Judge Hacon :
Introduction
- Is the purchaser of a product sold under a trade mark
entitled
to
disassemble
the product and sell component parts under the trade mark? That was the principal issue in this action.
Background
- The First Claimant is an Italian partnership which deals in charm bracelets. These have been successfully sold in many countries, including the United Kingdom. The Second Claimant is a related Italian limited company which markets the bracelets. I will call the Claimants '
Nomination'
where referred to collectively.
- The First Claimant owns the following registered trade marks:
(1)
EU
Trade Mark No.
EU000456822,
registered in class 14 as of 27 January 1997, being the word
NOMINATION,
(2) International Trade Mark No. WE00000769289, granted protection in the
EU
on 14 April 2010, also the word
NOMINATION.
(3) International Trade Mark No. WE00001069273, granted protection in the
EU
on 26 January 2012, a device mark in this form:

- The
EU
Trade Mark is registered in class 14 in respect of
'Precious metals and their alloys and goods in precious metals or coated therewith, not included in other classes;
jewellery,
precious stones; horological and chronometric instruments.'
- The other two marks have broader registrations, in
each
case including the foregoing goods in class 14. I will refer to all three marks as 'the Trade Marks'.
- The Second Claimant is the
exclusive
licensee under the Trade Marks.
- One of
Nomination's
products is a 'composable bracelet'. It consists of individual links, measuring about 10 x 9mm, which may be detached from
each
other and relinked in any order to the
taste
of the wearer. These include what were called 'base links', which are made of stainless steel and bear the
NOMINATION
device mark.
Nomination
also sell a wide
variety
of decorated links and links with charms attached, all of which may be added to the bracelet. Some of the decorated and charm links are made of precious stones, set in 18k or 9k gold or silver, and are priced accordingly. Others are less
expensive.
According to
JSC
Nomination's
links can cost as little as £10.
- This is one of
Nomination's
advertisements, showing the bracelets:

- The First and Second Defendants are husband and wife. In December 2002 they started trading as a partnership under the name '
JSC
Jewellery'
selling body and costume
jewellery
online. I will call both Defendants and their business '
JSC'.
From 2004
JSC
began to sell composable charm bracelets (not made by
Nomination)
under their trading name 'Daisy Charm' and under a logo. The logo was registered as a UK trade mark as of 8 October 2010 for all goods in class 14.
- In January 2011
JSC's
listing on
eBay
was amended to state that
JSC's
product 'fits
Nomination'.
This reflected the fact that the links of
JSC's
bracelets were interchangeable with those of
Nomination's
bracelets; a
JSC
link can be fitted to a
Nomination
link using a similar click mechanism – or
vice
versa
– to create a mixed bracelet.
JSC
sold its products as 'Italian charms' promoting them by reference to the Daisy Charm logo. In February 2013, due to a change of policy at
eBay,
JSC
stopped stating 'fits
Nomination'
on its site and
did
not otherwise indicate compatibility with
Nomination
bracelets.
- Shortly afterwards
JSC
started to buy
Nomination
'base bracelets' from retailers of
Nomination's
products in Germany and Italy. Base bracelets are composed of 13 or 18 base links (no decorated or charm links). The bracelets were
disassembled
by
JSC
into individual links. Between April 2013 and July 2018
JSC
sold single
Nomination
base links bundled together with a single
JSC
link. The bundles
either
consisted of two blister packs, one for
each
of the
Nomination
and
JSC
links, or alternatively the
JSC
link was supplied in a blister pack and the
Nomination
base link was in a small plastic bag bearing a label 'Manufactured by
Nomination
Italy Repackaged by
JSC
Jewellery
UK'.
- From 2015 some of the
Nomination
base links supplied by
JSC
were sourced from a UK retailer and others from an Italian retailer, in
each
case purchased as single links from
disassembled
Nomination
bracelets.
- The bundles of two links were advertised and sold by
JSC
on
eBay.
JSC
stopped selling these bundled links in July 2018. However, in response to the allegation in the Particulars of Claim that
JSC
threatens and intends to continue such sales,
JSC's
Defence goes no further than a non-admission. I infer that
JSC
has
taken
the reasonable
view
that if their sales of bundled links are found to be lawful they will be recommenced.
Nomination
alleges that
JSC's
advertising and sales of the bundled base links infringed the Trade Marks.
Nomination
also alleges that such sales passed the bundles off as being goods made by, or authorised by, or otherwise associated with
Nomination.
- Chris Pearson appeared for
Nomination,
Ali Reza Sinai for
JSC.
The trade mark case
- There were two parts to the trade mark case. The first concerned the use by
JSC
of the
Nomination
sign in relation to genuine, individual
Nomination
base links. The second turned on whether there had been use of the
Nomination
sign in relation to
JSC's
own links.
Use of the sign in relation to individual
Nomination
links
- The starting point was common ground. The
Nomination
base links bear the
Nomination
device and therefore a sign identical to all three Trade Marks.
JSC's
marketing of individual
Nomination
base links constituted use of the sign in relation to goods identical with those for which the Trade Marks are registered. Section 10(1) of the Trade Marks Act 1994 ('the 1994 Act') is
engaged
unless
JSC
has a statutory defence.
Nomination's
right to restrain such use was potentially limited by section 12:
"12. (1) A registered trade mark is not infringed by the use of the trade mark in relation to goods which have been put on the market in the
European
Economic
Area under that trade mark by the proprietor or with his consent.
(2) Subsection (1) does not apply where there
exist
legitimate reasons for the proprietor to oppose further dealings in the goods (in particular, where the condition of the goods has been changed or impaired after they have been put on the market)."
- The corresponding provision in art.7 of
Directive
2008/95/
EC
(superseded since 14 January 2019 by an almost identical art.15 of
Directive
(
EU)
2015/2436) has
different
wording, but not such as to make a material
difference:
"7. 1. The trade mark shall not
entitle
the proprietor to prohibit its use in relation to goods which have been put on the market in the Community under that trade mark by the proprietor or with his consent.
2. Paragraph 1 shall not apply where there
exist
legitimate reasons for the proprietor to oppose further commercialisation of the goods,
especially
where the condition of the goods is changed or impaired after they have been put on the market."
- I will refer to
Directive
2008/95/
EC
and its predecessor, 89/104/
EEC
interchangeably as 'the Trade Mark
Directive'.
The latter was relevant to some of the authorities cited and contained the same art.7 on the
exhaustion
of rights.
Nomination
argued that it had not consented to the individual base links being put on the market or alternatively, if it
did,
there
existed
legitimate reasons to oppose further commercialisation of the links by
JSC.
Use of the sign in relation to
JSC's
links
- The second part of
Nomination's
trade mark case was that
JSC
had used the
Nomination
sign in relation to
JSC's
own links and had thereby infringed the Trade Marks pursuant to s.10(1) of the 1994 Act. The Particulars of Claim also alleged infringement under subsections 10(2) and (3) but counsel were agreed that these added nothing. The issue was whether there had been use of the sign in relation to
JSC's
links.
Passing off
- As to passing off,
JSC
conceded that
Nomination
owned goodwill in their business associated with the Trade Marks.
Joint liability
JSC
also accepted that Mr and Mrs
Brealey
were jointly liable with the
JSC
partnership for any acts done by the partnership relevant to this case.
The issues
- That left the following issues:
(1) Whether
Nomination's
consent to the marketing of its base bracelets constituted consent to the marketing of the base links individually, such that s.12(1) of the 1994 Act/art.7(1) of the Trade Mark
Directive
was
engaged.
(2) If so, whether there
existed
legitimate reasons for
Nomination
to oppose further commercialisation of individual base links by
JSC,
pursuant to s.12(2)/art.7(2). The reasons advanced were:
(a)
Nomination's
retailers were not
entitled
to sell base links
either
singly or as a base bracelet without a
Nomination
decorated or charm link.
(b)
Nomination
sold its products in high quality packaging, whereas
JSC
marketed the
Nomination
base links in low quality blister packs or plastic bags.
(c) The packaging in which
Nomination
sold its products was accompanied by a written guarantee stamped at the point of sale. Purchasers of
Nomination
base links from
JSC
did
not benefit from the guarantee.
(d)
JSC
had repackaged some of the base links without identifying who had done the repackaging.
(
e)
The repackaging used by
JSC
placed the condition of the
Nomination
links at risk.
(3) Whether
JSC
had used the
Nomination
sign in relation to its own links.
(4) Whether
JSC
had represented to the public that its own links had been made by
Nomination
or were authorised by, or otherwise connected in the course of trade with
Nomination.
(5) Whether
Nomination
had suffered damage as a consequence of
JSC's
misrepresentation.
The witnesses
- Kenneth Brown gave
evidence
for
Nomination.
He is their UK area manager.
Antonio
Gensini
also gave
evidence.
Mr
Gensini
is one of the partners of the First Claimant along with his father, Paulo
Gensini,
and is also CEO of the Second Claimant. Mr Brown and Mr
Gensini
were both cross-
examined.
- The First Defendant, Mr
Brealey,
provided a witness statement and was cross-
examined.
JSC
also filed a witness statement from Maureen Priestman who is the proprietor of The
Jewellery
Box, a
jewellery
and gift shop in Sunderland. Ms Priestman was not cross-
examined,
so her
evidence
stood unchallenged.
- Mr Brown, Mr
Gensini
and Mr
Brealey
were all good witnesses, I believe doing their best to set out the facts as they honestly believed them to be. My only qualification is that I think Mr Brown and Mr
Gensini
tended to
elide
their current
view
of how
Nomination's
products should be sold with
Nomination's
position in the past. Other
evidence
indicated that the two were not identical.
Art 7(1): the
extent
of
exhaustion
JSC's
argument
- Mr Sinai submitted that when
Nomination
sold the base bracelets it realised the
economic
value
of its Trade Marks and could not thereafter prevent anyone in the subsequent line of ownership from using the Trade Marks in relation to the bracelets, whether marketed as a whole or in separate links. This submission was derived from the judgment of the
European
Court of Justice in Peak Holding AB
v
Axolin-
Elinor
AB, Case C-163/03,
EU:C:2004:759,
[2005] Ch 261. The case concerned the act necessary for goods to be 'put on the market' within the meaning of art.7 of the Trade Mark
Directive.
The CJEU confirmed that if such an act were done, such that the goods were put on the market by the trade mark proprietor or with his consent, the proprietor's trade mark rights were
exhausted
at that point:
"[40] A sale which allows the proprietor to realise the
economic
value
of his trade mark
exhausts
the
exclusive
rights conferred by the
Directive,
more particularly the right to prohibit the acquiring third party from reselling the goods."
- Mr Sinai said that
Nomination
were not
entitled
to
distinguish
between putting a bracelet of 13 or 18 links on the market and putting
each
link individually on the market.
Either
way, there was
exhaustion
under art.7 of the Trade Mark
Directive
and s12 of the 1994 Act once a bracelet had been sold.
- This was all the more true, he said, because the
evidence
revealed that
Nomination
had consented to its retailers selling individual links to customers. There was no
evidence
about
express
agreement having been
directed
to the particular bracelets that
JSC
had
dismantled,
but
Nomination
must have contemplated the possibility that this could happen to those bracelets since its policy was not to object to the
dismantling
of base bracelets and sale of the individual links. Therefore the
exhaustion
of
Nomination's
trade mark rights upon the sale of its bracelets to retailers in the
EEA,
specifically to those which had gone on to supply
JSC,
extended
to subsequent sale of individual links just as much as to subsequent sale of intact bracelets.
The
evidence
on
Nomination's
attitude to sales of individual base links
- In cross-
examination
Mr
Gensini
confirmed that
Nomination
has imposed no contractual restriction on retailers supplied with
Nomination's
bracelets preventing the sale of individual base links
taken
from those bracelets. The initial stance
taken
by both Mr
Gensini
and Mr Brown was that retailers were orally made to understand that they were only
entitled
to sell a single base link to a customer who
expressed
the wish to
enlarge
a
Nomination
bracelet. Yet both had to concede that
even
when retailers had sold individual base links without any limitation on their use, including sales which must have been drawn to
Nomination's
attention by the pleadings and
evidence
in this case,
Nomination
had not approached the relevant retailers to complain or otherwise to
enforce
the alleged oral understanding. Ms Priestman, the proprietor of an authorised
Nomination
retailer, gave unchallenged
evidence
that she sold individual
Nomination
base links and that restrictions on such sales agreed with
Nomination
did
not include any restraint on selling single base links.
- Letters were sent from time to time by
Nomination
to retailers of its products about lack of compliance with
Nomination's
guidelines for the sale of its products but these
did
not include any warning against the sale of individual base links.
- I find that
Nomination's
retail customers, including those which supplied
JSC
with the
entire
bracelets which were later
disassembled
by
JSC
and those which supplied single base links to
JSC,
reasonably assumed that they could sell single base links if asked to do so.
Nomination
did
not
express
any restriction on sales of individual links at the relevant time and probably
did
not consider that there was a need for such a restriction.
Whether
Nomination's
attitude constituted consent
- However, this
did
not close down
Nomination's
argument on lack of consent under art.7(1). Mr Pearson submitted that since there had been no
express
consent to the sale of individual links under the Trade Mark,
JSC
must rely on implied consent and meet the requirements set out by the CJEU in Zino Davidoff SA
v
A & G Imports Ltd, Joined Cases C-414 to 416/99,
EU:C:2001:617,
[2002] Ch 109.
- Davidoff was about dealers had who obtained goods bearing one of the trade marks in issue outside the
EEA
and sold them, still bearing the trade mark, within the
EEA.
There had been no
express
consent by the trade mark proprietors to sales in the
EEA.
The CJEU considered the circumstances under which such consent may be implied. This was the ruling at the conclusion of the judgment:
"1. On a proper construction of article 7(1) of First Council
Directive
89/104/
EEC
of 21 December 1988 to approximate the laws of the member states relating to trade marks, as amended by the Agreement on the
European
Economic
Area of 2 May 1992, the consent of a trade mark proprietor to the marketing within the
European
Economic
Area of products bearing that mark which have previously been placed on the market outside the
European
Economic
Area by that proprietor or with his consent may be implied, where it follows from facts and circumstances prior to, simultaneous with or subsequent to the placing of the goods on the market outside the
European
Economic
Area which, in the
view
of the national court, unequivocally demonstrate that the proprietor has renounced his right to oppose placing of the goods on the market within the
European
Economic
Area.
2. Implied consent cannot be inferred (i) from the fact that the proprietor of the trade mark has not communicated to all subsequent purchasers of the goods placed on the market outside the
European
Economic
Area his opposition to marketing within the
European
Economic
Area; (ii) from the fact that the goods carry no warning of a prohibition of their being placed on the market within the
European
Economic
Area, or (iii) from the fact that the trade mark proprietor has transferred the ownership of the products bearing the trade mark without imposing any contractual reservations and 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
European
Economic
Area.
3. With regard to
exhaustion
of the trade mark proprietor's
exclusive
right, it is not relevant (i) that the importer of goods bearing the trade mark is not aware that the proprietor objects to their being placed on the market in the
European
Economic
Area or sold there by traders other than authorised retailers, or (ii) that the authorised retailers and wholesalers have not imposed on their own purchasers contractual reservations setting out such opposition,
even
though they have been informed of it by the trade mark proprietor."
- If
Nomination
is correct in drawing an analogy with Davidoff, the question in the present case would be whether
JSC
has unequivocally demonstrated that
Nomination
renounced its right to oppose the placing of the base links on the market individually.
- I must also consider the judgment of the
European
Court in Sebago Inc
v
GB Unic SA, Case C173/98,
EU:C:1999:347,
[2000] Ch 558. In that case the importer argued that the trade mark proprietor had
earlier
consented to the same type of goods being marketed in the
EEA
under the trade mark and by implication had consented to all goods of that type being sold in the
EEA
under its mark. The
European
Court rejected the argument, saying this at the conclusion of its final ruling:
"… 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."
- The analogy between Davidoff and the present case is not
exact.
Firstly, a central question in Davidoff was whether
EU
trade mark law should apply international
exhaustion
or
European
exhaustion.
The
effect
of international
exhaustion
would have been that where there has been marketing anywhere in the world of a product under the trade mark by the trade mark proprietor or with his consent, the trade mark rights are
exhausted.
The alternative was
European
exhaustion:
marketing in the
EEA
was required. There was
evidence
and argument before the
European
Court in Davidoff about the policy of the
European
legislature when the relevant provisions were
enacted,
sometimes styled the 'Fortress
Europe'
policy. The present case has no similar territorial aspect to it. Sales of both the bracelets and the single links were all in the
EEA.
- Secondly, as appears from paragraphs 2 and 3 of the ruling of the Court of Justice in Davidoff (quoted above), the judgment went ahead on the unchallenged assumption that the trade mark proprietors were opposed to the marketing of their goods in the
EEA
under the trade mark, although they had not
expressly
communicated their opposition. In the present case I doubt that
Nomination
had reached any decided
view
about the sale of their individual base links under the Trade Marks at the relevant time, although I accept that
Nomination's
position has now changed.
- Looking at this as a matter of general principle, it is not clear to me why
Nomination
should have a sound basis for objecting to the onward sale under the Trade Marks of links
taken
from their bracelets unless there are legitimate reasons for doing so, in which case art.7(2) applies.
Nomination
can certainly not object to their bracelets being
disassembled
by purchasers. There would be nothing misleading, of itself, about a purchaser of a
Nomination
bracelet stating on
eBay
that a link
taken
from such a bracelet is a
Nomination
link. However, for the reasons to which I now turn, it is
enough
for me to decide the present case by reference to art.7(2).
Art. 7(2): legitimate reasons
Retailers not
entitled
to sell individual base links
- The first reason pleaded by
Nomination
was that retailers were instructed not to sell individual
Nomination
base links. I have found that this to be incorrect on the
evidence;
it is a reiteration of
Nomination's
argument on lack of consent.
JSC
products not sold in high quality packaging
- The second reason concerned packaging.
Each
bracelet sold by
Nomination
goes out to a retailer with packaging which separately accompanies the bracelet. The retailer puts the bracelet into the packaging for supply to consumers. I was shown an
example
of a sturdy and
elegantly
designed cardboard box with
Nomination's
name and logo prominently on the front and back. Inside the box there is a foam support in which the bracelet is contained. The
evidence
indicated that the bracelet and support are wrapped in yellow tissue paper. The box contains a leaflet which includes a guarantee. The box is presented in a similarly
elegant
cardboard bag, closed by a ribbon. I agree with Mr Pearson that the impression given by
Nomination's
packaging is that its contents are of high quality.
- As I have said,
JSC
supplied
Nomination
base links to their customers
either
in a small blister pack or in a small transparent plastic bag. No one could say that
JSC's
packaging conveys an impression of quality.
- A potential
difficulty
for
Nomination
was the packaging sometimes used by their retailers for the sale of individual links. I was shown a
Nomination
base link in a transparent plastic bag as supplied by one of
Nomination's
authorised retailers. However, a customer going to an authorised
Nomination
retailer to buy an
extra
base link has already bought or been given a
Nomination
bracelet. The image of quality has already been conveyed by the bracelet's packaging.
JSC's
customers may never have received a
Nomination
bracelet. In fact
JSC's
advertising promotes the idea of using a
Nomination
base link as an additional part of
JSC's
'Italian charm bracelet'. So far as packaging is concerned, these customers would associate
Nomination's
product only with
either
a small blister pack or a small plastic bag.
- Mr Sinai pointed out that non-authorised traders other than
JSC
have supplied
Nomination's
base links in simple packaging and
Nomination
have not sought to stop such sales. I agree that
Nomination
have been relaxed about policing its rights. But that does not neutralise the rights if they
exist.
- Both counsel again sought to draw an analogy with the law
explained
by the CJEU. This time the analogy was with the Court's judgments on repackaging.
- Bristol-Myers Squibb
v
Paranova A/S, Joined Cases C-457, 429 and 436/93,
EU:C:1996:282,
[2003] Ch 75 was concerned with the right or otherwise of a pharmaceutical company to restrain the sale of its products where they have been repackaged by an importer. The CJEU ruled that pursuant to art.7(2) the trade mark owner may legitimately oppose such sales unless (1)
enforcing
the trade mark would contribute to the artificial partitioning of the market between member states, (2) repackaging cannot affect the original condition of the product, (3) the new packaging clearly states who repackaged the product and the name of the manufacturer, (4) the presentation of the repackaged product is not liable to damage the reputation of the trade mark and of its owner and (5) the importer gives notice to the trade mark owner before the repackaged product is put on sale, see paragraph 3 of the final ruling of the Court. These have been referred to as the five 'BMS conditions'. In this part of their case
Nomination
relied on the fourth.
- The CJEU reconsidered the five conditions in the two subsequent judgments it gave in the Boehringer repackaging litigation. The second of these was Boehringer Ingelheim KG
v
Swingward Ltd, Case C-348/04,
EU:C:2007:249,
[2007]
ETMR
71 ('Boehringer II'). The Court said:
"[43] Accordingly, a repackaged pharmaceutical product could be presented inappropriately and, therefore, damage the trade mark's reputation in particular where the carton or label, while not being defective, of poor quality or untidy, are such as to affect the trade mark's
value
by detracting from the image of reliability and quality attaching to such a product and the confidence it is capable of inspiring in the public concerned (see, to that
effect,
Bristol-Myers Squibb at [76]; and Case C-337/95 Parfums Christian
Dior
SA
v
Evora
BV [1997]
E.C.R.
I-6013 at [45])."
- The Court's reference to
Dior
shows that a trade mark owner's right to object to its goods being poorly presented is not confined to the repackaging of pharmaceuticals. In
Dior
the trade mark owner, a perfume house, objected to the marketing of parallel imports of its products on the ground that the advertising used was liable to damage the luxurious and prestigious nature of the trade marks. The Court held that where the reseller uses modes of advertising which are customary in his trade sector, the trade mark owner could not rely on art.7(2) unless the reseller's advertising seriously damages the reputation of the trade mark (see [46]).
- In a subsequent
Dior
case, Copad SA
v
Christian
Dior
Couture SA, Case C-59/08,
EU:C:2009:260,
[2009] FSR 22, the CJEU reiterated (at [55]):
"… damage done to the reputation of a trade mark may, in principle, be a legitimate reason, within the meaning of art.7(2) of the
Directive,
allowing the proprietor of the mark to oppose further commercialisation of luxury goods which have been put on the market in the
EEA
by him or with his consent …"
- On this occasion there was no requirement of serious damage. The Court of Justice has been inconsistent about this, see Dansac A/S
v
Salts Healthcare Ltd [2019]
EWHC
104 (Ch) at [46]-[48].
- In Boehringer II the Court held that it was for the parallel importer to prove that the presentation of the repackaged product was not liable to damage the reputation of the trade mark and of its proprietor, but added this (at [54):
"Where the importer furnishes such initial
evidence
that the latter condition has been fulfilled, it will then be for the proprietor of the trade mark, who is best placed to assess whether the repackaging is liable to damage his reputation and that of the trade mark, to prove that they have been damaged."
- I do not believe that the present case turns on a shifting burden of proof. I must reach a
view
as to whether it is likely that
JSC's
packaging will damage the reputation of the Trade Marks and thereby
Nomination.
I think it is likely. I am satisfied that the
elegant
packaging of
Nomination's
bracelets will convey an image of luxury to purchasers and that this increases the reputation of the Trade Marks. The receipt of
Nomination's
products in a small blister pack or polythene bag is likely to damage that reputation.
Nomination
sought to bolster their case under this head by
evidence
from Mr Brown that their retailers were carefully selected. No doubt they are selected but Mr Brown's cross-
examination
indicated that the selection may or may not turn out well. Ms Priestman said that she
did
not undergo any due
diligence
measures from
Nomination
before her business became an authorised
Nomination
retailer. She was not
even
asked to sign a written agreement.
JSC's
customers do not benefit from the guarantee
- The third reason was that those who purchase
Nomination
base links from
JSC
will not benefit from
Nomination's
guarantee. I was told that the written guarantee supplied in the
Nomination
box is stamped on the date of sale and that the guarantee must be presented if the product requires repair.
JSC's
customers would not receive the guarantee and it was argued that this was a further legitimate reason to oppose the sale of
Nomination
base links by
JSC.
- However, it was not made clear on the
evidence
whether the guarantee made any practical
difference
to a customer who returned a faulty
Nomination
link and sought to rely on their usual consumer rights.
JSC
did
not always identify who had done the repackaging
- For
Nomination's
fourth reason Mr Pearson sought to rely on BMS condition (3). Where
JSC
supplied a
Nomination
base link in a plastic bag, on the bag was a label which clearly stated that the product had been manufactured by
Nomination,
Italy, and repackaged by
JSC
Jewellery
UK. If the base link was supplied in a blister pack there was no such label. In such cases, Mr Pearson said, there was a breach of BMS (3).
- I am not satisfied that BMS (3) applies to goods other than repackaged pharmaceuticals or products of an
equally
sensitive nature. It would be important to be able to trace all stages of supply of pharmaceuticals in the
event
of, say, a health scare. There is no such sensitivity attached to the sale of bracelets. BMS (3) was not mentioned by the Court of Justice in the
Dior
cases.
The repackaging risked damaging the condition of the links
- The last of
Nomination's
proposed legitimate grounds under art.7(2) came from BMS condition (2). In Boehringer II the Court held that the parallel importer bore the burden of proof to show that there was no damage caused to the condition of the goods due to the repackaging, but (at [54]):
"… it is sufficient that the parallel importer furnishes
evidence
that leads to the reasonable presumption that that condition has been fulfilled."
- Pharmaceuticals are liable to be damaged by poor repackaging, caused by
exposure
to damp or heat or physical impact, more liable than bracelet base links anyway. I was given no sound reason to believe that the blister packs or polythene bags used by
JSC
would
expose
the links to damage in circumstances where
Nomination's
packaging would not have done.
Conclusion under art.7 of the Trade Mark
Directive
Nomination
had legitimate reason to oppose
JSC's
sales of
Nomination
base links pursuant to art.7(2) of the Trade Mark
Directive.
The packaging used by
JSC
to supply its customers, blister packs or polythene bags, was liable to damage the reputation of the Trade Marks. Such sales therefore infringed the Trade Marks.
Whether
JSC
used the
Nomination
sign in relation to its own links
- I was shown several images of websites on which
JSC
have advertised products for sale. One was a posting on
eBay
dated 17 March 2015 which advertised bundles of one
JSC
link plus one
Nomination
link: "1 x Family Superlink Daisy Charm 1 x Genuine
Nomination
Italian Charms"
- The advertisement continues:
"
JSC
Italian Charm – DAISY CHARM Plus
Nomination
Charm
Item description
18mm (superlink) Family charm of your choice by Daisy Charm®, plus you also get a single branded
Nomination
link for your bracelet. So you will receive one branded Daisy Charm and one plain
Nomination
link, both compatible and for the classic size bracelet.
…
Mix and match with the thousands of Daisy Charm UK branded Italian charms for your classic Italian charm bracelet that can be found on our
eBay
store, just click on the door symbol near the top of the page.
The Daisy charm is 9mm x 18mm in size, has a matt finish, and the
Nomination
charm is 9mm in size and has a shiny finish. All our 9mm charms come individually packaged in a small blister packet and have our brand name – Daisy Charm – stamped on the back."
- A typical reader of this and other online advertisements from
JSC
would reasonably have priorities other than pondering in depth which link is made by whom. However, I think a reasonable reader would have received a blurred message about the manufacturing source of the two bundled links and might have formed the impression that both are made for
JSC,
one of them being styled '
Nomination'.
- Mr Pearson argued that proof of what consumers actually thought came from the complaints they made. He drew my attention to seven letters and
emails.
- The first, dated 8 March 2016, was from Natalie Hall of Xen
Jewellery
Design Ltd in Beverley,
East
Yorkshire, an authorised
Nomination
dealer. The letter is to Mr Brown. It begins:
"Dear Ken,
I would like to drawer your attention to problems and issues we are facing as a result of
Nomination
Stainless Steel plain links being pictured alongside copy product of
Nomination
Charms by
JSC
which seem to be on
Ebay
and Amazon.
Firstly there is never a week goes by that we do not have a customer that
enters
the store and asks us to fit the non-genuine item to their
Nomination
Bracelet, we point out this is not a genuine
Nomination
charm but another Italian style charm and that by fitting this to their
existing
Nomination
bracelet this will
void
the guarantee by
Nomination
on their
existing
charms. Generally just stating the item is not genuine is
enough
to stimulate a response from the consumer. 'IT IS GENUINE and it came with a steel link that was clearly marked
Nomination!',
we then
explain
that the plain link is indeed genuine but that the charm isn't. We then try to
explain
to the customer that the
Nomination
charms are clearly marked and we show them the stamp on the back."
- Ms Hall's letter continues, stating that consumers are unconvinced that their
JSC
links are not
Nomination
links and that this creates ill feeling. She also
discusses
packaging.
- The second, dated 9 March 2016, was from Shaun Bell, Managing
Director
of Joshua James, a
jewellery
business in Hessle,
East
Yorkshire, addressed to
Nomination.
Mr Bell complained about a muddle among consumers between charms sold by businesses such as
JSC
and
Nomination
charms, but I find his letter too unclear to be sure what the confusion was and why it happened.
- The third was an
email
to Mr Brown dated 9 March 2016 from Dale Gamble, Managing
Director
of J&D Duo
Jewellery
in Yorkshire. Like Ms Hall Mr Gamble refers to
JSC's
charms and complains about customers bringing charms which are not made by
Nomination
expecting
them to be fitted to their
Nomination
bracelets:
"…when we refuse we have had some serious abuse from these customers, as they just don't understand and in most cases believe they have purchased a genuine product at a reduced price from
JSC."
- The
email
is headed 'Without prejudice'. Mr Sinai argued that this showed that Mr Gamble was not prepared to commit himself to the truth of what he said in his letter. I do not accept that. Clearly Mr Gamble
did
not know what the term means because it was inappropriate in context. I cannot say what he intended by it.
- Mr Pearson referred me in closing to four further
emails
but I have not been able to get much from them one way or the other.
- Mr Brown admitted
very
fairly in cross-
examination
that the timing of the three communications to him in March 2016 was not coincidental. They had all been prompted by him as part of an
exercise
to gather
evidence
of confusion. I do not believe that this undermines the truth of their contents. I also
take
the
view
that the confusion reported by Mr Hall and Mr Gamble was likely to have occurred at some
Nomination
outlets
elsewhere.
There is no reason for me to think that there was anything atypical about the way that Xen
Jewellery
and J&D Duo
Jewellery
traded such as to make them the only places where confusion could
emerge.
- It seems to me that
JSC's
advertising and supply of bundled
Nomination
base links with its own Daisy Charm links has led to confusion in the mind of some of the relevant public. I would guess that it took
different
forms, but I find that among a significant proportion the confusion took the form of a belief that charms not made by
Nomination
were genuine
Nomination
charms.
- Issue 3 in the present action is about whether the
NOMINATION
sign was used by
JSC
in relation to
JSC's
own charms within the meaning of section 10(1) of the 1994 Act and its
equivalent,
art.5(1) of the Trade Mark
Directive.
- In Céline Sàrl
v
Céline SA, Case C-17/06,
EU:C:2007:497,
[2007]
ETMR
80, the CJEU said (at [20]):
"It is clear from the scheme of Art.5 of the
Directive
that the use of a sign in relation to goods or services within the meaning of Art.5(1) and (2) is use for the purpose of
distinguishing
the goods or services in question, …"
- At least some of
JSC's
customers thought that
JSC's
use of the sign
NOMINATION
distinguished
JSC's
Daisy Charm links as coming from
Nomination.
The inference to be drawn is that objectively assessed, the sign was used by
JSC
in relation to those goods. I find that
JSC
infringed the Trade Marks pursuant to s.10(1) of the 1994 Act.
Misrepresentation
- I have found that
JSC's
use of the
NOMINATION
sign led a significant proportion of the relevant public to believe that
JSC's
Daisy Charm links were supplied by
Nomination.
Such use of the sign therefore constituted a misrepresentation.
Damage
- The letters from Ms Hall and Mr Gamble point up the damage likely to follow from the misrepresentation: annoyance in the minds of
Nomination's
customers and the consequent damage to its reputation. I find that there was damage.
Conclusion
JSC
has infringed the Trade Marks and passed off its own goods as being those of
Nomination.