The European Court of Justice (ECJ) judgment in the Silhouette case has been long awaited by trade mark owners, practitioners and parallel importers alike. Now that we have the decision, is it so illogical and the bad news that most commentators would have us believe?
Given that part of the rationale for the European Union was to produce a common trading block to allow Europe to compete with other trading nations, the judgment is anything but illogical. If goods can be imported into the European Economic Area without restriction, the concept of the single market would be eroded.
We have all read newspaper articles championing the cause of the consumer, but what of the cause of the brand owner? Owners of designer labels such as Calvin Klein and Giorgio Armani, who spend millions of pounds promoting a brand and creating an exclusive image, are entitled to protect that valuable image.
Their goods are priced as they are because people expect to pay a higher price for exclusivity. Brand owners will always argue that they are entitled to protect their image by insisting that their goods are only sold in exclusive outlets and at appropriate prices. Such exclusivity is lost if Giorgio Armani sunglasses appear on a rotating carrousel in Asda and are sold for £29.99.
The immediate consequence of this judgment is clear – the supermarkets will not be able to sell such goods and the consumer apparently loses out. But what of the consumer who wants designer labels? He now has the choice of paying full price or buying counterfeit products.
Leading supermarkets would never knowingly sell counterfeit goods but there are other less scrupulous businesses who would.
It is possible that we will see a boom in the black as opposed to grey market, and an increase in counterfeit goods.
But this is surely not what the ECJ envisaged because both brand owners and retailers would lose out.