Silhouette International v. Hartlauer

Silhouette International Schmied GmbH & Co. KG (Silhouette) (plaintiff) produced high-end eyeglasses under the trademark “Silhouette,” which was registered in Austria and most other countries of the world. Silhouette supplied eyeglasses directly to opticians in Austria and had subsidiary companies or distributors supply their eyeglasses to other countries. Hartlauer Handelsgesellschaft mbH (Hartlauer) (defendant) also sold eyeglasses in Austria through its subsidiaries, but at a lower price point than Silhouette’s. Silhouette did not supply eyeglasses to Hartlauer because Silhouette believed that being distributed by the more budget friendly Hartlauer would be harmful to its image as a luxury brand. In October 1995, Silhouette sold 21,000 eyeglass frames to the Bulgarian company Union Trading. Silhouette had directed its representative to instruct Union Trading to only sell the eyeglasses frames in Bulgaria or the states of the former USSR, but it was uncertain whether the representative actually did so. Subsequently, Hartlauer bought the frames from an unknown source. Hartlauer then offered the frames for sale in Austria and released a press campaign advertising that it had managed to buy 21,000 Silhouette frames abroad. Silhouette brought an action for preliminary relief in Austrian court. Silhouette sought an injunction restraining Hartlauer from selling eyeglass frames in Austria under Silhouette’s trademark without being put in the European Economic Area (EEA) by Silhouette or third parties with Silhouette’s consent. Hartlauer argued that trademark-exhaustion laws were not totally comprehensive and left member states to the treaty establishing the European Economic Community (EC Treaty) with the ability to adopt their own exhaustion laws for products placed on the market in nonmember countries. Further, Hartlauer argued that Austria did not put any law in place prohibiting Hartlauer’s importation of the eyeglasses, so Silhouette was not entitled to an injunction.