Theodor Kohl KG v. Ringelhan & Rennett SA and Ringelhan Einrichtungs GmbH (Case 177/83) Before the Court of Justice of the European Communities ECJ

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1 Theodor Kohl KG v. Ringelhan & Rennett SA and Ringelhan Einrichtungs GmbH (Case 177/83) Before the Court of Justice of the European Communities ECJ (Presiding, Lord Mackenzie Stuart C.J.; Bosco, Due and Kakouris PP.C.; O'Keeffe, Koopmans, Everling, Bahlmann and Galmot JJ.) Herr Carl Otto Lenz Advocate General. 6 November 1984 Reference from Germany by the Landgericht (Regional Court), Munich, under Article 177 EEC. Imports. Discrimination. Consumer protection. Trade marks. Unfair competition. Even though a provision of national unfair competition law applies without distinction to the marketing of domestic and imported goods, it is not nondiscriminatory if it is interpreted such that the use of a distinctive symbol may be prohibited for the sole reason that the public may be misled as to the national origin of the goods, other evidence of unfair competition being absent. To the extent to which it enables the imposition of such a prohibition, a provision of national law cannot be regarded as legislation applying in a uniform manner to the marketing of domestic and imported products. It is therefore prohibited by Article 30 EEC. [15]-[17] Imports. Consumer protection. 'Public policy'. Whatever interpretation is to be given to the term 'public policy' in Article 36 EEC, it cannot be extended to include considerations of consumer protection. [19] The Court interpreted Articles 30 and 36EEC in the context of the sale in Germany of pharmaceuticals imported from France and bearing the logo 'r + r' in a distinctive get up, the symbol having once belonged to a respected German

2 company (now defunct) and the present French company having originally been the German company's subsidiary, an action in the German courts now being brought under section 3 of the Unfair Competition Act which bans misleading statements regarding the origin of specific goods (use of the logo implying falsely that the French goods originated in the old German group), to the effect thatsection 3 infringed Article 30 EEC in so far as it made it possible to prohibit the use by the *341 French company of the logo on the sole ground that it was formerly used by the German group and that it might therefore be regarded by the public as a reference to the latter. N.B. This ruling should be analysed and used with care. In appearance it is extremely wide, particularly since section 3 of the UWG is itself expressed in wide and non-discriminatory terms. It is clear from hints by the Court and from evidence referred to by the Advocate General, however, that in practice the section has never been used in a purely domestic context. It is thus the practical application of the German law and not its original intention which seems to have determined the issue in this case. Representation Helmut Eichmann, of the Munich Bar, for the plaintiff company. Hermann Schwanhäusser, of the Munich Bar, for the defendant companies. Martin Seidel, Ministerialrat at the Federal Ministry of Economic Affairs, for the German Government as amicus curiae. Jean-Paul Costes, of the Secretariat General of the Interministerial Committee for Questions of European Economic Co-operation, for the French Government as amicus curiae. Christoph Bail, of the Legal Service of the E.C. Commission, for the Commission as amicus curiae. The following case was referred to by the Court in its judgment: 1. Re Restrictions on Importation of Souvenirs: E.C. Commission v. Ireland (113/80), 17 June 1981: [1981] E.C.R. 1625, [1982] 1 C.M.L.R Gaz:113/80 The following further cases were referred to by the Advocate General: 2. Procureur du Roi v. Dassonville (8/74), 11 July 1974: [1974] E.C.R. 837, [1974] 2 C.M.L.R Gaz:8/74 3. Re Advertising of Alcoholic Beverages: E.C. Commission v. France (152/78), 10 July 1980: [1980] E.C.R. 2299, [1981] 2 C.M.L.R Gaz:152/78 4. Oosthoek's Uitgeversmaatschappij (286/81), 15 December 1982: [1982] E.C.R. 4575, [1983] 3 C.M.L.R Gaz:286/81 5. Rewe-Zentral AG v. Bundesmonopolverwaltung für Branntwein (120/78), 20 February 1979: [1979] E.C.R. 649, [1979] 3 C.M.L.R Gaz:120/78 6. Terrapin (Overseas) Ltd. v. Terranova Industrie C.A. Kapferer & Co. (119/75), 22 June 1976: [1976] E.C.R. 1039, [1976] 2 C.M.L.R Gaz:119/75 7. Van Zuylen Freres v. Hag (192/73), 3 July 1974: [1974] E.C.R. 731, [1974] 2

3 C.M.L.R Gaz:192/73 8. Industrie Diensten Groep BV v. J.A. Beele Handelmaatschappij BV (6/81), 2 March 1982: [1982] E.C.R. 707, [1983] 3 C.M.L.R Gaz:6/81 * Robertson (220/81), 22 June 1982: [1982] E.C.R. 2349, [1983] 1 C.M.L.R Gaz:220/ Dansk Supermarked A/s v. Imerco A/S (58/80), 22 January 1981: [1981] E.C.R. 181, [1981] 3 C.M.L.R Gaz:58/ Beguelin Import Co. v. G. L. Import Export SA (22/71), 25 November 1971: [1971] E.C.R. 949, [1972] C.M.L.R. 81. Gaz:22/ Schutzverband gegen Unwesen In der Wirtschaft v. Weinvertriebs-GmbH (59/82), 20 April 1983: [1983] E.C.R. 1217, [1984] 1 C.M.L.R Gaz:59/82 The following additional case was referred to in argument: 13. Keurkoop v. Nancy Keen Gifts (144/81), 14 September 1982: [1982] E.C.R. 2853, [1982] 2 C.M.L.R. 47. Gaz:144/81 TABULAR OR GRAPHIC MATERIAL SET FORTH AT THIS POINT IS NOT DISPLAYABLE Facts This case concerns the use by a French company on the German market of a distinctive sign. The French company Ringelhan & Rennett SA, the first defendant in the main proceedings, was founded in 1971 as a subsidiary of the German company Ringelhan & Rennett which was wound up as a result of insolvency in Before the winding-up the French company was sold to a third party and since the winding-up the second defendant, Ringelhan Einrichtungs GmbH, has looked after its commercial interests in Germany. The old German company Ringelhan & Rennett and Theodor Kohl KG, the plaintiff in the main proceedings, were two of the main manufacturers and installers of pharmacy equipment on the German market. The old German company Ringelhan & Rennett and its subsidiaries in other member-states, including in particular the French company, offered the same range of pharmacy equipment under a joint business name, their trade symbol being 'r & r'in white letters on a red background. Since the winding-up of the German company the French company and its new representative in Germany have continued to use that mark for the presentation and marketing of their products on the German market. On 27 January 1983 Kohl KG brought an action under section 3 of the Gesetz gegen den unlauteren Wettbewerb (Unfair Competition Act) in the Landgericht München I (Regional Court, Munich *343 I) for an injunction restraining the defendants from referring in their business correspondence and advertisements concerning pharmacy equipment to the 'r & r' symbol of the old Ringelhan & Rennett company without clearly indicating that they have no legal or economic

4 links with that company. Section 3 of the Gesetz gegen den unlauteren Wettbewerb (UWG) reads as follows: Whosoever in the conduct of business for purposes of competition makes misleading statements regarding commercial matters, in particular regarding the quality, origin, method of manufacture or of calculating the price of specific goods or services or the whole range of his products or services, price lists, the manner in which supplies are obtained or their source, the winning of awards, the cause or purpose of the sale or the quantities available may be sued for an injunction restraining him from making such statements. The plaintiff asserted before the Landgericht that the use of the mark in question gave the false impression that the old German company, which had an excellent reputation, was involved when there were no longer any links with that company and that the defendants were therefore unfairly exploiting the goodwill of the old company. The defendants argued that before the German company was wound up the two companies, German and French, formed a single economic entity sharing common management. Their business was carried on jointly at both the manufacturing level and the marketing level. To some extent the French company also supplied equipment to pharmacies in the Federal Republic of Germany. By virtue of Article 30 of the EEC Treaty the French company therefore had the right, even after the liquidation of the German company, to use the 'r & r' symbol on the German market too and could not be required to provide additional information other than that usually provided in business relations. In view of that dispute the Landgericht München I, by order of 9 June 1983, submitted the following question to the Court for a preliminary ruling under Article 177 of the EEC Treaty: If a company symbol (in this case 'r & r' in white lettering on a contrasting background) has hitherto been lawfully used by a foreign undertaking (in this case French) in its own country (France) to designate that undertaking in business or trade and that undertaking used to form a group with an undertaking in the Federal Republic of Germany which used the same company symbol to designate that (German) undertaking in the Federal Republic of Germany until the German undertaking went into liquidation and as a result ceased to exist and if under national (German) competition law the use of the company symbol in question by the foreign (French) undertaking in the Federal Republic of Germany is unlawful on the ground that persons seeing the symbol perceive it as designating the non-existent German undertaking or in any event the (likewise non-existent) group of undertakings and such use is therefore misleading (section 3 of the Gesetz gegen den unlauteren Wettbewerb (Unfair Competition Act), *344 does Community law (in particular Article 30 of the EEC Treaty) prevent the foreign (French) undertaking from being prohibited from using the symbol in the Federal Republic of Germany? Does the answer depend on the degree to which such usage is misleading? Upon hearing the report of the Judge-Rapporteur and the views of the Advocate General the Court decided to open the oral procedure without any preparatory

5 inquiry. However, it put some questions to the parties to the main proceedings to which they replied within the time allowed. Opinion of the Advocate General (Herr Carl Otto Lenz) This case concerns the limits in Community law on an action for an injunction, based on provisions regarding fair trading and consumer protection, against the use in a member-state of a company symbol lawfully used in trade in another member-state. A According to the information supplied by the national court the facts are as follows: The plaintiff in the main proceedings, Theodor Kohl KG, Regensburg, is a leading German manufacturer and distributor of pharmacy equipment. The first defendant, Ringelhan & Rennett SA of Annecy, was established in 1971 as a subsidiary of the German firm Ringelhan & Rennett GmbH & Co. KG of Oberhausen, which had been in business since the end of the 1950s. Until it was wound up for insolvency in 1982, the parent company was also one of the leading German manufacturers and installers of pharmacy equipment. Shortly before its winding-up it sold its French subsidiary to a third party. The second defendant, Ringelhan Einrichtungs GmbH, is a German limited liability company, founded after the winding-up, which became the commercial representative of the French firm. Originally the French subsidiary and the German parent company offered a single range of equipment under their respective business names and used as their trade symbol a white 'r & r' on a contrasting background. After the winding-up of the German company the French undertaking and its commercial representative continued to use the trade symbol in question; in particular, they used an illuminated advertising sign incorporating that symbol on a stand at a trade fair. The plaintiff, relying on sections 1 and 3 of the German Gesetz gegen den unlauteren Wettbewerb (Unfair Competition Act), seeks an injunction restraining the defendants from referring in their business correspondence and advertisements concerning pharmacy equipment to the symbol described without clearly indicating that *345 they have no legal or economic connection with the defunct German company. The relevant part of section 3 of the Unfair Competition Act reads as follows: Whosoever in the conduct of business for purposes of competition makes misleading statements regarding commercial matters, in particular regarding the quality, origin, method of manufacture or of calculating the price of specific goods or services or the whole range of his products or services, price lists, the manner in which supplies are obtained or their source... may be sued for an injunction restraining him from such statements. The plaintiff, which does not claim any superior right of its own to the trade symbol, bases its claim essentially on the allegation that the symbol in question gives the false impression that the economically insignificant French firm

6 Ringelhan and Rennett SA is the same as the formerly substantial undertaking Ringelhan & Rennett, of Oberhausen, or at least has legal or economic links with that undertaking, which used to enjoy an excellent reputation. In reply the defendants argue that the French firm is in no way an insignificant undertaking, but is one of the largest suppliers in France. Both firms, originally joined in a single group, inter alia shared the same managing director and carried on an integrated business. In particular, they had joint manufacturing and marketing programmes, used uniform advertising methods, exchanged personnel and switched orders from one firm to the other. Even before the winding-up the French firm had to some extent supplied equipment to pharmacies in the Federal Republic of Germany. The defendants argue that they are entitled to use the business name in question pursuant to section 12 of the German Bürgerliches Gesetzbuch (Civil Code) in conjunction with Article 8 of the Paris Convention. As a former member of a group the French firm has merely continued to use a symbol of common origin which it formerly used with the permission of the parent company. Furthermore, it obtained express permission from the liquidator of the German firm for the use in Germany of the trade symbol of the former parent company and therefore, alongside its own right, has a contractual right to its use. Article 30 of the EEC Treaty, in particular, permits the use of the trade symbol in question on the German market. It cannot be required to add information to that permissible designation other than the usual name of the firm, including its status as a company, and its French address. By order of 9 June 1983 the Fourth Commercial Chamber of the Landgericht München I stayed the proceedings and referred the following question to the Court of Justice pursuant to Article 177 of the EEC Treaty: [The Advocate General repeated the question, and continued:] *346 B My view of the matter is as follows: The national court wishes essentially to know whether the provisions of Community law on the free movement of goods make inadmissible a national law according to which an undertaking from another member-state which originally formed a group with a domestic undertaking which has subsequently ceased to exist may be prohibited from using a trade symbol within the country concerned, on the ground that such use constitutes a reference to the defunct domestic undertaking or to the defunct group and is therefore misleading. The national court seems inclined to the view that on the basis of the provision of national law, which is designed to promote fair trading and to protect consumers against the use of misleading statements, the plaintiff is entitled to demand that the defendants cease to use the trade symbol in question. 1. In considering this question is must first be pointed out that the Court of Justice has consistently held that the free movement of goods is one of the foundations of the Common Market. Accordingly, it has in every case weighed the interests protected by the law on unfair competition or by the law on industrial property against the interests secured by the free movement of goods. It has thus recognised that the implementation of such national protective provisions must in

7 principle be measured against the objectives of Community law. 2. The prohibition envisaged by the national court preventing the defendants from using in the Federal Republic of Germany their trade symbol, which is lawfully used in France, or at least preventing them from referring to the now defunct original owner of the mark in Germany, must, as all parties to the proceedings agree, be regarded as a measure capable of hindering Intra-Community Trade As Referred To In The Dassonville formula (Case 8/74 [FN1]). That is because a prohibition on the use of the trade symbol in question, which contains a reference to the trade name of the first defendant, is likely to restrict the advertising and sales promotion possibilities of the French owner of the mark in Germany. As the Court of Justice held in Case 152/78(E.C. Commission v. France [FN2]: advertising of alchoholic beverages) and in Case 286/81 (Oosthoek [FN3]), even if such a regulation does not affect imports directly it may restrict the volume of imports since it influences sale possibilities for the imported products. FN1 [1974] E.C.R. 837, [1974] 2 C.M.L.R FN2 [1980] E.C.R. 2299, [1981] 2 C.M.L.R FN3 [1982] E.C.R. 4575, [1983] 3 C.M.L.R Finally, the restriction on trade which may result from such provisions is also expressly acknowledged by Council Directive 84/450 of 10 September 1984 relating to the approximation of the *347 laws, regulations and administrative provisions of the member-states concerning misleading advertising. [FN4] In the preamble to that directive it is stated inter alia that: 'Since advertising reaches beyond the frontiers of individual member-states, it has a direct effect on the establishment and the functioning of the Common Market.... The differences between the laws of the member-states not only lead, in many cases, to inadequate levels of consumer protection, but also hinder the execution of advertising campaigns beyond national boundaries and thus affect the free circulation of goods and provision of services.' The application of section 3 of the Unfair Competition Act in the manner envisaged by the national court must therefore in principle be regarded as a measure having an effect equivalent to a quantitative restriction on imports. FN4 [1984] O.J. L250/17, [1985] 1 Commercial Laws of Europe The matter therefore depends essentially on the extent to which such an application of that provision can be justified in the interests of fair trading and consumer protection. There are two possibilities: either the judicial prohibition of the use of the trade symbol in question might not be regarded as a measure having equivalent effect prohibited by Article 30 of the EEC Treaty, under the cassis de dijondoctrine [FN5], or it might be justified under Article 36 of the EEC Treaty by reference to trade mark rights and the judgments of the Court on the common origin of trade

8 mark rights. Consequently, both possible justifications are considered by the parties to the proceedings. FN5 [1979] E.C.R. 649, [1979] 3 C.M.L.R (a) As regards the justification based on trade mark rights, all parties to the proceedings correctly start from the proposition that the principles of Community law regarding the exhaustion of trade marks must also apply to company symbols. Company symbols and trade marks are to a large extent similar to each other as regards their nature, which is analogous to that of property, their function of guaranteeing to the consumer the origin of the goods, and the legal protection accorded to them, so that the judgments of the Court on the exhaustion in Community law of industrial and commercial property rights and in particular on the splitting of rights of common origin may also apply to company symbols. Accordingly, in the Terrapin v. Terranova judgment (Case 119/75), [FN6] the Court of Justice phrased the operative part of its judgment so as equally to cover rights to trade marks and commercial names protected by law. FN6 [1976] E.C.R. 1039, [1976] 2 C.M.L.R In contrast to the Terrapin case, however, this case concerns the splitting of the right to the symbol, and it is irrelevant whether the splitting took place as a result of the alienation of the right or as a result of the liquidation of the German firm. According to the *348 judgment in Van Zuylen v. Hag (Case 192/73), [FN7] it is in any event a case of exhaustion of the right to the mark, since the identifying rôle of the mark has already been nullified by its splitting and can therefore no longer be protected. That means that even the German parent company, if it still existed, or a successor firm, could not, according to law on the use of trade symbols, prohibit the use of the identical company symbol, of common origin, in the territory where its right is valid. In the opinion of the defendants in the main proceedings, the French Government and the Commission, that fundamental principle of Community law must a fortiori apply also to actions for injunctions based not on industrial property rights but, as in this case, on considerations of fair trading and consumer protection. FN7 [1974] E.C.R. 731, [1974] 2 C.M.L.R (b) Although that proposition is at first sight convincing, there are a number of reasons why the judgments on Article 36 referred to cannot, as the defendants in the main proceedings and the Commission concede, be applied to this case without further consideration. In contrast to those cases, the plaintiff in the main proceedings is not in this case the owner of a symbol of common origin, and the claim is based not on the infringement of rights analogous to property rights but on the alleged deception of consumers. In Van Zuylen v. Hag, the Court made it clear that its decision related only to actions for injunctions based on legislation regarding trade mark rights. In

9 stating that it is contrary to the provisions on the free movement of goods that the sale of a product which in one member-state lawfully bears a trade mark should be forbidden in another member-state for the sole reason that in the latter State there exists an identical trade mark of common origin, it showed that where there are additional elements of impropriety there remains room for the application of the provisions on unfair competition. It must now be accepted, at least since the 'Irish Souvenir' case (Case 113/80, E.C. Commission v. Ireland), [FN8] that consumer protection and fair trading may be taken into account only in the context of Article 30 and not under Article 36, since those interests are not included in the exceptions exhaustively listed in Article 36. FN8 [1981] E.C.R. 1625, [1982] 1 C.M.L.R As the Court of Justice has repeatedly pointed out in its judgments applying the Cassis De Dijon doctrine (see in particular Case 6/81, Industrie Diensten Group v. Beele, [FN9] Case 220/81, Robertson, [FN10] and Case 286/81, Oosthoek), in the absence of common rules relating to marketing, obstacles to intra-community trade resulting from disparities between national legislation must be accepted in so far as such legislation is applicable to domestic *349 products and imported products without distinction and is necessary in order to satisfy imperative requirements relating to consumer protection and fair trading. FN9 [1982] E.C.R. 707, [1982] 3 C.M.L.R FN10 [1982] E.C.R. 2349, [1983] 1 C.M.L.R It is therefore necessary to examine whether the application of section 3 of the Unfair Competition Act in the manner suggested by the national court meets those conditions. Like the defendants and the Commission, I am of the view that the prohibition envisaged by the national court cannot be regarded as a measure applicable without distinction.it is true that, according to its wording alone, section 3 of the Unfair Competition Act unquestionably applies without distinction to the marketing of domestic as well as imported goods. If, however, that provision is interpreted in such a way that the use of a company symbol is prohibited solely on the ground that it misleads the consumer as to the domestic origin of the goods, and if no other evidence of unfair trading is required, it amounts to discriminatory application of the provision to domestic and imported products based not on any differences in the goods but essentially on the territorial limitation of national rights to the use of trade marks and other symbols. The judgments of the Court regarding the territorial exhaustion of trade marks and similar rights show, however, that the Common Market must be regarded as a single market for the purpose of those rights. It follows that the application of the provision in question suggested by the national court could only be regarded as a measure applicable without

10 discrimination if a corresponding domestic set of circumstances would be treated in the same way. That would in particular be the case if, to quote the example put forward by the Commission, an undertaking carrying on business in northern Germany which had been sold off before the liquidation of its parent company, formerly in business in southern Germany, could, after that liquidation, be prohibited on the basis of section 3 of the Unfair Competition Act from using in southern Germany for advertising purposes its company symbol, which was identical and of the same origin, and which made no reference to its geographic origin. In the course of the proceedings, however, neither side has been able to cite decisions of German courts applying section 3 in purely domestic circumstances of that kind. The fact that no such comparable cases involving purely domestic circumstances exist would tend to indicate that the application of section 3 envisaged by the national court discriminates between imported and domestic goods. Such an application is implied not least by the wording of the question submitted, according to which the use of the company symbol in question in Germany by the foreignundertaking is not permissible since the use in Germany of that symbol might be regarded as a reference to the defunct German undertaking. *350 As the Dansk Supermarket [FN11] judgment in particular makes clear, legislation on fair trading or consumer protection which is applied in a discriminatory manner to domestic and imported goods and which restricts the free movement of goods is always to be regarded as a measure equivalent in effect to a quantitative restriction, prohibited by Article 30 of the EEC Treaty. In that case the Court first of all emphasised that Community law does not in principle have the effect of preventing the application in a member-state to goods imported from other member-states of the provisions on marketing in force in the State of importation. Referring to the Beguelin [FN12] judgment, however, it went on to stress that the actual fact of the importation of goods which have been lawfully marketed in another member-state cannot be considered an improper or unfair act since that description may be attached only to offer or exposure for sale on the basis of circumstances distinct from the importation itself. The same must also apply in a case where goods are lawfully marketed in another member- State under a particular company symbol. FN11 [1981] E.C.R. 181, [1981] 3 C.M.L.R FN12 [1971] E.C.R. 949, [1972] C.M.L.R. 81. Finally, a prohibition on the use of a company symbol, based on national legislation and directed exclusively at the foreign origin of the symbol, must also be regarded as a measure which is not applicable without distinction and which favours domestic products under Article 2(3)(s) of Commission Directive 70/50. [FN13] According to that provision, measures which 'confine names which are not indicative of origin or source to domestic products only' fall within the category described.

11 FN13 [1970] O.J. Spec.Ed The Court has consistently held that provisions applicable in a discriminatory fashion cannot be justified under Article 30 of the EEC Treaty, but only under Article 36. Since, as has been shown, neither consumer protection nor fair trading can be invoked under Article 36, it must be concluded that national legislation which is intended to protect those interests and is not applied without distinction to domestic and imported products must be regarded as a measure equivalent in effect to a quantitative restriction on imports prohibited by Article 30 of the Treaty. Thus the Court held in Schutzverband gegen Unwesen In der Wirtschaft v. Weinvertriebs-GmbH (Case 59/82) [FN14] that a national provision for the protection of consumers which concerned only imported products was discriminatory and could not be justified on the grounds mentioned in Article 36. FN14 [1983] E.C.R. 1217, [1984] 1 C.M.L.R However, even if we were to assume that section 3 of the Unfair Competition Act would also lead to a prohibition of the use of the company symbol in comparable cases with a purely domestic *351 content and that the application of that provision in the manner envisaged by the national court therefore constituted a measure applicable without distinction to domestic and imported products, it would still be necessary under Article 30, according to previous judgments of the Court, to inquire whether the measure restricting trade could be justified on the basis that it was necessary in order to satisfy imperative requirements relating, inter alia, to consumer protection and fair trading. In the Cassis De Dijonjudgment the Court thus recognised that in the absence of Community legislation appropriate national marketing provisions may in principle result in a limitation of the free movement of goods guaranteed by the Treaty. (a) Unquestionably, the protection of the public against misleading information regarding the manufacturer of a product, which is one of the aims of section 3 of the Unfair Competition Act, must in principle be counted amongst the imperative requirements of consumer protection. On the one hand, it prevents the consumer from being deceived into thinking that a product comes from a firm with which certain notions of quality may be associated, and on the other hand acts as a safeguard against the dishonest exploitation of the good reputation of another undertaking. As the Court pointed out in the Beele [FN15] case, that such a rule does meet imperative requirements is borne out not least by the fact that it accords with the principle underlying Article 10bis of the Paris Convention for the Protection of Industrial Property, as last revised in Stockholm on 14 July 1967, which prohibits all acts of such a nature as to create confusion by any means whatever with the establishment, the goods, or the industrial or commercial activities of a competitor. FN15 [1982] E.C.R. 707, [1982] 3 C.M.L.R. 102.

12 (b) The Court has however consistently emphasised that in according such protection the existence of the Common Market must be taken into account and regard must be had to the limits in Community law which flow from the basic principle requiring free movement of goods. Taking as a basis the criteria laid down in Article 36, it has always inquired, in the context of Article 30, whether national legislation or the manner in which it is applied is appropriate and necessary for the achievement of the objectives in question, or whether it goes beyond the bounds of what may be justified by those objectives. (i) In this regard, it follows from the Irish Souvenir, Dansk Supermarked and Beguelincases that from the point of view of the protection of public interests and the related marketing regulations the foreign origin of a product can play no rôle, since otherwise it would not be a question of a measure applicable without distinction. *352 (ii) The Dansk Supermarked, Beele and Oosthoek cases show further that a prohibition on marketing founded on consumer protection and fair trading legislation which is applicable without distinction may only be justified where there are additional particular elements of impropriety. In the Dansk Supermarkedjudgment it is stated in this regard that the marketing of imported goods may be prohibited 'if the conditions on which they are sold constitute an infringement of the marketing usages considered proper and fair in the member- State of importation.' In the Beele case the particular element of impropriety was seen in the fact 'that in the provisional view of the national court the products which it intends to prohibit from being marketed are for no compelling reason practically identical to the products imitated and that the appellant in the main action thereby needlessly causes confusion'. In the Oosthoek case the Court came to the conclusion that the prohibition of a marketing system involving free gifts was capable of contributing to consumer protection and fair trading since 'the offering of free gifts as a means of sales promotion may mislead consumers as to the real prices of certain products and distort the conditions on which genuine competition is based.' 7. If, on the basis of those judgments, we now consider whether the prohibition of the use of the company symbol in question envisaged by the national court can be justified by imperative requirements of consumer protection and fair trading, it must be accepted, as the defendant in the main proceedings, the French Government and the Commission submitted, that an undertaking must in principle be able to use its business name and symbol throughout the Common Market and that that liberty may be restricted only on specific grounds, which must fulfil the requirements laid down in Article 36of the EEC Treaty. (a) From the point of view of the protection of competitors, the use of the company symbol in question for commercial purposes in Germany cannot in itself be regarded as improper, since, according to the judgment in Van Zuylen v. Hag, even a legal successor to the German firm, using an identical company symbol of common origin, could not bring an action for an injunction based on its right to that symbol. As the Court pointed out in the Terrapin case, the basic function of a trade mark (which may in this regard be equated with a company symbol) is to guarantee the origin of the product and that function is already undermined by

13 the subdivision of the original right. Such a view has all the more force where, after the division, one proprietor of the symbol is eliminated from the market and the symbol can therefore cause no confusion at all. The Commission is correct in submitting that the relevant criteria of Community law cannot in principle be less stringent *353 where a plaintiff relies on provisions designed to prevent unfair competition rather than on his own right to a trade symbol. (b) As the defendant in the main proceedings and the Commission correctly submit, moreover, in determining to what extent the prohibition of the use of the symbol in question under national competition law is acceptable from the point of view of consumer protection on the ground that consumers may be misled as to the manufacturer of the goods, the existence of the Common Market and the principle of the free movement of goods must also be taken into account. In this regard the plaintiff in the main proceedings and the German Government correctly point out that the answer to the question whether there is a deception of the consumer likely to influence his economic behaviour depends in principle on the expectations of the commercial circles in question. It must be conceded that the risk of such deception cannot be assessed in the abstract but can only be ascertained on the basis of a review by the national court of the circumstances of the particular case. In assessing the legal relevance of those circumstances the national court must however observe the restraints imposed by Community law. In that regard, the degree of deception is--to answer the second question--also relevant. (i) As I have already shown, the question to what extent the consumer is misled, by the use of a company symbol, with regard only to the foreign origin of a product must be disregarded, since otherwise the application of national law would be discriminatory and could not be justified on grounds of consumer protection. (ii) As regards the consideration of other aspects of unfairness which, in the context of competition law, may justify restrictions on the free movement of goods, the Court has consistently held that under both Article 36 and Article 30 there must be a balancing of the two legal interests concerned, taking into account the necessity and the proportionality of the restrictive measure. A measure restrictive of trade is therefore only compatible with the provisions on the free movement of goods if (i) it corresponds to imperative requirements which are matters of public interest and (ii) it is not devised in such a way as to contravene the prohibition on excessive measures, the principle of minimum intervention and the principle laid down in the second sentence of Article 36, according to which the measure must not constitute a means of arbitrary discrimination or a disguised restriction on trade between member-states. (iii) Having regard to those criteria, it must be stated, as the defendants in the main proceedings and the Commission submitted, that as a matter of general experience consumer *354 expectations link a company symbol above all with particular claims of quality. Such consumer expectations could therefore merit protection if, for example, the goods or services offered by the surviving French firm differed substantially in quality from those of the defunct group. The national court has provided no information from which specific aspects of unfairness of

14 that nature could be inferred. Where the products are identical, which does not seem to be disputed in this case, purchasers can hardly be deceived by the use of a symbol as to the particular nature of the goods and services offered under that symbol. At the hearing counsel for the plaintiff in the main proceedings conceded that point. In weighing the different interests represented by the free movement of goods and consumer protection the national court must also take into account the fact that consumer expectations with regard to the characteristics of goods and the rights of industrialists may only in exceptional cases and in particular circumstances justify interference in the free movement of goods. In making that assessment it must also be borne in mind that purchasers of pharmacy equipment can hardly fail to have learned of the disappearance of the original group of firms and that those purchasers can deduce from the place of business of the firm (Annecy) and the company designation (SA), which accompany the symbol, that the firm which now uses the symbol 'r & r' for its goods is a French undertaking. C For those reasons, I therefore propose that the Court should answer the preliminary question as follows: Articles 30 and 36 of the EEC Treaty must be interpreted as meaning that the use in a member-state of a company symbol which is lawfully used in another member-state as a reference to an undertaking, in the circumstances of previous economic unity and common origin described by the national court, cannot in itself be regarded as an unfair commercial practice. That applies without prejudice to the possible application of legal provisions of the importing State whereby such use may be prohibited on the ground of other specific factors of impropriety, such as the deception of consumers as to the particular nature and quality of the goods or services traded under such a company symbol. But even then the national authorities must still consider whether the restriction of the free movement of goods is absolutely necessary in the interests of fair trading. JUDGEMENT [1] By an order of 11 August 1983, which was received at the Court on 16 August 1983, the Landgericht München I (Regional *355 Court, Munich I) referred to the Court of Justice for a preliminary ruling under Article 177 of the EEC Treaty a question on the interpretation of Article 30 of the Treaty, so as to enable it to reach a decision on the compatibility with that Article of a provision of German law regarding unfair competition. [2] Section 3 of the German Unfair Competition Act (Gesetz gegen den unlauteren Wettbewerb) prohibits 'misleading statements regarding... the origin... of specific goods... or their source...'whosoever makes such statements in the conduct of business for purposes of competition may be sued for an injunction restraining him from making such statements. [3] That provision was relied on by an undertaking specialising in the

15 manufacture and installation of pharmaceutical equipment, Theodor Kohl KG, of Regensburg in the Federal Republic of Germany, in an action to restrain a French undertaking which distributes on the German market the same equipment as itself from using a distinctive symbol formerly used by a group of undertakings controlled by the German company Ringelhan & Rennett. [4] The French company Ringelhan & Rennett SA, of Annecy, France, was founded in 1971 as a subsidiary of the German company Ringelhan & Rennett. The group thus formed used the symbol 'r + r', in white letters on a contrasting background, to distinguish the undertakings belonging to the group. After the insolvency and liquidation of the German company Ringelhan & Rennett in 1982, the French company, which had in the meantime been sold to a third party, continued to use the distinctive symbol, having been authorised to do so by the liquidator of the German company. For the distribution of the equipment in question on the German market the French company used its new representative in the Federal Republic of German, the German company Ringelhan Einrichtungs GmbH, of Oberhausen. [5] The gravamen of Kohl's complaint is that Ringelhan & Rennett SA (the French company) and Ringelhan Einrichtungs GmbH (the new German company) refer in their business correspondence and advertisements on the German market to the 'r + r' symbol without indicating that there is no longer any legal or economic connection with the old Ringelhan & Rennett company, which formerly had a considerable reputation in the sector in question. Thus, according to Kohl, the two existing Ringelhan companies have misled the German public. [6] Kohl's contention was upheld in interlocutory proceedings before the German courts on the ground that the advertising of the two existing Ringelhan companies could, in the absence of any indication that there was no connection with the old German company, give the impression that the goods came from the old company and not from a foreign undertaking. Interlocutory *356 injunctions were granted prohibiting the two companies from using the distinctive symbol. [7] The case came before the Landgericht München I, which took the view that the use of the distinctive symbol in the Federal Republic of Germany by the French firm was prohibited by German competition law even though the symbol was lawfully used in France, since the relevant business sector in Germany might regard the symbol as a reference to the defunct German undertaking or, in any event, to the group of undertakings, which had also ceased to exist, and that such use might therefore be misleading, contrary to section 3 of the Unfair Competition Act. [8] The national court therefore referred to the Court of Justice for a preliminary ruling the questions whether under Community law, in particular Article 30 of the EEC Treaty, it is permissible to prohibit the French undertaking from using the distinctive symbol in question on German territory, and whether the degree to which such use is misleading has any relevance. [9] The purpose of those questions is to establish whether a member-state's legislation on unfair competition must be regarded as a measure equivalent in effect to a quantitative restriction within the meaning of Article 30 of the Treaty if it makes it possible to prohibit the use, by an undertaking established in another

16 member-state, of a distinctive symbol lawfully used in that other member-state, on the sole ground that the symbol was formerly used by a group of undertakings to which it belonged, in common with an undertaking established in the first member-state which has since been wound up, and that the symbol might therefore be regarded by the public as a reference to the defunct undertaking or group. [10] It should first be pointed out that in this case the undertaking seeking to restrain the use in the Federal Republic of Germany of the distinctive symbol in question does not rely on the fact that it is itself the proprietor of a similar distinctive symbol or of another industrial property right, such as a trade mark, and that the use of the symbol in question by the French undertaking might interfere with those rights or cause confusion in the mind of the German public between its own products and those of the French undertaking. It simply argues that the use of the symbol in question is misleading on the sole ground that it might be regarded by the German public as a reference to another German undertaking which has since been wound up. [11] Thus the question raised concerns the compatibility with the Treaty of a legal provision in one member-state making it possible to prohibit the use of a distinctive symbol by an undertaking established in another member-state where its use is lawful in that other member-state and was also lawful in the first member-state until the dissolution of the group which associated the undertaking in question with a company established in the first member-state. *357 [12] Theodor Kohl KG, the plaintiff in the main proceedings, and the Government of the Federal Republic of Germany pointed out in that regard that the Court has held in previous judgments that, in the absence of common rules, obstacles to intra-community trade resulting from disparities between national legislation must be accepted in so far as such legislation, being applicable to domestic products and imported products without distinction, is necessary in order to satisfy imperative requirements relating inter alia to consumer protection and fair trading. [13] According to the Ringelhan companies, the defendants in the main proceedings, the Government of the French Republic and the Commission, that principle does not apply to a case such as this, where the obstacle to trade created by the application of national legislation is a result of the liquidation of a German company and the dissolution of the group composed of it and a French undertaking. It is contended that such circumstances cannot have the result of allowing a competitor on the German market to invoke consumer protection where he could not do so before the dissolution of the group. [14] It must first be considered whether national legislation of the type concerned in this case may be regarded, from the point of view of its effect on trade between member-states, as being applicable without distinction to domestic and imported products. That is in fact a precondition for the application of the principle laid down in the judgments cited by Kohl and by the German Government, as the Court explained in particular in its judgment of 17 June 1981 (Case 113/80, E.C. Commission v. Ireland [FN16]).

17 FN16 [1981] E.C.R. 1625, [1982] 1 C.M.L.R [15] The facts established by the national court and set out in its order show that that condition is not fulfilled in a case such as the present. Even though a provision of national legislation on unfair competition applies without distinction to the marketing of domestic and imported goods, it cannot fulfil the condition referred to above if it is interpreted in such a way that it becomes possible to prohibit the use of a distinctive symbol for the sole reason that the public may be misled as to the domestic or foreign origin of the goods, without its being necessary to adduce evidence of other specific factors establishing the existence of unfair competition. In such a case, the provision in question in fact applies only to the marketing of imported products. [16] To the extent to which it makes it possible to impose such a prohibition, a provision of national law cannot be regarded as legislation applying in a uniform manner to the marketing of domestic products and imported products. [17] Such a provision makes it possible to erect barriers within the Common Market, amounting to a restriction on intra-community trade prohibited by Article 30 of the Treaty. *358 [18] The German Government further argued that even if the provision of national law in question was contrary to Article 30 it could be justified by reference to Article 36 of the Treaty, since consumer protection falls within a broad interpretation of the concept of public policy referred to in that Article. [19] That argument cannot be accepted. Whatever interpretation is to be given to the term 'public policy', it cannot be extended so as to include considerations of consumer protection. According to the aforesaid judgment of 17 June 1981, such considerations may in certain circumstances be taken into account in establishing whether national measures applicable without distinction to domestic and imported products are caught by the prohibitions laid down in Article 30; they cannot, however, serve to justify restrictions on imports under Article 36. [20] The answer to the question raised must therefore be that Article 30 of the EEC Treaty must be interpreted to mean that the prohibitions laid down therein apply to a member-state's legislation on unfair competition in so far as it makes it possible to prohibit the use, by an undertaking established in another member- State, of a distinctive symbol lawfully used in that other member-state, on the sole ground that the symbol was formerly used by a group of undertakings to which it belonged, in common with an undertaking established in the first member-state which has since been wound up, and that the symbol might therefore be regarded by the public as a reference to the defunct undertaking or group. Costs [21] The costs incurred by the Government of the Federal Republic of Germany, the Government of the French Republic and the Commission of the European Communities, which submitted observations to the Court, are not recoverable. As these proceedings are, in so far as the parties to the main proceedings are

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