The Munich Regional Court has ruled that a trademark infringement would be committed if someone were to offer for sale again Fritzboxes that he had bought from providers on a permanent basis with modified firmware.

The court recognized a likelihood of confusion with AVM’s original products and also did not want to apply exhaustion of claims.

Even if the trademark owner has in principle exhausted the legal power conferred on him by the trademark when the product is first placed on the market in the European Economic Area, there are cases in which the power of control under trademark law is revived with regard to overriding interests of the trademark owner. Art. 15 par. 2 UMV therefore stipulates, in the manner of a general clause, that the principle of exhaustion does not apply if the trademark owner opposes further distribution of the goods for justified reasons. Insofar as the provision mentions changes or deterioration of the goods, which are legitimate interests for the trademark owner to oppose, these are only examples of legitimate reasons. Rather, the trademark owner may ultimately oppose all actions that infringe the origin or guarantee function of the trademark or unfairly exploit or detract from the distinctive character or repute of the trademark.

The court is of the opinion that the so-called guarantee function of the trademark is no longer given in the specific case:

A feature of the equipment marked with the applicant’s trademark was acted upon. It changed their intended use, which the trademark owner had foreseen when placing these devices on the market, namely that they should only have a limited scope of performance compared to the series models. The features to which the guarantee function of the applicant’s mark relates also include the lower scope of services envisaged. However, if this scope of services is substantially increased contrary to what was intended on the part of the trademark owner, this is sufficient, in the opinion of the Board, for exhaustion under Art. 15 Par. 2 MarkenG to be excluded. This is because the target public expects that the function and intended use of the devices have not been altered in such a way by a third party without the consent of the trade mark proprietor after they have been placed on the market.

The full ruling can be found here.