On 6 December 2017 the Court of Justice of the European Union delivered its judgment in the case of Coty Germany GmbH v Parfümerie Akzente GmbH based on a request for a preliminary ruling by the Higher Regional Court, Frankfurt, Germany.
Earlier this month we published posts on our Competition Blog, here and here on the competition aspects of the judgment and following this judgment, the possibility of manufacturers of luxury products banning online sales of authorised distributors through third-party platforms. Here, we revisit this case to explore the brief commentary in the ruling in relation to trade mark law.
In short, the case involved Coty Germany, a luxury cosmetics supplier, which, in order to preserve its brand, distributed certain products through a carefully selected network of distributors that were authorised to do so (the "Selected Distribution System"). Parfümerie was an authorised distributor of the Coty products, and in dispute was a clause in the contract between the parties which prohibited Parfümerie distributing Coty goods through Amazon Germany.
An "aura of luxury"
In the judgment the court referenced the earlier Copad C-59/08 case which outlined that 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 that "aura of luxury".
Such "aura of luxury" is essential when determining luxury brands as it enables consumers to distinguish them from similar goods as it is likely to affect the actual quality of those goods. The court took the view that the Selected Distribution System (which seeks to ensure that goods are displayed in sales outlets in a manner that enhances their value) contributes to the reputation of the goods at issue and ensures that this "aura of luxury" is sustained around them.
Although, this was not at issue in this case, the court did take the opportunity to re-affirm Copad. The take home point being, selective distributors or licensees of luxury products can be liable for trade mark infringement, not only contractually, but because contravention of the terms of the contract damaged the aura and allure of the luxury brand.
This is because, for luxury brands, the perception of how the brand is portrayed by consumers and the allure and aura around the brand, is a key intangible asset which deserves protection by trade mark law in order to preserve the quality and luxury image of those goods. We are still holding out for a definition of what it means to be a "luxury brand" and equally, when and how this "aura of luxury" comes into play. Watch this space…