In Zino Davidoff SA v. A and G Imports Ltd., et al., the European Court of Justice (EJC) considered the interpretation of Article 7 of the Directive relating to trademarks in three joined cases referred to the Court by the High Court of Justice of England and Wales, Chancery Division.

According to Article 5 of the Directive, a trademark proprietor has, inter alia, the exclusive right to prevent third parties from importing or exporting goods bearing the trademark without his consent. However, an exception to this rule exists in Article 7 of the Directive, in which the trademark proprietor's right is subject to exhaustion where the goods bearing the trademark have been put on the market in the European Economic Area (EEA) by him or with his consent. This allows for the trademark proprietor to control the marketing of his goods outside the EEA without exhausting his rights within the EEA.

In all three cases the trademark proprietor claimed trademark infringement where the defendants had imported and sold within the EEA goods which had initially been marketed by the trademark proprietor, or with his consent, only outside the EEA. The Court had to consider under what circumstances a trademark proprietor could be said to have consented directly or indirectly to third parties importing and marketing such goods.

The Court stressed the importance of interpreting the concept of consent uniformly throughout the Community. Although intention is usually voiced by an express statement of consent, the Court held that consent may in some situations be implied, i.e., inferred from facts and circumstances prior to, simultaneous with or subsequent to the placing of the goods on the market outside the EEA". The consent must, however, "unequivocally demonstrate that the proprietor has renounced his right to oppose placing of the goods on the market within the EEA".

The burden of proof is on the importer to show that consent is present and the Court further held that implied consent to market the goods within the EEA, which are put on the market outside the EEA, cannot be inferred from the mere silence of the trademark proprietor. Also, the Court held that consent cannot be implied from the fact that the trademark proprietor has not communicated opposition to such marketing or that no warning is attached to the goods that they should not be placed on the market within the EEA. Finally, consent cannot be implied based on transfer of ownership of the goods from the trademark proprietor without him imposing contractual reservations concerning the right to market goods within the EEA.

When considering exhaustion, it does not matter that the importer has no knowledge of the trademark proprietor's objection to goods being placed on the market within the EEA or that traders other than authorized retailers are also selling such goods. In addition, it is not relevant that authorized retailers and wholesalers have not imposed contractual reservations on their own purchasers, even though the trademark proprietor has informed them of such reservations.