Ruby Sandhu on grey market law development in the EU. Ruby Sandhu is a former law lecturer

The recent decision of the European Court of Justice (ECJ) in the Silhouette case – Silhouette International Schmied v Hartlauer Handelsgesellschaft – interpreted the Trade Mark Directive 89/104 as not permitting national law to provide for the principle of "international exhaustion".

This issue may be developed further in Sebago Inc and SA Ancienne Maison Dubois et Fils v SA G-B Unic.

Sebago is currently at the ECJ for a preliminary ruling under an Article 177 reference on the issue of "exhaustion of rights".

Whereas the Silhouette case addressed the ability of third parties to undercut high price-branded goods in the EU by importing them from cheaper markets, Sebago will further focus on the question of consent by the owner of a trade mark – Sebago Inc.

Sebago will argue that the granting of a Salvadorian licence to export shoes to the European Union does not allow the respondents to imply to the further commercialisation of Sebago's shoes in the European Union.

The submission by the respondents, however, represents a concern voiced by retailers that Sebago will be allowed to partition the internal market by reserving the import of each insignificant and negligible variation of the same product to different licensees located in different member states, motivated by its own financial interests.

The decision of the ECJ is expected in approximately 12-18 months time, while the date of the Attorney General's opinion (which may or may not be followed by the ECJ) will be set about two to three months after the date of the oral hearing.

If the decision of the ECJ does not strike an effective balance between the rights of the trade mark owner and the legitimate interests of other traders, then it is likely that retailers will attempt to set a precedent themselves by breaching the decisions.