Under the Community Trade Mark Directive, a registered trade mark confers on the owner of the mark an exclusive right to prevent all third parties not having his consent from using in the course of trade any sign which is identical with that mark. But if the trade-mark owner consents to use of the mark, or uses it himself within the European Economic Area (the EEA, which comprises the 15 Member States of the EU plus Liechtenstein, Iceland and Norway), he loses the right to stop others using it under the doctrine of "exhaustion" of trade-mark rights. The place where trade-marked goods are first put on the market (with the trade-mark owner's consent) is therefore significant.

STUSSY Inc., a Californian company, owns the word and device mark "Stüssy", which is registered for clothing. It sells goods under that mark worldwide. Van Doren + Q. GmbH, a clothes wholesaler and retailer, is the exclusive distributor of STUSSY Inc. goods in Germany. It has STUSSY Inc.'s authority to bring legal proceedings in its own name in the event of infringement of the mark. Van Doren says there is only one exclusive distributor for each EEA country, and that distributors are contractually bound not to sell STUSSY Inc.'s goods to intermediaries for resale outside their contractual territory.

Michael Orth is managing director of Lifestyle + sportswear Handelsgesellschaft mbH, which markets goods bearing the Stüssy trade mark that it has not acquired from Van Doren in Germany.

Van Doren sued Michael Orth and his company in Germany for an injunction, damages and disclosure of information. Van Doren maintains that the offending goods were first put on the market in the USA, and that the trade-mark owner did not consent to their distribution in Germany or any other EU Member State. Michael Orth and his company argue that the rights in the trade mark have been exhausted, because the goods were sourced in the EEA, where they were put on the market by the trade-mark owner or with its consent.

The case therefore turns on where the products were first put on the market with the trade-mark owner's consent. Who has the burden of proof?

German law imposes the entire burden of proof on the party alleging exhaustion of trade- mark rights. That party must therefore prove that the goods were put on the market in the EEA for the first time by the trade-mark owner or with his consent.

A dealer will generally be able to name his suppliers, but he will not be able to compel those suppliers to disclose their sources, or to identify other links in the distribution chain. Even if he could, doing so might cause his supply source to dry up. There is a risk that the trade-mark owner might use this to partition national markets. In other words, imposing the entire burden of proof on the alleged infringer places him in a dilemma because he has to choose between:

.     producing the evidence required, thus losing his future supply sources; and

.     losing the case, even if the goods concerned have been put on the market in the EEA by the trade-mark owner or with his consent.

That is the background against which the German Bundesgerichtshof, which is hearing the case on appeal, has asked the Court to determine whether the German rule on the burden of proof is compatible with Community law.

Advocate General Stix-Hackl delivers her Opinion today.

The Opinion of the Advocate General is not binding on the Court. It is the role of the Advocates General, acting with complete independence, to propose to the Court a legal solution to the cases assigned to them.

Since the Directive does not affect national procedural law, the Advocate General takes the view that the Member States enjoy autonomy in that sphere. In other words, it is legitimate for national rules on the burden of proof to apply in exhaustion of rights cases. Ms Stix-Hackl does, however, set out the limits laid down by Community law: a procedure to determine where the burden of proof lies cannot be allowed to undermine trade-mark owners' rights, which the Directive seeks to safeguard.

The purpose of the Directive is to promote the free movement of goods - which is precisely what the doctrine of exhaustion is intended to protect.

Advocate General Stix-Hackl concludes that a rule whereby the entire burden of proving exhaustion falls on traders against whom trade-mark owners bring infringement proceedings places such traders in an impossible position. It is clear from the Court's case-law that trade mark rights are not there to make it possible for trade-mark owners to partition national markets, so enabling price differences between Member States to be maintained. Such a national rule therefore constitutes a barrier to the free movement of goods.

As regards possible justifications for such a barrier, the Advocate General observes that a parallel importer cannot be compelled to adduce evidence in the form of documents to which he does not have access, where that evidence can be produced by other means (be they administrative or through the courts). She emphasises that it is contrary to Community law to require the production of evidence that is excessively difficult or impossible to obtain.

Consequently, the Advocate General proposes that the burden of proof should be shared, to reflect a duty of cooperation on the part of the trade-mark owner. That would render the national rule compatible with the principle of the free movement of goods as enshrined in the Directive. The trade-mark owner should have to prove that there are no gaps in hisdistribution system within the EEA. If he succeeds in doing so, a national court would have to conclude that the goods acquired by the parallel importer must have come from elsewhere, and that the trade-mark rights attaching to those goods are not necessarily automatically exhausted as a result of their - perhaps - having been put on the market for the first time by the trade-mark owner or with his consent.

The duty of cooperation may not, however, go beyond what is necessary to avert the risk of market partition, or to prevent alleged infringers from being required to produce evidence that it is excessively difficult for them to obtain. The Advocate General emphasises that the detailed rules remain a matter of national procedural law.

The judges of the Court of Justice now begin their deliberations in this case. Judgment will be delivered later.

Unofficial document for media use only; not binding on the Court of Justice. Available in English, French and German. For the full text of the Opinion, please consult our internet page www.curia.eu.int  For further information, please contact: Mme Ulrike Staedtler Tel: (00 352) 4303-2409 ; Fax: (00 352) 4303-3184.