Sun comes from the East and West, so M-Tech loses parallel import case – Sun v M-Tech, High Court

M-Tech was a parallel importer of Sun Microsystems’ computer hardware products, meaning it bought products with Sun’s registered trade marks on in one country and re-sold them in the UK at a profit. EU trade mark law states that trade mark owners (such as Sun) have the right to put their products on the market in the European Economic Area for the first time, but once they have offered them for sale in the EEA their trade mark rights in those products are ‘exhausted’ (or extinguished). This means that trade mark owners can stop parallel importing from outside of the EEA but not within it.

In this case, Sun accused M-Tech of buying Sun’s products from China, Chile and the US and selling them in the UK without Sun’s consent. It therefore sought summary judgment against M-Tech. M-Tech raised a number of arguments.

The High Court dismissed M-Tech’s arguments and sided with Sun, awarding it summary judgment. It said M-Tech’s arguments had no real prospect of succeeding at a full trial. The judge was satisfied that the goods were first put on the market outside of the EEA and M-Tech had not produced any evidence to support its suggestion that they had been subsequently imported into the EEA with Sun’s consent.

M-Tech also raised another interesting legal argument, which was dismissed by the judge. It claimed that Sun’s distribution agreements which protected its trade mark rights infringed EU competition law and were therefore prohibited as they carved up the market. Sun was prepared to accept that its agreements may have infringed EU competition law, but argued that there was no connection between any such breach and its ability to enforce its trade mark rights. The judge was willing to accept Sun’s argument that the disappearance of any sort of secondary reseller market for Sun’s equipment was not because of its network of illegal agreements. Therefore, in the judge’s view, there was no real prospects of success between M-Tech’s argument that Sun should not be able to enforce its trade mark rights on EU competition law grounds.