Parallel importer not brand owner has burden of proving that goods were on the market with brand owner’s consent – Honda v David Silver Spares, High Court

DSS was the leading supplier of spare parts for Honda motorbikes. Honda alleged that DSS was infringing its registered trade marks by importing and supplying Honda branded parts which had not been put on the market in the European Economic Area with Honda’s consent. The branded parts were genuine Honda products, but the dispute revolved around whether the goods had been sourced from outside the EEA without Honda’s consent. It is a defence to infringing trade marks under European law to show that goods have been placed on the market in the EEA with the brand owner’s consent. However, any parallel importing of the goods from outside of the EEA does not have the benefit of the defence.

DSS argued that, as claimant, Honda should bear the burden of proving that trade mark infringement had occurred rather than for DSS to have to show that it had done no wrong. It also said that Honda’s claim was totally speculative and lacked particularity. In this preliminary legal action, DSS applied to strike out Honda’s claim.

The High Court refused to strike out Honda’s claim. All Honda needed to do was to allege that DSS had used Honda’s trade marks and that it had not consented to DSS’s use. It was for DSS to have the burden of proving its defence – ie that the goods had been put onto the market in the EEA by Honda. It was not for Honda to prove that DSS had parallel imported the goods from outside the EEA. It was also sufficient for Honda to make generalised claims and there was no legal requirement on it to make trap purchases as evidence of wrongdoing, even if that was the preferred method in practice for brand owners to show trade mark infringement. A trade mark owner could bring proceedings if it had a reasonable suspicion of infringement even if it did not have any hard evidence. As soon as the brand owner has not consented to the specific use by the dealer, it was then for the dealer to prove its defence that the brand owner had consented to the products being supplied in the EEA. In answer to DSS’s claim that brand owners could make frivolous claims without sufficient evidence, the Court responded that there was a sufficient disincentive to that because the claimant would be penalised by costs orders if its claim failed.