L'Oréal's trademarks successfully combat trade in damaged and tampered-with perfumesWednesday, 21 December 2016
Under EU law, it is generally allowed to resell brand products that have been put on the EU market by the trademark owner or with his consent. But what about reselling brand products that are damaged or tampered with?
Reselling damaged brand products can constitute trademark infringement
Recently, The Hague’s EU trademark court rendered an interesting judgment for both owners of well-known trademarks and unofficial resellers of brand products. The court held that trade in L’Oréal’s brand perfumes, of which the packaging was damaged and tampered-with, constituted trademark infringement. The damaged packaging was detrimental to the prestigious and luxurious repute of L’Oréal’s well-known trademarks. The judgment is a victory for trademark owners in their combat against trade in damaged brand products. Resellers should be aware: by selling brand products in broken cellophane and teared carton packaging, they run the risk of receiving trademark infringement claims!
Damaged packaging and fake product codes
The webshop parfumlux.nl offered and sold perfumes of various brands such as VIKTOR & ROLF, YVES SAINT LAURENT, LANCÔME, DIESEL, GIORGIO ARMANI and RALPH LAUREN. L’Oréal had a test purchase performed at parfumlux.nl and established that the cellophane packaging was opened and untidily closed. Also, the carton packaging was cut open and closed again. One of the perfumes was even packed in a wrinkled plastic bag. L’Oréal, authorized by the aforementioned brands, sent a cease-and-desist letter to Parfumlux.nl. Although Parfumlux.nl signed an acknowledgement and undertaking letter, L’Oréal found out that Parfumlux.nl again sold a damaged perfume: not only was the packaging cut open and untidily stuck again, the product codes were also removed and replaced by fake codes.
Exception to exhaustion of trademark rights: damaged packaging
As prescribed by law, a trademark generally doesn’t entitle its owner to prohibit use of the trademark in relation to products that have been put on the EU market under that trademark by the trademark owner or with his consent. Once the product is on the EU market with the consent of the trademark owner, the trademark right is exhausted. However, there is an exception to this rule: if there are legitimate reasons for the trademark owner to oppose further commercialization of his products, the trademark owner is entitled to prohibit the use of its trademark: Especially where the condition of the products is changed or impaired after they have been put on the market. For further information about exhaustion of trademarks and grey import, please read also our blog post “Is it allowed to import branded products into Europe”.
L’Oréal stated that it had legitimate reasons to prohibit the trade in the damaged L’Oréal perfumes, because the condition of the products was changed and impaired after they were put on the market. As a result, the quality of the products was deteriorated, which is detrimental to the strong, luxurious repute of L’Oréal’s trademarks. Moreover, by decoding and damaging the L’Oréal perfumes, the function of the trademark as an indication of origin and quality was impaired.
Parfumlux.nl stated, in its defense, that it bought all its products from suppliers in the EU, and that the damages were negligible. Furthermore, being a small reseller, it did not know that reselling decoded products was not permitted.
The court considered that, in general, merely lacking a product code does not constitute a legitimate reason for the trademark owner to prohibit the trade of the decoded product. However, such legitimate reason exists where decoding has resulted in damaged packaging of the product. In such case, the condition of the product has been changed and this has impaired the prestigious repute of the L’Oréal trademarks. According to the court, Parfumlux.nl had infringed L’Oréal’s trademarks by trading in such damaged products.
When it comes to the protection of well-known perfume brands, it is not only the inside that counts.
Question about trademarks or trade in branded products? Ask BANNING’s intellectual property lawyers.
If you have any questions about the trade in branded products, please do not hesitate to contact me.