Brand wars: the never-ending battle against the clones

When are goods supposed to be for personal use and when should they be assumed to be used in the course of trade under trade mark law? This question was brought before the District Court of The Hague, and later the Court of Appeal of The Hague, in a case (here and here) involving the importation of counterfeit Off-White products from Turkey to Germany by a private individual.

Background

In October 2022, Mr. Aslan travelled from Turkey to Germany. Upon his arrival in Germany, customs officials discovered 22 counterfeit items in his luggage, all bearing Off-White trade marks:

The items were confiscated by officials and subsequently ordered to be destroyed.

Mr. Aslan contested the destruction of the goods, resulting in the dispute being brought before the District Court of The Hague.

Off-White presented several claims, all of which were essentially dependent on whether Mr. Aslan's import of counterfeit goods bearing Off-White trade marks constituted trade mark infringement within the meaning of Article 9(2)(a) of the EU Trade Mark Regulation (EUTMR).

Reasoning

Article 9(2)(a) EUTMR inter alia allows trade mark holders to prohibit unauthorized third parties from using identical signs for identical goods or services in trade.

Aslan's main argument was that there had been no use within the meaning Article 9(2)(a) EUTMR because the goods were for his own use and therefore there had been no use within the meaning of the said provision.

Off-White submitted that there had been "use in the course of trade," citing the quantity and amount of counterfeit garments. They estimated the market value of original Off-White items to be around $11,700. Off-White also claimed that batches of this sizes were commonly resold on platforms like Marktplaats, Instagram, and Facebook.

With reference to judgments by the Court of Justice of the European Union (CJEU) in Arsenal v Reed (C-206/01) EU:C:2002:651 and C-324/09 L'Oréal v eBay EU:C:2011:474, the District Court of The Hague held that “use in the course of trade” is when the use takes place in the context of a commercial activity in pursuit of a commercial purpose and not within the private sphere. In this sense, a natural person who engages in sales which, because of their volume, frequency, or other characteristics, fall outside the sphere of a private activity is acting in the course of trade.

In view of the above and the evidence submitted before the court, Off-White had not sufficiently substantiated that there had been use (or threat of use) in the course of trade within the meaning of Article 9 EUTMR. The finding of 22 items of clothing in a person’s personal luggage does not automatically prove an intention to commercialize or keep a stock with the aim of selling or otherwise commercializing. This was especially true since the items in question were sweaters in different sizes with different prints within one size.

The District Court of The Hague therefore held that it had not been established that Mr. Aslan infringed Off-White’s trade mark rights and the matter was subsequently appealed to the Court of Appeal of The Hague.

Appeal before the Court of Appeal of The Hague

In so far as concerned the question of liability on part of Mr. Aslan, things took a sudden turn before the Court of Appeal. Mr. Aslan stated at an oral heading in April 2024 that he was now of the opinion that he had infringed Off-White’s trade mark rights through the importation of the counterfeit goods in 2022.

The Court of Appeal of The Hague thus annulled the District Court’s judgment and declared that Mr. Aslan had infringed the marks in question and ordered each party to bear its own costs.

Comment

Brand owners know that the battle against counterfeiting and piracy remains a challenging one. It is not surprising that companies invest significant resources to contrast these phenomena through various means (e.g., customs trainings). The investment is not unfounded: The EUIPO’s 2023 report on the Economic impact of counterfeiting in the clothing, cosmetics, and toy sectors in the EU flagged that the clothing industry lost almost EUR 12 billion of revenue as an annual average in 2018-2021. Cases such as the present one not only lift the interesting matter of the de minimis use in trade mark law (i.e.., when are goods supposed to be for personal use, and when should they be assumed to be used in the course of trade), but they also represent a relief for brand owners who can enjoy brief victory in a never ending game of whac-a-mole.