The European Union's high court Tuesday handed a victory to discount importers and loosened manufacturers' grip on who can sell trademarked products.

The Luxembourg-based European Court of Justice ruled that Stussy Inc., a California-based clothes maker, cannot stop the discounters without first proving their goods came directly from outside Europe's free trade area.

Previously, importers bore the burden of proving the goods' origin.

Stussy has been trying since 1995 to prevent an unofficial importer in Germany from reselling its products there at lower prices than its official Cologne-based distributor.

Two years ago the court upheld a complaint by Levi Strauss & Co. against British supermarket chain Tesco, which had been undercutting official Levi's distributors by selling jeans imported directly from the United States.

Levi Strauss won its case because all parties agreed that the jeans were first placed on the market outside Europe.

The Stussy case is different because of a dispute over the origins of the company's clothes which are mainly for the youth market.

Discounter Michael Orth insists the supplies come from within Europe's 18-nation free trade area, from countries where prices are lower than Germany. Stussy claims the products are from the United States.

Judges said current rules were too hard on discount importers and said it was up to manufacturers to prove products were initially placed on the market outside Europe.

The court added that manufacturers must not be allowed to "partition national markets and thus assist the maintenance of price differences."

The court's decision is binding and obliges Germany and other EU nations to change their rules of evidence.


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