Politov - Parallel Import v.EN

Parallel Imports
in the Light of Copyright and
Trade Mark Right

National Union of In-house lawyers Speaker: Yordan
Politov,
Sofia, 01 December 2011 Associated
Lawyer
Patent
Attorney

Legal framework
 The concepts of import and parallel import:
- Articles 28, 30, 34, 35, 36, 267, and 288 TFEU; Article 19 TEU;
- Article 30 (Non-preferential origin), Article 85 (Importation), 97 (Transit), 104 (Warehousing), and
163 (Exportation) of the Customs Act (CA); § 1(10) and (22) of the Additional Provisions of the
CA;
- Article 16 (Importation of Goods) of the Value Added tax Act (VATA); Article 161(1), Article
214(1) and §1(76) (Third Country) of the Additional Provisions of the Medicinal Products in
Human Medicine Act (MPHMA)
 Copyright, related rights, and parallel import:
- Article 18 (Types of Economic Copyright) of the Copyright and Related Rights Act (CRRA) — see
in particular Article 18(2)(11);
- Article 18а (Termination of Distribution Right) of the CRRA; Articles 19, 20 and 22а;
- Article 76(1)(1) and (4), Article 84, Article 86(1)(1) and (2), Article 90, Article 90а(1)(6) and (9),
Article 90c, Article 91(1)(2), Article 93, Article 93d, and Article 93c of the CRRA — concerning
related rights.
 Trade mark right and parallel import:
- Article 13 of the Marks and Geographical Indications Act (MGIA – TM Law), transposing Article 5
of Directive 2008/95 (First Council Directive 89/104/EEC) and Article 9 of Regulation 207/2009;
- Article 15 of the TM Law, transposing Article 7 of the Directive and Article 13 of the Regulation;
- §1(12) (Importation and Exportation of Goods) of the TM Law; and
- §1(24) of the Additional Provisions of the Genetically Modified Organisms Act (GMOA) and
§1(32) (Marketing) of the Additional Provisions of the Medical Devices Act (MDA).

Sofia, 01 December 2011 www.penkov-markov.eu 2
Yordan Politov

Case-law (trade marks)

 Case-law of the European Court of Justice:
- Case 102/77 Hoffmann-La Roche v Centrafarmр 1978;
- C-355/96 Silhouette International, 1998;
- Joined Cases C-414/99 to C-416/99 Zino Davidoff, Levi Strauss, Tesco, 2001;
- C-59/08 Copad v Christian Dior, 2009;
- C‑449/09 Canon v IPN Bulgaria, Order of the Court, October 2010.

 Case-law of Bulgarian courts:
- Interpretative Ruling No. 1 of the Supreme Court of Cassation of 15 June 2009 in
Interpretative Case No. 1/2008 of the General Meeting of the Commercial College;
- Judgment No.1436 of Sofia Court of Appeal of 03 August 2011 in the Canon case.

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I. The concepts of import and parallel import

Part III TFEU, Free Movement of Goods
• Article 28(1) – “The Union shall comprise a customs union which shall cover all trade in goods
and which shall involve the prohibition between Member States of customs duties on imports and
exports and of all charges having equivalent effect […]”;

• Article 30 – “Customs duties on imports and exports and charges having equivalent effect shall
be prohibited between Member States. […]”;

• Article 34 and Article 35 – “Quantitative restrictions on imports […]” and “Quantitative
restrictions on exports, and all measures having equivalent effect, shall be prohibited between
Member States.”

• Article 36 – “The provisions of Articles 34 and 35 shall not preclude prohibitions or restrictions
on imports, exports or goods in transit justified on grounds of […] the protection of
industrial and commercial property. Such prohibitions or restrictions shall not, however,
constitute a means of arbitrary discrimination or a disguised restriction on trade between Member
States”.

• Article 19 TEU and Article 267 TFEU – “the Court of Justice of the European Union shall have
jurisdiction to give preliminary rulings”, interpret EU law and ensure that it is observed.

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• Article 85 of the Customs Act (CA)—Release for importation shall confer upon foreign goods
the customs status of local goods. Importation shall entail application of commercial policy
measures, completion of the formalities laid down in respect of importation of goods, and the
levying of the customs duties due.
• Article 97(1) CA—The transit procedure shall allow the movement, from one point to another
point, within the customs territory of the Republic of Bulgaria of foreign goods, without such
goods being subject to import duties.
• Article 104(1) CA—The customs warehousing procedure shall allow the placing and storage,
in a customs warehouse, of (local or foreign) goods.
• Article 163(1) CA—The exportation procedure shall allow local goods to leave the customs
territory of the Republic of Bulgaria and shall entail the application of formalities provided for the
exportation of goods, including commercial policy measures and, where applicable, export
customs duties.
• §1 of the Additional Provisions of the CA—It regulates the importation, exportation, transit, and
customs warehousing as customs procedures (see sub-paragraph 10) and defines the ‘customs
territory of the Republic of Bulgaria’ (see sub-paragraph 22).

(Origin of goods: Non-preferential origin)
• Article 30(1) CA—Goods originating in a country shall be the goods wholly obtained or produced
in that country.

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• Article 16 VATA — Importation of goods
- Importation of goods shall mean the entry of non-Community goods into the national territory;
- Importation of goods shall also include the entry of Community goods into the national territory
from third countries or territories that are part of the customs territory of the European Union;
- Importation of goods shall also include releasing goods for free circulation following outward
processing arrangements.
- Any other event that causes customs debt to arise shall also qualify as ‘importation of
goods’.

- Notwithstanding the above scenarios, when goods—upon their entry into the territory of
Bulgaria—are given the status of goods in temporary storage, goods in a free zone or free
warehouse, as well as goods in customs warehousing, temporary admission, or external
transit, the importation shall be considered completed when the goods cease to be under
the relevant customs procedure within the territory of Bulgaria.

• § 1(76) of the Additional Provisions of the Medicinal Products in Human Medicine Act
(MPHMA) — ‘A third country’ shall be a state that is not a Member State of the European Union
(EU) or of another State party to the Agreement on the European Economic Area (EEA).

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• The term ‘parallel import’ is referred to in the case-law of the European Court of Justice and of
Bulgarian courts in connection with cases involving infringements of intellectual property rights
and cases involving iinfringements of competition rules.

• Neither EU law, nor Bulgarian legislation provides a legal definition of this term.
For example, the MPHMA introduces arrangements for registering parallel importers of medicinal
products and for granting authorizations for parallel import of such products, but its Additional
Provisions do not contain a definition of ‘parallel import’.

• Indications pointing to the existence of some elements of parallel import concerning medicinal
products are to be found in Article 214(1) MPHMA — “A medicinal product authorised for use
in another Member State may be imported in parallel on the territory of the Republic of Bulgaria
[…]”.
The above means that the law (MPHMA) essentially limits the scenario of parallel import of
medicinal products into the Republic of Bulgaria only to imports from countries that are
Member States of the EU or EEA States.

This conclusion is also confirmed by Article 161(1) MPHMA, which provides that only persons
registered as traders who have been granted an import authorization by the BDA may
import from third countries into the territory of Bulgaria. Article 1 MPHMA also specifies that
it lays down the procedure for import of medicinal products (sub-paragraph 2) and the procedure
for parallel import of medicinal products (sub-paragraph 5).

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Parallel import entails the following mandatory elements:

1. importation of goods (products, devices) bearing a trade mark or projecting another
object of intellectual property (works under the CRRA) with the consent of the proprietor of the
right (i.е. original goods);

2. imports are entered by a third party without the consent of the proprietor of the
intellectual property right (regardless of whether the importer has a contractual relationship
with the proprietor or not);
Exporting Proprietor
country (producer)

Parallel importer Official importer/
Country of distributor
importation

3. imports are entered into a territory where official distributors of the same type of goods
are operating, with the parallel importer or consignee being a competitor of such
distributors, and the goods are typically marketed at lower prices in the country of importation.

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* In the case of importation into a country whose territory is not covered by
distribution channels (i.е. goods of a given type are not distributed by distributors with
the consent of the proprietor), the import is ordinary (i.е. non-parallel). Therefore,
general rules shall apply.

• The main elements of parallel import include:

 Importation of original goods;
goods

 Importation of the same type of goods for the same country (EEA territory)
in parallel with another person (distributor) who has obtained the consent of
the proprietor.

 No consent of the proprietor (copyright holder) allowing the parallel importer
to import given goods into a given country;

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 Is there an infringement of intellectual property (IP) rights?

• On the one hand, when ‘importing’ from third countries (outside of the EEA), the right of the
proprietor in the EEA is not exhausted or terminated in respect of the specific imported
goods, which constitutes parallel import infringing IP law, because it is concerned with the use
of a registered mark, or work, respectively, without the consent of the proprietor/holder.

• The non-exhaustion of the trade mark right, or the non-termination of the distribution right over
the copies of a given work within a given territory, respectively, means that the proprietor/holder
of the right has not materialized—or consented to this effect—the time of “placing the original
goods on the market”, or the time of “transferring the ownership over the work”, respectively, for
the relevant territory.

In this case, parallel import will also have a fourth main element:
 Non-exhaustion/non-termination of the rights within the territory into which the relevant goods are
imported.

The issue of whether an infringement exists is iinseparably intertwined with the issue of
exhausting/terminating the rights of intellectual property proprietors.

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• In countries where legislation differs from EU law, including from Bulgarian Law, another
legislative solution is possible. Hence, parallel import does not always constitute an infringement
of IP rights—for example, in cases of international exhaustion of the right to a trade mark.

• On the other hand, any importation from one EEA State to another—and, more particularly, in
respect of the trade mark procedure referred to in §1(12) TM Law (Importation and Exportation
of Goods)—via the actual movement of the goods across the border of the Republic of Bulgaria,
is a matter of parallel import of goods for which no customs procedure (more precisely, trade
within the domestic market) has been activated.

In this case, the IP right has been exhausted/terminated, and parallel import will not
constitute an infringement.

• Parallel imports without customs obligations concerns the so-called ‘intra-Community supply’—
intra-Community trade within the EEA territory (between EU-27 and EEA+3: Norway, Iceland and
Liechtenstein)—on accounts of the free movement of goods established between these
countries.

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II. Copyright, related rights, and parallel import

• Copyright and related rights have territorial application. The rights that the CRRA
confers to authors and other persons, in the scope stipulated by this law, have
territorial application within the jurisdiction of the Republic of Bulgaria, as well as
outside of it, under the relevant international treaties, including:
- Berne Convention for the Protection of Literary and Artistic Works of 1886—in
164 countries, subject to reciprocity (national arrangement);
- concerning related rights: Rome Convention for the Protection of Performers,
Producers of Phonograms and Broadcasting Organizations of 1961—in 91 countries,
subject to reciprocity;
- TRIPS (Annex of the Marrakesh Agreement, 1994)—in 153 WTO member
countries (regarding software and databases; the principle of Most Favoured Nation,
and issues related to the exercise of rights).

• Copyright arises automatically—at the time of creating the work, presenting it and
giving it external external objectivity, in a manner that enables it being perceived. No
registrations are required (carrying out administrative procedures and issuing
individual administrative acts—the certification title does not exclude rights) in
separate countries or by regional organisations.

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• The scope of copyright in respect of economic rights is defined in Article 18 CRRA and
includes the right of the copyright holder to use the work created by him and to permit its use
by other persons (see paragraph 1). Pursuant to paragraph 2, the types of use
(entitlements) include:
– reproduction;
– distribution of the original of the work, or copies thereof, among an unlimited
number of persons;
– public presentation or performance;
– wireless transmission;
– transmission and retransmission by wire;
– public display of a work of art or a work created by photographic or similar means;
– translation of the work into another language;
– revision and synchronisation;
– implementation of an architectural design by building;
– providing access—wireless or by wire—to the work to an unlimited number of persons;
– import or export to third countries (outside of the EEA) of copies of the work in
commercial quantity, regardless of whether such copies have been manufactured
legally or in violation of the reproduction right.

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• The only economic entitlement of the copyright holder that is
terminated by law is the distribution right concerning the original or
copies of the work (see Article 18(2)(2)) as from:
- The first sale or other transfer of ownership, within the territory of
European Union Member States, of the original or a copy of the work by
the author or with the authorisation of the author (see Article 18а(1)
CRRA).

At this point in time, the right of distribution concerning the original or
a copy of the work for the relevant territory (EU) is terminated, with the
exception of:
- the right to permit further leasing thereof (see Article 18а(1) CRRA);
- the right under Article 20 CRRA (Royalty) and Article 22а(2) CRRA
(Royalty upon Lending—with some exceptions) (see Article 18а(2) CRRA);
- cases of digital transmission in respect of materialized copies of the
work made by the beneficiary with the consent of the copyright holder (see
Article 18а(3) CRRA).

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• Article 18а(1) CRRA also applies by analogy to the rights of performing
artists (see Article 84), phonogram producers (see Article 90), film
producers (see Article 90c), and radio and television organisations (see
Article 93).

• Article 76(1)(4), Article 86(1)(2), and Article 90а(1)(9) CRRA also provides—
as an individual entitlement under the exclusive economic right—the right of
performing artists, producers, and film producers to permit imports and
exports to third countries of copies of the recording, performance, or film
in commercial quantities, regardless of whether the copies have been
produced legally.

• In the case of data base makers, their right to control further
commercialisation of a database copy is terminated upon the first sale,
within the territory of a EU Member State, of a material copy of the database
made by the maker or with his consent, for this territory, excluding digital
transmissions, and for copies made by the beneficiary.

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• In the scenario of parallel import of copies of a given work in commercial quantities, or of the
original of the work, made from one EU Member State into another, no infringement of the
copyright will exist by inference to Article 18а(1) CRRA, once the ownership of the
original/copies of the work is transferred for the first time by the copyright holder or with his
consent.

• An infringement will always exist in parallel import from third countries or export for third
countries of copies of a given work in commercial quantities made without the consent of the
copyright holder, by inference to Article 18(2)(2) CRRA, regardless of whether the ownership
of the copies has been transferred for the first time by the copyright holder or with his consent.

• Because of the specificities of copyright, the distribution right can only be terminated in
respect of the original or copy of the work by transfer of ownership thereof.
This option is available only when executing transactions within the territory of the EU.

• The remaining copyright elements (inter alia, import and export into third countries of copies of
the work; public presentation or performance; wireless transmission; transmission by wire) under
Article 18 remain unchanged.

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III. Trade mark right and parallel import

• The exclusive right to a trade mark is conferred to the proprietor by registration (see Article 10
TM Law), as a consequence of an administrative procedure and the granting of IАА, unlike
copyright.
• The trade mark proprietor is holder of the registration and, as such, is registered in the relevant
register.

• Each registration is valid only for the territory of the issuing country (national mark), or the
territory of the regional authority(EU mark).
In the case of international mark registration, exclusive rights are valid for the territories of the
countries specified in the registration.

• Most commonly, one person is the proprietor of multiple mark registrations in different countries.
Though more rarely, it is possible for one mark to be owned by different persons registered as
holders of the registrations in the different countries.

• There is no universal proprietor of the exclusive right to a mark at a global level—a global mark
registration is still not designed.

• The exclusive trade mark right is valid in respect of diligent third persons as from the publication
date of the registration; in respect of non-diligent persons, validity starts from the date of
submitting the application for registration.

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• The mark is always granted a registration in connection with the use of specific goods and/or
services, which are grouped in classes according to the International Classification of Goods and
Services for the Purposes of the Registration of Marks.

• The scope of the exclusive right to a registered mark includes the following entitlements of
the registered holder of the registration (see Article 13(1) TM Law):
 to dispose of the registration;
 to use the mark for the registered goods/services; and
 To prohibit any other person from using the mark in the course of trade within the territory of
validity of the registration for the registered goods/services.

• The registration holder is also entitled to prohibit any other person from using, in the course of
trade, any sign which is similar to the holder’s mark, in relation to goods/services which are
identical with, or similar to, those for which that trade mark was registered, if such use may cause
confusion on the part of the public and lead to associating that similar sign with the mark.

• If the registered mark is well-known, its registration holder may also prohibit the use of the mark,
or any sign similar to it, in relation to goods/services which are not identical with, or similar to,
those for which that trade mark was registered.

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• The different types of entitlements concerning the exclusive economic right
when using, in the course of trade, the mark or a sign similar to it are non-
exhaustively listed in Article 13(2) TM Law:
1. affixing the sign to goods or to their packaging;
2. offering (for sale) of the goods bearing that sign; or
placing such goods on the market; or
storing such goods for the aforementioned purposes, as well as offering or
delivering services under that sign;
3. importing or exporting goods under that sign;
4. using the sign in business papers and in advertisements.

• The trade mark legislation lays down two main categories of exceptions when one or
more of the above types of use are at hand:
- under Article 14 TM Law (Limitation of Trade Mark Right), and
- under Article 15 TM Law (Exhaustion of Trade Mark Right).
The materialization of any of these exceptions is a factual element of the assessment
of the trade mark infringement under Article73(1) read in conjunction with Article
13(2) TM Law.

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• ANALYSIS OF ARTICLE 15 TM Law (Exhaustion of Trade Mark Right)

The provision is the following:
(4) The trade mark proprietor may not prohibit other parties from using that
mark in relation to goods that are placed—bearing his mark—on the market
within the territory of EU Member States or the EEA, respectively, by the
proprietor or with his consent,

• Except for cases where legitimate reasons exist for the proprietor to oppose
further commercialisation of those goods and especially where the condition
of the goods is changed or impaired after they have been put on the market.

• For the purposes of the analysis, we should first delve into the scope of the
principle of exhaustion introduced in paragraph 1:
The trade mark proprietor may not prohibit:
А) the use of the mark, but not the use of a sign similar to it;
B) the use of the mark only in relation to goods, but not in relation to services;
C) the use of the mark only in relation to goods placed on the market within the
EU/EEA territory;

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Г) the use of the mark in relation to goods placed on the market with the said mark by him or with
his consent (i.е. it is the proprietor who affixed the mark to the goods, or gave his consent to this
effect, and who placed the goods on the market, or gave his consent to this effect).

The above enables the following conclusions:
- Article 15 TM Law is applicable only in respect of original goods. Unauthorized affixing of the
mark to the goods or their packaging constitutes an infringement.
- Unauthorized offering or delivery of services under the mark is also necessarily an infringement.
- Unauthorized use of the mark in business papers and advertisements is an infringement.

- An exclusive trade mark right conferred by the registration is exhaustible in terms of the
possibility for the proprietor to oppose further commercialisation or storing for sale
purposes, as well as importation or exportation of original goods within the EU/EEA
market (exhaustion territory), after their first placing into circulation on this market by the
proprietor himself or with his consent.

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• According to §1(24) of the Additional Provisions of the GMOA, ‘placing on the market’ means
making a product available—whether free of charge or in return for payment—for the first time,
whereupon the product proceeds from the stage of production or import to the stage of
distribution and/or use.

• The exhaustion of a trade mark right always has the stipulated territorial application—under a
national, regional, or international procedure.
• It is the territorial right to a trade mark applicable to the territory of the relevant sovereignty that is
exhaustible.
• In the case of non-exhaustion of the territorial right within the EU, or the relevant State, an
infringement exists when importing original goods, offering them for sale, or storing them for the
aforementioned purposes within the EU, or the relevant State.

• The trade mark provisions in the TM Law are in line with Directive 89/104 (now codified by
Directive 2008/95) to approximate the laws of the Member States relating to trade marks.
• In particular, Article 5 of the Directive is transposed in Article 13 TM Law, and Article 7 of the
Directive is transposed in Article 15 TM Law (corresponding to Articles 9 and 13 of Regulation
207/2009).
• In this regard, the European Court of Justice has extensive case-law, which should be given
special attention.

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• C-355/96 Silhouette International, 1998

- First Council Directive 89/104/EEC (Directive 2008/95) to approximate the laws of the Member
States relating to trade marks introduces a unified arrangement for regional exhaustion for the
territory of the whole internal market (text with EEA relevance of 1994).

- The Directive, in particular Article 7 read in conjunction with Article 5, does not confer to
Contracting States the right to choose whether their legislation will stipulate national, regional, or
international exhaustion of the trade mark right.
- It will be in breach of Article 7 of the Directive for a EU Member State to provide in its domestic
law a possibility for international exhaustion of rights, i.е. when releasing goods with the relevant
mark on the market within a non-EU/EEA territory. This would give rise to barriers to the free
movement of goods and, consequently, to the functioning of the domestic EU market.
- Articles 5 and 7 of Directive 89/104 (Directive 2008/95/ЕО) should be interpreted as enshrining a
completed unification of rules concerning exclusive trade mark rights which are to serve as
grounds as to whether an infringement exists or not.
- Article 5(3) of the Directive sets out a non-exhaustive list of the kinds of practice which the
proprietor is entitled to prohibit.

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• Joined Cases C-414/99 to C-416/99 Zino Davidoff, Levi Strauss, Tesco,
2001

- The proprietor’s consent to the placing of goods bearing his trade
mark on the market within the European Economic Area is, according
to Article 7(1) of the Directive, tantamount to the proprietor's
renunciation of his exclusive right under Article 5 of the Directive to
prevent all third parties from importing such goods into the EEA from
third countries.

- This consent constitutes the decisive factor in the extinction of the trade
mark right.

- If the concept of consent were a matter for the national laws of the Member
States to legislate and interpret, the consequence for trade mark proprietors
could be that protection would vary according to the legal system
concerned, which is obviously not the objective of the Directive.

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- C-59/08 Copad v Christian Dior, 2009
(In connection with the application of Article15(2)—exhaustion of the right and
effect of the licence agreement; luxury goods.)

- Article 8(2) of the Directive is to be interpreted as meaning that the
proprietor of a trade mark can invoke the rights conferred by that trade mark
against a licensee who contravenes a provision in a licence agreement
prohibiting, on grounds of the trade mark’s prestige, sales to discount
stores, provided it has been established that that contravention damages
the allure and prestigious image which bestows on them an aura of luxury.

- Article 7(1) of the Directive is to be interpreted as meaning that a licensee
who puts goods bearing a trade mark on the market in disregard of a
provision in a licence agreement does so without the consent of the
proprietor of the trade mark where it is established that the provision
in question is included in those listed in Article 8(2) of that Directive (for
example, beyond the period of the license).

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• C‑ 449/09 canon v. IPN Bulgaria, ruling of October 2010

- Article 5 of the Directive is to be interpreted as meaning that the proprietor
of a registered trade mark may oppose the first placing into circulation
in the course of trade in the European Economic Area, without his
consent, of original goods bearing that mark.

- In respect of goods that have been physically brought into the EEA, but are
still not released into free circulation, the trade mark proprietor can duly
rely on an infringement of his exclusive rights according to Article 5(3)(b) of
the Directive (offering for sale of the goods, their placing on the market or
warehousing them to this end), where it is established that these goods are
subject to sale or sale offer that necessarily requires their placing in the EEA
market.

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• Interpretative Ruling No. 1 of the Supreme Court of Cassation of 15 June 2009
in Interpretative Case No. 1/2008 of the General Meeting of the Commercial
College

- Parallel import is importation by a third party of original goods placed on a market covered by the
territorial exhaustion of a trade mark without the proprietor’s consent to the importation, i. е.
without an agreement with the proprietor and outside of his distribution network. (Parallel drawn
with Article 214(1) MPHMA.)

- The General Meeting of the Commercial College considers original goods to be those that bear a
registered trade mark whose sign has been affixed to the goods with the consent of the trade
mark proprietor, regardless of the qualitative characteristics of such goods.

- The main indication concerning the sign under Article 13(1)(1)–(3) TM Law which the legislature
has introduced as a fact relevant to the infringement under Article73(1) read in conjunction
with Article 13(2)(3) TM Law is the lack of consent of the trade mark holder to have the
sign affixed to the goods.

- In the course of trade with original goods, there is not, in any event, a factual element of the
infringement under Article73(1) TM Law. Therefore, the trade mark right holder is not granted the
protection under Article76 TM Law. The General Meeting of the Commercial College found that
the non-exhaustion of a trade mark right pursuant to Article 15(1) TM Law is a fact irrelevant
to the infringement under Article73(1) read in conjunction with Article 13(2)(3) TM Law.

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- Judgment No.1436 of Sofia Court of Appeal of 03 August 2011 in the Canon
case.

Main issue in the case: Is there a trade mark infringement in connection with a question raised
as regards parallel import of goods from a third country (China) into the EEA territory, in particular
where it was an external transit procedure, and not an importation procedure, that was
activated in respect of goods and they are intended for a consignee outside of the EEA
territory (Serbia)?

Main conclusions of the Sofia Court of Appeal:

- The amendment to the TM Law (SG No.73/06—an amending act that regulates the
protection of trade marks) introduced a new provision of §1(12) of the Additional Provisions
which gives a legal definition of the concept of ‘import’ referred to in Article 13(2)(3) TM
Law. This definition provides that
importation of goods is the actual movement, across the border of the republic of
Bulgaria, of goods bearing a sign identical with, or similar to a registered mark or its
imitation, regardless of whether a customs procedure has been activated in respect
of such goods.

- Therefore, the legislature has given a broader meaning to the concept of ‘import’ by
defining it as an actual action in respect of goods bearing trade marks.

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• The existence of an explicit provision of the TM Law precludes the application by analogy
of the provisions of the Customs Act, which uses the term ‘import’ to denote one of the
nine types of customs procedures, applicable to goods crossing the borders of the Republic of
Bulgaria.

• In this context, an action which places goods under a transit procedure should also be
interpreted as an action involving the use of a mark in relation to ‘importation’ of goods under
Article 13(2)(3) TM Law, as the former also entails the physical movement of goods across the
borders of Bulgaria.

• From the analysis of the provisions of the TM Law follows that the legislature does not
differentiate between ‘original’ and ‘fake’ goods. (The scenario concerning the entitlement
under Article 13(2)(3) TM Law refers to “to prohibit the offering for sale, placing on the market or
storing for those purposes” and ”to prohibit importation”.) Consequently, the legislature does not
differentiate goods to which the proprietor himself affixed his mark from other goods bearing a
sign identical with, or similar to the mark that has been affixed by another person without the
proprietor’s consent. (In connection with the principle of exhaustion of exclusive right.)

• A sufficient condition for a trade mark infringement to exist is any action under Article
13(2) TM Law—conducted without the consent of the trade mark proprietor—which involved
the use of a sign identical with the mark and affixed to goods identical with those for which the
mark was registered (see Article 13(1) TM Law).

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IV. Trade mark right and repackaging of goods

(Concerning the application of Article 15(2)—opposing further use)

Collectanea of the World Intellectual Property Organization (WIPO):
The principle of exclusive trade mark right exhaustion applies only to the
right to place on the market given goods bearing the trade mark with the
consent of the proprietor.
The exclusive right of the proprietor to place his trade mark on goods
and their packaging, boxes, labels and other related elements
continue to exist.
Therefore, the proprietor may oppose actions which infringe upon that
exclusive right, in particular repackaging of goods bearing his trade mark,
destruction of his trade mark affixed to goods, or modification and
subsequent commercialization of his goods under his mark.

- Case 102/77 Hoffmann-La Roche v Centrafarmр 1978
- C-379/97 Pharmacia & Upjohn v Paranova (repackaging), 1999
- Joined Cases C 400/09 and C 207/10 (repackaging), 2011

Yordan Politov


- Case 102/77 Hoffmann-La Roche v Centrafarmр 1978 (Court of Justice)
- C-379/97 Pharmacia & Upjohn v Paranova (repackaging), 1999 (Court of Justice)

Article 36 TEC (TFEU) admits of derogations from the free movement of goods within the EU in
the scenario where a parallel importer buys goods placed on the EU market by the proprietor or
with his consent, repackages them, and reaffixes the original mark (without the proprietor's
consent) in order to trade in such goods in another Member State (the country of origin), only to
the extent to which such exceptions are justified for the purpose of safeguarding the rights which
constitute the specific subject-matter of that exclusive right. (See Case 102/77 Hoffmann-La
Roche v Centrafarm [1978] ECR 1139, paragraph 6, and Bristol-Myers Squibb, paragraph 42.)

When analyzing the possibility for a proprietor to oppose to a trade mark being affixed after
repackaging, the Court found that regard must be had to the essential function of the trade mark,
which is to differentiate the product of one person from the products of others and to guarantee
the origin of the trade-marked product—and, more particularly, the relation of the goods to the
trade mark proprietor—to consumers by enabling them, without any possibility of confusion, to
distinguish that product from products which have another origin. This guarantee of origin means
that the consumer can be certain that the original condition of the product has not been affected
in the case of offering by third parties. (See Hoffmann-La Roche, paragraph 7, and Bristol-Myers
Squibb, paragraph 47.)

Yordan Politov


• The Court interpreted the application of Article 36 TEC (TFEU) as meaning that the
proprietor of a trade mark can invoke his exclusive right to prevent importation and
offering by the importer of goods placed on the market in another Member State by
the proprietor or with his consent when the importer repackages the goods in utterly
different and new packaging and affixes the original mark to it.

• The repackaging cannot adversely affect the original condition of the product
and should not damage the reputation of the trade mark. (See Hoffmann-La
Roche, paragraph 10, Bristol-Myers Squibb, paragraph 49, and Case C-349/95
Loendersloot v Ballantine [1997] ECR I-6227, paragraph 29.)

• The possibility for a proprietor to oppose the commercial use of goods bearing his
mark should be limited to an extent which will not result in market segmentation.
In particular, the proprietor cannot prohibit a parallel importer importing from one EU
Member State to another from repackaging which is necessary in order to comply
with the local requirements concerning the use of the goods.

Yordan Politov

Thank you for your attention!
Contact details
Headquarters:
Iztok District, 13B Tintyava Str., floor 6,
1113 Sofia, Bulgaria
E-mail: yordan.politov@penkov-markov.eu
Tel.: + 359-2-971-3935
Fax: + 359-2-971-1191

София, 01.12.2011 www.penkov-markov.eu 33
Йордан Политов

Politov - Parallel Import v.EN

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