Case C-59/08

Copad SA

v

Christian Dior couture SA and Others

(Reference for a preliminary ruling from the Cour de cassation (France))

(Directive 89/104/EEC – Trade-mark law – Exhaustion of the rights of the proprietor of the trade mark – Licence agreement – Sale of goods bearing the trade mark in disregard of a clause in the licence agreement – No consent of the proprietor of the mark – Sale to discount stores – Damage to the reputation of the trade mark)

Summary of the Judgment

1.        Approximation of laws – Trade marks – Directive 89/104 – Licence – Proprietor who can invoke the rights conferred by the trade mark against a licensee who contravenes a provision prohibiting the sale of luxury goods to discount stores – Conditions

(Council Directive 89/104, Art. 8(2))

2.        Approximation of laws – Trade marks – Directive 89/104 – Goods put on the market by a licensee in disregard of a provision of the licence agreement – No consent of the proprietor of the mark – Condition

(Council Directive 89/104, Arts 7(1) and 8(2))

3.        Approximation of laws – Trade marks – Directive 89/104 – Putting on the market of luxury goods by a licensee in contravention of a provision in the licence agreement, which must nevertheless be considered to have taken place with the consent of the proprietor – Opposition by the proprietor

(Council Directive 89/104, Art. 7(2))

1.        Article 8(2) of First Directive 89/104 to approximate the laws of the Member States relating to trade marks is to be interpreted as meaning that the proprietor of a trade mark can invoke the rights conferred by that trade mark against a licensee who contravenes a provision in a licence agreement prohibiting, on grounds of the trade mark’s prestige, sales to discount stores of goods, provided it has been established that that contravention, by reason of the situation prevailing in the case in question, damages the allure and prestigious image which bestows on those goods an aura of luxury.

The quality of luxury goods is not just the result of their material characteristics, but also of the allure and prestigious image which bestows on them an aura of luxury.

Since luxury goods are high-class goods, the aura of luxury emanating from them is essential in that it enables consumers to distinguish them from similar goods.

Therefore, an impairment to that aura of luxury is likely to affect the actual quality of those goods.

It is for the national court to examine whether, taking into account the particular circumstances of the case before it, contravention by the licensee of a provision prohibiting the sale of luxury goods to discount stores damages the aura of luxury of those goods, thus affecting their quality.

In this respect, it is important to take into consideration, in particular, first, the nature of the luxury goods bearing the trade mark, the volumes sold and whether the licensee sells the goods to discount stores that are not part of the selective distribution network regularly or only occasionally and, secondly, the nature of the goods normally marketed by those discount stores, and the marketing methods normally used in that sector of activity.

(see paras 24-26, 31-32, 37, operative part 1)

2.        Article 7(1) of First Directive 89/104 to approximate the laws of the Member States relating to trade marks is to be interpreted as meaning that a licensee who puts goods bearing a trade mark on the market in disregard of a provision in a licence agreement does so without the consent of the proprietor of the trade mark where it is established that the provision in question is included in those listed in Article 8(2) of that Directive.

Where a licensee puts goods bearing the mark on the market he must, as a rule, be considered to be doing so with the consent of the proprietor of the trade mark, for the purposes of Article 7(1) of the Directive.

Even though it follows that, in such circumstances, the proprietor of the trade mark cannot plead that the contract was wrongly implemented in order to invoke, in respect of the licensee, the rights conferred on him by the trade mark, the fact remains that the licence agreement does not constitute the absolute and unconditional consent of the proprietor of the trade mark to the licensee putting the goods bearing the trade mark on the market.

Article 8(2) of the Directive expressly enables the proprietor of the mark to invoke the rights the trade mark confers on him against a licensee where the latter contravenes certain provisions in the licence agreement.

(see paras 46-48, 51, operative part 2)

3.        Where a licensee sells goods to a discount store in contravention of a provision in the licence agreement, a balance must be struck between, on the one hand, the legitimate interest of the proprietor of the trade mark covered by the licence agreement in being protected against a discount store which does not form part of the selective distribution network using that trade mark for commercial purposes in a manner which could damage the reputation of that trade mark and, on the other hand, the discount store’s legitimate interest in being able to resell the goods in question by using methods which are customary in its sector of trade.

Therefore, should the national court find that sale by the licensee to a third party is unlikely to undermine the quality of the luxury goods bearing the trade mark, so that it must be considered that they were put on the market with the consent of the proprietor of the trade mark, it will be for that court to assess, taking into account the particular circumstances of each case, whether further commercialisation of the luxury goods bearing the trade mark by the third party, using methods which are customary in its sector of trade, damages the reputation of that trade mark.

In this respect, it is necessary to take into consideration, in particular, the parties to whom the goods are resold and the specific circumstances in which the luxury goods are put on the market.

Accordingly, where a licensee puts luxury goods on the market in contravention of a provision in a licence agreement but must nevertheless be considered to have done so with the consent of the proprietor of the trade mark, the proprietor of the trade mark can rely on such a provision to oppose a resale of those goods on the basis of Article 7(2) of First Directive 89/104 to approximate the laws of the Member States relating to trade marks, only if it can be established that, taking into account the particular circumstances of the case, such resale damages the reputation of the trade mark.

(see paras 56-59, operative part 3)