Reseller M-Tech Data’s legal wrangle with Oracle could have huge implications for the industry, and the recent Appeal Court judgment could offer encouragement for second-user brokers.
In December 2009, Sun Microsystems, now Oracle, announced it had won a High Court judgment for trademark infringement against M-Tech. But the Mancunian firm served Oracle’s lawyers with appeal papers the very next day.
M-Tech lamented Oracle’s indiscreet approach and some onlookers spoke out in defence of the VAR, asking whether Oracle’s approach could “put an entire industry – second-hand IT resellers – out of business”.
Last month, the Court of Appeal decided not to uphold the summary judgment in favour of Oracle. The case is now set for trial, with potential referral to the European Court of Justice.
In the appeal hearing, M-Tech argued that Oracle’s policy of withholding product provenance details to its unauthorised channel is in breach of articles 28, 30 and 81 of the EC Treaty.
Article 28 outlaws “quantitative restrictions on imports”; article 30 states that restrictions “on the grounds of the protection of industrial and commercial property” must not “constitute a means of arbitrary discrimination”; article 81 forbids the “restriction or distortion of competition”.
Harvey Stringfellow, of Hill Dickinson, the firm representing M-Tech, said: “This judgment has very important consequences for the parallel market.”
In her judgment, Lady Justice Arden said Oracle’s policy has affected independent traders. “As a result of Oracle’s policy, trade in the independent network has largely disappeared. This is detrimental to competition. It also leads to artificial partitioning of the market in second-hand Oracle equipment, and permits Oracle to control that market.”
If the allegations against Oracle hold water, they could speak to an attempt to inflate prices, she added.
“The practices alleged arguably have more to do with restricting imports with the objective of preventing price competition within the EEA, and thereby protecting Oracle’s profit margins, than with the proper exercise of the right to control the first marketing of Oracle equipment within the EEA.”
Oracle has been directed to apply for a case management conference. Arden said the case’s outcome could be significant for all firms “involved in the grey market in Oracle [goods], and possibly other computer hardware”.
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