The probe concerns what are known as parallel imports – branded
goods that are imported into the EU from countries that sell those
goods at a lower price. The importers are therefore able to sell
the goods more cheaply than the trade mark holder intends.
The suspicion is that Amazon.com may have been sourcing its
products from cheap foreign wholesalers when, according to UK law,
the CDs should have been sourced from within the European Economic
Area. It is not investigating Amazon.co.uk, which only sells
UK-sourced CDs.
The BPI admitted to Reuters that an investigation is ongoing,
but spokesman Matt Phillips explained: "This is a standard routine.
We look at many web sites to determine if the product is
legitimate".
He added a warning, however: "If we find a net retailer is
importing music from outside Europe, then they are infringing
copyright law."
The BPI has been investigating other on-line retailers for
similar breaches of competition and trade mark law. The popular CD
and DVD sellers Play.com and CD-Wow have both been sued by the
trade group, with the case against CD-Wow due to begin its court
hearing next month.
The conflict between competition and trade mark rights is
another common feature of parallel import cases. In a different
case this week, the European Court of Justice struck a blow for
trade mark holders when it dismissed an appeal by the Commission
over imports of a heart drug.
Pharmaceutical giant the Bayer Group had restricted supplies of
its drugs to Spanish and French wholesalers who had taken advantage
of a 40% difference in the price of the drug in Spain and France
compared to the UK. The wholesalers had exported a large quantity
of the drug to the UK, causing the UK Bayer subsidiary a loss of DM
230 million.
In 1996 the Commission took the side of the wholesalers and
fined the Bayer Group for restricting its supplies. But its
decision was overturned by the European Court of First Instance in
October 2000, on the grounds that there was no provable agreement
between Bayer and the wholesalers to limit parallel exports of the
drug to the UK.
On Tuesday, the European Court of Justice approved this
ruling.
It should be noted, however, that the Bayer decision, which was
made on the basis of competition rules, related to imports within
the EU.
This reflects a Commission report from June of last year that
stated: "in law, trade mark rights cannot be invoked to restrain
the free movement of goods within the EU, but they can be used to
restrain the entry of such goods into the EU."
