice had previously taken into account only the specific characteristics of the pharmaceutical market. With this ruling, the Court is venturing into a different market.
The key to the ruling is determining whether there is a mistaken impression regarding the economic link between the trademark owners and the reseller who refilled the bottles. Although it is up to the national court to make that determination based on the circumstances of the case, the ruling does not hesitate to provide some interpretive guidelines.
The criteria set forth in the ruling in this regard are quite comprehensive (the degree of clarity of the information provided by the label, industry practices, and whether or not the original trademark remains visible), but it gives the impression that it does not fully side with a “condemnation” in the case at hand and prefers to leave the final decision on the matter to the discretion of the national court. It would not be surprising if each party interpreted the ruling in its own way and if we had to wait for the Finnish court’s decision to learn the outcome.
Author: Enrique Armijo Chávarri