Brussels, 02/02/2001 (Agence Europe) - Is it legitimate that in buying a brand manufactured in the European Union, a consumer, national of a Member State, pays today more if he carried out his transaction within the Union rather than outside, in the third country? Hans-Peter Mayer, MEP (Christian Democrat, German), rapporteur in the European Parliament on the problem of the expiry of rights conferred by a trade mark is of the negative opinion. Though this is what is presently happening, in virtue of a Community law presently enforced, which limits to the Union territory the expiry of rights conferred by the trade mark - concept that requires an owner of the brand to automatically loose his right to control without restriction the future sale of his product, as soon as it has been put into circulation by himself or with his assent. The aim of the report being drafted is to incite the European Commission to present a proposal for the modification of legislation, in the interest, according to him, of free competition and the consumer's purse. Recently, before the press the MEP presented the reasons leading to what he considers to be an anomaly, and the arguments calling for a new system based on the worldwide expiry of rights conferred by the trade mark.
In virtue of the present legislation, the expiry of the rights conferred by the trade mark applies to the interior of the European Union for brands protected at the national and Community level. As soon as the product is placed on the internal market, the right of the owner of the brand to set his price extends for the future use that will be made of the product: whoever buys the product under the trademark can resell it under his conditions (the same brand is then legally in competition within the internal market as the good that surround it can be re-imported and resold for less).
This is not the case if the product is put into circulation outside the borders of the Union. Community legislation allows the holder of a brand to oppose that retailers or wholesalers buy products of European trademarks on the world market, import them once more into the Union and market them under different conditions than those foreseen by the owner of the trade mark as the rights conferred by the trade mark never extend: the holder of the trade mark has the limited right to determine and control the marketing of his product. According to Hans-Peter Mayer, this system enables the industry to have "high prices within the Union and cheap prices, or even very cheap prices outside the Union." Let us recall that the aim of the trade mark law is to "define the origin of the product, a degree of notoriety and a certain level of quality associated with the brand, even if it cannot guarantee this quality," Hans-Peter Mayer feels that the present system occurs to the detriment of European Union consumers.
"The foundation of the free competition is totally blocked by the trade mark rights. Trade mark rights must not constitute a barrier to trade", stated the rapporteur. To remedy this, it would be suitable, he feels, to modify the legislation in order to put an end to the right of protection conferred by the trade mark to its owner applies both to inside and outside the Union.
For the MEP, the industry's argument, according to which a new system would not change much for consumers with regards to the low price differential observed (2.2 to 3% in average according to a study undertaken by NERA, a London based research institute) does not hold. "If we add together all of the products of European brands concerned, it is in billions that this difference in prices adds up inside and outside the Union," he stated, feeling that the interest of consumers is "the main argument" in this matter. According to Hans-Peter Mayer, the only derogation possible to the system, which he favours, at this stage, concerns pharmaceutical products, notably in order to avoid that these products for humanitarian ends exported are the object of smuggling and are exposed to transport conditions that do not respect the required temperatures.
The draft report in favour of the introduction of the international expiry of the rights conferred by trade marks has been the object of an initial discussion in the Parliament's "Legal Affairs and Internal Market" Committee and should be voted in March, before being submitted to the plenary session, probably in May.
The rapporteur recalled that it is a working document by the Commission in November 1999, in its time put aside by the parliamentary committee, which acted as a basis for the continuation of works on this issue. He welcomed that eight Member States are presently favourable towards a modification of legislation in a way that he favours (Sweden, Finland, Belgium, Netherlands, Luxembourg, Germany, Ireland and the United Kingdom). A letter to each of the Member States was, to this end, sent in December 2000 to the competent Commissioner Fritz Bolkenstein. According to Hans-Peter Mayer, France would be the most vociferous opponent to the plan.