Exhaustion of Trade Mark Rights and the Burden of Proof: Coty/Easycosmetic

The IPKat has received and is pleased to host the following guest post by Katfriend Diego Guerrero Obando (attorney at bureau Brandeis), commenting on a Dutch ruling on the burden of proof in a parallel trade case. Here is what Diego writes:

On 16 April 2025, the District Court of The Hague delivered a noteworthy judgment in a parallel trade dispute between Coty Beauty Germany GmbH (“Coty”) and Easycosmetic Benelux B.V. (“Easycosmetic”). The decision centers on trade mark exhaustion and the allocation of the burden of proof, particularly in light of the case law of the Court of Justice of the European Union (“CJEU”), e.g. in Van Doren/Lifestyle, Harman/AB, and HP/Senetic.

Background

Coty is a global company selling perfume and cosmetics products, including products bearing the 'Hugo Boss' European Union trade mark. This case specifically revolves around a 'Bottled Night' perfume bottle sold under the ‘Hugo Boss’ brand, which is marketed within the European Economic Area (“EEA”) through a selective distribution system, with sales prices varying by Member State. Using an internal tracking system and scanning unique serial numbers on the packaging, Coty is able to track the route the bottles have taken around the world.

Easycosmetic is a wholesaler of perfumes and cosmetics not affiliated with Coty’s selective distribution network. In late 2022, Coty discovered—through a test purchase and invoice—that Easycosmetic sold a bottle of ‘Bottled Night’ Hugo Boss perfume to a Dutch party. The bottle bore a specific serial number and barcode (the “Perfume Bottle”). Coty determined that a batch of 480 bottles of ‘Bottled Night’ with a barcode identical to that of the Perfume Bottle had been shipped to South Africa.

The central question was whether Easycosmetic had infringed Coty's trade mark rights by selling the Perfume Bottle because Coty argued that the Perfume Bottle was not placed on the market in the EEA with its consent.

Burden of Proof

Under Dutch law, Coty, as the trade mark holder, must initially substantiate its claim of infringement by describing how Easycosmetic allegedly violated its rights. Once this burden is met, it is up to Easycosmetic to contest or defend Coty's assertion.

Easycosmetic relied on Article 15(1) of the EU Trade Mark Regulation (2017/1001), which prohibits a trade mark owner from opposing further distribution of goods that have already been put on the market in the EEA with their consent. Because exhaustion is an affirmative defense, the burden of proof lies with the party invoking it—in this case Easycosmetic.

The burden of proof can be a challenge for Easycosmetic as the defendant because, most likely, they do not have (full) knowledge of the trade route and destination of the Perfume Bottle. Trade mark owners usually have this information. The risk is that exhaustion cannot be proven due to a lack of evidence on the side of Easycosmetic, so there is a risk that Coty may be able to use its trade mark right to prevent legitimate parallel trade.

To address this imbalance, the CJEU held that the burden of proof may shift under certain conditions, particularly where there is a risk of national market partitioning. In HP/Senetic, the CJEU outlined four factors that could justify such a shift:

The trade mark owner operates a selective distribution system;
The products lack markings identifying the intended market;
The trade mark owner refuses to share information about the product’s destination; and
The defendant’s suppliers are not inclined to reveal their own sources of supply.

If these conditions are met, the trade mark owner may first be required to show that the product was marketed outside the EEA. If successful, the defendant must then prove that the product was sold inside the EEA with the trade mark owner’s consent.

Internal records as conclusive evidence

Back to the course of the dispute between Coty and Easycosmetic. This one seems to be cut out for application of the doctrine that follows from HP/Senetic.

Easycosmetic argued that the burden of proof regarding exhaustion lied with Coty in this case, citing similar circumstances as in HP/Senetic. In its view, the provisions in Coty's distribution agreement allowed Coty to maintain price differences between EU Member States, indicating (the risk of) national market partitioning.

However, the Court left open whether there should be a shift of the burden of proof, because Easycosmetic indicated at the hearing that it no longer disputed that the 480 bottles of Hugo Boss' 'Bottled Night' were marketed outside the EEA. This was evidenced by transport documents submitted by Coty, which it submitted "without obligation" or possibly under pressure from Easycosmetic's disclosure claims. The only remaining issue in dispute was whether the Perfume Bottle was among those 480 bottles.

In that context, Coty showed that its tracking system, the serial number on the packaging of the Perfume Bottle and other available information allowed it to demonstrate in a detailed manner all that happened to the Perfume Bottle: on 31 July 2021, the Perfume Bottle was filled at the factory and placed in a ‘shipper’ (a cardboard package) on a pallet; on 4 and 18 August 2021, the pallet was scanned at Coty’s distribution center and by its logistics provider in Germany; and on 19 August 2021, it was shipped to a party in South Africa.

Easycosmetic argued that the data from Coty’s internal records cannot be verified and do not conclusively prove that the Perfume Bottle was supplied outside the EEA. The court rejected this, as Easycosmetic gave no reason to doubt the accuracy of Coty’s internal records. Thus, Easycosmetic's defense of exhaustion did not succeed and the court found a trade mark infringement. The court imposed an information disclosure obligation, damages and an EU-wide injunction, including a penalty payment.

Key Takeaways

Trade mark owners in the cosmetics sector generally appear to be well equipped to demonstrate the trade route of their products using internal databases. As such information can be found to constitute decisive evidence, the following takeaways are important:

Traceability is mandatory: Cosmetics distributors are already obliged under the EU Cosmetics Regulation (1223/2009) to ensure product traceability. Packaging must include a clearly legible and indelible batch number to identify the product’s route through the supply chain.
Traceability is not a new practice: As early as 1998, the District Court of The Hague ruled in a case between Dior and Tuk Consultancy that Dior had no difficulty proving trade mark infringement. This was due to its internal system in which each bottle of perfume was coded and linked to the specific customer it had been sold to.
Timing of disclosure matters: When litigation looms, timing is critical. Disclosure of trade route information should occur as early as possible. A pre-litigation request for information can be useful. If such a request is refused, this may, under the HP/Senetic doctrine, support a shift in the burden of proof.

Source: https://ipkitten.blogspot.com/2025/05/guest-post-exhaustion-of-trade-mark.html