Matthieu Bourgeois, Associate, KGA
In a recent decision dated June 3, 2010 (Case C-127/09), the Court of Justice of the European Union ruled in favour of Coty Prestige Lancaster Group GmbH, finding that the supply of samples to distributors did not suggest an authorisation to resell them and rejecting the “exhaustion of rights” theory invoked by the reseller of the samples under consideration.
In this case, Coty noted that certain samples distributed to members of its distribution network had been resold to a retailer outside of the network, “Sparfümerie” a German company, which resold these samples to the public in Germany.
The retailer claimed that Coty had agreed to the marketing of these samples when it distributed them to its distribution network and could not oppose the free distribution of the samples on the European market.
This line of reasoning relies on the theory of “exhaustion of rights”, which means that the owner of a trademark cannot prevent its use for products already introduced into the stream of commerce with its agreement in the European Union. In agreeing to this, the trademark holder would thus exhaust its rights.
On the contrary, Coty denied having made any such agreement and highlighted the provisions of the distribution contract that bound the members of the authorised retail network, all of whom agreed that these samples remained the property of Coty so long as they had not been given to the consumer and that they would not resell them as well.
After having been denied relief by the lower courts, the Superior Regional Tribunal of Nuremberg finally sided with Coty, finding that the contractual stipulations cited by Coty as well as the notice on the samples and their packaging (phrases like “Demonstration” and “Not for Sale”), which precluded any authorisation by Coty to market the samples.
The Court of Justice of the European Union was asked to respond to the following question by means of a question for preliminary ruling: “Are goods ‘put on the market’ (…) if ’perfume testers’ are made available to contractually-bound intermediaries without transfer of ownership and with a prohibition on sale, so that those intermediaries are able to allow potential customers to use the contents of the goods for test purposes, the goods bearing a notice stating that they may not be sold (…)?”
The Court of Justice of the European Union responded negatively, siding with Coty. It stated that the notice fixed to the samples “clearly reflects the intention of the proprietor of the trademark concerned that the goods bearing it should not be sold” and denied the application of the “exhaustion of rights” theory in this case.
Going forward, practitioners should note the necessity to precisely draft contractual clauses concerning samples in selective distribution contracts involving perfume to preclude any ambiguity regarding the resale of samples without agreement of the trademark owner.
