In a recent decision, Mitsubishi v Duma Forklifts and G.S. International (C-129/17), the Court of Justice of the European Union (CJEU) confirmed that ‘debranding’ products before importing them into the EEA, without the trade mark proprietor’s consent, is not allowed.
The facts of the case can be summarized as follows.
Two Belgian companies, Duma and GSI, purchase MITSUBISHI forklifts outside the European Economic Area (EEA), which they import into the EEA under a customs warehousing procedure. Before doing so, however, they remove from the goods all MITSUBISHI trade marks (‘debranding’), make the necessary modifications to render the goods compliant with EU standards, and replace the identification plates and serial numbers with their own signs. Afterwards, the modified goods are imported into and marketed in the EEA.
According to Duma and GSI, Mitsubishi cannot rely on its trade mark rights in relation to the debranded products, as the MITSUBISHI trade mark is no longer affixed to them. Mitsubishi, however, which did not consent to the modification and import of its goods into the EEA, argued that its trade mark rights are adversely affected and started proceedings in Brussels against the two companies. The Brussels Court of Appeal requested a preliminary ruling from the Court of Justice of the European Union (CJEU).
The CJEU sided with Mitsubishi and ruled that a trade mark proprietor has the right to oppose the removal by third parties of its trade marks and their replacement with other marks, even if the products formed the object of a customs warehousing procedure, before being imported into and marketed in the EEA.
Trade mark proprietors indeed have the right to control the initial marketing in the EEA of goods bearing their trade marks. If the goods are debranded without their consent, they are unable to control the initial marketing, which adversely affects the trade mark's functions.
The fact that the trade mark proprietor’s goods are placed on the market before the proprietor is able to do so while using his trade mark, with the result that consumers become familiar with the goods before associating them with the trade mark, is likely to substantially impede use of the trade mark by the proprietor to acquire a reputation likely to attract and retain consumers or promote sales or as an instrument of commercial strategy.
The CJEU held that Duma and GSI’s aim was to circumvent the proprietor’s right to prohibit the import of its branded products without its consent, which is contrary to the objective of ensuring undistorted competition.
According to the CJEU, it does not matter that debranding took place when the goods were still under the customs warehousing procedure, since the operation was carried out for the purpose of importing the goods into and placing them on the market in the EEA.