M-Tech bought for resale second-hand computer hardware of Sun Microsystems. Oracle (which has since taken over Sun’s business) objected on the basis that the goods had not been put on the market within the European Economic Area with its consent. It is an infringement of European Union trade mark rights if goods carrying a registered trade mark are imported into the EEA and marketed there without the brand owner’s consent. However, the trade mark owner’s rights are said to be ‘exhausted’ if it has already put the goods onto the market in the EEA. Parallel importing – where goods are bought from one country and re-sold in another – is therefore permitted between countries within the EEA but not from countries outside of the EEA. This was made clear several years ago when Levi Jeans managed to stop its jeans from being sold cheaply in stores in the EEA if they had originated from outside the EEA.
M-Tech’s objection here was that Oracle had conducted its business in a way in which it was not possible for traders to ascertain whether the goods had originated inside the EEA or outside. In particular, it had deliberately chosen not to make publicly available its database of product serial numbers – and those could have identified where the goods had been first marketed.
The High Court had awarded Oracle summary judgment but on appeal the Court of Appeal agreed that M-Tech had an arguable case. It thought that it was possible that Oracle’s actions amounted to an artificial partitioning of the European market, contrary to the Treaty on the Functioning of the European Union (previously the EC Treaty), with the aim of maintaining price differences in each country rather than any legitimate wish to protect its brand. The Court of Appeal did not award victory to one party or the other, but said that M-Tech’s arguments warranted a full trial and the case should probably end up being referred to the European Court of Justice to make a ruling.