image: Chanel

image: Chanel

A Netherlands court has held that use of perfume comparisons constitutes trademark infringement when it crosses the boundaries of comparative advertising. The flourishing trade in “smell-alikes” is a thorn in the side of the makers of well-known perfumes, including Chanel and Calvin Klein. However, thanks to a recent judgement from the District Court of The Hague, these parties’ ability to fight such practices has been strengthened.

Together, Chanel and famed cosmetics licensee Coty initiated legal proceedings against Bargello – a Dutch perfume producer known for its imitations of well-known fragrances – after the company began offering for sale and selling perfumes marketed as similar their own scents, including Chanel’s Chance and No. 5 fragrances, Chloe’s Love Chloe, and Calvin Klein Escape, among others.

Bargello marketed its “smell-alike” perfumes by explicitly making a comparative link between each of its perfumes and a well-known perfume, such as Chanel No. 5. Moreover, according to a Bargello advertisement, it has sold more than 400 high-quality perfumes that were comparable to well-known brands’ perfumes. The ad claimed that “the only difference that consumers will notice will be to their wallets.”

In filing suit, Chanel and Coty argued that Bargello was taking unfair advantage of the distinctive character and reputation of their well-known trademarks. According to their complaint, by presenting its perfumes as imitations of those of Chanel and Coty, Bargello was benefiting from the widespread appeal and recognition of their trademarks without paying any financial compensation to do so.

Bargello refuted the claims, arguing that because it sold its perfumes in basic packaging, which did not resemble the trade dress of Chanel or Coty perfumes, it should not be on the hook for infringement, as customers would not confuse Bargello’s perfumes with those of Coty or Chanel. It further asserted that the plaintiffs did not suffer any damage as a result of its imitation and comparatively marketed fragrances.  

L’Oréal All Over Again?

If the facts at hand sound familiar, that is likely because a similar battle played out in L’Oréal v. Bellure, in which the European Court of Justice (“ECJ”) rendered a landmark decision in European trademark law, which also dealt with the use of perfume comparisons.

It follows from the ECJ’s judgment in L’Oreal that using perfume comparison lists should be regarded as comparative advertising and a trademark owner is entitled to prevent the use of its mark in an ad that does not satisfy all legal conditions for permitted comparative advertising. The court held that This is the case even if such use does not jeopardize the trademark’s essential function –  which is to indicate the origin of the goods – provided that such use affects one of the mark’s other functions, including guaranteeing the quality of the goods and those of communication, investment or advertising.

If such functions are affected, the trademark owner may act against this the other party’s free riding. It is worth noting that in doing so, it is unnecessary for the trademark holder to establish a likelihood of confusion or even a likelihood of detriment to the distinctive character or reputation of the trademark or its brand as a whole.

For this reason, Bargello’s statement that no likelihood of confusion was established did not succeed, as none was required. Further, the district court was not swayed by Bargello’s statement that Chanel and Coty suffered no damages. As explained by the ECJ in L’Oréal, taking advantage of the distinctive character or reputation of a trademark may be judged unfair, even if it is not detrimental to either.

How to assess free riding

The ECJ paved the way for the district court’s decision in the Chanel and Coty case. The court applied the same criteria as the ECJ in determining whether use of another’s trademark takes unfair advantage of that trademark’s distinctive character or reputation. The court required a global assessment, taking into account all factors relevant to the circumstances of the case. These included:

• the strength of the trademark’s reputation;

• the degree of its distinctive character; and

• the degree of similarity between the marks at issue and the degree of proximity of the goods.

The District Court of The Hague established that Coty’s and Chanel’s trademarks were well known due to continuing investments and efforts in advertising and protection. The court ruled that the use of these marks in comparative ads is permitted only if such use meets the cumulative requirements of the European Union Comparative Advertising Directive (84/450/EEC), as implemented in Dutch law. As with any comparative ad, Bargello’s ads should not present goods or services as imitations or replicas of goods or services bearing a protected trademark or trade name – this condition applies not only to counterfeit goods, but also to any imitation or replica.

According to the court, Bargello’s ads crossed these boundaries. The ads created the impression that Bargello’s perfumes were imitations or replicas of Coty’s and Chanel’s, explicitly stating: “400 brand perfumes, you won’t notice any difference, except for in your wallet!”. The court found that the comparison lists utilized by Bargello – which comprised a number, which referred to a Bargello fragrance, directly followed by a well-known perfume trademark belonging to Chanel and Coty (among others) – also presented Bargello’s perfumes as imitations of Chanel’s and Coty’s.

Moreover, the court noted that Chanel’s and Coty’s trademarks played a larger role in Bargello’s sales strategy than necessary for a comparative ad. In light of the distinctive character and reputation of Chanel’s and Coty’s marks, it concluded that Bargello was taking unfair advantage of the distinctive character and reputation of those trademarks.

Internal use of comparison lists

Hypothetically, what if the comparison lists were used only internally by Bargello’s employees? The court considered that, and held that if that were the case, Chanel’s and Coty’s trademarks would still have played the same crucial role in the communication process of Bargello with its customers. Therefore, in the Netherlands, hiding perfume comparison lists behind the counter might be insufficient to prevent trademark infringement from taking place.

Ranee van der Straaten and Denise Verdoold are associates at Banning, an independent, full-service law firm with around 70 specialized attorneys-at-law, notaries and tax advisers based in Amsterdam.