EU court ruling on Levis jeans a setback for consumers

David Lawsky

Luxembourg: Europe’s highest court punctured consumers’ hopes of buying cheap designer goods imported from outside the European Union on Tuesday, handing Levi Strauss the right to lock out imports of cut-price jeans. The US clothing giant won a landmark ruling from the European Court of Justice ensuring its right to limit imports of its denims from outside the European Union.

The decision was a setback for British supermarket group Tesco Plc, which had imported Levis jeans from the US and sold them at cut-rate prices. The European court broke new ground in protecting the rights of trade mark holders against retailers seeking to import their products from outside the EU and resell them without the trade mark holder’s authorisation.

The court said a trade mark holder, such as Levi Strauss, must give explicit permission to a retailer such as Tesco to sell trade marked goods imported from outside the European Economic Area — the 15 EU states plus Norway, Iceland and Liechtenstein. Without such explicit authority, the court said it was up to the trader to prove it had received implied consent.

“The court finds that consent must be expressed positively, the factors taken into consideration in finding implied consent must unequivocally demonstrate that the trade mark proprietor has renounced any intention to enforce his exclusive rights,” the court said in a press release. “It follows that it is not for the trade mark proprietor to demonstrate absence of consent, but rather for the trader alleging consent to prove it,” it added. The court said its ruling should be enforced uniformly across the European Economic Area, “in order to avoid a situation in which protection varies according to the national legal systems of the member states.”

Consumer disappointment
Caroline Hayat, a spokeswoman for European consumers’ group BEUC, voiced disappointment at the ruling. “We believe that the trade mark regime is protecting brands and going against consumers’ interest,” Ms Hayat said. “Trade mark was created to protect brands and consumers against counterfeiting and piracy. Now it’s only used to protect the privileges of the brands,” she said.

The EU court’s ruling set legal standards that British courts must use in making a final ruling on the case. Perfume maker Zino Davidoff joined the case on the side of Levi Strauss, and discount retailer Costco on the side of Tesco. The decision was expected to have a broad effect on consumers, determining if retailers across Europe can legally buy everything from motorcycles and auto parts to toys and perfume outside the EU and sell them at home at prices below those of manufacturers’ authorised importers.

Tesco has stopped selling Levis imported from the US, but says it has recently found a way to work around the rules. It is importing Levis more cheaply from other countries in the EU and re-selling them, according to Christine Cross, world non-food buying director for Tesco.

The practice of buying jeans in other EU countries and re-selling them, known as “grey market” imports, would not be barred by Tuesday’s court ruling. Tesco is selling Levis 501 jeans for £27.99 ($39.61), compared with the £45 to 56 the same product sells for elsewhere.

— Reuters