Case No: HC10C00735 
Neutral Citation Number: [2010] EWHC 1973 (Ch)

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
(INTELLECTUAL PROPERTY)
Royal Courts of Justice
Strand, London, WC2A 2LL
Date: 28 July 2010 

Before :

MR. G. LEGGATT Q.C.
Sitting as a Deputy Judge of the Chancery Division 
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Between :

	(1)	HONDA MOTOR CO. LIMITED
(2)	 HONDA MOTOR EUROPE LIMITED 

Claimants	
	– and –

DAVID SILVER SPARES LIMITED	

Defendant	

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James Abrahams (instructed by Allen & Overy) for the Claimants
Brian Nicholson (instructed by Kempner Robinson) for the Defendant

Hearing date: 22 July 2010
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JUDGMENT
Mr G. Leggatt Q.C.:

Introduction
1.	The Claimants (whom I will refer to collectively as “Honda”) are the owners of UK registered and Community trade marks for HONDA which cover (amongst other goods) parts for motorcycles.  The Defendant, David Silver Spares Limited (“David Silver”), is the leading supplier in the UK of spare parts for Honda motorcycles.  In this action Honda complain that David Silver has infringed their trade marks by dealing in Honda motorcycle parts which, although genuine, have not been put on the market in the European Economic Area (“EEA”) by Honda or with its consent.  The ability to make such a complaint derives from the feature of European Community law which allows a trade mark proprietor to prevent the importation and marketing of goods under its trade mark in the EEA even if it has already put the goods on the market itself outside the EEA.

2.	David Silver has applied for an order that the Particulars of Claim be struck out, or in the alternative that it be granted summary judgment, on the ground that the claim as pleaded is entirely speculative and lacking in the particularity which David Silver submits is necessary to maintain a case of trade mark infringement.

3.	Since the application was issued, Honda has served draft Amended Particulars of Claim, and it is common ground that I should treat these as the relevant statement of Honda’s case for the purposes of the application. 

4.	The strike out application raises issues, first, as to who bears the burden of pleading and proving facts relevant to the question of whether Honda’s rights conferred by its trade marks have been exhausted and, second, as to the level of particularity with which allegations of infringement must be pleaded in order to enable the defendant sufficiently to know the case it has to meet and for the case to be dealt with justly.

The Law
5.	In relation to Honda’s UK registered trade marks, the relevant legal provisions are contained in the European Trade Marks Directive and in the Trade Marks Act 1994, which must so far as possible be construed so as to accord with the Directive. In relation to Honda’s Community trade marks, the relevant provisions are contained in a European Council Regulation (EC) No. 207/2009; but it is common ground that there is no material difference between the two regimes and that it is therefore sufficient to consider the law applicable to the UK registered trade marks. 

6.	Article 5(1) of the Trade Marks Directive states:
“Rights conferred by a trade mark 
The registered trade mark shall confer on the proprietor exclusive rights therein. The proprietor shall be entitled to prevent all third parties not having his consent from using in the course of trade
(a) 	any sign which is identical with the trade mark in relation to goods and services which are identical with those for which the trade mark is registered.
…”

7.	The key provision of the Directive for present purposes is Article 7(1), which states: 
“Exhaustion of the rights conferred by a trade mark
The trade mark shall not entitle the proprietor to prohibit its use in relation to goods or services which have been put on the market in the Community under that trade mark by the proprietor or with his consent.”

	As a result of the EEA Agreement, effective from 1 January 1994, the reference to “the Community” is to be read as applying to the whole EEA.

8.	Similar provisions are contained in sections 9, 10 and 12 of the Trade Marks Act 1994, as follows: 
“Rights conferred by registered trade mark 
9.(1) 	The proprietor of a registered trade mark has exclusive rights in the trade mark which are infringed by use of the trade mark in the United Kingdom without his consent.
	The acts amounting to infringement, if done without the consent of the proprietor, are specified in section 10.
...
Infringement of registered trade mark
10.(1) 	A person infringes a registered trade mark if he uses in the course of trade a sign which is identical with the trade mark in relation to goods or services which are identical with those for which it is registered.
…
Exhaustion of rights conferred by registered trade mark 
12.(1) 	A registered trade mark is not infringed by the use of the trade mark in relation to goods which have been put on the market in the European Economic Area under that trade mark by the proprietor or with his consent.”

9.	The ECJ has considered the effect of Article 7(1) in three principal cases: Case C-355/96, Silhouette International Schmied GmbH & Co KG v Hartlauer Handelsgesellschaft mbH [1999] Ch 77; Case C-173/98, Sebago Inc v GB Unic SA [2000] Ch 558; and Joined Cases C-414, 415, 416/99, Zino Davidoff SA v A&G Imports Ltd [2002] Ch 109.  

10.	The following principles derived from these cases are common ground:
(1)	Articles 5-7 of the Directive embody a complete harmonisation of the rules relating to the rights conferred by a trade mark and accordingly define the rights of proprietors of trade marks in the Community/EEA (Silhouette at [25], [29]; Davidoff at [32], [39]). 
(2)	In particular, national rules may not provide for exhaustion of trade mark rights in respect of goods put on the market outside the EEA by the proprietor or with his consent (Silhouette at [26] et seq; Davidoff at [32]-[33]).  Thus even where the trade mark proprietor has put the goods on the market himself outside the EEA, he may still assert his trade mark rights to prevent importation of those goods into the EEA without his consent (Sebago at [21], Davidoff at [33]).
(3)	As a matter of Community law, for there to be consent within the meaning of Article 7(1), such consent must relate to each individual item of the product in respect of which exhaustion of rights is pleaded (Sebago at [19]-[22]).
(4)	For the purpose of Article 7(1), consent must be so expressed that an intention to renounce those rights is unequivocally demonstrated (Davidoff at [45]-[47]). 

11.	What is not common ground is who bears the burden of proving where goods were first put on the market for the purpose of determining whether rights conferred by a trade mark have been exhausted. 

Burden of Proof
12.	On behalf of Honda, Mr Abrahams submitted that the burden is on the defendant to raise a defence of exhaustion of rights under Article 7(1) of the Directive (and section 12(1) of the Act).  Thus all that Honda needs to plead and prove is that David Silver is using Honda’s trade marks in the course of its trade and that Honda has not given its consent to such use; it is then for David Silver to make good a defence of exhaustion, if it seeks to rely on such a defence, by pleading and proving that the requirements of Article 7(1) are met. 

13.	As a matter of construction of the Directive and the Act, these submissions seem to me to be clearly correct.  The rights of the trade mark proprietor and the elements which must be demonstrated in order to show that there has prima facie been an infringement of a trade mark are set out in Article 5(1) of the Directive (and sections 9(1) and 10(1) of the Act).  Article 7(1) of the Directive (and section 12(1) of the Act) sets out circumstances in which something which would be an infringement if the earlier provisions stood alone is not an infringement after all.  Accordingly, if ordinary principles of the English law of evidence are applied, the burden will lie on the defendant to plead and prove that the circumstances described in Article 7(1) exist with the consequence that the rights of the proprietor have been exhausted.  I did not understand Mr Nicholson to dissent from this analysis.  

14.	Furthermore, in Davidoff (and the other cases joined with it) the defendants had obtained goods from outside the EEA and questions were referred to the ECJ to ascertain when it is permissible to infer in such circumstances that the trade mark proprietor has consented to such goods being put on the market within the EEA. The ECJ held that consent must be expressed positively and stated that it is for the trader alleging consent to prove it, and not for the trade mark proprietor to demonstrate its absence (see Davidoff at [54]). If this is so as regards the requirement of consent, it would seem logical that the same also applies to the other requirement specified in Article 7(1) – that the goods have been put on the market in the EEA under the trade mark. 

15.	On behalf of David Silver, Mr Nicholson relied, however, on the subsequent decision of the ECJ in Case C-44/00, Van Doren + Q GmbH v Lifestyle Sports + Sportswear Handelsgesellschaft mbH [2003] ETMR 75, which he submitted has the effect of reversing the burden of proof in this case.

16.	In Van Doren + Q an issue arose as to whether trade marked goods which were the subject of infringement proceedings in Germany had been first placed on the market outside the EEA.  The highest German Court (the Bundesgerichtshof)  referred to the ECJ for a preliminary ruling a question as to whether national legislation which places on the defendant the burden of proving that the goods had been put on the market for the first time in the EEA by the trade mark proprietor or with his consent was consistent with Community law. The ECJ held that such a rule of evidence is consistent with Community law and in particular with Articles 5 and 7 of the Trade Marks Directive. However, the ECJ went on to say that the requirements deriving from the protection of the free movement of goods enshrined in Articles 28 and 30 of the EC Treaty may mean that this rule of evidence needs to be qualified.  At paragraphs 39 to 41 of its judgment, the ECJ stated:
“39.	As the referring court observes, there is a real risk of partitioning of markets, for example, in situations where, as in the main proceedings, the trade mark proprietor markets his products in the EEA using an exclusive distribution system. 
40.	In such situations, if the third party were required to adduce evidence of the place where the goods were first put on the market by the trade mark proprietor or with his consent, the trade mark proprietor could obstruct the marketing of the goods purchased and prevent the third party from obtaining supplies in future from a member of the exclusive distribution network of the proprietor in the EEA, in the event that the third party was able to establish that he had obtained his supplies from that member. 
41.	Accordingly, where a third party against whom proceedings have been brought succeeds in establishing that there is a real risk of partitioning of national markets if he himself bears the burden of proving that the goods were placed on the market in the EEA by the proprietor of the trade mark or with his consent, it is for the proprietor of the trade mark to establish that the products were initially placed on the market outside the EEA by him or with his consent.  If such evidence is adduced, it is for the third party to prove the consent of the trade mark proprietor to subsequent marketing of the products in the EEA (see Zino Davidoff and Levi Strauss, para 54).”

17.	Mr Nicholson submitted that, where the trade mark proprietor markets its products in the EEA using a network of exclusive distributors, as Honda appears to do, the effect of this decision is to place on the trade mark proprietor the burden of proving that the goods were initially placed on the market outside the EEA by him or with his consent. 

18.	I do not read the judgment of the ECJ in Van Doren + Q in this way.  It seems to me that when it refers to a situation in which the trade mark proprietor operates a system of exclusive distributors in the EEA, the Court is giving an example of a situation in which there may be a real risk of partitioning of national markets but is not determining that this must necessarily be the case.  The question whether there is such a risk is one of fact and it is only – according to the answer given by the ECJ to the question referred for a preliminary ruling – where the defendant succeeds in establishing that such a real risk exists that the burden of proof is reversed.  This does not appear to be an easy test to apply in practice and it scarcely seems satisfactory that there should, potentially, need to be a preliminary issue tried before it is known who bears the burden of proof.  But this is, as I see it, the effect of the ECJ’s ruling in Van Doren + Q.  

19.	Mr Nicholson suggested that there is in the present case evidence of a real risk of partitioning of national markets in that, if David Silver were required to adduce evidence of the places where Honda spare parts in its stock were first put on the market by Honda or with its consent and were able to establish that the source of such parts was one or more of Honda’s exclusive distributors in the EEA, there is a real risk that Honda would prevent David Silver from obtaining supplies in future from those distributors. In support of this contention Mr Nicholson relied on a reference in correspondence between solicitors to a meeting said to have taken place at the UK Motorcycle Show in 2006.  In a letter dated 25 June 2009 David Silver’s solicitors stated:
“At this meeting a representative of Honda UK questioned our client as to the source of the Honda catalogues being distributed from our client’s stand.  Honda UK’s representative promised and assured our client that this information was only being requested in order to establish that the catalogues were genuine and not copies.  On the basis of these assurances and promises our client provided the information requested, only for Honda UK to then immediately use that information entirely contrary to the promises and assurances.”

20.	The letter does not explain what use Honda allegedly made of the information given by David Silver which was contrary to promises given.  Nor is any evidence about this alleged incident given in the witness statement of Mr Silver served in support of the present application. In any case David Silver has not so far even pleaded in its Defence that there is a real risk of partitioning of national markets if it is required to prove that motorcycle parts in which it is dealing in the UK under the Honda trade marks were first put on the market within the EEA.  I do not consider that the issue has yet been properly raised, nor that it is likely to be susceptible of determination on a strike out / summary judgment application. 

21.	I therefore conclude that, on the present state of the pleadings and the evidence, it is not necessary for Honda to plead or prove that motorcycle parts offered for sale by David Silver under Honda trade marks were first placed on the market by Honda (or with its consent) outside the EEA.  It is sufficient for Honda to assert on reasonable grounds that David Silver has used its trade marks within the EEA in relation to goods for which they are registered and that Honda has not consented to such use. The burden lies on David Silver, subject to any issue that may in future be raised as to whether the exception established by Van Doren + Q applies, to put forward if it chooses to do so a defence of exhaustion of rights under Article 7(1). 

22.	This conclusion is by itself in principle sufficient to defeat the application by David Silver to strike out or summarily dismiss the claim, since there is no doubt that Honda has reasonable grounds for claiming that David Silver is dealing in Honda motorcycle parts in the UK without Honda’s consent. 

Particularity
23.	David Silver contends, however, that Honda has failed to identify the acts which are alleged to have infringed its rights in its trade marks with sufficient particularity to show that it has a case which is more than merely speculative and to enable David Silver to understand and respond to the case which it has to meet.  Mr Nicholson pointed out that the acts described in paragraph 9A of the Amended Particulars of Claim as “examples” of the acts of infringement alleged are extremely general and wide-ranging, including as they do importing into the EU and offering for sale all the spare parts listed in David Silver’s 2008 Price Guide and on its website, all the “vast stocks” of parts (said to be over 70,000 in number) referred to in an advertisement placed by David Silver in the 14 January 2009 edition of MCN magazine, and “all Honda spare parts which David Silver has purchased from a source outside of the EEA”.  

24.	As authority for the general function of particulars of claim and the standards with which they must comply, Mr Nicholson cited Philipps v Philipps (1878) 4 QBD 127.  This was a case in which the plaintiff claimed to be entitled to certain land, of which the plaintiff had never had possession and which was in the possession of the defendants.  The statement of claim alleged that the plaintiff’s entitlement arose “under and by virtue of certain deeds, assurances, wills, and documents in the possession and control of the defendants”.  No particulars were given, however, of the nature of the plaintiff’s alleged title to the land nor of any facts which would support an inference that any documents in the possession of the defendants would substantiate his claim.  As stated by Bramwell LJ (at p.132):
“The conclusion I draw from the whole of this pleading is that it is a sort of fishing statement of claim, and that the plaintiff might really almost as well have made his statement of claim in this shape: ‘I am entitled to the possession of these premises, and I call on you, the defendants, to inform me what answer you can make.’”

25.	The Court of Appeal considered that the statement of claim was embarrassing and should be struck out.  Cotton LJ said (at p.139): 
“What particulars are to be stated must depend on the facts of each case.  But in my opinion it is absolutely essential that the pleading, not to be embarrassing to the defendants, should state those facts which will put the defendants on their guard and tell them what they have to meet when the case comes to trial.”
Later in his judgment Cotton LJ said (at p.140):
“I do not for one moment say that this action is brought without any reasonable ground for supposing the plaintiff is entitled; but if in the present case the rule, established for the purpose of preventing persons in possession of estates from being wrongfully and improperly attacked, works hardly on the plaintiff, that will be the necessary consequence of the rules laid down for the general purpose of protecting property, and preventing people from being improperly vexed.  But surely the rule is no such hardship.  If the plaintiff is doing anything more than merely guessing that by possibility he may make out his title to the estate, he must know something about it sufficient to enable him to state the facts on which he thinks the possession of this estate must come to him.”

26.	There can be no doubt about the continuing validity of these principles.  However, the present case is very different and cannot be characterised as one in which Honda is “merely guessing that by possibility” it may make out a case of infringement of its trade mark rights.  For the reasons given earlier, Honda has shown reasonable grounds for the allegation that its rights have been infringed, subject to any defences on which David Silver may rely, by identifying facts which indicate that David Silver has offered motorcycle spare parts for sale under the Honda trade marks in the course of its trade in the UK without Honda’s consent.  While paragraph 9A of the Particulars of Claim may be said in some respects to be cast in wider terms than is justified, it seems to me to be sufficient to enable David Silver to know what case it has to meet. 

27.	Both parties’ solicitors agreed that it is usual for a claimant in a ‘parallel import’ case to rely on a small number of ‘trap purchases’ and to seek to demonstrate that these sales constitute infringements, by using serial numbers or other identifying markings to trace the source of the goods.  I was referred to the case of Honda Motor Company Limited v Neesam where the action was started in relation to four specific motorcycles, and was subsequently expanded to include all bikes in the same class.  Unlike Honda motorcycles, Honda spare parts do not carry any unique identification number.  As a general matter, it is not therefore possible to make a trap purchase of a spare part, consult Honda’s records, and then establish on the basis of such records that that particular spare part was first put on the market outside the EEA.  Mr Nicholson submitted that this does not excuse the need to plead details of particular items which are alleged to infringe Honda’s trade marks and that Honda must specify at least one specific example of each type of infringement upon which the claim is founded: if Honda is unable to do so, then it has no actionable claim.

28.	I do not doubt that bringing a claim based initially on a small number of trap purchases or other specific acts of alleged infringement is a common method of proceeding.  But Mr Nicholson did not point to any authority or put forward any convincing reason for supposing that there is any requirement to proceed in this way.  I can see no reason in principle why a trade mark owner who has reasonable grounds for believing that his trade marks are being infringed by a trader should not be able to bring proceedings, even if he is unable to give specific details of individual acts of infringement.  Indeed, I see no reason in principle why, depending of course on the facts and the evidence, a trade mark owner should not obtain a judgment on the basis that the court can be satisfied that there has been infringement but without being able to identify individual infringing items.  I agree with Mr Abrahams that the judgment of Laddie J in the Davidoff case appears to be an example of this in that Laddie J was satisfied on the evidence that it was overwhelmingly likely that “all or substantially all” of the defendant’s stocks had been obtained from outside the EEA without, so far as is recorded in the judgment, any identification of specific items or acts of infringement: see Zino Davidoff SA v A&G Imports Ltd [2000] Ch 127 at [9]. 

29.	Mr Nicholson further submitted that the implication of Honda’s approach is that a trade mark proprietor is entitled simply to point at a business that openly trades in its genuine products and say “we are suspicious that not all of your stock has been put on the market in the EEA by us or with our consent” and then obtain judgment for infringement unless the defendant is able to disclose and justify every transaction he has undertaken. If this represents the law, it would be surprising and unjust.   

30.	Whether the current state of the law as established by the decisions of the ECJ to which I have referred earlier strikes a fair balance between the protection of trade marks and the free movement of goods is not a question for me to determine.  I am not convinced, however, that the position is as invidious for traders as Mr Nicholson sought to suggest. The English Courts have powers which can enable them to prevent infringement proceedings from being used as an instrument of oppression.  If a trade mark owner were to bring a claim of the kind postulated, I do not see why it should be difficult in principle for the trader to answer it by adducing evidence that its sources of supply are all within the EEA, if this is the case.  In the absence of evidence to the contrary, it may – depending of course on the facts – be reasonable to infer from this the trade mark owner’s rights in the goods have been exhausted.  Nor is it axiomatic that, if such a claim were brought, the trader would be required to give disclosure in relation to every transaction he has undertaken.  Not only is standard disclosure limited to documents located on a reasonable search, but the Court has the power under CPR Part 31 to refuse or limit disclosure of documents if the disclosure sought would be unduly expensive, inconvenient or troublesome in comparison with the benefits to be gained.  It therefore by no means follows that a trade mark proprietor who merely puts the defendant to proof that all the goods sold by the defendant under the trade mark were first put on the market in the EEA, and who puts forward no positive case to the contrary, will be entitled to extensive disclosure as to the defendant’s sources of supply.  A further deterrent to the bringing of speculative or unreasonable claims is that the claimant, if unsuccessful, is likely to be penalised in costs. 

31.	The present case, however, is not one in which the claimant is relying simply on the burden of proof.  Honda has pleaded a positive case that David Silver sources from outside the EEA spare parts which it has offered for sale under the Honda trade marks in the UK.  I take it to be Honda’s case – although it seems to me that it ought to be expressly pleaded – that these goods were first put on the market by Honda (or with its consent) outside the EEA.

Honda’s Positive Case
32.	In support of this positive case, Honda relies on the following matters which are pleaded in paragraph 10 of the Amended Particulars of Claim:
(1)	Until 2007 David Silver posted on its website statements (taken from a magazine article published in 2002) which included the following:
“David Silver buys up Honda spares from all over the world (Bolivia, would you believe?) …”
“David Silver built the business which bears his name with the supply of new ‘old stock’ genuine Honda parts bought from dealers and distributors all over the world.”
“Unused parts in their original boxes are still being discovered and just about everyone in the trade, from the jungles of South America to the deserts of Africa, knows that David Silver is a potential buyer.”
“Obviously, there are a finite number of genuine Honda-made parts for the older classics, but the supply has not been exhausted.  Hondas were sold world-wide and used by the military and police forces in numerous countries.”
“David Silver buys in bulk.  Tonnes of spares have been bought from the Middle East, a horde of Sixties parts came from Bolivia and the cheque book came out again when parts stockpiled by Honda’s first distributor in Switzerland came up for grabs.”
“David runs his business from the Masterlord Industrial Estate in Leiston, Suffolk.  It’s a few miles from the coast, convenient for shipments of new stock from the nearby Felixstowe Docks.” 
“David has travelled the world buying stock but has now delegated much of that work to his senior staff ...” 
[accompanying a photo of David Silver’s warehouse] “warehouse piled high with parts bought in bulk from as far afield as South America”.
 
(2)	David Silver’s 2008 Price Guide for Honda Parts includes a statement:
“parts that are not held in our stock can often be sourced by us from various contacts throughout the world, including parts for grey and parallel imports …”
(3)	David Silver’s website offers for sale spare parts for Honda motorcycles not sold by Honda in the EEA – in particular motorcycles for the US and Japanese markets.
(4)	An advertisement placed by David Silver in the 14 January 2009 edition of MCN magazine offered “PARTS FOR HONDA … over 70,000 parts for UK, Japanese, USA or European grey imports”.
(5)	David Silver’s business is conducted on a very substantial scale, being by far the largest dealer of Honda spare parts in the UK. In Honda’s estimation, it would not be possible for David Silver to conduct such a business on such a scale without purchasing substantial quantities of Honda spare parts outside the EU. 
(6)	At the 2008 Motorcycle Show in Birmingham Mr David Silver allegedly told a Honda employee, who was posing as a customer, “I can get you whatever you want as I buy from all around the world”. 
(7)	Since these proceedings were commenced, Honda has purchased a Honda part from David Silver for a Japanese model of motorcycle which, as appeared from its packaging, was at least 23 years old – indicating that David Silver keeps some stock for lengthy periods of time. 
(8)	David Silver has not, either in its Defence or in its evidence served in support of its strike out / summary judgment application, denied the allegation that it imports and sells in the UK under the Honda trade marks substantial quantities of motorcycle spare parts sourced from outside the EEA. 
(9)	In its Defence David Silver has pleaded a defence of acquiescence based on allegations such as that it has conducted its business in an open manner throughout its 24 year history and that Honda has known of David Silver’s business activities since at least 1990.  These allegations would only be relevant if the business activities referred to involved infringements of Honda’s trade marks.

33.	A number of criticisms of this pleaded case and of Honda’s evidence served in opposition to the application for summary judgment were made in evidence and submissions on behalf of David Silver. The points made included the following:
(1)	The point that no inference can properly be drawn that because David Silver has advertised Honda parts as being suitable for Japanese or US home market models of motorcycle it follows that the parts must themselves have been initially put on the market outside the EEA. In particular, Mr Silver says in his witness statement that many parts are common to both EU and non-EU models of motorbike or are in any case available from Honda within the EU.  
(2)	The fact that some of the parts sold by David Silver are so-called “pattern parts” (i.e. generic parts, not manufactured by Honda) which are suitable for use in Honda motorcycles, and are marketed by David Silver as such. Pursuant to Article 6(1)(c) of the Directive (and section 11(2)(c) of the Act) this does not constitute an infringement of Honda’s rights conferred by its trade marks.
(3)	The point that parts sold outside the EEA may nevertheless have been initially put on the market by Honda within the EEA.
(4)	The fact that the statements published (until 2007) on David Silver’s  website on which Honda relies were historic statements taken from a magazine article written in 2002 by a third party.
(5)	A denial that an inference can reasonably be drawn as to whether or not David Silver is importing Honda parts which were put on the market outside the EEA from the size of its business.
(6)	The fact that David Silver has denied in correspondence that it has infringed Honda’s trade marks (albeit that this denial has not been repeated in any statement of case or witness statement which is subject to a statement of truth).
(7)	The fact that the plea of acquiescence in the Defence is stated to be without prejudice to the other points made in the Defence and therefore cannot be relied on as an admission. 

34.	If this were an application for summary judgment by Honda, these points would be highly relevant. However, they do not in my view even begin to show that Honda’s claim lacks any reasonable basis and/or has no real prospect of succeeding such that it should be struck out or summarily dismissed.  The points made by David Silver indicate only that it may have a defence to the claim or to parts of the claim based on the exhaustion of Honda’s rights, not that it does in fact have such a defence – let alone an unanswerable one.  

35.	Before it is apparent whether and to what extent David Silver has a defence of exhaustion of rights under Article 7(1), David Silver will need to respond directly to the allegation that at least part of its stock offered for sale under the Honda trade marks has been purchased from sources outside the EEA and, if this is the case, whether it has any grounds for believing that such stock was first put on the market by Honda (or with its consent) in the EEA. 
Conclusion
36.	I will accordingly dismiss David Silver’s application and give permission to Honda to amend its Particulars of Claim in the form of the draft before the Court.