## Facts

- Silhouette, an Austrian maker of “Silhouette” branded eyeglass frames, controlled its distribution to preserve a luxury brand image and did not supply Hartlauer, a discount eyewear retailer.
- In October 1995, Silhouette sold about 21,000 frames to a Bulgarian company, intending resale only in Bulgaria and certain neighboring markets outside the EEA.
- Hartlauer acquired the frames via a secondary-market source, imported them into Austria, offered them for sale, and advertised that it had bought “21,000 Silhouette frames abroad.”
- Silhouette sought preliminary injunctive relief in Austria to stop Hartlauer from selling the frames unless the goods had first been placed on the EEA market by Silhouette or with its consent.
- Hartlauer argued that Member States could choose “international exhaustion,” meaning trademark rights would be exhausted by first marketing outside the EEA.
- The Austrian Supreme Court referred questions to the EU Court of Justice on the interpretation of Articles 5 and 7 of Directive 89/104/EEC (as applied in the EEA).

## Issues

1. Whether Articles 5–7 of Directive 89/104/EEC permit Member States to recognize international exhaustion for goods first put on the market outside the EEA by the trademark proprietor or with its consent.
2. Whether Article 7(1) of the Directive can, by itself, be invoked to obtain an injunction against a private party importing and selling goods first put on the market outside the EEA.

## Decision

- The Court held that Directive 89/104/EEC precludes national rules providing for exhaustion of trademark rights where goods were first put on the market outside the EEA by the proprietor or with its consent.
- The Court held that Article 7(1) cannot, on its own, be used to obtain an injunction against a private party; a directive provision cannot, as such, impose obligations on individuals.
- The Court instructed that national courts must apply national law consistently with the Directive’s interpretation, but relief in private litigation must rest on national law (as interpreted consistently), not the Directive alone.

## Legal Principles

- Articles 5–7 of Directive 89/104/EEC effect complete harmonization of the core rules defining trademark rights and exhaustion within the EEA, leaving Member States no discretion to adopt a broader exhaustion regime.
- Exhaustion under Article 7(1) is regional: trademark rights are exhausted only when goods are first put on the market in the EEA by the proprietor or with its consent.
- Allowing international exhaustion in some Member States would risk internal-market distortions by enabling indirect entry of goods first marketed outside the EEA into Member States that otherwise apply EEA-only exhaustion.
- Directives generally lack horizontal direct effect; Article 7(1) cannot, by itself, serve as the sole legal basis for an injunction against a private party, though national courts must interpret national law, so far as possible, consistently with the Directive.

## Conclusion

The Court required an EEA-only trademark exhaustion rule under Directive 89/104/EEC and rejected Member State authority to adopt international exhaustion; it also held that the Directive’s exhaustion provision cannot alone justify injunctive relief against a private parallel importer.


Silhouette Int’l Schmied GmbH & Co. KG v. Hartlauer Handelsgesellschaft mbH, Case C-355/96, [1998] E.C.R. I-4799 (Ct. Just. July 16, 1998)