2012 International Law Update, Volume 18, Number 3 (July - August - September)

2012 International Law Update, Volume 18, Number 3 (July - August - September)

Legal Analyses published by Mike Meier, Attorney at Law. Copyright 2017 Mike Meier. www.internationallawinfo.com. 

COPYRIGHT LAW

In a longstanding civil action involving competing claims to the right to use the term “Budweiser” as between the larger U.S. Company and the Czech Company who both manufacture and market beers in many nations, after a reference to the European Court of Justice, the English Court of Appeal (Civil Division) addresses whether English or European Union law enables the proprietor of its earlier mark to prevail in England even where there has been a long period of honest concurrent use in the English market of two identical trade marks for substantially identical goods

[Sir Robin Jacob: (giving the first judgment at the invitation of Ward L.J.)]

1. “By our judgment of 20th October 2009, [2009] EWCA Civ 1022, we decided to refer to the Court of Justice of the European Union (the CJEU) some questions of trade mark law: the answers would be necessary to resolve this appeal. It is from the decision of Norris J of 19th February 2008 dismissing BB’s (as I shall call the appellants) appeal from the decision of 2nd August 2007 of the Hearing Officer, Mr Foley, in the Trade Mark Registry.”

2. “The general facts and background to the appeal are already set out in our first judgment ¼. In the first judgment we resolved certain English law defences (abuse of process, estoppel) against BB. No more need be said about them.”

3. “BB also raised a defence of acquiescence under Art. 9(1) of the Directive. This raised two questions of law for the CJEU. BB accepts that the response from the CJEU rules out any defence of acquiescence. So no more need be said about that.”

4. But we had a third question. It was this: In Council Directive 89/104/EEC: 3. Does Art 4(1)(a) apply so as to enable the proprietor of an earlier mark to prevail even where there has been a long period of honest concurrent use of two identical trade marks for identical goods so that the guarantee of origin of the earlier mark does not mean the mark signifies the goods of the proprietor of the earlier and none other but instead signifies his goods or the goods of the other user?”

5. “The CJEU ruled that Article 4(1)(a) of Directive 89/104 must be interpreted as meaning that the proprietor of an earlier trade mark cannot obtain the cancellation of an identical later trade mark designating identical goods where there has been a long period of honest concurrent use of those two trade marks where, in circumstances such as those in the main proceedings, that use neither has nor is liable to have an adverse effect on the essential function of the trade mark which is to guarantee to consumers the origin of the goods or services.”

6. “Mr Mellor QC submits that answer to the case is now clear. It is that where a long‑standing situation of honest concurrent user of the same mark for the same goods has come about, each user can register its mark, each can stop third parties from using it, but that neither can stop the other. The state of honest concurrent use means that the essential function of the parties’ trade marks is not regarded as having adverse effect. True it is that there will always be some confusion, but that does not matter. It is also true that cases of honest concurrent use are rare, but this is such a case.”

7. “Mr Bloch QC for AB submits: (a) The honest concurrent use point is not open for BB to take on appeal; (b) If it can be taken, then on the basis of findings of fact in the earlier litigation between the parties, he can demonstrate an ‘adverse effect’; (c) If that be not so, then it would be unfair and unjust to resolve the appeal against AB because AB never had an opportunity of proving an adverse effect. Instead we should remit the case back to the Trade Marks Registry so that the issue of ‘adverse effect can be properly investigated by way of further evidence.”

Is it open for BB to take the point on appeal?

8. “I see nothing unfair about allowing the point to be taken on appeal to this court. It is simply a point of law which is taken on the basis of the evidence before the Hearing Officer. There is generally no unfairness in the Court of Appeal considering whether on the facts a case has been made out as a matter of law, even if the point is raised for the first time in that court. Things are of course different if the point also involves questions of fact which require further evidence.”

“It is perhaps worth observing that the great ‘honest concurrent use’ case, GE itself, involved two fresh points of law on appeal. The first instance case was concerned with issues about alleged improper licensing and ‘muddying the mark’, the Court of Appeal was concerned with whether the GE and GEC marks were confusingly similar and whether s.11 of the 1938 [Act] therefore invalidated GE’s mark and the House of Lords was concerned with the meaning of ‘disentitled to protection in a court of justice’ within s.11. Lord Diplock was moved to describe the case as having a ‘chameleon‑like history’ [1973] RPC 297 at p.318

9. “In considering whether it is unfair it is also pertinent to note that BB raised the point fairly and squarely in its Notice of Appeal. There is no question of AB being taken by surprise. Moreover, the fact that we referred a question about the point over AB’s objection shows that we have already allowed the point to be taken.”

10. “Accordingly, I think there is nothing unfair about allowing BB to run the point now. It is merely saying that in law, on the existing evidence, AB has failed to make out its case. The fact that AB did not put in evidence on essential function is due solely to its mistaken view of the law. I deal with the possibility of further fact finding later.(b)

Is there harm to the essential function made out on the existing evidence?

11. Mr Bloch submitted that the earlier cases between the parties established a non de minimis level of confusion. He then submitted that the old English rule permitting honest concurrent use was wider than the EU rule. The latter only permitted it where the level of confusion was de minimis. If there was a level of confusion above that, then the essential function of the mark relied on would be impaired and a case of permissible honest concurrent use would not be made out. So here BB was outside the scope of the Court’s ruling.”

12. “It is therefore necessary to consider what the findings of confusion in the earlier cases were and whether the Court’s answer was confined to de minimis levels of confusion only.”

The level of confusion

13. “In my judgment giving rise to the reference (with which the other members of the court agreed),I said: ‘[3] But although the names are the same, the beers are not. Their tastes, prices and get‑ups have always been different. In markets where they have co‑existed, consumers have by and large become aware of the difference, though of course there will always be some small level of confusion. And the question asked (I repeat the key bit) was on the basis that there had been: a long period of honest concurrent use of two identical trade marks for identical goods so that the guarantee of origin of the earlier mark does not mean the mark signifies the goods of the proprietor of the earlier and none other but instead signifies his goods or the goods of the other user.”

14. “Mr. Bloch submitted that it was wrong for us to hold that ‘consumers have by and large become aware of the difference, though of course there will always be some small level of confusion’. On the contrary, he said, the earlier cases show significant levels of confusion.”

15. “To substantiate this he took us to the following passages in the earlier judgments. Firstly Oliver LJ (in the passing off case reversing Whitford J on the facts) said at [1984] FSR p. 461: ‘In fact there was ample and unchallenged evidence of confusion. It should be mentioned that apart from the name, there is no similarity of get‑up, so that no one would pick up the Czech beer mistaking it for the American by reason of its appearance. But there was ample evidence of cases in which orders had been placed for Budweiser by people expecting the Plaintiffs’ beer and in which they had been served instead with the Defendants [beer]. And there was ample evidence that in the minds of several people the impression was created that the two were in some way connected.

“Next Dillon LJ said at p.477: ‘The learned judges’ conclusion that at the date of issue of the writ there was a dual reputation in the name Budweiser which neither party could claim had been improperly achieved is correct. It is the inevitable consequence of this that there will be some degree of confusion among some members of the public and some traders, as there has in fact been.”

16. “Similarly in the second Court of Appeal case Peter Gibson LJ said at [2000] RPC p.916: AB’s action [i.e. the earlier passing off action] failed because at the date of inception of the conduct complained of, in 1973/4, AB, whilst possessing the reputation in the name Budweiser and whilst proving confusion and the risk of deception could not establish that it possessed goodwill in this country. Judge LJ (as he then was) said, in a typically common sense way, at p. 920: ‘Further it seems to me likely that there is some continuing confusion between the two products, at any rate in the cases of those individuals who do not appreciate that there are differences between American Budweiser and Czech Budweiser.’”

17. “I do not accept that these findings are inconsistent with what I said in my first judgment. I did not hold that the level of confusion was de minimis. I said it was small, not that it was negligible. The level of confusion in the earlier cases was clearly not negligible: otherwise the claims in passing off would have failed for that reason alone, not because there was [a] defence of honest concurrent use or failure to prove goodwill. What I said is entirely consistent with the findings relied upon by Mr Bloch.”

“Common sense prevails here. These two brands have lived side by side for many, many years in different get‑ups, prices and taste and with large sales: the sales of AB’s beer are much greater than BB’s but the latter are substantial. You do not have to be a genius to infer from those very facts alone that the public by and large will have got used to that. Or that there will always be some who are confused, albeit that many are not.”

Was the Court’s ruling confined to de minimis levels of confusion?

18. “Mr. Bloch took us to some passages in the Judgment: 75. ‘In the present case, it is to be noted that the use by Budvar of the Budweiser trade mark in the United Kingdom neither has, nor is liable to have, an adverse effect on the essential function of the Budweiser trade mark owned by Anheuser‑Busch. 76. In that regard, it should be stressed that the circumstances which gave rise to the dispute in the main proceedings are exceptional.’ 77. ‘First, the referring court states that Anheuser‑Busch and Budvar have each been marketing their beers in the United Kingdom under the word sign ‘Budweiser’ or under a trade mark including that sign for almost 30 years prior to the registration of the marks concerned. 78. Second, Anheuser‑Busch and Budvar were authorised to register jointly and concurrently their Budweiser trade marks following a judgment delivered by the Court of Appeal (England & Wales) (Civil Division) in February 2000.79. Third, the order for reference also states that, while Anheuser‑Busch submitted an application for registration of the word ‘Budweiser’ as a trade mark in the United Kingdom earlier than Budvar, both of those companies have from the beginning used their Budweiser trade marks in good faith. 80. Fourth, as was stated in paragraph 10 of this judgment, the referring court found that, although the names are identical, United Kingdom consumers are well aware of the difference between the beers of Budvar and those of Anheuser‑Busch, since their tastes, prices and get‑ups have always been different.”

Fifth, it follows from the coexistence of those two trade marks on the United Kingdom market that, even though the trade marks were identical, the beers of Anheuser‑Busch and Budvar were clearly identifiable as being produced by different companies.’”

19. “He submitted (correctly) that the circumstances of the dispute are exceptional. But then he suggested that the five factors referred to by the Court, and in particular that ‘consumers are well aware of the difference between the beers’ and that ‘the beers [of the parties] were clearly identifiable as being produced by different companies’ circumscribed the ruling so much that it was limited to cases of de minimis confusion.”

20. “I do not accept that. The Court could have said just that but did not. The rather self‑evident point as to the effect of a long period of honest concurrent use was clearly laid before the Court when I summarised Mr Mellor’s submission: Mr Mellor suggests that the Court might recognise a further exception in the case of long established honest concurrent use. For in such a case the guarantee of origin of the mark is not impaired by the use of the mark by each party. Once such concurrent use is established the mark does not solely indicate the goods of just one of the users. It means one or the other. Hence there is no impairment of the guarantee and, if impairment is the touchstone of Art 4(1), no infraction of it.”

21. “The Court did not rule that only de minimis levels of confusion are acceptable when there is honest concurrent use. Nor did the Court rule that the inevitable confusion in a same mark/same goods case is enough to take a case out of acceptable concurrent use. Yet that is what Mr Bloch’s submissions involve.”

22. “More fundamentally, Mr Bloch’s submissions involve the unstated premise that even where there is long established honest concurrent use the mark of one party must provide a guarantee of origin in that party and not the other. That is quite unrealistic. Here for instance, Budweiser has never denoted AB’s beer alone.”

23. “So I do not think that there is any impairment of the guarantee of origin—of either side’s mark. The guarantee is different given a situation of long established honest concurrent use.”

Would it be unfair to resolve the appeal without remittal for further fact finding?

24. “It is here necessary to chart the course of proceedings below. I concentrate only on the essential elements. AB’s Statement of Grounds in the Registry claimed that its registration of Budweiser under No. 1,125,449 was of an ‘earlier trade mark’. It then referred to BB’s impugned registration of Budweiser and alleged it post‑dated its own registration. All that was correct.”

25. “It then went on to allege that this was a ‘same mark, same goods’ case and so BB”s registration was invalid under s.5(1) of the Trade Marks Act 1994 (corresponding to Art. 4(1)(a)).”

26. “The pleading did not stop there. It went on to allege that AB had used Budweiser since 1974 and relied on the ‘previous findings in respect of such use’ referring expressly to the decision of Whitford J in the passing off case [1984] FSR 413. It claimed ‘continued use and substantial accrued reputation’ in Budweiser ‘from 1974 on a continuous basis to date.”

27. “The pleading did not allege any ‘adverse effect’ on the essential function of the trade mark. It is unclear why, given that it was a same mark, same goods’ case any use was relied upon, but it was.”

28. “BB responded by raising acquiescence and other points which no longer matter. It expressly referred to the earlier passing off and trade mark registration Court of Appeal decisions, [1984] FSR 413 and [2000] RPC 906. Both of these decisions confirm the state of honest concurrent use between the parties.”

29. “AB filed evidence. It was simply of its extensive use of Budweiser since 1974, giving the sales figures. AB did not allege any adverse effect on its trade mark or of confusion.”

30. “BB responded with evidence of its sales figures, claiming use from 1973 though the detail of the earlier years is not specified (most of the figures are there in the reports of the earlier cases). There was a hearing, at which BB did not expressly say: ‘but it has not been proved or pleaded that there was an adverse effect on AB’s mark’. And AB did not expressly contend the opposite.”

31. “The hearing officer in his decision reluctantly decided in AB’s favour. He held that this was a case of same mark same goods and that alone was enough to satisfy Art. 4(1) (s.5(1) of the UK Act). But he said this: [61]¼¼ ‘Such as it is, the evidence indicates (although it does not substantiate) that the two marks have co‑existed for some considerable time with no apparent confusion, a fact that on its face could have provide[d] a compelling reason to allow what exists in the market to remain undisturbed. It may well be that having traded side by side for so long the consumer is now fully aware of the two competing brands, but equally could mean that confusion is there but this had not surfaced; there is no evidence one way or another.’

[62] ‘The question of confusion or no confusion is, however, academic, for under Section 5(1) there is no requirement for there to be a finding of confusion. If the marks and goods are found to be identical, the potential for confusion is simply assumed. No amount of evidence of non‑confusion, if there is such a thing, nor the absence of any confusion, can change the conclusion. The position is that even though the parties appear to have traded alongside one another without there being any harm, because the marks and goods are identical, concurrent use is not a factor that I can properly take into account; refusal is mandatory.’

“I have certain unease at the position in which I find myself. The court of appeal issued a decision that on the facts, allowed the status quo in the reality of the market. In concentrating on the legal issues the parties have left me in the position of having to determine these proceedings on the thinnest of evidence.”

32. “We know now from the Court’s answer that the hearing officer was wrong to conclude that ‘concurrent use is not a factor I can properly take into account’. If the concurrent use is honest (as is accepted to be the case here) and there is no adverse affect on the essential function of the trade mark, the case is not within Art.4(1).”

33. “It is just worth stepping back and examining what has happened in the jurisprudence of the Court. Those who framed the same mark/same goods rule were rather naive. To say that confusion is necessarily so in such a case, is wrong. The apparently black and white rigid application of the rule which the hearing officer thought was compelled, has been tempered to produce rational answers. The Court has steadily been recognising this in a series of cases, O2 v. Hutchison case C‑533/06, [2008] ECR I‑4231 (comparative advertising conforming with the Comparative Advertising Directive); Holterhoff [2002] ECR I‑4187 (purely descriptive use); BMW v Deenik [1999] ECR I‑905 (honestly stating that a garage repaired BMWs); Adam Opel v. Autec case C‑48/05 [2007] ETMR 5 (use of mark on a toy car not infringing if no effect on essential function even though mark was registered for toys), Celine v. Celine case C‑17–06 [2007] ECR I‑7041 (use as a business name for a clothes shop not affecting essential function of mark registered for clothing). The ruling here is another example of tempering the apparently inflexible same mark/same goods rule to produce a rational answer.”

34. “Turning back to the present case, it is now apparent that AB approached it on a wrong legal basis. It was quite clear, following BB’s explicit reference to the Court of Appeal cases in its pleading, that honest concurrent use was somehow in play though it is fair to say that exactly how was obscure at best. AB could have put in a reply pleading saying ‘ah but the use affects the essential function of our mark’ and so is no defence, or it could have left it at that. It did the latter. Perhaps it had in mind to advance something more, something in the nature of an adverse affect, for it is difficult to see why it put its extensive sales in evidence. Mr. Bloch said he personally had no idea why the figures were put in—but there must have been some reason. But what is clear is that no case of affecting the essential function of the mark was pleaded or proved.”

35. “Mr Bloch submits that my approach is not fair. He asserted (but provided no material to support his assertion) that, at the time the pleading was filed (2005), the practice for a case under s.5(1) was merely to assert same mark/same goods. By implication he was suggesting that it was for BB to raise a defence of honest concurrent use which did not affect the essential function of the mark. I do not agree. The alleged practice was not established. The fact of honest concurrent use under the old law was clearly raised on the pleadings by BB’s references to the two Court of Appeal cases. ”

“The legal consequence was not spelt out. It was quite open to AB to reply by alleging that the essential function of its mark was adversely affected. It did not do so. Probably it was acting under a mistake of law (the same mistake as was made by the hearing officer, namely that proof of same mark/same goods was enough). I am not entirely convinced of that, however, because there must have been some purpose in putting the sales figures in—I can only surmise that it was a desultory attempt at something intended to show harm. It does not matter, however. The fact was that the onus lay on AB to plead and prove what was necessary to make out a case under s.5(1) and it failed to do so.”

36. “One can find confirmation of this if one considers what would be necessary if the case were, as Mr Bloch suggested, remitted to the Registry. AB would have to amend its pleadings to allege for the first time (and particularise) damage to the essential function of its trade mark. It would then have to adduce evidence in support of its case. It would be a new trial, caused by the fact that AB failed to put its case at the first trial. Justice does not require this—indeed it would be unjust to allow AB to assail BB yet again.”

37. “I therefore reject all Mr Bloch’s points and conclude that the appeal should be allowed.”

Mr. Justice Warren:

38. “I agree with the conclusion of Jacob LJ. However, I see rather more force in Mr Bloch’s complaints about unfairness than he does. I would therefore like to say a little more about it.”

39. “I agree with Jacob LJ that the onus was on AB to plead and prove what was necessary but when it was necessary to do so is a matter to which I will come. I also agree that honest concurrent use was in the frame from the beginning but exactly how was, as he says, obscure at best. Had BB made its point clearly, AB would have realised that it might need to amend its pleadings and to adduce further evidence. But the point was not clearly raised at the beginning. Further, even as the case proceeded, there was still no explicit reference to the point by BB. It did not surface before Norris J. It only surfaced in the Grounds of Appeal to this court.”

40. “BB needs our permission to raise the point before us. If there were evidence which enabled AB to establish adverse effect, I do not think that it would be right to allow BB to take the point without affording AB the opportunity to establish adverse effect on the facts. Jacob LJ take a different view which he tests by considering what would happen if we remitted the matter to the Registry.”

41. “He says that AB would have to amend its pleadings and to allege for the first time damage to the essential functions of its trade mark. That is true. But in purely pleading terms, one might have expected BB’s response in the Registry to have asserted that it had a defence based on honest concurrent use to which AB would have responded by way, in effect, of reply, that there was adverse effect. After all, the literal meaning of the words of section 5(1) are absolute. It is only judicial interpretation, both in the Court and in our domestic courts, which has put a gloss on the words of the EU and domestic legislation in order to make the provisions workable in a sensible commercial way. Even if Jacob LJ is right to say that the new trial would be caused by the fact that AB failed to put its case at the first trial, I do not, for my part, consider that the circumstances are such that it would be unjust to allow AB to amend and to adduce further evidence.”

42. “But before that can happen, I would need to be persuaded that at least, in theory, there could be evidence of some sort to support a claim of adverse effect. In that context, evidence of confusion would, in my judgment, be insufficient. However much evidence of confusion is adduced, I do not see how that could, in the light of the earlier cases, be sufficient to establish any impairment of the guarantee of origin given the unstated premise in Mr Bloch’s submissions identified by Jacob LJ in paragraph 22 of his judgment.”

43. “In any case, AB has known since the service of the Grounds of Appeal that honest concurrent use was being relied on by BB in the context of section 5(1) ; it has known since the decision of the Court on 22 September 2011 that it might need to show adverse effect affirmatively. And yet it has not, notwithstanding this passage of time, given this court any hint about how such adverse effect might be established or the nature of the evidence which might be adduced to establish such adverse effect. I do not consider that we should remit the matter to the Registry without at least knowing in outline the nature of the evidence which AB would want to adduce. It is now too late for us to be told.”

Lord Justice Ward:

44. “I agree the appeal should be allowed.”

Citation: Budejovicky Budvar Narodni Podnik (BB) v. Anheuser‑Busch, Inc.(AB), [2012] EWCA Civ. 880; 2012 WL 2499981 (U.K.Ct. App. (Civ.Div.) July 3, 2012).

EUROPEAN COMMUNITY LAW ON FREE MOVEMENT OF GOODS

In an action by Sun Microsystems against a European company raises the question whether a party who, without Sun’s permission, has imported and sold Sun’s trademarked product in the European Union can defend on the grounds that Sun’s commercial practices have the effect of obstructing the free movement of goods in violation of the laws and policies of the European Union

1. [Opinion for the United Kingdom Supreme Court by Lord Sumption, JSC] “This is another case arising out of the economically controversial but legally well established policy of the European Union relating to parallel imports of genuine goods bearing registered trade marks. Broadly stated, *2029 the question at issue is whether a person who has imported goods bearing the mark into the EEA and offered them for sale there without the consent of the trade mark proprietor, is entitled to defend an action for infringement on the ground that the proprietor of the mark is engaged in conduct calculated to obstruct the free movement of such goods between member states or to distort competition in the EEA market for them.”

2. “Ever since the Trade Marks Act 1994 gave effect in the United Kingdom to First Council Directive 89/104/EEC of 21 December 1988 to approximate the laws of the member states relating to trade marks ( OJ 1989 L40, p 1), the rights of proprietors of registered trade marks have been governed by a uniform scheme of EU law.”

“That Directive has now been replaced by the current Directive 2008/95/EC of the European Union and of the Council of 22 October 2008 to approximate the laws of the member states relating to trade marks ( OJ 2008 L299, p 25), but the two Directives are in the same terms in every respect relevant to the present dispute. I shall refer to them indifferently as ‘the Trade Mark Directive’ or ‘the Directive’.”

“1.The trade mark shall not entitle the proprietor to prohibit its use in relation to goods which have been put on the market in the Community under that trade mark by the proprietor or with his consent.

 “2.Paragraph 1 shall not apply where there exist legitimate reasons for the proprietor to oppose further commercialisation of the goods, especially where the condition of the goods is changed or impaired after they have been put on the market.”

4. “It has been accepted ever since the decisions of the [European] Court of Justice [ECJ] in Silhouette International Schmied GmbH & Co KG v Hartlauer Handelsgesellschaft mbH (Case C‑355/96) [1999] Ch 77 and Sebago Inc v GB‑Unic SA (Case C‑173/98) [2000] Ch 558, that the combined effect of articles 5 and 7(1) of the Directive is to confer on the trade mark proprietor the exclusive right to control the first marketing in the European Economic Area (EEA) of goods bearing his trade mark, even if they are genuine goods which have previously been put on the market by him or with his consent outside the EEA.”

“This is the only right attaching to the trade marks which is relevant in the present case. The subsequent decision of the ECJ in *2030 Zino Davidoff SA v A & G Imports Ltd (Joined Cases C‑414/99 to C‑416/99) [2002] Ch 109, underlined its absolute nature by establishing that the consent of the trade mark proprietor had to be such as to amount to an unequivocal renunciation of the right. It could therefore rarely be implied, and never from the mere fact of his having placed the goods on the market outside the EEA and/or his silence on the question whether they had been lawfully placed in the market within the EEA.” [see paras 53–56.]

“These decisions are understandably unpopular with parallel traders not forming part of the authorised distribution network of the trade mark proprietors. But they are securely established as part of the legal order of the EU in the domain of trade mark protection. Proposals to modify their effect or to adopt a rule of international exhaustion have been firmly rejected by the EC Commission and the Economic and Social Committee and no attempt was made to change the position when the new Directive was adopted in 2008.” [There is an interesting account of these debates in Stothers, Parallel Trade in Europe: Intellectual Property, Competition and Regulatory Law (2007), pp 347–354.]

5. “The claimants, Oracle America Inc., were at the relevant time called Sun Microsystems Inc. and that is how I shall refer to them. They are manufacturers of computer systems, workstations and related goods. They are also the proprietors of five relevant Community trade marks and two relevant United Kingdom trade marks registered for use in connection with computer hardware.”

“M‑Tech is a supplier of computer hardware in Manchester, which in 2009 fulfilled a trap order from a purchaser called KSS Associates in Epsom for 64 new Sun disk drives. The disk drives had originally been supplied by Sun to purchasers in China, Chile and the United States. M‑Tech had bought them through a broker in the United States and imported them into the United Kingdom. Although there was at one time a dispute about this, it is now common ground that Sun had not consented to their being put on the market in the EEA. On the face of it, therefore, M‑Tech infringed the marks contrary to article 5(1)(a) by using them in circumstances where Sun’s exclusive right had not been exhausted under article 7(1).”

6. “The present appeal arises out of an application initially made by Sun to Kitchin J for summary judgment for (among other things) damages for the infringement, and an injunction restraining any further infringements of the same kind. There is no challenge to the validity of the trade marks, nor to the facts said to constitute the infringement.”

“M‑Tech’s defence is set out in a number of witness statements, whose contents are the basis of a draft pleading served shortly after Sun applied for summary judgment. In summary, M‑Tech say that Sun’s trade marks are not enforceable because:

the object and effect of enforcement would be to partition the EEA market in Sun hardware contrary to the Treaty provisions relating to the free movement of goods (articles 34FEU to 36FEU of the Treaty on the Functioning of the European Union (FEU Treaty) and [(consolidated version at OJ 2010 C83, p 47));]

the exercise of Sun’s trade mark rights is connected with its distribution agreements, which are said to contain restrictive provisions inconsistent with article 101 FEU.

After the hearing before Kitchin J, M‑Tech added a third argument, to the effect that enforcement of Sun’s trade marks would constitute an abuse of rights as that concept is understood in EU law.”

7. “’Euro‑defences’ of this kind have been deployed by alleged infringers of intellectual property rights for many years, and the English courts have *2031 varied in the robustness with which they approach them. The dilemma is that litigation [itself] devalues intellectual property rights, by increasing the cost and delay associated with their enforcement. It may also serve to confer on the alleged infringer a temporary immunity or an improvement of his bargaining power in settlement negotiations, to which he will turn out not to be entitled. The effect can often extend beyond the parties or transactions in issue, to many other cases in which similar questions might be raised.”

“These factors mean that defences like the present one must be scrutinised with some care, even if that requires a certain amount of analysis. On the other hand, a defendant must be allowed to go to trial if it has raised a triable issue of fact which is relevant in point of law. For obvious reasons, this is especially important when the case is founded on fundamental principles of the European Union such as the free movement of goods and undistorted competition. [The trial judge] resolved this dilemma in favour of the trade mark proprietor. He gave summary judgment, ordering (among other things) an inquiry as to damages and an injunction: [2010] FSR 251.”

“The Court of Appeal ¼ [(Lord Neuberger of Abbotsbury MR, Arden and Tomlinson LJJ)] allowed the appeal and set aside the order: [2011] FSR 79. This court has been invited to order a reference to the Court of Justice of the European Union. It is, I think, common ground that, if there is an arguable defence in EU law, there will have to be a reference at some stage, either now or after the facts have been found at a trial. But the first question is whether there is [such a defence.]”

8. “Articles 34FEU and 35FEU of the FEU Treaty prohibit quantitative restrictions on imports and exports between member states and measures having equivalent effect. Both are subject to article 36FEU, which provides that they do not apply to ‘prohibitions or restrictions ¼ justified on grounds of ¼ the protection of industrial and commercial property’, provided that these do not constitute a ‘means of arbitrary discrimination or a disguised restriction on trade between member states.’”

9. “The facts on which M‑Tech relies as engaging these provisions are disputed, at least in part, but must for present purposes be assumed to be true. They can be summarised as follows. There is a large global market for second‑hand computer hardware, much of which is in the hands of independent resellers who do not belong to the manufacturers’ authorised distribution networks.”

“In 2007, according to M‑Tech, the secondary market in the EEA for Sun hardware alone was worth US$107billion, of which US$64bn. was sold by independent resellers. Much of the trade which independent resellers handle is entirely lawful because it involves goods which were previously marketed in the EEA by—or with the consent of—the trade mark proprietors.”

“The allegation [here] is that since 2007 Sun has deliberately set about securing this market for itself and its authorised dealers by declining to supply information which would enable independent resellers to discover whether any particular equipment was first put on the EEA market by or with Sun’s consent. This information is not available from any other source. It is not apparent from the goods themselves. Nor can it be inferred from the circumstances in which they have been acquired.”

“This is because the same goods may be resold several times in the course of their serviceable life and they are not necessarily located in the same territory as the vendor or broker selling them. The result, they say, is to produce a ‘chilling effect’ on independent sellers, deterring them from dealing in any Sun hardware, whether it is legitimately present on the EEA market or not, because their inability to distinguish between the two exposes them to the risk of enforcement actions by Sun.”

“This risk is increased by the vigour with which Sun enforces its trade mark rights against independent resellers found dealing in the EEA in hardware which has not been marketed there by them or with their consent. The combination of aggressive enforcement of its trade mark rights and the withholding of information about provenance has, says M‑Tech, both the object and the effect of eliminating the legitimate as well as the illegitimate parallel trade in the EEA, thus giving Sun effective control of the secondary market in its products there, and enabling them to partition that market through its control of an authorised network of dealers.”

10. “M‑Tech say that they have been harmed by Sun’s practice of withholding information about the provenance of their products, because that practice was among the reasons why they had largely ceased to deal with Sun equipment by about 2007 or 2008. The KSS transaction of 2009 is said to have occurred as a result of a failure of their ordinary procedures. [I]t is important to note, however, that the 64 disk drives supplied to KSS were new goods which were imported into the EEA and first marketed there by M‑Tech themselves, without Sun’s consent as they now accept.”

“M‑Tech do not say that this happened as a result of any policy on Sun’s part of withholding information about the provenance of the goods. The position is exactly the same in relation to transactions affected by the injunction. In the form that Kitchin J granted it, the injunction restrained only the marketing by M‑Tech within the EEA of Sun’s trade marked goods which had not previously been marketed there by Sun or with its consent. There is a proviso designed to ensure that Sun does supply information about the provenance of goods potentially affected by the injunction. Its effect is that the injunction is not to apply to goods marketed by M‑Tech unless Sun have confirmed within ten days of being told the serial and part numbers of the goods in question that their records show that they have not been put on the EEA market by them or with their consent.”

11. “It will be apparent that it is not good enough for M‑Tech’s purposes to establish a breach of the Treaty. It has to show that that breach gives them a defence to an action for infringement of the marks. There is a principle of English public policy, which is common to the national legal systems of most member states, that a person may not profit from his own illegal act. The Court of Justice has held that it is open to member states to apply that principle to causes of action arising from directly applicable provisions of EU law, as indeed it has sometimes done itself: see Courage Ltd v Crehan (Case C‑453/99) [2002] QB 507, para 31.”   “Mr. Vajda (who appeared for M‑Tech), however, disclaimed any reliance on the principle. His case is that Sun has no enforceable rights under article 5 of the Trade Mark Directive in the circumstances of this case, because that article is subject to an implied limitation to be derived as a matter of construction from articles 34FEU to 36FEU of the Treaty. The effect of the suggested limitation is to preclude any exercise of trade mark rights which would have the object or effect of partitioning the EU internal market.”

“What this amounts to is a general suspension of a proprietor’s trade mark rights as against the entire EEA market, and not just in respect of those transactions which are affected by Sun’s policy of refusing to disclose the provenance of the goods. M‑Tech must, as it seems to me, put its case in this way because the ‘chilling effect’ on the secondary market, which is said to result from that policy, has not affected the particular transaction which has given rise to the allegation of infringement in this case and cannot affect any future transactions restrained by the injunction. It follows that the fundamental question on this appeal is whether the implied limitation on the application of article 5 of the Directive for which Mr. Vajda contends can be supported as a matter of EU law.”

12. “The Trade Mark Directive is in most respects substantially based on the case law of the Court of Justice as it had developed over the two previous decades. It is a harmonising measure concerned with (among other things) the achievement of the internal market and the free movement of goods: see recitals (2) and (10). Its efficacy as a harmonising measure uniformly applicable across the whole of the EU depends on treating it as an exhaustive statement of the rights of trade mark proprietors. For that reason, the Court of Justice held in Silhouette International Schmied GmbH & Co KG v Hartlauer Handelsgesellschaft mbH (Case C–355/96) [1999] Ch 77, para 25 that articles 5 to 7 of the Trade Mark Directive ‘must be construed as embodying a complete harmonisation of the rules relating to the rights conferred by a trade mark’. In Zino Davidoff SA v A & G Imports Ltd. (Joined Cases C‑414/99 to C‑416/99) [2002] Ch 109, paras 32, 39, the Court of Justice reaffirmed the principle, observing that articles 5 to 7 of the Directive ‘accordingly define the rights of proprietors of trade marks in the Community’.”

13. “These statements reflect the general rule that, where a particular area of commercial activity engaging the principle of the free movement of goods is regulated by harmonising legislation of the EU, then that legislation supersedes the general provisions of articles 34FEU to 36FEU of the Treaty. The rule, which originates in the decision of the Court of Justice in Tedeschi v Denkavit Commerciale Srl (Case 5/77) [1977] ECR 1555, has been reiterated many times in many contexts, including the EU legislation relating to trade marks: see Bristol‑Myers Squibb v Paranova A/S (Joined Cases C‑427/93, C‑429/93 and C‑436/93) (Note) [2003] Ch. 75, paras 25–26; [Phytheron International SA v Jean Bourdon SA (Case C‑352/95) [1997] ECR I‑1729, para 17.]

“Its rationale is not that the EU legislator is at liberty to override or displace the provisions of the Treaty. It is that harmonisation measures are directed to the achievement of the single market. They must therefore be treated, assuming that they are valid, as giving effect in the relevant commercial context both to the principle of the free movement of goods and to the limitations on that principle embodied in article 36. [In its Guide to the application of Treaty provisions governing the free movement of goods (2010), para 3.1.1, the European Commission, after stating the Tedeschi principle, puts the point in this way:

“This is due to the fact that harmonising legislation can be understood as substantiating the free movement of goods principle by establishing actual rights and duties to be observed in the case of specific products. Therefore, any problem that is covered by harmonising legislation would have to be analysed in the light of such concrete terms and not according to the broad principles enshrined in the Treaty.”]

14. “Mr. Vajda submits that the Treaty remains relevant as the dominant instrument which informs the construction of the Directive. For my part, I need no persuasion of this. To say that the Directive is the relevant source of law is entirely consistent with resort to the Treaty as an aid to discovering what it means. The Trade Mark Directive must be construed on the assumption that it was intended to be consistent with Treaty provisions relating to the free movement of goods, and indeed with other relevant Treaty provisions.”

“The case law which I shall cite below can be treated as so many variations on that theme. But I do not think that this carries the argument any further, because there is no potential inconsistency between the language of the Directive and the provisions of the Treaty which calls to be resolved by reference to the latter. This is because the scheme of articles 5 and 7 of the Directive already embodies both the primary provisions governing the free movement of goods in articles 34FEU and 35FEU, and the limited exception in article 36 FEU for the protection of industrial and commercial property.”

15. “Article 5 of the Directive provides that the proprietor of a trade mark ‘shall’ be entitled to exercise certain rights, including the right to prevent the use by others of his own or an identical trade mark in connection with goods of the class for which the mark is registered. It is not qualified by any proviso relating to the free movement of goods within the EU, because it does not need to be.”

“The reason is that the reconciliation between article 5 of the Directive and articles 34FEU to 36FEU of the Treaty is achieved in the Directive by article 7. The rights derived from article 5 of the Directive are exhausted under article 7(1) as soon as the goods are first put on the market in the EU by, or with the consent of, the proprietor of the mark. Thereafter, subject to article 7(2), the proprietor has no subsisting rights capable of engaging the prohibition in articles 34FEU and 35FEU of restrictions on trade between member states. As the Court of Justice observed in Bristol‑Myers Squibb v. Paranova A/S [2003] Ch 75, para 40:

“Article 7 of the Directive, like article 36 of the Treaty, is intended to reconcile the fundamental interest in protecting trade mark rights with the fundamental interest in the free movement of goods within the common market, so that those two provisions, which pursue the same result, must be interpreted in the same way.”

16. “The one exception to the EU rule of exhaustion stated in article 7(1) of the Directive is the situation envisaged by article 7(2). This deals with the only circumstances in which a proprietor may, by virtue of his trade mark, control the marketing (‘commercialisation’) of the goods after they have been put on the market in the EEA by him or with his consent. It is therefore qualified by the requirement that there should be ‘legitimate reasons’ for him to exercise that control. Since the exception in article 36 for the protection of industrial or commercial property does not extend to the use of the rights derived from that property as a ‘disguised restriction on trade between member states,’ it goes without saying that a desire to achieve such restrictions does not constitute ‘legitimate reasons’.”

17. “The case law of the Court of Justice accordingly differentiates between [1] cases where the goods have not previously been marketed in the EEA by the proprietor or with his consent and the proprietor is seeking to exercise his rights under article 5 of the Trade Mark Directive in *2035 circumstances where his rights are not yet exhausted under article 7(1), and [2] cases governed by article 7(2), where the goods are legitimately in circulation within the EEA but the proprietor nevertheless claims to have ‘legitimate reasons’ to oppose their ‘further commercialisation’.”

18. “The law relating to cases in this category was stated in EMI Records Ltd v CBS United Kingdom Ltd. (Case 51/75) [1976] ECR 811. This case was decided long before the first Directive was adopted in 1989, and turned on direct application of what are now articles 34FEU to 36FEU of the Treaty. The main question at issue was whether EMI, which owned the Columbia trademark throughout the European Community, could consistently with those provisions of the Treaty prevent CBS from marketing in the Community records bearing the mark that had been imported from third countries.”

“The court considered that the principle of the free movement of goods was incapable of restricting the right of a trade mark proprietor to prevent the first marketing within the Community of goods imported from outside the Community:

‘9. Article 36, in particular, after stipulating that articles [34 and 35] shall not preclude restrictions on imports, exports or goods in transit justified inter alia on grounds of the protection of industrial and commercial property, states that such restrictions shall in no instance constitute a means of arbitrary discrimination or disguised restriction on trade ‘between member states’.’

‘10. Consequently the exercise of a trade mark right in order to prevent the marketing of products coming from a third country under an identical mark, even if this constitutes a measure having an effect equivalent to a quantitative restriction, does not affect the         free movement of goods between member states and thus does not come under the prohibitions set out in article [34] et seq. of the Treaty.’

‘11. In such circumstances the exercise of a trade mark right does not in fact jeopardise the unity of the common market which article 34 et seq. are intended to ensure. ¼’

19. “This decision is not an aberration, nor does it depend on any quirk of the facts. It has subsequently been applied in the context of the corresponding rule of exhaustion relating to patent protection: [see Generics (UK) Ltd v Smith Kline and French Laboratories Ltd (Case C‑191/90) [1992] ECR I‑5335, para 17.] It is regularly cited as authoritative by Advocates General, for example Advocate General Jacobs in his opinions in Criminal proceedings against Richardt (Case C‑367/89) [1991] ECR I‑4621, para 14, and the Silhouette case [1999] Ch. 77, para. 49.”

“It has continued to be regarded as self‑evident by textbook writers: see, in particular, [Kerly’s Law of Trade Marks and Trade Names, 15th ed (2011), para 16‑091.] In Levi Strauss & Co v Tesco Stores Ltd. [2003] RPC 319, para 51, Pumfrey J. observed that it ‘could hardly be clearer. It has formed, with the principle of exhaustion, the basis for the application of the principles of free movement in the context of trade marks and other intellectual property rights.’”

20. “I agree with this observation, and I think that it is worth pausing to note the context in which it was made. The Levi Strauss case was, like the present one, concerned with goods imported into the European Community without the consent of the trade mark proprietor. It had been joined in the same reference to the Court of Justice as Zino Davidoff SA v A & G Imports Ltd. [2002] Ch. 109. I have already referred to the court’s decision on this reference as part of a consistent line of authority for the propositions [1] that the Directive must be construed as a definitive statement of the harmonised law concerning the rights of trade mark proprietors, and [2] that it confers on trade mark proprietors a right to control the first marketing of their goods in the EEA save in cases where that right had been unequivocally renounced.”

“[A]fter noting these propositions and referring to the statement of principle in the EMI Records case [1976] ECR 811, Pumfrey J proceeded to reject a submission very similar to M‑Tech’s in the present case, that the exercise of a right to control the first marketing of the goods in the EEA could be precluded by the Treaty provisions relating to the free movement of goods. He gave summary judgment in favour of the proprietor, and declined to refer the question to the Court of Justice: see Levi Strauss & Co. v Tesco Stores Ltd. [2003] RPC 319, paras 51–55, 58.”

21. “The position in relation to the exercise of the proprietor’s extended right under article 7(2) is different. This is because, in cases governed by article 7(2), the goods have by definition been put onto the market in the EEA by or with the consent of the proprietor, who is seeking to prevent their ‘further commercialisation’. It follows that the principle of the free movement of goods may be engaged, depending on the facts.”

“The great majority of cases in this category are repackaging cases. Their characteristic feature is that the trade mark proprietor is seeking to prevent a trader who has acquired the proprietor’s branded goods in one member state from altering them so as to enable them to be sold in another member state, commonly by repackaging them with the same mark so as to comply with different national languages, regulations or marketing practices. The proprietor in these cases is generally attempting to exercise his trade mark rights in a way which directly partitions the internal market by objecting to a repackaging which is necessary to enable the goods to be sold in a particular national market.” [The case law on what may constitute “legitimate reasons” really begins with the decision of the Court of Justice in Hoffmann‑La Roche AG & Co v Centrafarm Vertriebsgesellschaft Pharmazeutischer Erzeugnisse mbH (Case 102/77) [1978] ECR I‑1139, but]

“[T]he leading modern decision is Bristol‑Myers Squibb v Paranova A/S [2003] Ch. 75. Two arguments were advanced in the Bristol‑Myers Squibb case to justify the proprietor’s position. The first was that article 7(1) provided for the exhaustion of the proprietor’s trade mark rights only in respect of the goods in the exact form in which they were originally put on the market in the EEA. Therefore, even *2037 without article 7(2), the proprietor was said to be entitled to object to their being marketed in their repackaged form. The Court of Justice rejected this contention because one of the objectives of the EU principle of exhaustion was precisely to allow trade in branded goods between member states once they had been put on the market in the EEA by—or with the consent of—the trade mark proprietor: paras 34–37.”

“The second argument was that article 7(2) justified the proprietor’s position because there were legitimate reasons for opposing the further ‘commercialisation’ of the goods in their repackaged form. In addressing this argument, the court took it for granted that the protection of a national market within the EU was not a legitimate reason. It then proceeded to formulate the conditions on which a trade mark proprietor might oppose repackaging which was necessary for sales to be made in a particular market.”

“Broadly speaking, the least that he would have to show was that his opposition was objectively justified by some adverse effect of the repackaging on the condition or reputation of the goods. The same principles were applied in two cases decided at the same time, Eurim‑Pharm Arzneimittel GmbH v Beiersdorf AG (Joined Cases C‑71/94 to C‑73/94) [1996] ECR I‑3603 and MPA Pharma GmbH v Rhone‑Poulenc Pharma GmbH (Case C‑232/94) [1996] ECR I‑3671; and later in Pharmacia & Upjohn SA v Paranova A/S (Case C‑379/97) [2000] Ch. 571.”

“On the same ground, it has been held that a trade mark proprietor may not object to the removal of identification codes or marks which would reveal the trader’s sources of supply to the trade mark proprietor and thereby make it impossible for the trader to serve that market at all: Frits Loendersloot [(trading as F Loendersloot Internationale Expeditie)] v. George Ballantine & Son Ltd. (Case C‑349/95) [1997] ECR I‑6227, para. 40.”

22. “The reasoning of these decisions is applicable only in cases where the goods are already lawfully in circulation within the EEA with the consent of the trade mark proprietor, and he is trying to exercise the only right of control which the Directive allows him in that situation. It is right to add that, even in that context, the court did not hold that a right expressly conferred by the Directive in unqualified terms was unenforceable when the effect of enforcement would be to impede trade between member states.”

“What it [did hold] was that the right did not exist at all. That conclusion was possible in the case of rights governed by article 7(2) because it provides that the rights exist only if there are ‘legitimate reasons’. A corresponding conclusion would not have been possible in the case of rights governed by article 5 which were not exhausted under article 7(1), because those rights are in every relevant respect unqualified.”

23. “There was a good deal of debate before us—as there was in the courts below—about the effect of the case law of the Court of Justice concerning the burden of proving whether the trade mark proprietor did or did not consent to the marketing of the goods in the EEA. This question does not arise in the present case, because it is now accepted that the goods were first marketed in the EEA by M‑Tech and that Sun did not consent.”

“But the case law is said to have a broader relevance, as authority for the general approach of the Court of Justice to the enforcement of trade mark rights in a manner said to be inconsistent with the free movement of goods. In summary, the rule is that while national law may place the burden of proving consent on the alleged infringer who asserts it, nevertheless if the effect would be to enable the trade mark proprietor to partition national markets within the EU, the burden of proof must lie with the proprietor.”

“The authority for this is Van Doren + Q GmbH v Lifestyle sports + sportswear Handelsgesellschaft mbH (Case C‑244/00) [2003] ECR I‑3051, paras 21 and 37–41. It is apparent from the judgment in that case, that the concern of both the referring court and the Court of Justice was that a requirement that the alleged infringer should prove that the goods had been marketed in the EEA with the proprietor’s consent would in practice require him to identify an authorised distributor in the EEA from whom he had obtained his supplies, thereby enabling the proprietor to use his control over his distribution network to prevent him from obtaining any more.”

“[T]he rule does not apply, however,(indeed, the problem does not arise) in a case where it is admitted or clear, as it is in the present case, that the goods in question were imported into the EEA by third parties without the proprietor’s consent: Zino Davidoff SA v. A & G Imports Ltd. (Joined Cases C‑414/99 to C‑416/99) [2002] Ch. 109, para 54; subsequently reaffirmed in Class International BV v. Colgate‑Palmolive Co. (Case C‑405/03) [2006] Ch 154, paras 71–74. The difference between the two situations is discussed in the judgment in the Van Doren case [2003] ECR I‑3051, paras 28–31. It corresponds to the long‑standing distinction between trade marked goods which are already legitimately in circulation in the EEA and those which are not.”

“The reason for the difference of treatment is that, where it is established that the goods have not previously been on the market in the EEA, the proprietor is only exercising his right to control the first marketing of his branded goods in the EEA. This right is conferred on him by EU law and does not engage the Treaty provisions concerning the free movement of goods. Where, on the other hand, it may turn out that the goods were already legitimately circulating in the EEA because the trade mark proprietor had consented to their previous marketing there, the attempted enforcement of the trade mark rights potentially affects trade between member states.”

24. “The real question in the present case is whether, applying those principles, the facts alleged by M‑Tech would give them a defence if they could be proved. Like Kitchin J, I do not consider that they would. The reason is that, once the scheme of articles 5 and 7 of the Directive are correctly understood, it is clear that the unlawful conduct alleged by M‑Tech is collateral to the particular right which Sun is seeking to enforce.”

25. “The first and main reason follows directly from the scheme of those articles. On the agreed facts, these goods were never marketed in the EEA until they were imported and marketed there by M‑Tech without Sun’s consent. It is therefore not in dispute that the only right derived from its trade marks which Sun is seeking to enforce by these proceedings is its right to control the first marketing of the goods in the EEA.”

“This is an exercise of rights which does not engage the principle of the free movement of goods between member states embodied in articles 34FEU to 36FEU of the Treaty. It affects only the entry of the goods onto the EEA market, not the movement of the goods within it. It is specifically authorised by articles 5 and 7(1) of the Trade Mark Directive, which are part of an exhaustive code that itself fully reflects the requirements of articles 34FEU to 36FEU of the Treaty.”

“M‑Tech’s argument to the contrary, and the decision of the Court of Appeal accepting it, are both substantially based on decisions of the Court of Justice under article 7(2) concerning the use of trade mark rights to obstruct the trading between member states of goods already legitimately in circulation within the EEA. That is a different—and for present purposes—irrelevant situation.”

26. “Second, what produces the impediment to the free movement of goods is not the enforcement of Sun’s right to control the first marketing of its products in the EEA. On M‑Tech’s account of the facts, the adverse effect on the free movement of goods arises from the partitioning of the market through Sun’s controlled distribution network. That is made possible by the disappearance of the independent secondary market for its hardware, which removes any alternative source of supply. The disappearance of the independent secondary market is in turn the result of Sun’s refusal to disclose where any particular goods were first marketed and, if it was in the EEA, whether it happened with its consent. This is said to achieve the ‘chilling effect’ on both the legitimate and the illegitimate parallel trade, which has served to eliminate independent resellers in both categories.”

“This is the only economically intelligible way in which M‑Tech’s case may be understood. It is also the mechanism which is clearly being put forward in the evidence of the two witnesses, Mr Marion and Mr Buta, who deal with this matter on their behalf. The difficulty about M‑Tech’s argument is that the act of a trade mark proprietor in seeking to control the first marketing of his products in the EEA is—in principle—an ordinary exercise of the essential right conferred on him by articles 5 and 7(1) of the Directive.”

“He may or may not also engage in activities such as withholding information about provenance, which are designed to eliminate the independent parallel trade. But Sun cannot be prevented from doing something which is in itself entirely lawful and consistent with the principle of the free movement of goods, simply because it proposes to do something else as well which is unlawful and inconsistent with that principle. It does not advance the argument to say, as M‑Tech does, that Sun’s policy of withholding information about provenance is effective only because it is combined with a policy of ‘vigorously’ enforcing its trade mark rights.”

“The only conceivable relevance of the fact that Sun seeks to control the first marketing of its trade marked products in the EEA is that, if they did not do this, then it would be impossible to eliminate independent resellers by withholding information about provenance, because they could supply themselves with stock from outside the EEA regardless of provenance and market it in the EEA regardless of Sun’s objection. But that is the very thing that EU law unquestionably says that they cannot do.”

“It cannot, therefore, follow that, because Sun enforces its trade mark rights ‘vigorously,’ it should have no trade mark right to enforce in those circumstances. Nor, in my view, does it advance the argument to refer to the enforcement of Sun’s trade mark rights as part of a ‘scheme’ to eliminate the independent resellers from the secondary market. This is simply a pejorative way of making the same unsustainable point.”

27. “Third, even if (which is not the case) the jurisprudence arising from article 7(2) about the obstruction of trade within the EEA in goods which are already legitimately in circulation there had any application to the particular right which Sun is seeking to enforce, the case law would not justify the conclusion pressed upon us by M‑Tech.”

“I have already discussed the cases on article 7(2). They are authority for the proposition that a trade mark proprietor cannot claim a right under the Directive to oppose the ‘further commercialisation’ of the goods if the exercise of that right would itself unjustifiably impede the free movement of goods between member states. [N]one of the cases go so far, however, as to hold non‑existent or unenforceable [those] rights whose exercise would in itself have no impact on trade between member states, merely because they are accompanied by other acts which do. The law responds to this situation by restraining the acts which do. It does not pull down the whole temple.”

28. “Fourth and last, it is a consequence of the collateral character of the unlawful acts alleged against Sun that M‑Tech have to advance a case which may fairly be characterised as extreme. The argument that article 5 of the Directive is impliedly limited in the manner suggested by Mr. Vajda necessarily operates to suspend Sun’s trade mark rights indiscriminately as against the entire EEA market, including traders who are entirely unaffected by the withholding of information about provenance because, for example, they are knowingly importing Sun’s goods without their consent.”

“The argument would be exactly the same, and just as sound or unsound whether or not the trader needed to be told the provenance of the goods. Mr. Vajda accepts this. Logically, as he also acknowledged, the effect would be to make the rights unavailable not only as against unauthorised parallel importers like M‑Tech but as against any other categories of infringer, for example industrial counterfeiters. This is a submission of truly remarkable breadth. In Imperial Chemical Industries Ltd. v Berk Pharmaceuticals Ltd. [1981] 2 CMLR 91, para 9, Sir Robert Megarry V‑C characterised a somewhat similar argument as a proposal to treat a person guilty of collateral breaches of the Treaty as ‘an outlaw, unable to enforce any of his rights against anyone.’ None of the cases relied upon by M‑Tech come close to justifying such a proposition, which would be quite unnecessary to vindicate the principles of the Treaty and contrary to the object and express terms of the Directive.

29. “It may well be that M‑Tech has a perfectly good cause of action against Sun based on articles 34FEU to 36FEU of the Treaty for damages for preventing them from selling Sun products by their policy of withholding information about the previous history of the goods. I make no comment on that, because it is irrelevant to this appeal.”

“We are not concerned in these proceedings, however, with business that M‑Tech have been prevented from doing, still less with business that other traders have been prevented from doing. We are concerned with business which M‑Tech have done in infringement of Sun’s trade marks. It is not a defence to proceedings brought on that basis that there is other business that M‑Tech have been prevented from doing by Sun’s arguably unlawful policy of withholding information.”

30. “Article 101FEU of the FEU Treaty prohibits agreements and concerted practices so far as they have as their object or effect the prevention, restriction or distortion of competition within the internal market. An intellectual property right is not itself an agreement or concerted practice capable of contravening article 101 of the Treaty. But there are undoubtedly circumstances in which it may be unenforceable because there is a sufficient nexus between the exercise of the right and the agreement or concerted practice in question.”

“The test, which dates back to the venerable—but still authoritative—decision of the Court of Justice in Sirena Srl v Eda Srl (Case 40/70) [1971] ECR 69, para 9, is whether it is ‘the subject, the means or the result of a restrictive practice’ [(see also Keurkoop BV v Nancy Kean Gifts BV (Case 144/81) [1982] ECR 2853, para 27:] the exercise of that right may be subject to the prohibitions contained in the Treaty when it is the purpose, the means or the result of an agreement ¼ or concerted practice’).”

31. “The facts relied upon as engaging article 101 FEU in this case are that Sun distributes its products through a network of authorised dealers. The dealers are said to be bound by distribution agreements which require them to obtain their supplies from Sun or from other authorised Sun dealers, unless the goods in question cannot be supplied from those sources. It is alleged that this is contrary to article 101 FEU (and for present purposes Sun is prepared to assume that it is). The question is whether that has any relevant connection with the exercise by Sun of its right to control the first marketing in the EEA of its trade marked goods.”

“The argument seems to have undergone a certain amount of refinement since it was presented to the judge. As presented in M‑Tech’s printed case, it was that the restriction in the distribution agreements served to reinforce the ‘chilling effect’ of withholding information about the provenance of the goods. This is because, so it is said, Sun’s authorised dealers are able to access the Sun database from which the provenance of the goods can be identified.”

“They are not therefore inhibited from sourcing their supplies from independent resellers by Sun’s policy of withholding provenance information from the independent market. Therefore, in order to achieve its objective of eliminating the independent secondary market, it is necessary to prevent the authorised dealers contractually from buying from them. In effect, what is being said is that Sun has two tactics for eliminating the independent secondary market, one (withholding information) aimed directly against independent resellers and the other aimed at their own distributors. ‘The two tactics’, say M‑Tech, ‘work in tandem’.”

32. “There are two insuperable difficulties about this part of M‑Tech’s case. The first is that there is no relevant connection between the policy of withholding information about provenance and the prevention, restriction and distortion of competition by means of the distribution agreements. The whole premise of the argument is that the policy of withholding information has no anti‑competitive effect on the choices of Sun’s authorised distributors.”

“The second difficulty is that there is no relevant connection between the policy of withholding information about provenance and the enforcement of Sun’s right to control the first marketing of its trade marked products in the EEA, for the same reasons as there is no such connection in the context of articles 34FEU to 36FEU. More generally, neither the trade marks nor the rights conferred on their proprietor by the Directive can be characterised as the subject, the means or the result of an agreement or concerted practice contravening article 101 FEU.”

33. “The final point taken by M‑Tech seems to me to be incapable of succeeding in circumstances where their other points have failed.”

34. “The leading case on the EU concept of abuse of rights is the decision of the Court of Justice in Halifax plc v. Customs and Excise Comrs (Case C‑255/02) [2006] Ch 387, in which a tax‑saving scheme which formally complied with the requirements of the Sixth VAT Directive (Council Directive 77/388/EEC ) was said to be abusive.”

“In his opinion, at paras 62–71, Advocate General Poiares Maduro traced the development of the concept in the jurisprudence of the Court of Justice, before expressing the principle as being that ‘no provision of Community law can be formally relied on to secure advantages manifestly contrary to its purposes and objectives’: para 74. This test was adopted by the Grand Chamber in its judgment. The court said, at paras 74–76:

‘74.¼ it would appear that, in the sphere of VAT, an abusive practice can be found to exist only if, first, the transactions concerned, notwithstanding formal application of the conditions laid down by the relevant provisions of the Sixth Directive and the national legislation transposing it, result in the accrual of a tax advantage the grant of which would be contrary to the purpose of those provisions.’

 ‘75. Secondly, it must also be apparent from a number of objective factors that the essential aim of the transactions concerned is to obtain a tax advantage. As the Advocate General observed in para 89 of his opinion, the prohibition of abuse is not relevant where the economic activity carried out may have some explanation other than the mere attainment of tax advantages.’

‘76. It is for the national court to verify in accordance with the rules of evidence of national law, provided that the effectiveness of Community law is not undermined, whether action constituting such an abusive practice has taken place in the case before it ¼’

35. “The rule of EU law which Sun is invoking in the present case is to be found in articles 5 and 7(1) of the Trade Mark Directive. It is beyond argument that the purpose of those provisions was (among other things) to enable the trade mark proprietor to control the first marketing of his trade marked goods in the EEA. The exercise of that right by Sun did not only satisfy the formal requisites of those articles. It was entirely consonant with their purpose. Even if (contrary to my view) M‑Tech were right to say that by achieving that purpose Sun was enabled to do other things which tended to eliminate independent resellers from the secondary market, that would not make it an abuse of rights.”

36. “Once the Court of Justice has laid down the relevant principles of law in terms which are clear, consistent, and sufficient for the decision of the case, it is the function of national courts to apply them. That there are obscurities in parts of this area of EU law is beyond question. But the particular legislative provisions and legal principles which make M‑Tech’s case impossible are in my judgment entirely clear. A reference is not required to elucidate them. M‑Tech’s real problem, under all three heads of their argument, is that they are unable to establish a relevant connection between the exercise of Sun’s right to control the first marketing of their trade marked goods in the EEA and any breach of the Treaty.”

37. “I would allow the appeal and restore the order of [the Court of first instance.] Appeal allowed.” [2043].

Citation: Oracle America Inc (formerly Sun Microsystems Inc) v Tech Data Ltd. [2012] UKSC 27; [2012] 1 W.L.R. 2021 [27June 2012].

FUGITIVES

Citizen of Northern Ireland who had fled from a prosecution for attempted terrorism there and had served several years in U.S. and German prisons on other local charges, appealed the refusal of the Northern Ireland Secretary of State to exercise the Royal Prerogative of Mercy that would count the foreign imprisonments toward reducing his Northern Ireland sentence

Appellant (McGeough or M) appealed to the Northern Ireland Court of Appeal a decision that the Respondent (secretary of state) had acted lawfully in refusing to recommend the exercise of the royal prerogative of mercy (RPM) in his favour.

M had been involved in a [local] attempted murder with terrorist motives. Before he could be charged, however, he had escaped to the United States where he committed some offences involving the illegal transportation of weapons. Later on, German authorities arrested M as he was trying to cross the German/Dutch border for possessing two rifles. After he spent some time in a German prison, Germany extradited M to the U.S. to serve further time in prison.

M then spent a combined total of seven and a half years in custody in Germany and the U.S. before his release. Back in Northern Ireland, the court sentenced M to 20 years’ imprisonment for attempted murder. The secretary of state refused to recommend exercising the RPM in M’s favour so as to relieve him of the obligation to serve any part of that sentence.

The United Kingdom and the Republic of Ireland had signed the Belfast Agreement which gave rise to the Northern Ireland (Sentences) Act 1998 dealing with the early release of prisoners convicted of terrorist crimes. The Act required certain prisoners to serve at least two years of custody before they could invoke the provisions of the Act. The issue for judicial determination was the nature and scope of the power of a court to review a decision not to recommend exercising the RPM.

M contended that he should benefit from the RPM because his custodial sentences in Germany and the U.S. were for offences connected to Northern Ireland, and that therefore he should not have to serve any part of the 20‑year sentence imposed. He submitted that the secretary of state had acted in a way which involved his unequal or inconsistent treatment when compared to others in a materially analogous situation to him and who had benefited from the RPM. He argued: [1] that the secretary of state had provided contradictory reasons for her refusal to recommend exercising the RPM; and [2] that there was an agreement between Sinn Fein and the British Government to prevent the exercise of the RPM in his favour. He was unsuccessful at first instance.

[The court of first instance apparently denied his request.] It pointed out that, when deciding whether to exercise the Royal Prerogative of Mercy, the decision‑maker had a wide degree of latitude within which to make his decision and the court should only interfere with that decision in the clearest cases of irrationality or errors of law.

The Secretary of State for Northern Ireland had thus acted lawfully in refusing to recommend exercising the Royal Prerogative of Mercy in relation to M. He was an individual who had been sentenced to 20 years’ imprisonment for attempted murder because he had not served more than two years’ imprisonment in either the United Kingdom or the Republic of Ireland.

M filed an appeal but the Court of Appeal for Northern Ireland dismissed M’s appeal. First, the Court noted that the courts could interfere with decisions on whether to exercise the RPM only if it was clear that the decision‑maker had refused to pardon someone on irrational grounds, Regina v. Secretary of State for the Home Department Ex p. Bentley, [1994] Q.B. 349. A refusal to exercise the RPM might also be reviewable where the decision‑maker had made an error of law, Regina (on the application of Shields) v. Secretary of State for Justice [2008] EWHC 3102 (Admin); [2010] Q.B. 150.

By its very nature the RPM was a residual power which could only be exercised where the legal process might be unable to resolve an apparent injustice. As it was a flexible power and one which should not be regarded as only exercisable in certain defined categories of circumstance, its exercise was likely to be highly dependent upon the particular facts of each case. Further, many such cases might require the decision‑maker to take into account and weigh competing considerations where views might legitimately vary as to the relevance of those considerations and the weight to be given to them. For those reasons the decision‑maker should be afforded a wide degree of latitude within which to make his decision, and the courts should interfere only in the clearest of cases and where the applicant had surmounted a high factual threshold. [(see paras 10‑11, 13‑14 of judgment).]

Secondly, the judge below was correct in finding that the circumstances of each group or individual comparator were far from analogous to M’s case. The decisions to exercise the RPM in each of those cases were consistent and based upon the position that only those who had served a period of two years’ imprisonment within the jurisdiction of the U.K. or the Republic of Ireland should be considered for the exercise of the RPM.

Those countries were the only signatories to the Belfast Agreement, and it was entirely understandable for the secretary of state to take the view that only those who had served two years’ imprisonment in those countries, or whose circumstances were analogous thereto, should benefit from the exercise of the RPM to ensure that they were released after serving at least two years’ imprisonment in either country. There was no inequality or unfairness in the way the secretary of state had handled M’s case [(para.25)].

Thirdly, there was no merit in M’s argument that the secretary of state had advanced contradictory explanations for her decision. A careful reading of the relevant correspondence showed that the secretary of state had answered each specific question appropriately as it was posed and that there was no contradiction or inconsistency in her reasoning. There was no evidence to support M’s assertion that there was a deal between Sinn Fein and the British Government to prevent the exercise of the RPM in his favour. [N.B. from U.K. “Case Digest” slightly edited and re‑punctuated].

Citation: McGeough v. Secretary of State for Northern Ireland, [2012] NICA 28[official transcript]; 2012 WL 3963540 (Ct. App. N. Ireland 2012).

HUMAN RIGHTS

A seven‑judge panel of the European Court of Human Rights rules that Applicant Edwards if convicted and sentenced to life imprisonment without parole by the Courts of Maryland, U.S.A, there would be no violation of either Article 3 or Article 5(4) of the European Human Rights Convention should the government of the United Kingdom respond favorably to the request from the United States and extradite the Applicant to serve the sentence likely to be imposed by the Maryland courts based on Applicant’s conviction for murder in the first degree

On October 24, 2006, a grand jury in Washington County, Maryland, U.S.A. indicted a Mr. Edwards (Applicant) on 11 counts, relating to the death of one J. Rodriguez, the non‑fatal shooting of T. Perry, and assault of a third man, S. Broadhead. The most serious charges are [1] murder in the first degree of Rodriguez; and [2] attempted murder in the second degree of Perry. The 3rd and 4th counts are alternatives to counts 1 and 2, charging the applicant with murder in the second degree of Rodriguez and attempted murder in the second degree of Perry.

Applicant, Rodriguez, Perry and Broadhead were visiting the apartment of a friend on the evening of July 23, 2006. Applicant began to argue with Rodriguez and Perry who had made fun of his small stature and feminine appearance. Applicant left the apartment and later returned with 3 other men. Broadhead told the police that, while the other men in the kitchen were restraining him, Applicant produced a handgun and went into the living room. Shots were then fired killing Rodriguez and injuring Perry with a non‑fatal gunshot wound to his head. Somehow Applicant fled the U.S. and ended up in the United Kingdom.

On January 21, 2007, U.K. authorities arrested Applicant pursuant to a provisional warrant of arrest issued under section 73 of the Extradition Act 2003. In an affidavit of March 14, 2007, Mr. Joseph S. Michael, an attorney in the Office of the State’s Attorney for Washington County, Maryland, outlined the facts of this case and the state charges against the Applicant. As to count I, he stated: “Although a defendant convicted of first degree murder may, under certain circumstances, be subject to the death penalty, none of those circumstances exist in this case. Consequently, the maximum penalty is life in prison.”

The U.S. Embassy in London issued Diplomatic Note 12 in March 2007. It asked for Applicant’s extradition to the U.S. for trial. The Note specified that both Counts one and two carried a maximum penalty of life imprisonment, and that count two, attempted first‑degree murder, also carried a maximum penalty of life imprisonment.

Later that month, the Secretary of State certified that the extradition request was valid. In a decision given on April 16, 2007, the district judge, sitting at the City of Westminster Magistrates’ Court, ruled that the extradition could proceed. He held that, inter alia, Applicant’s extradition would not be incompatible with his rights under Article 3 of the 1950 European Convention for the Protection of Human Rights and Fundamental Freedoms, 312 U.N.T.S. 221 as amended [ECPHR]. [It provides: “Article 3. Prohibition of Torture. No one shall be subjected to torture or to inhuman or degrading treatment.”]

The Maryland Criminal Code stated that it was up to the State of Maryland to seek the death penalty. The extradition request clearly declared that it would not do so. The District Judge accordingly sent the case to the U.K. Secretary of State for his decision as to whether the U.K. should extradite the Applicant to Maryland.

On June 5, 2007, the U.S. Embassy issued a further diplomatic note on Applicant’s case. It assured the U.K. Government that Applicant was not subject to the death penalty, that Maryland would not seek or carry out the death penalty upon his extradition to the United States, and that the Deputy State Attorney of the State of Maryland has assured the U.S. Federal Government of this decision.

Three weeks later, the U.K. Secretary of State ordered Applicant’s extradition. Applicant appealed to the High Court, inter alia, on the ground that a sentence of life imprisonment without the possibility of parole amounted to “inhuman or degrading treatment” in violation of ECPHR Article 3.

On July 26, 2007, in a second affidavit in support of the extradition, Mr. Michael provided further details of the potential sentences for first‑degree murder under Maryland law. He stated: “5.This particular case qualifies for a maximum penalty of life imprisonment under Maryland Ann. Criminal Law § 2‑201(b). The Death Penalty does not apply.”

Given the heinous nature of the instant case, which the State characterizes as a[n] ‘execution style’ homicide, which claimed one life, and seriously and permanently injured a second victim, the State anticipates that it will ask the Court to impose a life sentence without the possibility of parole under Maryland Criminal Law §2‑203 and §2‑304(a)(1).

In the present case, in the event that the State did in fact file its notice of intention to seek life without parole, the trial judge would be the sole sentencing authority. State law grants the judge the discretion to impose one of the following 3 types of sentence: [1] life without the possibility of parole; [2] life with the possibility of parole; or [3] life with the possibility of parole, with all but a certain number of years suspended, followed by up to 5 years of probation.

In Mr. Michael’s experience, “there is no way to accurately predict what sentence a defendant will face if convicted of first‑degree murder.” Mr. Michael added that a person convicted of first‑degree murder was entitled to a pre‑sentencing investigation. This involves a background report from the Department of Parole and Probation on the Defendant and includes information received from the surviving victims.

Convicted defendants also have the right to apply for review of the sentencing by the sentencing judge and thereafter for review by 3 other circuit judges. Mr. Michael also stated he was unprepared to offer an opinion on any mitigating factors which might affect Applicant’s sentence if a court convicts him of first‑degree murder.

Mr. Michael continued: “In general terms, the Washington County Circuit Court [the county where Applicant would be tried] has considered as mitigating factors several known attributes possessed by Applicant: youth and lack of serious criminal history. The single biggest mitigating factor in regard to whether a defendant receives life without parole would be an acceptance of responsibility upon the part of a given defendant.”

Before the U.K. High Court, Applicant accepted that the House of Lords’ ruling in Regina v. Lichniak [25 November 2002] [202 UKHL 47] precludes an appeal based on Article 3 of the ECPHR and conceded that it had to be dismissed. On July 27, 2007, the High Court therefore dismissed Applicant’s appeal on this ground, allowing only his appeal that count 10 of the indictment was not an extraditable offence. The Court also refused to certify to the House of Lords a point of law of general public importance.

On August 1, 2007, this Applicant lodged an application with the European Court of Human Rights (ECHR) and requested an interim measure to stay his extradition. On August 3, 2007 the President of the assigned Chamber decided to *574 apply Rule 39 of the Rules of Court. It therefore indicated to the Government of the United Kingdom that it should not extradite the Applicant until further notice. The ECHR then relates the various extradition arrangements between the United Kingdom and the United States. [Another Applicant named Harvey was considered along with Mr. Edwards but is not covered herein.]

33. A seven‑ judge panel of the ECHR explains its rulings and their bases. “For [Mr. Edwards], the applicable bilateral treaty on extradition was the 1972 UK–USA Extradition Treaty (now superseded by a 2003 treaty). Article IV of the 1972 Treaty provided that extradition could be refused unless the requesting party gave assurances satisfactory to the requested party that the death penalty would not be carried out. II. For relevant U.K. law on article 3 and extradition: see Regina (on the application of Wellington) v. Secretary of State for the Home Department, [2008] UKHL 72; [2009] 1 A.C. 335.

34. “[In that case] [t]he United States requested the extradition of Ralston Wellington from the United Kingdom to stand trial in Missouri on 3 counts of murder in the first degree. In his appeal against extradition, Mr. Wellington argued that his surrender would violate art. 3 of the Convention, on the basis that there was a real risk that he would be subjected to inhuman and degrading treatment in the form of a sentence of life imprisonment without parole.”

35. “In giving judgment in the High Court,[7] Laws L.J. found that there were ‘powerful arguments of penal philosophy’ which suggested that risk of a whole‑life sentence without parole intrinsically violated Article 3 of the Convention. He observed: ‘The abolition of the death penalty has been lauded, and justified, in many ways; but it must have been founded at least on the premise that the life of every person, however depraved, has an inalienable value. The destruction of a life may be accepted in some special circumstances, such as self‑defence or just war; but retributive punishment is never enough to justify it.”

“Yet a prisoner’s incarceration without hope of release is in many respects in like case to a sentence of death. He can never atone for his offence. However he may use his incarceration as time for amendment of life, his punishment is only exhausted by his last breath. Like the death sentence, the whole‑life tariff is lex talionis. But its notional or actual symmetry with the crime for which it is visited on the prisoner (the only virtue of the lex talionis ) is a poor guarantee of proportionate punishment, for the whole‑life tariff is arbitrary: it may be measured in days or decades according to how long the prisoner has to live. It is therefore liable to be disproportionate – the very vice which is condemned on Article 3 grounds – unless, of course, the death penalty’s logic applies: the crime is so heinous it can never be atoned for.”

“But in that case the supposed inalienable value of the prisoner’s life is reduced, merely, to his survival: to nothing more than his drawing breath and being kept, no doubt, confined in decent circumstances. That is to pay lip‑service to the value of life; not to vouchsafe it. However, and ‘not without misgivings’, he considered that the relevant authorities, including those of this Court, suggested an irreducible life sentence would not always raise an Article 3 issue.”

36. “Wellington’s appeal from that judgment was heard by the House of Lords and dismissed on December 10, 2008. Central to the appeal was at [89] of this Court’s judgment in Soering v. United Kingdom, (A/161) (1989) 11 E.H.R.R. 439; Times, July 8, 1989. There the Court stated that considerations in favour of extradition: ‘[m]ust also be included among the factors to be taken into account in the interpretation and application of the notions of inhuman and degrading treatment or punishment in extradition cases.’”

37. “A majority of their Lordships,[Lord Hoffmann, Baroness Hale and Lord Carswell,] found that, on the basis of this paragraph, in the extradition context, a distinction had to be drawn between torture and lesser forms of ill‑treatment. When there was a real risk of torture, the prohibition on extradition was absolute and left no room for a balancing exercise. Insofar as Article 3 applied to inhuman and degrading treatment and not to torture, however, it was applicable only in a relativist form to extradition cases.”

38. “Lord Hoffmann, giving the lead speech, considered the Court’s judgment in the case of Chahal v. United Kingdom, (22414/93) (1997) 23 E.H.R.R. 413; 1 B.H.R.C. 405; Times, November 28, 1996; in which the Court stated that: ‘It should not be inferred from the Court’s remarks [in] Soering that there is any room for balancing the risk of ill‑treatment against the reasons for expulsion in determining whether a State’s responsibility under Article 3 is engaged.’ Lord Hoffmann stated: ‘In the context of Chahal, I read this remark as affirming that there can be no room for a balancing of risk against reasons for expulsion when it comes to subjecting someone to the risk of torture.”

“I do not however think that the Court was intending to depart from the relativist approach to what counted as inhuman and degrading treatment which was laid down in Soering and which is paralleled in the cases on other articles of the Convention in a foreign context. If such a radical departure from precedent had been intended, I am sure that the Court would have said so.”

“For Lord Hoffmann, in Soering made clear that: ‘[T]he desirability of extradition is a factor to be taken into account in deciding whether the punishment likely to be imposed in the receiving state attains the ‘minimum level of severity’ which would make it inhuman and degrading. Punishment which counts as inhuman and degrading in the domestic context will not necessarily be so regarded when the extradition factor has been taken into account.’”

“He went on to state: ‘A relativist approach to the scope of Article 3 seems to me essential if extradition is to continue to function. For example, the Court of Session has decided in Napier v Scottish Ministers, 2005 1 S.C. 229; 2004 S.L.T. 555; 2004 S.C.L.R. 558; [2004] U.K.H.R.R. 881; [2005] (2005) S.C. 229, that, in Scotland, the practice of ‘slopping out’ (requiring a prisoner to use a chamber pot in his cell and empty it in the morning) may cause an infringement of Article 3. Whether, even in a domestic context, this attains the necessary level of severity is a point on which I would wish to reserve my opinion. If it were applied in the context of extradition, however, it would prevent anyone being extradited to many countries, poorer than Scotland, where people who are not in prison often have to make do without flush lavatories.”

39. “A minority of their Lordships [Lord Scott and Lord Brown,] disagreed with these conclusions. They considered that the extradition context was irrelevant to the determination of whether a whole life sentence amounted to inhuman and degrading treatment. They found no basis in the text of Article 3 for such a distinction. Lord Brown also considered that the Court, in Chahal and again in Saadi v. Italy (37201/06) (2009) 49 E.H.R.R. 30; 24 B.H.R.C. 123; [2008] Imm. A.R. 519; [2008] I.N.L.R. 621; [2008] Crim. L.R. 898; ECHR (Grand Chamber) had departed from the previous, relativist approach to inhuman and degrading treatment that it had taken in Soering.”

He explained “There is, I conclude, no room in the Strasbourg jurisprudence for a concept such as the risk of a flagrant violation of article 3’s absolute prohibition against inhuman or degrading treatment or punishment (akin to that of the risk of a ‘flagrant denial of justice’). By the same token that no one can be expelled if he would then face the risk of torture, so too no one can be expelled if he would then face the risk of treatment or punishment which is properly to be characterised as inhuman or degrading.”

“That, of course, is not to say that, assuming for example ‘slopping out’ is degrading treatment in Scotland, so too it must necessarily be regarded in all countries [(see para 27 of Lord Hoffmann’s opinion)] ¼ the Strasbourg Court has repeatedly said that the Convention does not ‘purport to be a means of requiring the contracting states to impose Convention standards on other states’ (Soering, para 86) and Article 3 does not bar removal to non‑Convention states (whether by way of extradition or simply for the purposes of immigration control) merely because they choose to impose higher levels or harsher measures of criminal punishment.”

“Nor is it to say that a risk of Article 3 ill‑treatment, the necessary pre‑condition of an Article 3 bar upon extradition, will readily be established. On the contrary, as the Grand Chamber reaffirmed in Saadi at para 142:‘[T]he Court has frequently indicated that it applies rigorous criteria and exercises close scrutiny when assessing the existence of a real risk of ill‑treatment ¼ in the event of a person being removed from the territory of the respondent State by extradition, expulsion or any other measure pursuing that aim. Although assessment of that risk is to some degree speculative, the Court has always been very cautious, examining carefully the material placed before it in the light of the requisite standard of proof ¼ before ¼ finding *577 that the enforcement of removal from the territory would be contrary to Article 3 of the Convention.”

“As a result, since adopting the Chahal judgment it has only rarely reached such a conclusion.’” Therefore, for Lord Brown, if a mandatory life sentence violated Article 3 in a domestic case, the risk of such a sentence would preclude extradition to another country.”

40. “Despite these different views, however, none of the Law Lords found that the sentence likely to be imposed on Mr. Wellington would be irreducible; having regard to the commutation powers of the Governor of Missouri, it would be just as reducible as the sentence at issue in Kafkaris v. Cyprus, (21906/04) (2009); 49 E.H.R.R. 35; 25 B.H.R.C. 591; [2010] 1 Prison L.R. 1; ECHR (Grand Chamber).”

“All five Law Lords also noted that, in Kafkaris, the Court had only said that the imposition of an irreducible life sentence may raise an issue under Article 3. They found that the imposition of a whole life sentence would not per se constitute inhuman and degrading treatment in violation of Article 3, unless it were grossly or clearly disproportionate.”

“Lord Brown in particular noted: ‘Having puzzled long over this question, I have finally concluded that the majority of the Grand Chamber in Kafkaris would not regard even an irreducible life sentence—by which, as explained, I understand the majority to mean a mandatory life sentence to be served in full without there ever being proper consideration of the individual circumstances of the defendant’s case—as violating Article 3 unless and until the time comes when further imprisonment would no longer be justified on any ground—whether for reasons of punishment, deterrence or public protection. It is for that reason that the majority say only that Article 3 may be engaged.’

“Lord Brown added that this test had not been met in Wellington’s case, particularly when the facts of the murders for which he was accused, if committed in the United Kingdom, could have justified a whole life order. Lord Brown, however, considered that, in a more compelling case, such as the mercy killing of a terminally‑ill relative, this Court: ‘[M]ight well judge the risk of ill‑treatment to be sufficiently real, clear and imminent to conclude that extradition must indeed be barred on Article 3 grounds.”

41. “Finally, Lord Hoffmann, Lord Scott, Baroness Hale and Lord Brown all doubted Laws L.J.’s view that life imprisonment without parole was lex talionis. Lord Hoffmann, Baroness Hale and Lord Brown did not accept his premise that the abolition of the death penalty had been founded on the idea that the life of every person had an inalienable value; there were other, more pragmatic reasons for abolition such as its irreversibility and lack of deterrent effect. Lord Scott rejected the view that an irreducible life sentence was inhuman and degrading because it denied a prisoner the possibility of atonement; once it was accepted that a whole life sentence could be a just punishment, atonement was achieved by the prisoner serving his sentence.”

42. “Wellington’s application to this Court was struck out on October 5, 2010, the Applicant having indicated his wish to withdraw it. “ *578

* * * *

141. “Applicant [Edwards] faces, at most, a discretionary sentence of life imprisonment without parole. Given that this sentence will only be imposed after consideration by the trial judge of all relevant aggravating and mitigating factors, and that it could only be imposed after the applicant’s conviction for a premeditated murder in which one other man was shot in the head and injured, the Court is unable to find that the sentence would be grossly disproportionate.”

142. “Moreover, for the reasons it has given in respect of the first applicant, the Court considers that Applicant (Edwards) has not shown that incarceration in the United States would not serve any legitimate penological purpose, still less that, should that moment arrive, the Governor of Maryland would refuse to avail himself of the mechanisms which are available to him to reduce a sentence of life imprisonment without parole. ¼Therefore, he too has failed to demonstrate that there would be a real risk of treatment reaching the Article 3 threshold as a result of his sentence if he were extradited to the United States. The Court therefore finds that there would be no violation of Article 3 in his case in the event of his extradition.

Alleged violation of Article 5 of the Convention

143. The Court then considers the Applicant’s claim that there would be a violation of Article 5 of the Convention. “Applicant Edwards [also] submitted that, if the Court did not examine his complaint relating to his sentence under Article 3, then, alternatively, that issue could be examined under Article 5 which guarantees the right to liberty and security. In particular, Article 5(1)(a) and (4) provide: ‘1. Everyone has the right to liberty and security of person. No one shall be deprived of his liberty save in the following cases and in accordance with a procedure prescribed by law: (a) the lawful detention of a person after conviction by a competent court; ¼4. Everyone who is deprived of his liberty by arrest or detention shall be entitled to take proceedings by which the lawfulness of his detention shall be decided speedily by a court and his release ordered if the detention is not lawful.’”

144. “This Court considers that, even assuming that this submission is intended to raise a separate issue from the complaint made under Article 3, it has been determined by its recent admissibility decision in Kafkaris v. Cyprus (No.2). [120] That application was introduced by Mr. Kafkaris following the Grand Chamber’s judgment in his case. He complained, inter alia, that, under Article 5(4), he was entitled to a further review of his detention, arguing that his original conviction by the Limassol Assize Court was not sufficient for the purposes of that provision.”

“He submitted that he had already served the punitive period of his sentence and, relying on Stafford v. United Kingdom, (46295/99) (2002) 35 E.H.R.R. 32; 13 B.H.R.C. 260; [2002] Po. L.R. 181; [2002] Crim. L.R Stafford. 828; (2002) 152 N.L.J. 880; Times, May 31, 2002. ECHR argued that new issues affecting the lawfulness of his detention had arisen. These included the Grand Chamber’s finding of a violation of Article 7, the Attorney General’s subsequent refusal to recommend a presidential pardon and the fact that, in habeas corpus proceedings, the Supreme Court had failed to consider factors such as his degree of dangerousness and rehabilitation.”

 145. “The Court rejected that complaint as manifestly ill‑founded. The Court found that the Assize Court had made it quite plain that the applicant had been sentenced to life imprisonment for the remainder of his life. It was clear, therefore, that the determination of the need for the sentence imposed on the applicant did not depend on any elements that were likely to change in time. [122] The ‘new issues’ relied upon by the applicant could not be regarded as elements which rendered the reasons initially warranting detention obsolete or as new factors capable of affecting the lawfulness of his detention.”

“Nor could it be said that the Applicant’s sentence was divided into a punitive period and a security period as he claimed. Accordingly, the Court considered that the review of the lawfulness of the Applicant’s detention required under Article 5(4) had been incorporated in the conviction pronounced by the courts, no further review therefore being required.”

146. “The Court considers the complaint made in the present cases to be indistinguishable from the complaint made in Kafkaris (No.2). It is clear from the provisions of Maryland law which are before the Court that any sentence of life imprisonment without parole would be imposed to meet the requirements of punishment and deterrence. Such a sentence would therefore be different from the *607 life sentence considered in Stafford, which the Court found was divided into a tariff period (imposed for the purposes of punishment) and the remainder of the sentence, when continued detention was determined by considerations of risk and dangerousness.”

“Consequently, as in Kafkaris (No.2), the Court is satisfied that, if convicted and sentenced to life imprisonment without parole, the lawfulness of Applicant’s detention required under Article 5(4) would be incorporated in the sentence imposed by the trial, and no further review would be required by this Article. Accordingly, this complaint is manifestly ill‑founded and must be rejected.”

Citation: [Mr. Edwards’ Application No. [9146/07 and 32650/07] [Harkins and] Edwards v. United Kingdom, (2012) 55 E.H.R.R. 19; 19 Times, 2/13/2012 (Eur. Ct. Hum. Rts. 2012).