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French Supreme Court rules on trade mark infringement with respect to goods intended for export only

Landmark ruling

18 July 2019

In its decision of 17 January 2018, the French Supreme Court clarified that the unauthorised use of a registered trade mark in France amounts to trade mark infringement even though the products are intended for export to a country where the use of the same sign is lawful. This constitutes a remarkable turnaround in the French Supreme Court case law.

On 17 January 2018, the French Supreme Court ("Cour de cassation") issued a landmark decision on trade mark infringement.  The Cour de cassation ruled that holding products bearing a French trade mark in France, without the authorization of its owner, can amount to trade mark infringement, even though (i) the products are intended for export in a country where the use of such trade mark is not prohibited, and (ii) there is no risk for the products to be commercialized in the French territory. 

This judgment marks a notable turnaround in the Cour de cassation case-law. 

The Cour de cassation's previous position

In a very controversial judgment of 10 July 2007 , the Cour de cassation held that holding products bearing a French trade mark in France without the authorization of the trade mark owner did not amount to trade mark infringement under the same circumstances as described above. 

The Paris Court of Appeal previously ruled that the mere storage of marked products to be exported to in a country where the use of the trade mark was not prohibited did not constitute "use in the course of trade" pursuant to Article 5§2 of Directive 2008/95/EC to approximate the laws of the Member States relating to trade marks (the "2008 Directive") and hence did not constitute a trade mark infringement . 

This analysis was arguable in the light of the Court of Justice of the European Union ("CJEU") case law and in particular the CJEU's interpretation of the notion of "use in the course of trade" as meaning use of the sign "in the context of commercial activity with a view to economic advantage and not as a private matter" . The Court of Appeal position was also arguable in view of the wording of Article 5§3 of the 2008 Directive which prohibited inter alia "affixing the sign to the goods or to the packaging thereof" and "exporting the goods under the sign".

The Cour de cassation decided not to follow the rationale of the Court of Appeal regarding "use in the course of trade" and ruled that the holding of marked products in order to export them, constitutes use of the sign in the course of trade. However, controversially, the Cour de cassation found that the defendant's use of the trade mark did not amount to trade mark infringement as it was "legitimate" as long as the products at stake were intended for export only and not intended for the French market. 

In order to reach this judgment, the Cour de cassation relied on Article L. 716-10 of the French Intellectual Property Code providing criminal sanctions for trade mark infringement when, inter alia, products bearing a trade mark are being held with no "legitimate reason". The Decision lead to heavy criticism in particular because it did not seem to comply with the 2008 Directive which did not provide for any equivalent exception. 

The turnaround in the Cour de cassation case-law

In the case which resulted in the Cour de cassation's ruling of 17 January 2018, the world leading Bordeaux wine company Castel Frères – owner of the trade mark "Ka Si Te" in France – had initiated a trade mark infringement action against a Chinese citizen who had affixed the sign "Ka Si Te" on wine bottles in France in order to export them to China, where he was fully entitled to use the sign. 

Castel Frères argued that such unauthorized use of the "Ka Si Te" trade mark in France amounted to trade mark infringement even though the goods were destined to China. 

The Cour de cassation followed the claimant's arguments and reversed its case-law, highlighting that its 2007 ruling was in breach of the principle of full harmonisation of national laws intended by the 2008 Directive, since the 2008 Directive did not provide for any "legitimate reason" exception. 

Key Take-Away Points
  • In a 2007 judgment, the French Supreme Court provided for an exception to trade mark infringement in cases where the trade mark was affixed on products intended for export to a country where the use of the trade mark was lawful.
  • This position had been criticized for being incompatible with EU law. 
  • In a recent judgment of 17 January 2018, the Court reversed its previous position and expressly stated that its previous ruling in this respect was incorrect.
  • The owner of a French trade mark is now entitled to prevent a third party from affixing its sign on products and holding those products in France even though the products are not intended for the French market.