Repackaging branded products: what is and isn’t allowed?

It is becoming increasingly common for entrepreneurs to purchase branded products in large quantities and then repackage them in smaller or alternative packaging. This is often done with the aim of selling the products separately, offering them as samples, or making them more attractive to a different type of customer. But are you allowed to simply repackage a branded product and then sell it under the original brand name? In this article, you can read about what is and is not permitted when repackaging branded products, and what conditions you must meet to avoid trademark infringement.

The basic principle: the trademark owner decides

The owner of a trademark has the exclusive right to use their trademark. This means that, in principle, others may not use the trademark without the trademark owner’s permission. However, there is one important exception: exhaustion.

What is exhaustion?

Once a branded product has been placed on the market in the European Economic Area (EEA) with the permission of the trademark owner, the trademark right is said to be ‘exhausted’. The trademark owner can then no longer oppose further sales of that specific product.

You can read more about exhaustion in our previously published article on parallel trade and exhaustion.

Exception to the rule: valid reason for opposition

Even when the principle of exhaustion applies—i.e., when the branded product has been placed on the market within the EEA with the trademark owner’s consent—the trademark owner retains the right to oppose further sales in certain cases. This is possible when there is a valid reason. Such a valid reason may arise in the following situations, among others:

• Damage to the product

If the product has been modified or its quality has deteriorated, the trademark owner may, under certain circumstances, object to resale. Examples include repackaging or applying new labels.

• Reputational damage

The trademark owner may also object if the manner of presentation detracts from the luxury or exclusive image of the brand. Examples include cheap or non-original packaging, or labels that do not match the image that the trademark owner has in mind.

• Confusion about the origin

If resale unjustifiably creates the impression that there is an economic link between the reseller and the trademark owner, for example because the reseller presents itself as an official dealer or distributor when this is not the case, this may also be a valid reason for objection.

When is repackaging permitted?

Repackaging of branded products is only permitted if all five of the following conditions are met.

1. Necessity: Repackaging must be objectively necessary in order to market the product. Commercial motives, such as margin improvement or logistical convenience, are insufficient.
2. No impairment of quality: Repackaging must not impair the product or reduce its original quality.
3. Transparent labeling: The new packaging must clearly state who originally produced the product and who repackaged it.
4. No damage to the brand image: The new packaging must be neat and tidy and in line with the brand image. It must also comply with all applicable labeling rules.
5. Prior notification to the trademark owner: The trademark owner must be informed of the repackaging prior to further marketing. In addition, the trademark owner has the right to inspect and check the repackaging to assess whether it complies with the applicable conditions.

If all five conditions are not met, this constitutes trademark infringement and the repackager runs the risk that the trademark owner will be able to successfully prevent further sales.

Questions?

Do you have any questions about this article or other questions about repackaging and trademark law? Please contact one of our lawyers by email, telephone, or fill in the contact form for a no-obligation initial consultation. We are happy to help you.