Levis trade mark rights backed by EU court

BRUSSELS, Nov. 20 (UPI) -- The world's best known jeans manufacturer, Levi Strauss, was jubilant Tuesday following a ruling by the European Union's top court that effectively stops supermarkets from importing jeans outside the EU or the European Economic Area and selling them at cut prices.

The long-running dispute centred on the British supermarket chain Tesco which bought Levi jeans supplied to Africa at lower than European wholesale prices and marketed them at cut price in their nationwide grocery chain outlets.

John Littleton, head of Levi's in Europe, greeted the Luxembourg-based European Court of Justice decision saying: "This allows us to do what we do best -- make the best jeans in the world."

Levi's successfully complained that the import and sale of their goods -- Levi jeans and 501 -- constituted an infringement of rights under their registered trademarks. Tesco and its associated companies claimed that once sold to a third country the trademark had been exhausted.

The British High Court referred the issue to the European Court of Justice to clarify the concept of consent and the importance of the case prompted five governments -- Germany, France, Italy, Finland and Sweden -- to submit observations.

The court decided that EU law --- known as a Directive --- limits the exhaustion of trade mark rights to where goods have been put on the market in the European Economic Area --- the EU and countries with EA agreements --- and allows the marketing of goods outside the area without exhausting manufacturers rights in the EEA without consent.

This allows the proprietor holding a trademark to control the initial marketing in the EEA of goods bearing the relevant trademark. The court ruled that consent to extinguish trade mark rights must be unequivocally demonstrated and that while consent might be inferred from the placing on of goods on the market outside the EAA this cannot be inferred from the "mere silence" of the trademark proprietor.

Saying that consent must be expressed positively the court said that the absence of contractual reservations at the time of sale cannot imply consent.

The ruling brought an immediate reaction from the European Parliament in Brussels where elected representatives of the EU's 15 member states were sitting Tuesday.

Professor Philip Whitehead, a British Socialist declared: "This is a bad day for consumers. It is an end to cheap goods in stores." Unofficially, MEPs say that over time attempts will be made to loosen the EU directive in the interests of consumers.