Sun Microsystems v M-Tech Data Ltd and Another
| Jurisdiction | England & Wales |
| Judge | THE HONOURABLE MR. JUSTICE KITCHIN |
| Judgment Date | 25 November 2009 |
| Neutral Citation | [2009] EWHC 2992 (Pat) |
| Court | Chancery Division (Patents Court) |
| Date | 25 November 2009 |
| Docket Number | Case No: HC09 C02620 |
[2009] EWHC 2992 (Pat)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
INTELLECTUAL PROPERTY
Royal Courts of Justice
Strand, London, WC2A 2LL
The Honourable Mr. Justice Kitchin
Case No: HC09 C02620
Mr. James Mellor QC (instructed by Nabarro LLP) for the Claimant.
Mr. Guy Tritton (instructed by Halliwells LLP) for the Defendants.
Hearing dates: 5 November 2009
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Mr Justice Kitchin:
Introduction
This is an application for summary judgment in an action for infringement of a registered trade mark which concerns parallel imports into the EEA.
The claimant (“Sun”) is a US corporation which makes and sells computer systems and workstations and other related goods and services. It is the registered proprietor of a series of UK and Community trade marks comprising or consisting of the word “Sun”. All of these marks are registered in respect of, inter alia, computers, computer hardware, computer software and computer peripherals.
The first defendant (“M-Tech”) is a company incorporated in England and Wales and it carries on business supplying computer hardware in what has been described as the secondary market for hardware originally sold by one of the major manufacturers such as Hewlett Packard, IBM or Sun.
The particular activities giving rise to this action concern 64 Sun disk drives which M-Tech purchased from a broker in the USA, imported into the UK and sold to a business called KSS Associates. Sun contends these disk drives were put on the market by M-Tech in the UK without its consent and accordingly there can be no doubt that M-Tech has infringed its registered trade marks.
M-Tech resists this application essentially on three grounds. First, it contends Sun has failed to establish where the disk drives were first marketed, and says it may be the case that they were first marketed in the EEA, in which case Sun's trade mark rights are exhausted. Second, it asserts that the enforcement by Sun of its trade mark rights is contrary to Articles 28–30 EC as its effect will be to prevent the attainment of a single market in hardware which has been marketed by Sun or with its consent in the EEA. Third, it asserts that the enforcement by Sun of its trade mark rights is connected with agreements which are contrary to Article 81 EC and is therefore prohibited. The agreements relied upon are those between Sun and its authorised distributors which require the distributors to buy Sun equipment, whether new or second hand, within the Sun authorised supply network whenever possible. I must elaborate the various facts and matters upon which M-Tech relies in support of these defences later in this judgment.
Principles to be applied on a summary judgment application
There was no dispute between the parties as to the principles I must apply upon this application. They have been conveniently drawn together by Lewison J. in Pegasus Management Holdings S.C.A. v Ernst & Young [2002] EWHC 2720 at [42]:
“42. …:
i) The court must consider whether the claimant has a “realistic” as opposed to a “fanciful” prospect of success: Swain v Hillman [2001] 2 All ER 91;
ii) A “realistic” claim is one that carries some degree of conviction. This means a claim that is more than merely arguable: ED & F Man Liquid Products v Patel [2003] EWCA Civ 472 at [8];
iii) In reaching its conclusion the court must not conduct a “mini-trial”: Swain v Hillman;
iv) This does not mean that the court must take at face value and without analysis everything that a claimant says in his statements before the court. In some cases it may be clear that there is no real substance in factual assertions made, particularly if contradicted by contemporaneous documents: ED & F Man Liquid Products v Patel at [10];
v) However, in reaching its conclusion the court must take into account not only the evidence actually placed before it on the application for summary judgment, but also the evidence that can reasonably be expected to be available at trial: Royal Brompton Hospital NHS Trust v Hammond (No 5) [2001] EWCA Civ 550;
vi) Although a case may turn out at trial not to be really complicated, it does not follow that it should be decided without the fuller investigation into the facts at trial than is possible or permissible on summary judgment. Thus the court should hesitate about making a final decision without a trial, even where there is no obvious conflict of fact at the time of the application, where reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case: Doncaster Pharmaceuticals Group Ltd v Bolton Pharmaceutical Co 100 Ltd [2007] FSR 63.
To these I would add the cautionary observation of Longmore LJ. in Doncaster Pharmaceuticals at [92]:
“92. The relevant law is still in the process of formulation and, rather as this Court has held in Sportswear SpA v Stonestyle Ltd [2006] EWCA Civ 380; [2007] F.S.R. 2, summary disposition is not appropriate in what is a developing area of law.”
Legal framework
The relevant provisions of First Council Directive 89/104 of 21 December 1988 (“the Directive”) (now European Parliament and Council Directive 2008/95 of 22 October 2008) read as follows:
“Article 5
Rights conferred by a trade mark
1. The registered trade mark shall confer on the proprietor exclusive rights therein. The proprietor shall be entitled to prevent all third parties not having his consent from using in the course of trade:
(a) any sign which is identical with the trade mark in relation to goods or services which are identical with those for which the trade mark is registered;
…
3. The following, inter alia, may be prohibited under paragraphs 1 and 2:
(a) affixing the sign to the goods or to the packaging thereof;
(b) offering the goods, or putting them on the market or stocking them for these purposes under that sign, or offering or supplying services thereunder;
(c) importing or exporting the goods under the sign;
…
Article 7
Exhaustion of the rights conferred by a trade mark
1. The trade mark shall not entitle the proprietor to prohibit its use in relation to goods which have been put on the market in the Community under that trade mark by the proprietor or with his consent.
2. Paragraph 1 shall not apply where there exist legitimate reasons for the proprietor to oppose further commercialization of the goods, especially where the condition of the goods is changed or impaired after they have been put on the market.”
These provisions correspond to Articles 9(1)(a), (2) and 13 of Council Regulation 40/94 on the Community trade mark of 20 December 1993 (“the Regulation”) (now Council Regulation 207/2009 on the Community trade mark of 26 February 2009) and sections 10(1), (4) and 12 of the Trade Marks Act 1994.
The application of these provisions to the importation into the EEA of goods first marketed by a trade mark proprietor outside the EEA has been considered by the Court of Justice of the European Communities (the “ECJ”) in a number of cases. For present purposes I need only refer to the decision in Joined Cases C-414 to 416/99 Zino Davidoff SA v A & G Imports and Levi Strauss & Co v Tesco Stores and Costco Wholesale UK Ltd [2002] Ch 109. In paragraphs [32], [33] and [39] of its judgment, the ECJ made clear that Articles 5 to 7 of the Directive embody a complete harmonisation of the rules relating to the rights conferred by a trade mark and a limitation of the rule of exhaustion:
“32. It must also be borne in mind that in articles 5 and 7 of the Directive the Community legislature laid down the rule of Community exhaustion, that is to say, the rule that the rights conferred by a trade mark do not entitle the proprietor to prohibit use of the mark in relation to goods bearing that mark which have been placed on the market in the EEA by him or with his consent. In adopting those provisions, the Community legislature did not leave it open to the Member States to provide in their domestic law for exhaustion of the rights conferred by a trade mark in respect of products placed on the market in non-member countries: Silhouette International Schmied GmbH & Co KG v Hartlauer Handelsgesellschaft mbH ( Case C-355/96) [1999] Ch 77, 97, para 26.
33. The effect of the Directive is therefore to limit exhaustion of the rights conferred on the proprietor of a trade mark to cases where goods have been put on the market in the EEA and to allow the proprietor to market his products outside that area without exhausting his rights within the EEA. By making it clear that the placing of goods on the market outside the EEA does not exhaust the proprietor's right to oppose the importation of those goods without his consent, the Community legislature has allowed the proprietor of the trade mark to control the initial marketing in the EEA of goods bearing the mark: Sebago Inc v GB-Unic SA ( Case C-173/98) [2000] Ch 558, 570, para 21.
…
39. Articles 5 to 7 of the Directive embody a complete harmonisation of the rules relating to the rights conferred by a trade mark and accordingly define the rights of proprietors of trade marks in the Community: Silhouette [1999] Ch 77, 97, 98, paras 25 and 29.”
The ECJ then proceeded to articulate a series of clear principles which can be summarised by as follows. First, the “consent” referred to in Articles 5 and 7 is tantamount to the proprietor's renunciation of his exclusive right under Article 5 and therefore constitutes the...
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