Merchants should know the origin of the products they sell

In The Polo/Lauren Company LP v Bustos (Case 608/05, February 18 2010, only recently released), the Court of Appeals has ruled against the defendant in a case involving counterfeit Ralph Lauren clothes.

The plaintiff, The Polo/Lauren Company LP, seized 165 counterfeit products (mainly clothes) bearing the marks POLO and RALPH LAUREN. The plaintiff sued the defendant, seeking a permanent injunction and damages. 

The defendant argued that the matter was abstract since he had ceased to use the marks. The Court of Appeals rejected this argument, stating that a “matter becomes abstract when the injury at issue disappears without having an effect on the rights involved in the dispute”. This will not be the case where the injury "could be repeated in the future".

The defendant also claimed that he had acted in good faith and had been defrauded by the supplier of the goods. The defendant thus alleged that he should not pay any damages. The Court of Appeals rejected the good-faith argument and, with regard to the fraud argument, stated that:

it was not credible that the defendant had been the victim of deceit since, in certain activities and in certain circumstances, merchants know, or ought to know, the origin of the products and the legitimacy of the marks that they use.”

Moreover, the Court of Appeals confirmed that the defendant should pay damages to the plaintiff in the amount of approximately $2,500. It further stated that nobody infringes a mark with altruistic purposes - the aim is always to gain commercial benefits. Moreover, in most cases, the infringed mark will lose its prestige due to the “existence of ‘twin’ products that lack the quality of the originals”.

Finally, the Court of Appeals stated that the courts have discretion to establish the amount of damages.
Jorge Otamendi, G Breuer, Buenos Aires

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