Fragrance brands face a pot pourri

Editorial: Jeremy Phillips

Citation: Journal of Intellectual Property Law & Practice 2009 4(10):685; doi:10.1093/jiplp/jpp153

It has been a good summer for the luxury scent industry. The decision of the European Court of Justice in Case C-59/08 Copad v Christian Dior has given owners of famous and expensive brands the encouragement to review their marketing policy in the knowledge that the sale of products, once placed in the safe hands of carefully selected distributors, may still be policed by them when those goods have fallen into the clutches of less prestigious sellers. Then came the bonus of the same court's subsequent ruling in Case C-487/07 L'Oréal v Bellure that the invocation of a well-known trade mark as a means of describing to a consumer the fact that a competing cut-price product resembled it would in most practical instances constitute an infringement of the registered right.

Will the good times last? It is difficult to predict. Copad enables the brand owners to invoke the need to protect the ‘aura of luxury’ that surrounds their expensive products, but the reasoning of the Court appears to be based on the assumption that perfumes are expensive and luxurious items that people purchase for themselves. Is this so? A recent online survey on the IPKat weblog suggests not. Admittedly, the number of respondents was small (134) and there were no means of ascertaining how representative of the relevant consumer this sample was. However, its results were revealing.

Just under one quarter of the respondents indicated that their normal mode of acquiring a perfume was via the chic and glamorous ambience of an up-market parfumerie, the traditional outlet for such products in continental Europe. In contrast, exactly 50% reported a greater degree of interest in competitive pricing than in the glamour of the purchasing experience: this group can be divided into two uneven sectors: the larger group (31%) who restrained their purchase habits until they visited a duty-free shop and the remaining 19% who bought their fancy scents online. The remaining 36% did not purchase perfumes, but rather received them as gifts.

It cannot be denied that some degree of glamour and excitement attaches itself to the purchase of expensive branded goods at a duty-free shop, since many such outlets are pleasantly appointed and share the vicarious frisson of excitement and adventure which many of us still experience when travelling abroad. However, the overall picture is one of a market of which a full 76% of respondents do not seek to acquire their fragrances from a distributor selected by the manufacturer and 50% avoid making their purchases there for reasons that include, but are probably not limited to, price sensitivity. In situations such as this, it is inevitable that the European Commission will be invited to reconsider its position on the desirability of allowing selective distribution agreements that have the effect of maintaining higher prices. It is equally inevitable that the perfume industry will be asked to respond to questions such as ‘are your luxury products less luxurious in markets where selected outlets face greater price competition?’

Regarding the protection given against the use of well-known brands in the marketing of smell-alike products, the perfume industry appears to be better placed. The ruling of the Court is arguably based upon a fudging of the distinction between a competing product being an imitation of (i) the brand owner's product qua product (ie as a genre) and (ii) the brand owner's product qua branded product sourced by that brand owner. In other words, there is a difference between the manufacturer of a smell-alike product saying ‘my product imitates brand X fragrance’ and ‘my product imitates the characteristics and functionality of a product which, when manufactured by the brand owner, is sold under the brand X’.

For as long as it is difficult or impossible for the Court, or indeed the consumer, to appreciate the subtle differences of these messages, the leading brands should feel secure enough. They have a ruling in their favour, they have a war chest that will tolerate protracted large scale litigation, and, most importantly, they have every reason for wishing to preserve the market position that they have worked so long and hard to achieve. While the long term may presage a diminution in their ability to determine how and where their precious goods are sold, and while the protection against free-riders remains—like an umbrella in the rain—capable of offering cover that extends beyond the object of protection, the short term looks rosy.

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