Sellers May be Held Liable for the Illegal Repackaging

Author: Inga Lukauskiene, Associated Partner, Attorney-at-law, Patent Attorney at METIDA, Court Mediator

shop-791582_640If it is not known whether the repackaging of goods met legal requirements, the marketing of such goods may cause legal disputes. Usually, traders do not know that the products they sell have been repackaged without manufacturer’s consent.  Unfortunately, if the trade of such goods is found to be illegal, the sellers will be held liable for this.

The scenario of this situation could be exemplified by the civil case No. 3K-3-477-684/2015 and its judgement ruled on 18 September 2015 by the Supreme Court of Lithuania. A plaintiff, which is a Russian company that manufactures car insulation materials bearing StP trademark, became suspicious of the packaging of their products sold in Lithuania. To specify, this packaging was not done by the plaintiff, and stickers on the products and their packages indicated that Standartplast, a non-existent company in Latvia, was the manufacturer. The goods in defendant’s online store were advertised as products manufactured by Silent Coat.

It appeared, that a Latvian company CTP, which had once been plaintiff’s distributor, repackaged the received goods into their own packages without indicating the name of the real manufacturer. These goods were sold online by the defendant specifying that they had been manufactured by Silent Coat, which was later recognised as the trademark belonging to plaintiff’s ex-distributor. The plaintiff lodged the claim on the basis of the infringement of trademark rights.

Vilnius County Court satisfied the claim and decided that the defendant sold illegally repackaged goods, in this way violating plaintiff’s rights. However, the defendant appealed to the Court of Appeal of Lithuania which cancelled County Court’s decision on the grounds that the defendant submitted CTP’s explanation that the goods had been repackaged with plaintiff’s consent (note, however, that the copy of this consent was not presented to the Court) and that the plaintiff did not show which packages they had delivered to the distributor. The court also stated that the defendant had acquired the goods before the trademark belonging to the plaintiff was obtained protection in Lithuania.

The final judgement was made by the Supreme Court of Lithuania which argued that, under the case law of the European Court of Justice (CJEU), parallel importer needs to indicate the names of the repackaging and manufacturing companies. In this case, it is the defendant that is the parallel importer and it gave no evidence that the repackaged goods had any reference to the plaintiff, which is the owner of StP trademark and the manufacturer of the goods bearing the trademark.

Because the defendant did not provide the requested evidence, the legal criteria for the repackaging were not met. The court also ruled that plaintiff’s trademark rights were infringed after the trademark of the plaintiff obtained protection in Lithuania, clarifying that the time when the defendant acquired the goods did not matter in this case. The court also stated that the fact that no original packaging sample produced by the plaintiff was provided for the case was not important here too, as the goods were found to be repackaged without meeting the legal repackaging requirements.

Hopefully, the sellers and other individuals that attempt to repackage goods will learn something from Court’s final decision. The case suggests that the defendant is responsible to prove the repackaging to be legal and the plaintiff only needs to issue dissent against the marketing of the repackaged goods. According to the CJEU, the repackaging is considered to be legal only if the following conditions are met:

  • it is shown that the repackaging is necessary to allow the product to be put on sale in the importing State;
  • it is shown that the repackaging cannot adversely affect the original condition of the product;
  • it is stated on the new packaging by whom the product has been repackaged;
  • the presentation of the repackaged product must not be such as to damage the reputation of the trade mark, meaning that the package must be flawless, in good quality and neat; 
  • the proprietor of the mark receives prior notice of the marketing of the repackaged product; and under request receives a sample of the repackaged good. (CJEU’s judgement in joined cases C-400/09 and C-207/10 as well as C-427/93, C-429/93 and  C-436/93 (section 79);  case C-232/94 (section 50); case C276/05 (section 23).

What is more, if you sold the repackaged goods, you would infringe not only the rights of the proprietors, but also the rights of the consumers. Firstly, the consumers might be misguided when it comes to the origin of goods, as the information about the manufacturer may influence their decision whether to buy a certain product or not. Also, the incorrect information or no indication of the manufacturer may reduce the possibility to protect consumers’ rights if the quality of goods is questioned.

There is a tendency for the companies to advertise probably lower quality goods and market their new trademarks by taking advantage of the better quality products and trademarks with high reputation that belong to other economic entities. Yet, this case reminds us that both sellers and companies repackaging the products may be held liable for this.

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