POLO LAUREN CO v MAUDHOO S

2012 SCJ 494

SCR 101283 and Co. 47/2009

IN THE SUPREME COURT OF MAURITIUS

(COMMERCIAL DIVISION)

In the matter of:-

The Polo/Lauren Company, LP PLAINTIFF

v.

Sudheer Maudhoo DEFENDANT

AND

In the presence of:

The Mauritius Revenue Authority CO-DEFENDANT

AND

In the matter of:-

Nissan Jidosha Kabushi Kaisha PLAINTIFF

v.

Zario Ltd. DEFENDANT

AND

In the presence of:

The Mauritius Revenue Authority CO-DEFENDANT

JUDGMENT

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Both cases have been consolidated in view of the fact that the same issue has been

raised which is whether it is permissible in the state of our law for the parallel importation,

obviously, of genuine goods. I propose to deliver a single judgment with a copy to be filed in the

second court record.

In the first case, the plaintiff claims to be the owner of numerous trademarks as well as

the copyright of the Polo Player Symbol worldwide. It claims that in a case entered in this

jurisdiction in 2004 for infringement of its rights in the trademarks and copyright and where the

present defendant was one of the parties concerned, an agreement was reached whereby the

defendant expressly agreed that he would not carry out any importation of any product bearing

the copyright and/or trademarks of the plaintiff.

The plaintiff avers that on or about early July 2008, the defendant imported into Mauritius

goods bearing one or more of the trademarks of the plaintiff. It was notified by the co-defendant

by letter of the 10th July 2008 that clearance of the goods imported by the defendant would be

suspended pending the plaintiff’s decision to enter legal proceedings regarding those goods

within the statutory delay. Indeed, the co-defendant was informed of an application made by the

plaintiff to the Judge in Chambers for an interim injunction against the defendant. The plaintiff

claims that the goods which were imported by the defendant came from the USA and that they

did not form part of products it had put onto the market in Mauritius.

It is the case for the plaintiff that the defendant had (a) infringed the rights of the plaintiff

under the Patents, Industrial Designs and Trademarks Act 2002 (PIDTA) inasmuch as he

imported the detained goods into Mauritius without its agreement and/or consent. The said

products had not been put on the market neither by the plaintiff nor with its consent; (b) further

infringed the economic rights of the plaintiff under the Copyright Act 1997 inasmuch as the

importation of the said products bearing the copyright of the plaintiff has been effected without

its consent; and (c) acted in contempt of the Court inasmuch as he has imported the aforesaid

goods in breach of both the judgment and on his own express acknowledgment therein that

such a conduct would amount to a contempt.

The plaintiff has prayed for the following orders:-

(a) a perpetual order restraining and prohibiting the defendant from importing by any

means, for the purposes of commercial exploitation and/or distribution, either

by himself and/or through his agents and/or préposés and/or associated entity

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and/or employees any products (i) bearing the Polo Player Symbol in respect of

which the plaintiff is the copyright owner for the territory of Mauritius; (ii) and/or

bearing the word (and/or) marks LAUREN/LAUREN and/or POLO and/or POLO

(POLO PLAYER SYMBOL) RALPH LAUREN and/or POLO BY RALPH LAUREN

and/or POLO FACTORY OUTLET STORE and/or POLO JEANS & DESIGN

and/or POLO JEANS CO. and/or POLO PLAYER SYMBOL and/or POLO

SPORT and/or POLO USA and/or POLORALPHLAUREN and/or PRLC IN

CONCENTRIC CIRCLES and/or RALPH and/or RALPH LAUREN and/or

RALPH LAUREN & DESIGN and/or RALPHLAUREN and/or RL FLAG LOGO

and/or RLX POLO SPORT and/or RRL LOGO and/or RUGBY and/or

TRADITIONAL INDIA CREST and/or LAUREN/LAUREN and/or POLO BY

RALPH LAUREN and/or POLO/RALPH LAUREN and/or LAUREN/RALPH

LAUREN which marks are lawfully owned by the plaintiff in Mauritius;

(b) restraining and prohibiting the Co-defendant from releasing the goods imported

by the defendant into Mauritius and currently detained by it, which goods bearing

one or more of plaintiff’s trademarks namely (i) 12 caps; (ii) 21 shirts; (iii) 15

sweaters; (iv) 36 pants; (v) 4 polo shirts; (vi) 20 T-shirts; (vii) 15 shorts and (viii) 6

coats;

(c) directing the Co-defendant to destroy the aforesaid goods.

The defendant does not deny that the plaintiff is the owner of the copyright/trademarks

as listed in paragraph 2 of the plaint with summons in Mauritius. He claims that the goods which

are detained by the co-defendant are genuine products imported from an authorized dealer of

the plaintiff and consequently, they cannot be said to have infringed the copyright and/or

trademark and any other right of the plaintiff. He avers that there was no need for authorization

from the plaintiff inasmuch as the latter having sold the goods had lost its exclusive privilege

and that the plaintiff has no right to stop importation and trade of genuine products. He also

avers that as there is no restriction imposed on the first buyer, the plaintiff’s right “is absorbed”.

He reiterates that the plaintiff cannot claim any additional protection inasmuch as it is precluded

by the ‘first sale doctrine’. Furthermore, it did not restrict territorially or otherwise its authorized

dealer to market its genuine products via the Internet which is a worldwide commercial outlet

network. He adds that the owner of a copyright is not entitled to restrain free trade inasmuch as

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the defendant imported genuine goods from dealers who have authority to export such goods

lawfully and such authority was granted directly or impliedly by the plaintiff. Finally, he claims

that in trying to keep the monopoly of the product, the plaintiff violates the Fair Trading Act and

the generalized liberation of goods and services.

The co-defendant, after taking note of numerous paragraphs of the plaint and admitting

the importation of goods bearing the trademark of the plaintiff, avers that at the request of the

defendant by letter dated the 7th July 2008, the consignment which was imported through Air

Parcel Post was physically examined by the Customs and found to contain 129 pieces of

garments bearing the registered trademarks of Polo/Lauren Co.

In the second case, the plaintiff claims to be the owner in Mauritius of the following

registered trademarks namely NISSAN (Class 12); NISSAN & DEVICE (Class 12) [with logo]

and NISSAN AND DEVICE (Class 12 & 37) [with logo] and that it did also apply to the co-

defendant under the Customs Act for border protection measure. It avers that it has an

authorized and accredited distributor in Mauritius with a distribution agreement duly deposited

before the Industrial Property Office as provided by law. It claims that on or about the 31st March

2009, the defendant caused to be imported into Mauritius: Side Lamps, Side Bumpers, Grills,

Head lamps, Radiator, Bump Supports, W/S Mould Uppers, A/Con Condenser and Fenders

bearing one or more of Nissan Marks (particulars of which have been given under paragraph 5

of the plaint). It avers that it was informed by the co-defendant of the arrival of the goods and its

stand to release the goods in the absence of any objection. It did verify the goods which were

found to be genuine products. The plaintiff claims that by its acts and doings, the defendant has

infringed its rights under section 40 of the PIDTA and also under the Prevention Against Unfair

Practices (Industrial Property Rights) Act 2002 inasmuch as the defendant imported those

goods into Mauritius without its agreement and/or consent. It avers that it did apply to the Judge

in Chambers for an injunction restraining and prohibiting the defendant and/or its directors

and/or its managers and/or its préposé from importing by any means for the purposes of

commercial exploitation and/or distribution, either by itself and/or through his agents and/or

préposés and/or associated entity and/or employees, any products bearing the word NISSAN

and/or NISSAN LOGO and/or NISSAN LOGO & CIRCLE DEVICE which marks are lawfully

owned by the plaintiff in Mauritius and restraining the co-defendant from releasing the goods

imported by the defendant into Mauritius and currently detained by it as particularized in the

plaint. It is therefore claiming for a perpetual order.

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The defendant does not deny that the plaintiff is the owner of those trademarks as listed

in the plaint. It claims that it imported genuine products bearing the marks of the plaintiff and

that it did cause to be imported similar goods on the following dates: 30th May 2008, 12th June

2008, 10th July 2008, 4th August 2008, 11th August 2008, 8th January 2009 and the 28th January

2009. Those goods were detained by the co-defendant on arrival and were cleared after they

were examined by the plaintiff who was satisfied that the goods imported were genuine products

of Nissan. The defendant took delivery and put them on sale on the Mauritian market. It avers

that the plaintiff’s distributor, ABC Motors Co. Ltd., had been purchasing spare parts imported

by it. It claims that there is no restriction in the parallel importation of genuine goods and that it

had been carrying on the business of parallel imports of those goods that had already been

marketed in Mauritius by the plaintiff and/or by the latter’s consent. It avers that the plaintiff is

therefore debarred from preventing it from carrying on the parallel imports of Nissan goods. It

further denies having infringed the rights of the plaintiff as a registered trademark owner. It

avers that the plaintiff cannot be heard to have suffered damages and/or prejudice simply

because the defendant has been carrying on parallel importation of goods already marketed in

Mauritius. It claims that there can be no bar to the free movements of goods once the owner of

the mark has had the first opportunity of marketing it. It also avers that it has not infringed any

existing legislation, be it the Competition Act, the Fair Trading Act or the Protection Against

Unfair Practice Act. It claims that the balance of convenience is in its favour.

The defendant has entered a counterclaim wherein the same averment in its plea had

been recited. It claims that the plaintiff had committed an ‘abus de droit’ which has caused it

prejudice and damages in that its creditworthiness, commercial integrity and reputation have

been injured and which it evaluates at Rs5m. The claim for the damages is based on the fact

that the goods imported by him, being genuine goods, cannot mislead the public as to the

quality and other characteristics of the products of the plaintiff; goods imported previously from

the same origin were cleared in the recent past; it did not commit any act which constituted an

unfair practice and that it did not infringe the right of the plaintiff.

In reply to the counterclaim, the plaintiff has averred that it has the right to stop any

infringement or suspected infringement of its trademark rights according to law and that includes

the right to stop any product to be put on the market in Mauritius if such is done without its

consent. It further avers that infringement of trademark rights is an offence in Mauritius.

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The plea of the co-defendant is that the defendant imported a consignment of various

motor vehicle parts under customs declaration made on the 23rd March 2009 and which was

examined on the 26th March 2009. It was found to contain goods bearing the trademark Nissan

suspected to be infringing intellectual property rights.

FACTS

As the facts are not disputed, no evidence has been ushered by any parties. Although

there was a consensus to put in an agreed statement of facts, that has not been done in respect

of the first case. However, it is common ground that the goods imported in the two cases are

genuine goods but imported by the defendants after they had purchased them from a dealer

outside Mauritius. No consent had been obtained from the copyright/trademark owners before

the importation of the goods in lite into Mauritius.

In the first case, the defendant imported the goods in question through the internet from

Closeout Explosion Company in respect of an overstock from Macys, a Departmental Store in

the USA. There has been no restriction upon the dealers in the USA in respect of those goods.

There was a previous court case before the Supreme Court where the defendant was a party

and an agreement was reached between the parties. One of the clauses of the agreement is

that the defendant will not carry out any importation of any product bearing the copyright and/or

trademarks of the plaintiff.

In the second case, as can be read from the agreed statement of facts, the defendant

has been importing goods bearing the mark NISSAN for some time without any objection from

the plaintiff and the latter’s accredited distributor, ABC Motors Co. Ltd., has also been

purchasing spare parts from the defendant. Previous consignments were, upon examination as

to the genuineness of the goods by the representative of the plaintiff, Fakebusters Ltd.,

authorized to be sold in Mauritius. The goods in lite were purchased from Fong Tat Motors Co.

of Singapore which does not form part of the NISSAN Group of companies and it was also not

the plaintiff’s agent. It has also been stated that ABC Motors Ltd. has a sister company, Ginza

Motors Ltd. which imports second hand vehicles into Mauritius. ABC Motors Ltd. as distributor of

NISSAN does not import all the vehicle models which are sold in Mauritius, although consumers

may order any parts from them even for vehicles it did not import. According to the law, so says

defendant, second hand motor vehicle dealers are obliged to maintain spare parts stocks of the

cars they import and are not required to apply for any permit from any Ministry for such imports.

They purchased them from the defendant or from other dealers including ABC Motors Co. Ltd.

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SUBMISSIONS OF LEARNED COUNSEL FOR THE PLAINTIFFS

Learned counsel for the plaintiff in the two cases submits that Mauritius is a signatory of

the Paris Convention for the Protection of Industrial Property which provides for territoriality of

trademarks. In other words, if someone wants his trademarks to be protected in a country, he

must have it registered in the country concerned in order to be able to enforce its rights. Each

country will have its own laws which will be along the philosophy of the Convention. He says

that there are three principles of exhaustion namely (i) national exhaustion; (ii) international

exhaustion; and (iii) regional exhaustion. The right to sell in a country for the first time is that of

the owner of the trade mark only or with his consent. This is what is known as national

exhaustion. He expatiates in saying that under the international exhaustion regime, certain

countries provide that an owner of a trademark is the only person who has the right to import

products in that country for resale. Once the goods had been imported in a country for sale, any

person who purchases goods from that importer/dealer can resell it to whosoever. It is deemed

that the trademark owner’s right is exhausted on the first sale of the product i.e. any person who

purchases the goods and sells to a third party and that third party, if he wants to re-export it in

any part of the world, he does not need the permission of the trademark owner. As an example

of regional exhaustion, he refers to European Community. There is a bloc of countries who by

common agreement enacts a law stating that where any owner is given the right to first market

the product in one of the State parties e.g. France, nothing can stop any trader from buying the

car in France to sell it in another signatory State e.g. Belgium. However, the law will still allow

the trademark owner to stop the same car sold in Japan from entering the region.

Regarding the USA which applies the international exhaustion regime, once a product is

sold in the USA, it can be resold from that purchaser to anyone. It is deemed that on that first

sale of the product, the right of the trademark owner in the USA is exhausted. However, there

are other laws like the Tariff Act which reduces the tariff rights to re-import to the USA if the

products are not manufactured by an affiliate of the trademark owner. He adds that India and

Singapore have the same regime as the USA in that goods once put on the market in anywhere

in the world, it is deemed that the trademark owner has given his consent for import and export

freely.

Regarding Europe, he refers to the Trademark Directive of the EU in its article 7 which

he adds is similar to section 40(5) of our PIDTA. He quotes article 7 of the EU Directive which

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provides that “The trade mark shall not entitle the proprietor to prohibit its use in relation to

goods or services which have been put on the market in the Community under the trade mark

by the proprietor or with his consent”. He submits that in the light of that article, any trademark

owner in Europe can stop the importation of goods which have not been done by it or with its

consent.

Learned counsel explains the various changes brought to our law. He says that in our

1868 Trademark Law, there was no prohibition to parallel importation. Then came the Fair

Trading Act of 1979 and section 6 was added in 1988 to make trade free namely that any

agreement that would restrict trade, restrict and create a monopoly and to distort markets was

illegal. That section provides that “Except as otherwise provided by any enactment or as

approved by the Minister, no trader shall enter or induce another trader to enter any

undertaking, agreement, contract or other instrument which has the effect or is likely to have the

effect of preventing, restricting or distorting competition or of promoting, establishing or

observing any exclusive sales agreement or monopoly in connection with the production and

supply of goods branded or otherwise, or of services.” However, with the enactment of the

Copyright Act 1997, the copyright owner has been given exclusive right to carry out or authorize

certain acts which are economic rights. He refers to section 4(1)(f) which says that “importation

of copies of the work, even where the imported copies were made with the authorization of the

author or other owner of the copyright”.

In the light of the above, he argues that even if Polo Ralph Lauren Group created a

product, its authorization is still required to import copyrighted goods into Mauritius.

Furthermore, he adds that under section 44(1)(a)(vi) of the Copyright Act 1997, it is an offence

for “any person who (a) without the express authorization of the copyright owner….(vi) imports

otherwise than exclusively for his own private and personal use, sells, exposes or offers for sale

or hire, or has in his possession in the course of the trade, any copy of a work which constitutes

an infringement of the copyright of its owner, or would constitute such an infringement if the

copy of the work were made in Mauritius”. Consequently, he says that parallel importation of

copyrighted goods in Mauritius is prohibited. Any importation requires the express authorization

of the copyright owner and there can be no implied authorization.

He adds that section 6 of the Fair Trading Act was amended in 1998 to provide a

subsection 2, the original section was renamed as subsection 1. He quotes the amendment

which provides that “Subsection (1) shall not apply to any person acting in the exercise of a right

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vested in him by virtue of the Copyright Act, the Patents Act or the Trade Marks Act.” He says

that protection had been given by the Courts in Mauritius to a copyright holder. He refers to the

decision of N.R.D. Ltd. v V.K. Samputh [2003 SCJ 129] regarding the non-application of

section 6 of the Fair Trading Act in respect of matters falling under the Copyright Act.

With the enactment of the PIDTA in 2002, learned counsel says that under its section

40(2), “any registered owner of a mark shall, in addition to any other rights, remedies or actions

available to him, have the right to institute court proceedings against any person who infringes

the mark by using, without his agreement, the mark as aforesaid or who performs any act likely

to cause an infringement.” Under section 40(5), he says that “the rights conferred by registration

of a mark shall not extend to acts in respect of articles which have been put on the market in

Mauritius by the registered owner or with his consent.” In the light of that subsection (5), learned

counsel argues that a trademark owner will have no right in the trademark if the products put in

the market in Mauritius were with his consent.

Learned counsel says that there are different regimes for copyrights, trademarks and

patents. He points out that under section 21(4) of the PIDTA which deals with the rights of the

owner of a patent, there cannot be prohibition of parallel import for that section provides that the

right under the patent shall not extend “to acts in respect of articles which have been put on the

market in Mauritius or in any other country by the owner of the patent or with his consent, or by

any other authorized party.” Whereas for the mark, there is protection under section 40(5) of

the PIDTA which provides that “The rights conferred by the registration of a mark shall not

extend to acts in respect of articles which have been put on the market in Mauritius by the

registered owner or with his consent.” With the different wordings, he submits that in respect of

the trademark, marketing of a trademark product anywhere in the world does not cause the loss

of protection of the trademark. The prohibition of parallel importation is a matter of State policy.

He says that it is not disputed that the goods which are the subject matter of the two

cases in hand are genuine goods but however, they were not imported into Mauritius by the

copyright/trademark owners or with his consent. They were imported by the defendants who

had nothing to do with the copyright/trademark owners.

The question is what amounts to consent. Since the wording of section 40(5) of the

PIDTA is similar to article 7 of the EU Directive, learned counsel submits that a perusal of the

decisions in Europe may bring some assistance as to the interpretation to be given to the word

‘consent’ in our law.

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He refers to Sebago Inc. and Ancienne Maison Dubois et Fils SA v GB-Unic SA

([2000] R.P.C. 63) where GB-Unic imported 2500 pairs of shoes bearing Sebago trademark into

Europe from a licensee of Sebago in El Salvador. GB-Unic argued that consent meant that once

the shoes of the same type are sold in Europe, it can import. The Court ruled that consent must

be that of the proprietor of the trademark within the territory.

He further submits that it was irrelevant whether consent had been given in the past. He

says that the issue is whether, for the consignments in the two cases which are now lying at

Customs, there has been any consent given. He adds that the burden of proof is on the parallel

importer to show that there was consent. In support of his contention, he has quoted the case of

Zino Davidoff SA v A&G Imports Ltd. [2001 ECR I-869]. In that case, Davidoff’s perfumes

bearing the mark “Cool Water” were manufactured in France and distributed worldwide. The

parallel imports were obtained from Singapore and sold in Europe despite the fact that the

distributor had undertaken not to sell outside his territory and to oblige the customers to refrain

from such sales. No other contractual restrictions were imposed. The question was whether the

seller could do so. Learned counsel states that the decision dealt with the burden of proof

namely who must establish the issue of consent. He says that the decision is authority for the

proposition that the burden is on the importer and not on the owner of the trademark to prove

that there is consent. Furthermore, even though the owner of the trademark has been silent in

not saying to its distributors that you cannot export or the trademark owner fails to put any

restriction on the goods, even then failure on the part of the trademark owner to do so does not

imply that he has given consent for the export of the goods to another country. He adds that no

consent is deemed if the importer was not aware that the trademark owner was enforcing his

rights in any other country in the world.

Another proposition which emanates from the decision of Davidoff (supra), according to

learned counsel, is that it does not matter whether or not there were any contractual

reservations on any sale by any distributor or dealer to a third party. Absence of such

reservation does not mean that the trademark owner is giving consent, implied or otherwise. He

argues that any consent must be express and unequivocal on the part of the trademark owner.

Reference has also been made to the decision of the ECJ in Makro Zelfbedieningsgroothandel CV and 2 Ors. v Diesel SpA [C-324/08] which confirms the

proposition advanced above.

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He points out that in the case of Honda Motor Company and Ors v Neesam and Ors. [(2006) EWHC 1051 (Ch)] and in Honda Motor Co. Ltd. and Anor v Derek James Neesam and 3 Ors [(2008) EWHC 338(Ch)], the Court held that consent could be implied. In those

cases, motorbikes for which Honda was the trademark owner were put on sale in Australia by

an authorized distributor of Honda and purchased from it by Lime Exports. It was Lime Exports

which exported to the defendants to be sold in the UK. The Court held that purchase from

unauthorized dealer does not confer consent and thus goods by the defendants were said to

have infringed the trademark owner’s rights. There was evidence that there was written consent

by Honda Australia to allow Lime Exports to sell a stock release. However, any permission

given in the past, even though it was implied because no one did anything about it, does not

prevent the trademark owner to stop future importation.

Regarding the sale through the internet, he refers to the case of Kabushiki Kaisha Sony Computer Entertainment and Anor. v Nuplayer Ltd. [2005 EWHC 1522 (Ch)]. In that

case PSP, the Sony play station, was launched in Japan and the States but not yet in Europe.

Nuplayer sold the Sony play station which it obtained from the States to sell in England through

the internet as it did not have an outlet in UK. The Chancery Division ruled that notwithstanding

that Nuplayer did not have a presence in UK, by the fact of selling to customers in the UK

through the internet, it has defrauded the trademark owner of that exclusive right to use its

trademark to first market the goods in Europe.

As regards the second case in hand, in the light of the Honda cases, learned counsel

for the plaintiff conceded that goods from the defendant Zario Ltd. were purchased by the

plaintiff’s local exclusive distributor in the past. He argues that for those goods which are now

under the custody of the co-respondent, it cannot be said to have been imported with the

express or implied consent of the plaintiff. He says that consent must be obtained for each items

and for each consignment. He sought support from the decision of Davidoff (supra). Similarly

regarding the first case, he argues that the absence of restriction does not amount to consent to

importation into Mauritius.

He points out that the Competition Act finds no application to goods which are protected

under the Copyright Act or the PIDTA. He says that the case for the plaintiffs has been proved

and he prays for the orders.

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SUBMISSION OF LEARNED COUNSEL FOR THE DEFENCE IN THE FIRST CASE

Learned counsel for the defendant in the first case submits that it cannot be disputed

that the intellectual property is something which must be respected and deserved protection.

That protection also goes to the economic rights associated with the inventions or creations. He

says that registration of trademarks confers protection. He refers to section 40 of the PIDTA

which provides the protection and he argues that that section must be read together with section

43(1) of PIDTA in that non use of it would entitle any person to request the removal of the mark

from the register. By not making use of it and by denying somebody who buys genuine goods

from overseas to come and market it here, the owner of the trademark then relying on the

absence of its consent to prevent its marketing is clearly making an “abus de droit”. He says that

in the light of the submission of learned counsel for the plaintiff, it is clear that there is no

consensus in the world regarding the question of consent.

Regarding the United States, there is international exhaustion in the sense that once a

product is put on the market, the economic right associated with that first sale had been

recouped by the creator or inventor. In respect of the case of Sebago, he argues that the

European Court of Justice [ECJ] did not overrule the concept of implied consent as the case

was dismissed on facts. He says that in the Davidoff case, the dealer in Singapore had

undertaken with the manufacturer of Davidoff products not to sell outside the territory of

Singapore. He adds that the ECJ recognizes the essential value of trademarks in that it grants

to the owner the right to use the mark for the first marketing of the particular goods and in this

way protect him against competition and against an abuse of the right of the owner by making

copies. He says that essentially the trademark is to identify the product in order not to mislead

the customer. So when genuine goods are imported, there is no risk at all of any misleading the

customer, but the owner is claiming protection arising out of registration. He submits that as to

the substance of the right of registration, it is the use of that right which is protected for it cannot

be an ancillary right. So when the trademark owner does not make use of it, he has no right to

say that he can rely on the provisions of the law.

In the present case, he says that the goods came from the United States. There had

been no repackaging, no relabelling or tampering. The goods were in their original state.

Turning to section 40(5) of the PIDTA, he argues that does consent mean consent in writing,

express consent or implied consent. If the issue of consent is to be decided according to the law

of the United States, he asks what is that right which has been infringed. He argues that it could

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not be a trademark right as that trademark has not been used as the goods are genuine goods.

The only right that the plaintiff can exercise will be the right of abuse of its registration. He

argues that once a trademark owner puts a thing on the market anywhere in the world without

any restrictions, then consent must be interpreted as having been given because it is up to the

trademark owner to put restrictions be it geographical or any sort of restriction. In the absence of

any restriction and in the absence of any action taken by Ralph Lauren against the defendant in

the United States or elsewhere, he argues that in the light of the authorities submitted, the

action against the defendant has not been made out.

SUBMISSION OF LEARNED COUNSEL FOR THE DEFENCE IN THE SECOND CASE

Learned counsel for the defendant in the second case concurs with the interpretation of

section 40(5) of PIDTA given by learned counsel for the defendant in the first case. He refers to

Hansard regarding the purpose of the enactment of the PIDTA and says that it was “to protect

the owner of registered trademark which has the exclusive rights to prevent third parties from

using identical or similar goods or signs that are similar to those in respect of which the mark is

registered…...”

In the case in hand, he says that it is not disputed that the defendant had been importing

into Mauritius for years genuine products bearing the mark Nissan which after checking, the

goods were released for sale. Being genuine goods, the right of the trademark owner is not put

in peril. The plaintiff has an authorized dealer in Mauritius, the ABC Motors and the latter has a

sister company which has been importing second hand Nissan cars.

He argues whether protection of trademarks is restricted only to spare parts and not to

vehicles for he says that there are many dealers in second-hand cars and the licence granted

provides for the licensee to stock spare parts. He submits that as lots of vehicles bearing the

mark Nissan had been put in the market and as the licensee had to stock spare parts, it stands

to reason that the plaintiff had impliedly consented. Section 40(5) of PIDTA provides therefore

for implied consent.

In the case in hand, he argues that in none of the packaging is there any mention

restricting the sale of the product in Singapore only. He argues that there has not been any

prejudice caused to the plaintiff as the goods imported are genuine goods. He adds that the

protection is in respect of the trademark. The goods that had been sold in Singapore are

genuine goods and no prejudice could have been caused to the plaintiff. He says that the

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defendant is helping the plaintiff in putting genuine parts on the market thus protecting the

plaintiff’s rights. It was the authorized dealer of the plaintiff who had put the goods on the market

and there is therefore an implied consent for the goods to be put on the market.

He argues that the balance of convenience is for the Mauritian public to have access to

genuine spare parts and no prejudice has been caused to the plaintiff. He goes into the problem

encountered by users having purchased second-hand car who cannot find spare parts.

SUBMISSION OF LEARNED COUNSEL FOR THE CO-DEFENDANT

Learned counsel for the co-defendant, after referring to section 40(1) of PIDTA, argues

that in the text there is the word “use” which has not been defined. He says that assistance can

be sought from the English text. He says that our section 40(5) of PITDA is similar to section

12(1) of the English Trademark Act of 1994 which speaks of consent. He refers to the passage

regarding exhaustion of IP rights authored by Justice Harms. He says that unlike Mauritius, in

Singapore parallel import is permissible for there the law speaks of “a registered trademark is

not infringed by the use of the trademark in relation to goods which have been put on the market

whether in Singapore or outside Singapore”.

He says that in Mastercigars Direct Limited v Hunters & Frankau Limited ([2007] EWCA Civ 176), there is the concept of the “European fortress” and which concept is given to

the interpretation of section 12(1) of the English Trademark Act. For that reason, he concurs

with the submission of learned counsel for the plaintiff that in Mauritius there is the concept of

national exhaustion namely the goods must first be put on the market by the trademark owner or

with his consent.

The question is whether there can be implied consent. In so far as express consent is

concerned there is no difficulty. Regarding implied consent, he refers to the decision of

Mastercigars (supra) and that of Davidoff (supra) to say that the onus is on the person using

the trademark to show that there has been consent on the part of the trademark owner and that

implied consent cannot be inferred from the fact that the proprietor has not communicated his

opposition to marketing of the goods to all subsequent purchasers. Therefore any inaction on

the part of the trademark owner in respect of goods being sold within a given jurisdiction cannot

per se be deemed to be implied consent. He adds that in the light of the decision in Davidoff (supra), the conduct of the plaintiff is an important factor as in that case, despite having

exclusive distributors outside Cuba, the trademark owner was prepared not only to tolerate but

15

to allow small quantities of cigars to be sold within Cuba for resale abroad. In essence, the

owner was encouraging parallel importation.

In respect of the two cases before the court, he submits that on the facts of each case,

there will be a different application of the principles. In respect of the first case, he submits that

there is no evidence of any past dealings between the defendant and the plaintiff so that section

40(1) of the PIDTA will apply and there cannot be heard that there was consent and in the light

of Davidoff (supra), inaction on the part of the plaintiff cannot be said to be tantamount to

implied consent.

Regarding the second case, there is a different conduct. The accredited and authorized

distributor of the plaintiff had been purchasing genuine Nissan products from the defendant

thereby falling on all fours with the facts in Mastercigars (supra) in that there was not only

failure to police but encouraging a parallel trade.

THE ISSUES

As pointed out earlier, three issues have been raised in both cases. Firstly, does our law

authorize parallel importation? Secondly, are the plaintiffs debarred from objecting to the

importation of genuine goods as there has been an exhaustion of their rights when those goods

had been put on the market by their authorized dealers? Thirdly, what meaning to be given to

the word consent under section 40(5) of the PIDTA.

Parallel importation concerns goods that have been produced and sold legally by the

owner of the copyright, patent or trademark but illegally imported into a country without the

consent of their owners. They are commonly referred to as ‘Grey Goods’ as the goods are

produced with the consent of the owner of the rights concerned unlike black market goods

which are often counterfeit goods.

Regarding the present issue which is whether it is permissible under our law for parallel

importation, indeed, all counsel do not deny the fact that importation of Grey Goods is

permissible only if done with the consent of the owner of the trademark as provided for under

section 40(5) of the PIDTA.

In most of the cases referred to, the issue is whether there has been exhaustion of the

rights of the trademark/copyright proprietor.

16

THE LAW

It is common ground that the issue turns on the interpretation of section 40 of the PIDTA

which reads as follows:-

“40. Rights conferred by registration

(1) Any interested person, other than the registered owner, who intends to use a

registered mark, in relation to any goods or services for which it has been registered,

shall require the agreement of the owner.

(2) Any registered owner of a mark shall, in addition to any other rights, remedies or

actions available to him, have the right to institute Court proceedings against any

person who infringes the mark by using, without his agreement, the mark aforesaid

or who performs any act likely to cause an infringement.

(3) Any registered owner may, where the use of any sign similar to the registered mark

or in relation to goods and services similar to those for which the mark has been

registered, is likely to cause confusion in the public, institute Court proceedings in

accordance with subsection (2).

(4) The provision of section 36(2) shall apply, mutatis mutandis, in any action instituted

by the owner of a well known mark against any person in respect of the unlawful use

of the well known mark.

(5) The rights conferred by registration of a mark shall not extend to acts in respect of articles which have been put on the market in Mauritius by the registered owner or with his consent.”

As rightly pointed out by learned counsel for the plaintiff and which is not disputed by

the other counsel in the case that our law gives different treatment to copyright, patent and

trademarks.

Indeed, section 4 of the Copyright Act which deals with the Economic rights of the work

belonging to the copyright owner provides that “subject to Part IV, the copyright owner of a work

shall, in relation to the whole or a substantial part of the work, have the exclusive right to carry

out or authorize any of the following acts….(f) importation of copies of the work, even where the

imported copies were made with the authorization of the author or other owner of the

copyright..” It clearly reveals that no other person is entitled to do parallel importation of genuine

works of the copyright holder.

17

Similarly for Industrial Designs under section 32 of the PIDTA, the rights conferred by

registration do not extend to “act in respect of articles which have been put on the Market in

Mauritius by the registered owner or with his consent”.

Whereas under section 21 of the PIDTA which deals with rights conferred by registration

of a patent, it is stated that “any right under the patent shall not extend (a) to acts in respect of

articles which have been put on the market in Mauritius or in any other country by the owner of

the patent or with his consent, or by any other authorized party; (b) in respect of articles which

have been put on the market in Mauritius or in any other country or imported into Mauritius…”.

The legislator has deemed it fit not to give any rights to the patent owner in those circumstances

relying on the exhaustion principle.

REFERENCE TO THE EUROPEAN DECISIONS AND THOSE OF THE EUROPEAN COURT OF JUSTICE

It is not disputed by learned counsel for the two defendants regarding the submission of

learned counsel for the plaintiffs that the wording of our section 40 of the PIDTA is not different

from that which obtains under article 7 of the EU Directive or that of learned counsel for the co-

defendant who has submitted that our section 40(5) of the PIDTA is similar to section 12 of the

English Trademark Act . Consequently, the cases decided by the EU Courts may be of

assistance in the interpretation of our section 40.

Article 7 of the EU Directive provides that “The trade mark shall not entitle the proprietor

to prohibit its use in relation to goods or services which have been put on the market in the

Community under the trade mark by the proprietor or with his consent”.

In Sebago Inc. and Ancienne Maison Dubois et Fils SA v GB-Unic SA (supra), which

is a judgment of the European Court of Justice [ECJ] of the 1st July 1999 following a referral by

the Court of Appeal of Brussels regarding the interpretation of article 7 of the EU Directive, the

case concerns the sale by GB-Unic without Sebago’s consent of goods bearing a trademark of

which Sebago is the proprietor. Sebago is an American company and is the registered owner of

trademarks “Docksides” and “Sebago” in the Benelux in respect of shoes and Maison Dubois is

the exclusive distributor in the Benelux of the shoes bearing Sebago’s trademarks. In 1966, in

its brochure entitled “La quinzaine Maxi-GB” announcing prices valid from 29th May until 11th

June 1996, GB-Unic had advertised ‘Docksides Sebago’ shoes for sale in its Maxi-GB

hypermarkets. There were 2561 pairs of shoes in question which were sold during the summer

18

of 1996 and they were manufactured in El Salvador and purchased from a company

incorporated under the Belgian law which specilalises in parallel importation. The shoes in

question were genuine shoes. Sebago and Maison Dubois contended that GB-Unic had no right

to sell those shoes in the Community as they did not authorize the sales. In the circumstances,

there was an application before the Belgian Courts that GB-Unic had infringed Sebago’s

trademark right by marketing those goods within the Community without its consent. Reliance

was placed on Belgian law which was similar as to the terms used in article 7 of the EU

Directive.

The questions posed to the Belgium Court were (i) whether the provision laid down the

principle of international exhaustion (as contended by GB-Unic) or the principle of Community

exhaustion only (as contended by Sebago) and (ii) the conditions under which a trademark

proprietor’s consent may be deemed to have been given.

Regarding the issue of consent, GB-Unic contended that the requirement of consent had

been satisfied once similar goods bearing the same trademark had already been lawfully

marketed in the Community with the consent of the trademark proprietor. Sebago’s contention

was that its consent must be obtained in relation to each defined batch of goods i.e. each

consignment imported at a particular time by a particular importer. Its view was that it was for

GB-Unic to prove that it had obtained the shoes in question from a seller who was part of the

distribution network established by Sebago in the Community, or from a reseller, who although

not belonging to that network, had obtained those shoes lawfully within the Community. GB-

Unic also argued that by not prohibiting its licensee in El Salvador from exporting its goods to

the Community, Sebago had given its implied consent to the marketing of the shoes in question

in the Community. Sebago’s argument was that no licence was granted.

The Court after finding that no licence was granted also stated that the mere fact that the

manufacturer in El Salvador had exported the goods in question to the Community could not be

regarded as proof that Sebago had consented to their being marketed there.

The matter was stayed pending ruling of the ECJ on the question as to whether: “article

7 of the EU Directive must be interpreted as meaning that the right conferred by the trademark

entitles its proprietor to oppose the use of the trademark in relation to genuine goods which

have not been put on the market in the EEC (extended to Norway, Iceland and Liechtenstein by

virtue of agreement) by the proprietor or with his consent, where:- (i) the goods bearing the

trademark come directly from a country outside the EEC or the European Economic Area [EEA];

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(ii) the goods bearing the trademark come from a member State of the EC or the EEA in which

they are in transit without the consent of the proprietor of the trademark or his representative;

(iii) if the goods were acquired in a member State of the EC or of the EEA in which they were

put on sale for the first time without the consent of the proprietor of the trademark or his

representative; (iv) either where the goods bearing the trademark - which are identical to the

genuine goods bearing the same trademark but are imported in parallel either directly or

indirectly from countries outside the EC or the EEA – are, or have already been, marketed

within the Community or the EEA by the proprietor of the trademark or with his consent and (v)

either where the goods bearing the trademark - which are similar to the genuine goods bearing

the same trademark but imported in parallel either directly or indirectly from countries outside

the EC or the EEA – are, or have already been, marketed within the Community or the EEA by

the proprietor of the trademark or with his consent.”

The ECJ relying on its previous decision in Silhouette International Scmied v Hartlauer ([1998] ECR I-4799) considered that the first three questions posed had been

answered namely that ‘according to article 7 of the Directive itself, rights conferred by the mark

are exhausted only if the products have been put on the market in the Community (in the EEA

since the EEA agreement entered into force) and that the Directive does not leave it open to the

member States to provide in their domestic law for exhaustion of the rights conferred by the

trademark in respect of products put on the market in non-member countries.’ Regarding the

last two questions which the ECJ considered as being “whether there is consent within the

meaning of article 7 of the Directive where the trademark proprietor has consented to the

marketing in the EEA of goods which are identical or similar to those in respect of which

exhaustion is claimed or if, on the other hand, consent must relate to each individual item of the

product of which exhaustion is claimed”.

The ECJ considered that “the text of Article 7(1) of the Directive does not give a direct

answer to that question. Nevertheless, the rights conferred by the trademark are exhausted only

in respect of the individual items of the product which have been put on the market with the

proprietor’s consent in the territory there defined. The proprietor may continue to prohibit the

use of the mark in pursuance of the right conferred on him by the Directive in regard to

individual items of that product which have been put on the market in that territory without his

consent.” In essence the Directive was for the purpose “to make possible the further marketing

of an individual item of a product bearing a trademark that has been put on the market with the

consent of the trademark proprietor and to prevent him from opposing such marketing (Case C-

20

337/95 Parfums Christian Dior v Evora [1997] ECR I-6013 paragraphs 37 and 38, and Case

C-63/97 BMW v Deenik [1999] ECR I-0000, paragraph 57. That interpretation is, moreover,

confirmed by Article 7(2) of the Directive which, in its reference to the ‘further commercialisation’

of goods, shows that the principle of exhaustion concerns only specific goods which have first

been put on the market with the consent of the trademark proprietor.” The ECJ ruled that Article

7(1) of the Directive must be interpreted as meaning that:-

“the rights conferred by the trademark are exhausted only if the products have been put

on the market in the Community (in the EEA since the EEA Agreement entered into

force) and that provision does not leave it open to the Member States to provide in their

domestic law for exhaustion of the rights conferred by the trademark in respect of

products put on the market in non-member countries;

for there to be consent within the meaning of Article 7(1) of that directive, such consent

must relate to each individual item of the product in respect of which exhaustion is

pleaded.”

In Mastercigars Direct Limited v Hunters & Frankau Limited (supra), the issue was

whether Corporacio Habanos SA (HSA), a Cuban joint venture company, 50% owned by

European interests and 50% owned by Empresa Cubana Del Tabaco “Cubatabaco”, a Cuban

subsidiary of Tabacuba, the Cuban State tobacco company, the owner of the trademark in

issue, did consent to the cigars being put on the market within the EEA (European Economic

Area) within the meaning of Art 5.1 of the Directive? HSA does not sell the Cuban Havanos

Cigars direct to customers in Cuba or worldwide but it does so through a number of outlets

namely through the foreign sales channel or the domestic (Cuban) sales channel. Every sale

must be recorded on a standard sale invoice printed for security purposes with a traverse water

mark “HABANOS SA” visible under ultra violet light. There was a Franchise Agreement with

conditions regarding territorial sale and prohibitions. There are also a number of legal

restrictions imposed on a foreigner who wishes to take Habanos out of Cuba. If more than 23

cigars were to be taken out of the country they must be in their original closed packaging

showing the domestic hologram sticker and the traveler must also provide Customs with

evidence that the purchase was legal. There is a maximum value restriction of a purchase

which any individual can make on the occasion of any one visit to any given retail outlet. From

the “La Casa del Habano” outlet which has a Franchise Agreement with HSA, the maximum

value is $25,000 while from other non-franchised outlets, the value is $2,000. Hunters and

21

Frankau Limited [HFL] was appointed by Tabacuba to be the sole and exclusive distributor for

the UK to import, sell and distribute Habanos and after the incorporation of HAS, HFL entered

into a new exclusive distributorship agreement. The business of Mastercigars Direct Limited’s

[MDL] is to import cigars and in particular cigars into the United Kingdom for resale in

competition with HFL.

The dispute concerns 10 consignments of Habanos and the seizure by the UK Customs

was at the instigation of HFL who alleged that the consignment was counterfeit. It was MDL who

entered the case claiming a declaration against HFL that there was no trademark infringement

and to release the consignment. HSA joined in to allege that there has been an infringement of

the trademark. Two issues were raised namely (i) counterfeiting and (ii) unlawful parallel import.

The Court of Appeal reversing the decision of the trial judge found, on the facts, that

there was implied consent on the part of HSA to the parallel importation of Habanos by MDL.

NATIONAL EXHAUSTION

It is beyond dispute that under our section 40(5) of PIDTA, it is the national exhaustion

concept which is adopted in view of the wording of that section which specifies products put on

the market in Mauritius. More often than not, traders believe that they are free to import

genuine goods into Mauritius as those goods are far more cheaper abroad than in Mauritius.

Alas, they seem to forget the protection given by sections 40(1) and 40(5) of PIDTA. I shall

quote the pertinent observation of Lord Justice Jacob in Mastercigars (supra) approved by the

other two members of the bench which reads as follows:

“I suppose nearly all members of the public would think that you cannot infringe a trade mark if

you are just selling the genuine goods of the proprietor to which he has applied his trade mark.

Many (probably most) trade mark lawyers think that ought to be the rule. After all, trade marks

are the badge of the owner, a sign by which the customer can know ‘Here are the goods or

services of a particular owner. I can rely on that sign’. In the language of the Directive the

function of a trade mark is to ‘guarantee the trade mark as an indication of origin’. So the public

would be surprised to know (and perhaps somewhat resentful of the fact) that the law of the

EEA is such that if genuine goods are available outside Europe much cheaper than they are

here, traders cannot buy them and import them for sale here, unless the trade mark owner has

22

consented. Even though the trade mark tells the truth, its use can be prevented without that

consent. The policy behind this rule has been called ‘fortress Europe’. It has very substantial

implications since nearly all goods (save perhaps same raw materials’ bear trade marks. It

means traders can use trade marks to partition Europe from the rest of the World Market. This

can sometimes have beneficial effects (e.g. trade marks are perhaps the easiest of intellectual

property rights to invoke to stop re-importation into Europe of pharmaceuticals sold cheaply in

third world countries for local use). But generally, the rule is self-evidently rather anti-

competitive and protectionist. Our task is not to consider whether the rule is good or bad from

an economic perspective. It is to apply it.”

I fully endorse that observation and as rightly pointed out it is more of a policy of the

State.

In Europe, even before the publication of the EU Directive which reiterates the doctrine

of EEA-wide exhaustion of rights, the Courts in the EU have in view of the Community law of

free movement of goods applied that doctrine of exhaustion of rights in intellectual property law

[vide Deutsche-Grammophon v Metro (1971 ECR 487)(concerning copyright), Centrafarm v Winthrop (1974 ECR 1183) (in respect of patents); Centrafarm v Sterling Drug (1974 ECR 117 (concerning trademarks)]. The doctrine of exhaustion of right has been settled in the

European Courts and it applies “to trade marks as much as it does to the other IP rights, even

though the nature of those rights is very different from trade marks and is particularly so much

more obviously territorial in nature.” [vide Mastercigars (supra)].

Regarding goods placed on the market outside the EEA by the trade mark owner or with

his consent and then imported into the EEA the question therefore became just ‘exhaustion” or

not, with no prior consideration of the basic nature of a trade mark. It was just treated as

territorial intellectual property right which could be ‘exhausted’ like any other [vide Davidoff (supra)].

In Zino Davidoff SA v A & G Imports Limited ([1999] 3 AER 711), Laddie J. held that

parallel importation could not be prevented unless there was full and explicit contractual

restrictions on each player in the chain of supply of the goods. That decision of the English

Court sent a shockwave throughout the European market as it effectively allowed parallel

importation of trademarked goods. However, when that case was heard together with the case

of Levi Strauss v Tesco (C-415/99) and Levi Strauss v Costo (C-416/99), the ECJ held that

for parallel importation to be allowed there must be express, positive and unequivocal consent

23

on behalf of the owner of the trademark. It was held that the effect of the Directive is therefore to

limit exhaustion of the rights conferred on the proprietor of a trademark to cases where goods

have been put on the market in the EEA and to allow the proprietor to market its products

outside the area without exhaustion of its rights within the EEA. By making it clear that the

placing of goods on the market outside of the EEA does not exhaust the proprietor’s right to

oppose the importation of those goods without its consent, the Community legislature has

allowed the proprietor of the trademark to control the initial marketing in the EEA of goods

bearing the mark [Sebago (supra)].

CONSENT

The question is the nature of the consent required. In the case in hand, it is not

disputed that there had been no express consent to the defendants to import the goods

bearing the marks of the plaintiffs. The question posed in the circumstances are (a) Has there

been national exhaustion of the rights of the trademark owner? (b) Can there be implied

consent?; (c) If yes, in what circumstances can it be said that there is implied consent? and (d)

Who bears the burden of establishing it?.

It appears from a reading of the cases from the ECJ that consent, which is tantamount to

the proprietor’s renunciation of its exclusive right under article 5 of the Directive to prevent all

third parties from importing goods bearing its trade mark, constitutes the decisive factor in the

extinction of that right. Furthermore, in view of its serious effect in extinguishing the exclusive

rights of the proprietors of the trademarks in issue (rights which enable them to control the initial

marketing in the EEA) consent must be so expressed that an intention to renounce those rights

is unequivocally demonstrated.

Such intention will normally be gathered from an express statement of consent.

Nevertheless it is conceivable that consent in some cases be inferred from facts and

circumstances prior to, simultaneous with or subsequent to, the placing of goods on the market

outside the EEA which in the view of the national court, unequivocally demonstrate that the

proprietor has renounced its rights.

Since consent must be expressed positively, therefore the facts to be taken into

consideration in finding whether there is implied consent or not must unequivocally demonstrate

that the trademark proprietor has renounced any intention to enforce its exclusive rights.

24

The ECJ in the case of Davidoff (supra) came up with the following propositions of law

with which I endorse namely:-

(a) consent amounts to renunciation of the right of the trademark proprietor, and

must, therefore, be unequivocally demonstrated;

(b) an intention to renounce will normally be gathered from the express statement;

(c) there may be circumstances from which consent may be inferred, but it is an

actual consent, and not a deemed consent that must be established;

(d) it is, in almost all cases, for the trader to prove consent, not for the trademark

proprietor to prove absence of consent; and

(e) consent cannot be inferred from the trademark proprietor’s silence nor from the

fact that the goods carry no warning, nor from the fact that the trademark

proprietor originally placed goods on the market without any further restriction on

the outward sale of those goods.

In Sun Microsystems Inc. v M-Tech Data Limited and Anor. ([2009] EWHC 2992), the claimant, “Sun”, is a US company which makes and sells computer systems and

workstations and other related goods and services. It is the registered proprietor of the marks

comprising or consisting of the word “Sun” in respect of computers, computer hardware and

software and peripherals. M-Tech Data is a UK company and its business is the supplying of

computer hardware sold by major manufacturers like Hewlett Packard, IBM and Sun. M-Tech

Data purchased some 64 Sun disk drives from a broker in the US and imported them into the

UK. Sun contends that those disk drives were put on the market in the UK by M-Tech Data

without its consent and accordingly there was infringement of its registered trademark. M-Tech

Data resisted the claim and argued that (a) Sun has failed to establish where the disk drives

were first marketed and argues that they were first marketed in the EEA, in which case Sun’s

trademark rights are exhausted; (b) the enforcement by Sun of its trademark rights is contrary to

article 28 to 30 of the European Community as its effect will be to prevent the attainment of a

single market in hardware which has been marketed by Sun or with its consent in the EEA; (c)

the enforcement by Sun of its rights is connected with agreements contrary to article 81 of the

European Community and is therefore prohibited.

25

The Court referred to and approved the approach taken in the decision of Davidoff and Levis Strauss (supra) before the ECJ and it spelt out the ratio decidendi as follows:

(i) Consent under articles 5 and 7 of the EU Directive is tantamount to the proprietor’s

renunciation of his exclusive right under article 5 and therefore constitutes the

decisive factor in the extinction of that right;

(ii) If the concept of consent were a matter of national laws of the Member States, the

consequence for trademark proprietors could be that protection would vary according

to the legal system concerned. It therefore fell to the ECJ to supply a uniform

interpretation of the concept of “consent” to the placing of goods on the market within

the EEA;

(iii) In view of the serious effect in extinguishing the exclusive rights of proprietors of

trademarks, consent must be so expressed that an intention to renounce these rights

is unequivocally demonstrated;

(iv) Such an intention will normally be gathered from an express statement of consent.

Nevertheless, it is conceivable that consent may, in some cases, be inferred from the

facts and circumstances surrounding the placing of the goods on the market outside

the EEA which unequivocally demonstrate that the proprietor has renounced his

rights;

(v) Implied consent to the marketing within the EEA of goods put on the market outside that

area cannot be inferred from the mere silence of the trademark proprietor. More

specifically, implied consent cannot be inferred from the fact that the proprietor has

not communicated his opposition to goods placed on the market outside the EEA

being placed on the market within the EEA, nor from that fact that the goods carry no

warning of a prohibition on their being placed on the market in the EEA.

(vi) Ignorance on the part of the trader importing the goods into the EEA is irrelevant.

26

IMPLIED CONSENT

Consequently, implied consent to the marketing within the EEA of goods put on the market

outside that area cannot be inferred from the mere silence of the trademark proprietor. Likewise,

implied consent cannot be inferred from the fact that the trademark proprietor has not

communicated its opposition to marketing within the EEA or from the fact that the goods do not

carry any warning that it is prohibited to place them on the market within the EEA. Such consent

cannot be inferred from the fact that the trademark proprietor transferred ownership of the

goods bearing the mark without imposing contractual reservations or from the fact that,

according to the law governing the contract, the property right transferred includes, in the

absence of such reservations, an unlimited right of resale or, at the very least, a right to market

the goods subsequently within the EEA. A rule of national law which proceeded upon the mere

silence of the trade mark proprietor would not recognize implied consent rather than deemed

consent. This would not meet the need for consent positively expressed required by Community

law.

CONSENT NOT BY ACTUAL OWNER

Is it sufficient if consent is given not by the actual owner of the trademark right but by a

party which is ‘legally or economically linked’ to it? Where consent was given by one of a group

of linked companies even though another member of the group was the actual right holder.

(Vide Keurkoop v Nancy Kean ([1982] ECR 2853; CNL-Sucal v Hag (“HAG 2”) ([1990] ECR I-3711); Pytheron v Jean Bourdon ([1997] ECR I-1729); IHT v Ideal-Standard ([1994] ECR I-2789).

In Honda Motor Company Limited and Ors v Neesam and Ors (supra) the

defendants imported motorcycles from authorized dealers of Honda and there was a restriction

clause to export. It is beyond doubt that Honda did not give its consent to the import of those

motorcycles into the UK. The contention of the defence was that “consent of a Honda

subsidiary, or of an authorized distributor or dealer, to the import of the bikes into the EEA

counts as consent of the trademark proprietor for the purpose of exhausting the rights of the

trademark proprietor.” That contention was based on the decision of the ECJ in IHT International v Ideal Standard ([1994] ECR I-2789) which reads as follows: “This principle,

known as the exhaustion of rights, applies where the owner of the trademark in the importing

state, and the owner of the trademark in the exporting state are the same. Or where, even if

they are separate persons, they are economically linked. A number of situations are covered:

27

products put into circulation by the same undertaking by a licensee, by a parent company; by a

subsidiary of the same group, or by an exclusive distributor.” In the situation described, the

function of the trademark is in no way called into question by the freedom to import. As was held

in HAG 2, for a trademark to be able to fulfil its role it must offer a guarantee that all goods

bearing it have been produced under the control of a single undertaking, which is accountable

for their quality. In all the cases mentioned. Control was in the hands of a single body. The

group of companies in the case of products put into circulation by a subsidiary, the manufacture

in the case of products marketed by the distributor; the licensor in the case of products

marketed by the licensee. In the case of a licence, the licensor can control the quality of a

licensee’s products by including in the contract clauses requiring the licensee to comply with the

instructions and giving him the possibility of verifying such compliance. The origin which the

trademark is intended to guarantee is the same. It is not defined by reference to the

manufacturer, but by reference to the point of control of manufacture”.

The Court rejected the reasons put forward by the defence that the same principle must

apply to consent to importation into the EEA as the judgment of the ECJ referred to “a person

who is economically dependant on the trademark proprietor”. The fact in that case was goods

were placed on the market in one part of the EU by the trademark proprietor or with his consent.

The question was “whether those goods could circulate within the rest of the EU or now the

EEA, without further consent” whereas in the case before the court the question was “whether

goods can be placed on the market in the EEA at all without the consent of the trademark

proprietor.”

The Court considers that “the ECJ has broadened the scope of the rights conferred by a

trademark, and more recent cases show that a trademark is not simply a guarantee of origin. If it

were then its use on the genuine goods would not amount to an infringement at all. Part of the

function of the trademark, as the law has developed, is that the trademark proprietor has the

right to control the first marketing of the goods in the EEA.” The trial Judge adds that “In

addition, I cannot accept that a distributor or dealer who exceeds his authority, or breaks his

contract in consenting to import into EEA, can saddle the trademark proprietor with the

consequences of his excess of authority or breach.”

GENUINENESS OF THE GOODS

Learned counsel for the defendant in the first case has argued that there was no

prejudice caused to the owner of the copyright or trademark as the goods marketed were

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genuine goods. Section 40(5) of the PIDTA which deals with parallel importation has nothing to

do with the genuineness of goods but rather with economic rights. I may refer to Kerly in his

book on ‘Trade Marks’ that “the issue raised by parallel imports into the EEA has nothing to do

with the essential function of a trademark, or whether a trademark should confer the ability to

interfere with this type of activity. It is purely a matter of economic policy of the EU and the EEA.

A trademark proprietor is entitled to stop parallel imports even though the trademark is applied

to genuine goods, and the function of the trademark guarantee of origin and quality is not

impaired. Put bluntly, as the law has developed, the trademark proprietor is entitled to keep up

prices in the EEA by use of his rights in the trademark”, has been approved by the Court in the

case of Honda Motor Company Limited and Ors v Neesam and Ors ([2006] EWHC 1051 (Ch.)).

In Silhoutte [1998] F.S.R. 729, some 21,000 pairs of out-of- fashion sunglasses bearing

the mark Silhouette were sold by a representative of the Austrian trade mark proprietor to

Bulgaria apparently on condition that they should be sold only in Bulgaria or in the former states

of USSR. That condition was not proved and the ECJ proceeded on the assumption that no

consent had been given that the sunglasses could be sold in Austria. The defence took the point

that there was international exhaustion which the ECJ did not accept on the ground that article 7

could not be interpreted as leaving it open to Member States to provide in their domestic law for

exhaustion of the rights conferred by a trade mark in respect of products put on the market in

non-member countries. If one Member State imposed a rule of international exhaustion, this

would either mean international exhaustion applied throughout the EEA or it would give rise to

barriers within the EEA to the free movement of goods.

The rule of international exhaustion cannot prohibit a country to apply its national

exhaustion rule. This principle is applicable in the EU as can be gathered from the decisions in

Sebago (supra) and Silhouette (supra). The ECJ has made it clear in the Davidoff’s case that

the issue raised by the parallel imports into the EEA has nothing to do with the essential

function of a trade mark or whether a trade mark should confer the ability to interfere with this

type of activity for it is a purely economic policy of the EEA. The result is that the ECJ has ruled

that parallel imports into the EEA will result in the infringement unless the trade mark proprietor

has given his consent. Cases of implied consent are likely to be very rare. In practice, unless

express consent has been given, parallel imports into the EEA are most likely to result in

infringement.

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In the light of the various authorities referred to above and the findings of which I concur, I am of

the view that consent can also be implied.

BURDEN OF PROOF

It follows, having regard to a long list of decided cases, that it is for the trader alleging

consent to prove it and not for the trade mark owner to demonstrate its absence. (Vide Davidoff (supra), Roche Products v Kent Pharmaceuticals ([2006] EWCA Civ 1775); Quicksilver v Charles Robertson ([2004] EWHC 2010 (Ch.); Sony Entertainment v Nuplayer ([2005] EWHC 1522 (Ch.)(supra); Hewlett-Packard v Expansys ([2005] EWHC 1495 (Ch.)); Sony Computer Entertainment v Electricbirdland ([2005] EWHC 2296 (Ch.)); Sun Microsystems v Amtec Computer ([2006] EWHC 62 (Ch.)); Honda Motor v Neesam ([2006] EWHC 1051 (Ch.)); Adidas v Microhaven ([2003] EWHC 840 (Ch.)); Levi Strauss v Tesco ([2002] EWHC 1556 (Ch.)).

THE COMPETITION ACT.

Learned counsel for the plaintiff and learned counsel for defendant in the first case have

referred to section 6 of the Fair Trading Act but since the 25th November 2009, that section has

been repealed by section 73(b) of the Competition Act 2007. It must also be noted that under

section 3(4) of the Competition Act finds no application in respect of certain matters listed

under the Schedule. Indeed under paragraph 2 of Part A to the Schedule provides that “Any

agreement insofar as it contains provisions relating to use, licence or assignment of rights

under or existing by virtue of laws relating to copyright, industrial design, patents, trade marks

or service marks”. In its draft guideline, theCompetition Commission recognizes that “An IPR

such as patent, copyright or trademark is essentially a legally-protected monopoly.. A legal

monopoly provided by IPR on a specific product does imply that the owner has a monopoly

position within the meaning of the Competition Act. A monopoly position can be held only in

relation to a market..However, there are occasions when actions that might be considered

anticompetitive are specifically exempt from competition law when they concern IPR.”

Consequently, any qualms which the defendant in the first case have regarding the

monopolistic position of the IPR holders cannot call in aid the Competition Act. The

Competition Commission may deal with other aspects of trade but not regarding importation.

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CASES IN HAND

Having regard to the various decisions of the ECJ which I find to be persuasive in the

interpretation of our section 40(5) of the PIDTA and section 4(1)(f) of the Copyright Act, I am of

the view that the same interpretation as obtains before the ECJ in its interpretation of article 7 of

the EU Directive must be applied in the interpretation of section 40(5) of the PIDTA and

section4(1)(f) of the Copyright Act. Our national exhaustion system provides that no person can

import into Mauritius goods bearing the copyright or mark of the owner of the copyright or mark

without the latter’s consent or authorization.

I am of the view that there is a misapprehension by the defendants that after the

trademark owner had sold trademarked goods in Mauritius, any person is then free to import

from any part of the world and to import it into Mauritius, the more so that the goods are genuine

goods. In the various authorities referred to above, the protection given against parallel

importation of copyrighted or trademarked goods is not that the goods must be genuine, it is

clearly an economic issue which is for the legislator to consider. It is no defence that the goods

imported are cheaper than those put on the market by the copyright or trademark owner [vide

remark of Jacob J in Mastercigars (supra)]. Such argument has been shown to be irrelevant in

the light of the wording of section 40(5) of the PIDTA or section 4(1)(f) of the Copyright Act.

There is national exhaustion when the goods imported by the copyrighted or trademarked owner

or by accredited dealers or distributors in Mauritius are purchased and sold by a seller who

obtained those goods from the accredited or sole distributors in Mauritius.

Now, the application of those principles with which I concur in the context of the present

cases would seem to lead to the inevitable conclusion that both defendants have no defence to

the plaintiff’s claim for protection under section 40(5) of the PIDTA. It is not disputed that the

plaintiffs are the owner of the copyright/trademarks in question and that there is no express

consent from them for the importation of those goods which had been detained by the Customs

following the barrier protection under the Customs Act. In both cases the goods in lite were

first put in the market in the United States and in Singapore but not in Mauritius. Furthermore,

the burden to prove implied consent which must be unequivocal lies on the defendants and they

have both failed lamentably to establish it.

In the first case, it is no defence that the goods were purchased in the United States

through the internet. As shown above, absence of any objection on the part of the owner of the

trademark or copy or any restrictions imposed cannot constitute implied consent. In his case the

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defendant gave an undertaking in the settlement before the court that “he will not carry out any

importation of any product bearing the copyright and/or trademarks of the plaintiff”. He cannot

ignore that the plaintiff, Ralph Lauren Co. Ltd. is not agreeable to third parties importing its

goods into Mauritius without its authorization irrespective of whether the plaintiff wants to control

the price of its goods.

I therefore find that the defendant has infringed the rights of the plaintiff in importing

goods bearing the copyright and trademarks of the plaintiff without its consent. I do not think

much of the argument put forward by the defendant in the first case, en passant, that there is

an “abus de droit” or that there has been non-use of the marks. The defendant has anyway

failed to establish that there has been non-use of the marks by the plaintiff.

I also order that the goods detained by the co-defendant be destroyed. The interim order

made on the 1st December 2008 is made perpetual with costs against the defendant.

As regards the second case, I do not share the view of learned counsel for the co-

respondent that there is evidence of implied consent for the importation of the consignment in

issue. It may well be that in the past there was no objection to the importation of those spare

parts, As has been shown above, the absence of any objection or restriction in the sale cannot

amount to implied consent. The facts of the present case are a far cry from those in

Mastercigars (supra) where there was evidence of the owner of the trademark not only failing

to police parallel trade but was encouraging it. As pointed out earlier above, the owner of the

trademark cannot be bound by the acts of its accredited dealers in order to establish that there

has been implied consent. In the absence of any proof that there has been unequivocal implied

consent, I find that the defendant has no defence to the application.

Regarding the counterclaim, I fail to see how there can be an “abus de droit” when the

copyright/trademark owner is exercising the protection granted to it following the registration of

its copyright/trademark under the law. The facts reveal that every single import by the defendant

was stopped at the Customs and was released by the co-defendant only after there was no

objection from “Fakebusters Ltd.” the representative of the plaintiff and not from the ABC Motors

Co. Ltd. The defendant knew that there was an issue of trademark in view of the Customs

barrier protection and that release of the goods was only given after obtaining authorization from

the owner of the trademark. As pointed earlier, for every consignment and items of goods

bearing the copyright/trademark, consent is required. The defendant cannot rely on the fact that

for the previous consignments consent was granted that it would be obtained thereafter or that

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there was implied consent as ABC Motors Co. Ltd., the plaintiff’s accredited agent, had also

purchased, at times, spare parts from it. The defendant has taken a risk in importing the spare

parts which are now detained by the co-defendant when it knew that the authorization of the

trademark owner is required. The contention that the plaintiff’s decision to exercise its right

under section 40(5) of PIDTA now is an “abuse de droit” cannot be sustained. The plaintiff’s

right can only be extinguished when the condition of first marketed with its consent has been

made out.

Furthermore, the contention of the defendant that one of the conditions of the licence

authorizing it to import second hand car is that the importer must have a stock of spare parts is

no defence. The licence cannot and does not authorize it to import the spare parts in breach of

the rights of the owner of the copyright/trademark. The fact that the spare parts it put on the

market are cheaper and benefit the public is still not a consideration as shown above. It will still

in my opinion raise the issue of importation of goods bearing the mark/copyright of a

copyright/trademark owner. The question which will have to be thrashed out in the future is

whether the importation of second car is an exception to section 40(5) of the PIDTA?

For the reasons given, the application is granted and the interlocutory order made by the

learned Judge in Chambers is made perpetual and the detained goods to be destroyed with

costs against the defendant.

The counterclaim for the reasons given is dismissed with costs.

P. LAM SHANG LEENJUDGE

28 December 2012

In 1st caseFor Plaintiff : Mr Attorney P D Lallah – Mr S Ghurburrun, of CounselFor Defendant : Mr Attorney B Rampoortab – Mr A Gayan, SC In 2nd caseFor Plaintiff : Mr Attorney J Gujadhur – Mr S Ghurburrun, of CounselFor Defendant : Mr Attorney B Sewraj – Mr S Lallah, SC together with Mr M Lallah, of Counsel In both casesFor Co-defendant : Mr Jean Louis, Senior State Counsel