CTM Court of Appeal upholds decision in smell-alike perfumes case

Section 8 of the Alicante Court of Appeal, acting as the Community Trademark Court of Appeal, has confirmed its first instance decision in a case involving the use of ‘comparison lists’ to sell smell-alike perfumes.

On January 28 2014 the Community Trademark Court Number 1 found that Equivalenza Retail SL and Cataleg de Serveis Integrals SL were guilty of trademark infringement and unfair competition, and ruled in favour of three companies belonging to the perfume and fashion group Puig - Carolina Herrera Limited, Puig France SAS and Antonio Puig SA.

The object of the lawsuit was the use by the defendants, in their smell-alike perfume business Equivalenza, of registered trademarks for well-known perfumes owned by the plaintiffs, which were marketed in Spain by Antonio Puig SA. In particular, the plaintiff’s trademarks were used to offer, promote and advertise smell-alike perfumes that allegedly imitate well-known fragrances. The marks were mainly used through the so-called ‘comparison lists’ or ‘equivalence lists’, which link the numerical references of the smell-alike perfumes with the registered trademarks of the original perfumes.

The Community Trademark Court Number 1, in line with the EU case law established in L’Oréal v Bellure (C-487/07), held that such use of the plaintiffs’ trademarks constituted an infringement of the exclusive rights conferred by Article 9(1)(c) of the Community Trademark Regulation (207/2009) and the corresponding provision under national law, Article 34(2)(c) of the Spanish Trademarks Act (17/2001). In the court’s view, the defendants’ business sought to establish a link between the well-known trademarks and the smell-alike perfumes, thus unduly taking advantage of the reputation of third-party well-known marks. From the point of view of unfair competition, the court found that such practice was unlawful, qualifying it as unfair comparative advertising.

The decision was appealed by the defendants and also challenged by the plaintiffs regarding the amount of damages. In its judgment of June 13 2014, the Community Trademark Court of Appeal confirmed its first instance decision in its entirety.

The court confirmed the findings of trademark infringement and unfair competition against the defendants, and focused on the issues raised by the defendants regarding two of the court’s orders arising from the infringement (ie, the removal and destruction of the advertising material and the amount of the compensation) and the order to pay the costs of the proceedings.

The defendants did not dispute that their use of the plaintiffs’ trademarks was unlawful. However, the defendants argued on appeal that it was impossible for them to comply with the order of the first instance judge that they remove the disputed advertising or promotional material (in particular, the comparison lists) from the Equivalenza network of stores and destroy it. In particular, they argued that these practices had been inherited from another company (from which they split in 2012) and that they had abandoned the use of comparison lists, but that they could not control the acts of their delegates and of the various owners of the Equivalenza stores, whom they regarded as “third parties”.

The Court of Appeal rejected this argument and declared that defendant Equivalenza Retail SL was responsible for the use of comparison lists in the network of Equivalenza shops. The court thus agreed with the reasoning of the first instance judge, who found that such advertising was attributable to Equivalenza Retail SL because the latter had taken over the advertising and marketing strategy of the stores and provided the lists. The Court of Appeal added that the common design of these listings, or the fact that Equivalenza Retail SL itself offered such listings to potential clients interested in opening a store in the network, led to the conclusion that Equivalenza Retail SL was responsible for the use of lists in the Equivalenza shops.  

As regards the amount of damages (which, in the judgment under appeal, was based on an assessment made by mutual agreement between the parties, conditional on a finding of trademark infringement or unfair competition), on appeal the defendants requested that such amount be lowered as they considered that the plaintiffs’ claims had been only partially upheld.

The Court of Appeal stated that, as trademark infringement and unfair competition had occurred, the agreement was binding and included a global compensatory sum, regardless of the legal basis for the conviction. Further, the court held that this sum could not be increased, as requested by the plaintiffs, due to infringing acts that had occurred after the agreement. Under these circumstances, the court dismissed the grounds of appeal of both parties and confirmed the amount of compensation awarded at first instance.

Finally, the court confirmed the order that the defendants pay the costs of the first instance proceedings, since, contrary to what the defendants alleged on appeal, all the claims had been upheld and these costs were different from the amount of damages that had been agreed on by the parties.

Carlota Viola, Grau & Angulo, Barcelona