Proof of exhaustion: Poland's Supreme Court signals a shift for parallel importers

A luxury perfumery brand with a selective distribution network and a single exclusive distributor in Poland took on a major Polish online retailer, suing for trade mark infringement. The retailer had sourced the brand's products from Polish suppliers who contractually ensured lawful EEA marketability.

The District Court in Warsaw sided with the defendant and dismissed the infringement action. It found that the risk of market partitioning shifted the burden of proof to the claimant. The Court of Appeal saw things differently. It reversed, placed the burden squarely on the online retailer, and found it had not been discharged. The online retailer fought back with a cassation complaint to the Supreme Court, seeking a declaration that the appellate judgment was unlawful.

The Supreme Court in its recent judgment (II CNPP 3/25) zeroed in on the central issue. The Court recalled that, in the absence of rules on the burden of proof in Regulation 2017/1001 or Directive 2004/48, the CJEU said a national rule placing that burden on the defendant is, in principle, compatible with EU law. However, free movement of goods considerations may require adjustment. Van Doren (C-244/00) illustrates why. A trade mark owner may market goods in the EEA through an exclusive distribution system. In such a case, requiring a third party to prove where the goods were marketed creates a risk of market partitioning. The right holder could identify and cut off whichever network member supplied the goods. That structural asymmetry of information generates the risk. Once the third party demonstrates that the risk exists, the burden shifts to the trade mark owner to prove the products were initially placed outside the EEA. Only then must the third party prove consent to first marketing in the EEA. This two-stage mechanism does not relieve the defendant of all evidentiary responsibility.

The Supreme Court then turned to Hewlett Packard (C-367/21), where the CJEU drew a clear line: the burden of proof cannot rest exclusively on the defendant where the goods bear no markings identifying the intended market, are distributed through a selective network whose members may resell only to other members or end users, the defendant obtained supplier assurances of lawful marketability, and the trade mark owner refuses to verify the goods' status. The facts of the present case tracked those circumstances closely. The Supreme Court found that there were serious grounds to consider whether a breach of Article 15(1) of Regulation 2017/1001 had occurred, especially given the exclusive national distributor's dual role and the real risk of market partitioning. Yet (and here lies the twist) the cassation complaint was nonetheless dismissed. A declaration of unlawfulness requires a qualified, manifest breach, a threshold not met where national courts chose one of several plausible interpretations consistent with existing case law.

Commentary

The significance of the Supreme Court's judgment lies in its reasoning. As the CJEU confirmed in Hewlett Packard, exhaustion operates in relation to specific product placed on the EEA market by the trade mark owner or with its consent. A supplier's assurance of lawful marketability is not, by itself, sufficient. The defendant must also demonstrate that the conditions of exhaustion have been satisfied for the specific goods at issue. Even where suppliers refuse to reveal their sources, a parallel importer should seek to build product-specific evidence of EEA first marketing.

The takeaway for parallel importers is straightforward: treat the Supreme Court's sympathetic analysis as encouragement to build product-specific evidence of exhaustion. A selective or exclusive distribution system is the trigger for the "Van Doren" adjustment. It is that structure which gives the trade mark owner both the ability to control market information and the incentive to use burden-of-proof rules to sustain price differentials. The court hearing the infringement action must adjust the burden once the defendant demonstrates that its allocation would create a real risk of market partitioning. Ultimately the Supreme Court dismissed the cassation complaint, but the message is clear: trade mark owners whose networks are permeable cannot use burden-of-proof rules as a substitute for controlling who sells their goods. The Supreme Court said as much, even if it could not yet say it formally.