The exhaustion principle comes in the way of parallel importers

Abstract

An Austrian Court, seized with a dispute between two Austrian companies, Silhouette and Hartlauer, sought the assistance of the European Court of Justice in Luxembourg, through a preliminary reference. Silhouette, a manufacturer of top of the range branded spectacles sold its product to a company established in Bulgaria on condition that they would not be resold elsewhere, including the European Economic Area. Hartlauer, a discount outlet in Austria, sought to obtain Silhouette spectacles from the brand owner, but was turned down because of the down-market image of the outlet. On being refused supply, Hartlauer succeeded in sourcing genuine Silhouette spectacles from Bulgaria on the grey market and imported them into Austria for resale from his discount outlet. In an effort to protect the image of the spectacles, Silhouette sought an injunction before the Austrian courts to stop Hartlauer from offering the spectacles for sale in Austria. Since the matter turned on the interpretation of a provision of the European TradeMark Directive, the Austrian Court referred a question to the European Court of Justice, in virtue of the preliminary reference procedure under Article 177 of the EC Treaty.