Brands ECJ cases: Parfums Christian Dior v Evora BV - official distribution networks, parallel imports and the exhaustion of rights

Parfums Christian Dior v Evora BV

This case involved a dispute between the fine fragrance manufacturers Christian Dior and Evora, a chain of chemist shops in Holland which was not part of Christian Dior's official distribution network. Evora had obtained Dior product from parallel importers (the legality of which was not challenged) which it advertised in promotional leaflets depicting Dior's bottles and packaging. Dior objected on the grounds that the type of advertising was inconsistent with the prestigious image of its brand and infringed its trade marks.

The case for Dior was based on Article 7(2) of the European Trade Marks Directive. This allows trade mark rights to be invoked (contrary to the general principle of exhaustion of rights) in situations where there are legitimate reasons for the trade mark proprietor to oppose further dealing in the goods, particularly where the condition of the goods has been changed or impaired. This provision is reflected in English law by Section 12 of the Trade Marks Act 1994.

Of course, such arguments are often raised in cases involving re-packaged goods, particularly pharmaceuticals where the physical nature of the goods or their packaging has been altered by parallel traders. Here Dior argued that the "condition of goods" included the "mental image" of those goods, in particular, their allure, prestigious image and aura of luxury, and not merely their physical condition.

The ECJ accepted that in some circumstances this argument could succeed. The reference to the change or impairment to the condition of goods in Article 7(2) was merely an example of a "legitimate reason". However, in order to succeed, a trade mark proprietor would have to show that the use of his trade mark by the reseller seriously damaged the reputation of the mark. There was an obligation on the reseller not to act unfairly in damaging the proprietor's mark, but here the method of advertising was customary in the reseller's trade sector and there was no evidence as to damage. The same principles were held to apply to copyright on which Dior also relied in relation to its packaging designs.

This case opens the way for brand owners, particularly those in the luxury goods market, to seek to prevent the resale or promotion of their goods in undesirable circumstances. However, it is unlikely that a Court will accept such an argument without cogent and credible evidence of damage, probably from members of the public. It remains to be seen whether any brand owners will be successful in mounting such an attack.