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Appeals court rules in favour of grey trader in Sun case

Alex Scroxton

In a case with massive ramifications for grey marketing, the Court of Appeal has today held that a reseller accused by Oracle of importing second-hand Sun Microsystems hardware from outside the EEA was entitled to argue that specific articles in the EC Treaty prevented Oracle from obtaining summary judgment for trademark infringement.

The reseller in question, a firm called M-Tech, was accused of buying grey market Sun kit from a US dealer, which infringes EC trademark law even if the goods are genuine.

Central to M-Tech's argument was the position that Oracle had no right to enforce its trademark rights because it was "impossible for independent traders to differentiate between genuine Sun goods first marketed in the EEA and those first marketed outside the EEA".

It claimed Oracle had deliberately not made its serial number database available to the channel, and that aggressive litigation by Oracle meant that the independent sector was no longer dealing in any second-hand Sun gear, regardless of its provenance.

M-Tech maintained Oracle had caused articifical partitioning of the European market, adding that distribution agreements that prevented buying from the independent sector were anti-competitive.

Oracle's arguments, that the Trade Mark Directive was a complete code and there was no basis for M-Tech's claims, were initially accepted, but on appeal the court decided that the facts presented by M Tech could give rise to a defence.

"This case clearly has important financial and economic implications not just for the parties but also for others involved in the grey market in Oracle, and possibly other, computer hardware and goods. The economic function of parallel imports and the grey market is controversial," the court said.

In a statement, Harvey Stringfellow of Hill Dickinson LLP, which acted for M-Tech, said: "It is often the case that the independent sector cannot determine the provenance of branded goods and thus are often sued for trademark infringement as a result of trap purchases by brand owners."

He added: "This case provides a potential defence to parallel importers and a warning to trademark holders that they may have to be careful in the enforcement of their rights."

In the lead judgment, Lady Justice Arden said the issues may well be "likely to affect the European Union as a whole."

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