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Article 42. Third-party Claims based on Intellectual Property

TEXT OF ARTICLE 42

(1) The seller must deliver goods which are free from any right or claim of a third party based on industrial property or other intellectual property, of which at the time of the conclusion of the contract the seller knew or could not have been unaware, provided that the right or claim is based on industrial property or other intellectual property:

(a) under the law of the State where the goods will be resold or otherwise used, if it was contemplated by the parties at the time of the conclusion of the contract that the goods would be resold or otherwise used in that State; or

(b) in any other case, under the law of the State where the buyer has his place of business.

(2) The obligation of the seller under the preceding paragraph does not extend to cases where:

(a) at the time of the conclusion of the contract the buyer knew or could not have been unaware of the right or claim; or

(b) the right or claim results from the seller's compliance with technical drawings, designs, formulae or other such specifications furnished by the buyer.


OUTLINE OF ISSUES

Reproduced with permission of UNCITRAL

42A Sellers obligation to deliver goods free from third-party claim based, e.g., on copyright, patent, trademark

42A1 Seller's knowledge of claim when contract was made

42B Third-party claims in particular state or region

42B1 State where goods will be resold or otherwise used

42B11 Contemplation of resale or use in that state (art. 42(1)(a))

42B2 State of buyer's place of business (art. 42(1)(b))

42C Seller's obligation not applicable when:

42C1 At time of contract buyer knew of right or claim

42C2 Right or claim resulted from technical drawings, designs, etc. furnished by the buyer (art. 42(2)(b))

42D Other issues


DESCRIPTORS

Intellectual property


CASE ANNOTATIONS: UNCITRAL DIGEST CASES PLUS ADDED CASES

UNCITRAL has identified relevant cases in Digests containing case annotations for each article of the CISG. For Art. 42, the UNCITRAL Digests cites several 1994 to 1996 Netherlands cases and a 1995 Israeli case.

Presented below is a composite list of Art. 42 cases reporting these UNCITRAL Digest cases (identified in the following schedule by asterisk) and other Art. 42 cases. All cases are listed in chronological sequence, commencing with the most recent. Cases are coded to the UNCITRAL Thesaurus.

English texts and full-text English translations of cases are provided as indicated. In most instances researchers can also access UNCITRAL abstracts and link to Unilex abstracts and full-text original-language case texts sourced from Internet websites and other data, including commentaries by scholars to the extent available.
 

Germany 21 March 2007 Oberlandesgericht [Appellate Court] Dresden (Stolen automobile case) 42A [translation available]
 

Austria 12 September 2006 Oberster Gerichtshof [Supreme Court] (CD media case) 42A [translation available]
 

France 23 November 2004 Tribunal de grande instance [District Court] Versailles 42C1 [translation available]

France 13 November 2002 Cour díappel [Appellate Court] Colmar 42A ; 42C1 [translation available]

France 19 March 2002 Cour de Cassation [Supreme Court] 42C1 [translation available]

United States 15 January 2002 U.S. District Court [Texas] (Texas Instruments v. Linear Technology)
 

France 17 February 2000 Cour d'appel [Appellate Court] Rouen 42C [translation available]
 

ICC 1997 International Court of Arbitration, Case 8855
 

* Netherlands 21 May 1996 Gerechtshof [Appellate Court] Arnhem 42A1 [translation available]
 

* Netherlands 1 March 1995 Arrondissementsrechtbank [District Court] Zwolle 42A1
 

* Netherlands 16 March 1994 Arrondissementsrechtbank [District Court] Zwolle
 

* Israel 22 August 1993 Supreme Court (Examin v. Textile and Footware) 42C1 [translation available]


UNCITRAL CASE DIGEST

The UNCITRAL Digest of case law on the United
Nations Convention on the International Sale of Goods
[*]

A/CN.9/SER.C/DIGEST/CISG/42 [8 June 2004]. Reproduced with the permission of UNCITRAL.

ARTICLE 42

     (1) The seller must deliver goods which are free from any right or claim of a third party based on industrial property or other intellectual property, of which at the time of the conclusion of the contract the seller knew or could not have been unaware, provided that the right or claim is based on industrial property or other intellectual property:

     (a) under the law of the State where the goods will be resold or otherwise used, if it was contemplated by the parties at the time of the conclusion of the contract that the goods would be resold or otherwise used in that State; or
     (b) in any other case, under the law of the State where the buyer has his place of business. †

     (2) The obligation of the seller under the preceding paragraph does not extend to cases where:

     (a) at the time of the conclusion of the contract the buyer knew or could not have been unaware of the right or claim; or
     (b)††the right or claim results from the sellerís compliance with technical drawings, designs, formulae or other such specifications furnished by the buyer.†

In general

1. Article 42 states the sellerís duty to deliver goods that are free of intellectual property rights or claims of third parties. A seller breaches if it delivers goods in violation of article 42, but the sellerís obligation to deliver goods free of third party rights or claims based on intellectual property is subject to three significant limitations. First, the seller is only liable under article 42 if the third partyís right or claim is one "of which at the time of the conclusion of the contract the seller knew or could not have been unaware".[1] Second, the seller is only liable if the third partyís right or claim is based on the law of the State designated by articles 41(1)(a) or (b), whichever alternative is applicable. The third limitation on the sellerís obligations under article 42 is stated in article 42(2), and appears to be based on assumption of risk principles: the seller is not liable if the third partyís right or claim is one of which the buyer "knew or could not have been unaware"[2] when the contract was concluded, or if the right or claim arose from the sellerís compliance with technical requirements ("technical drawings, designs, formulae or other such specifications") that the buyer itself supplied to the seller.

Application of Article 42

2. Article 42 has been the subject of few decisions. In one piece of litigation, both the lower court and the appeals court emphasized that the buyer bears the burden of proving that, at the time the contract was concluded, the seller knew or could not have been unaware of the third partyís intellectual property right or claim that the buyer alleges produced a violation of article 42.[3] In another decision, although the transaction was governed by the 1964 Hague Convention on the Uniform Law for International Sales ("ULIS") the court invoked CISG article 42(2) in deciding that, although the seller delivered goods with a symbol that infringed a third partyís well-known trademark, the seller was not liable to the buyer because the buyer could not have been unaware of the infringement, and the buyer had itself specified attachment of the symbol in the designs that the buyer supplied the seller.[4]


FOOTNOTES

* The present text was prepared using the full text of the decisions cited in the Case Law on UNCITRAL Texts (CLOUT) abstracts and other citations listed in the footnotes. The abstracts are intended to serve only as summaries of the underlying decisions and may not reflect all the points made in the digest. Readers are advised to consult the full texts of the listed court and arbitral decisions rather than relying solely on the CLOUT abstracts.

[Citations to cisgw3 case presentations have been substituted [in brackets] for the case citations provided in the UNCITRAL Digest. This substitution has been made to facilitate online access to CLOUT abstracts, original texts of court and arbitral decisions, and full text English translations of these texts (available in most but not all cases). For citations UNCITRAL had used, go to <http://www.uncitral.org/english/clout/digest_cisg_e.htm>.]

1.†The phrase "knew or could not have been unaware" as a standard for a partyís responsibility for awareness of facts is also used in articles 8(1), 35(3), 40 and 42(2)(a).

2. The phrase "knew or could not have been unaware" as was just noted, is also used in article 42(1). It also appears in articles 8(1), 35(3), and 40.

3. [NETHERLANDS Gerechtshof [Appellate Court] Arnhem 21 May 1996 , available online at <http://cisgw3.law.pace.edu/cases/960521n1.html>]; [NETHERLANDS Rechtbank [District Court] Zwolle 1 March 1995, available online at <http://cisgw3.law.pace.edu/cases/950301n2.html>] (final decision) and 16 March 1994 (interim decision), Unilex.

4. [ISRAEL Eximin v. Textile and Footwear [Supreme Court] 22 August 1993, available online at <http://cisgw3.law.pace.edu/cases/930822i5.html>].


Pace Law School Institute of International Commercial Law - Last updated June 26, 2009
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