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Products sell for widely differing prices in different national markets and that creates the opportunity for goods to be transferred from a low-price market to a higher-price one – a practice known as 'grey importing'. This can undermine the profitability of the higher-priced market, especially where its marketing and distribution carry much higher costs.
Where the grey import uses the protected trade mark of the product, it is a relatively straightforward process to stop it. However, what is the situation when the goods are relabelled and have the original trade mark removed?
You might think that the general desire for free trade would mean that such situations are just bad luck for the brand owners, but a recent decision of the Court of Justice of the European Union (CJEU) shows that this is not the case.
It involved a grey importer of Mitsubishi forklift trucks. The importer removed all traces of the origin of the products, including serial numbers etc. as well as badges.
Could Mitsubishi prevent the importation and resale of the rebranded forklifts? The CJEU said it could. In particular, the removal of Mitsubishi's trade mark adversely affected the functions of the mark. A trade mark requires investment and its use is part of a commercial strategy. Impeding the use of the mark by its removal can affect the owner's ability to make the most effective use of it.
Where the origin of the goods is clear even without branding, the harm to the trade mark will be even greater.