Drafting license agreements for the use of
the supplier’s trademark on a website
where his products are proposed for sale
Venice (Italy) – May 18, 2012
Avv. Marco Venturello
THE ISSUE TO BE DISCUSSED
 To what extent is a reseller who has purchased branded products entitled
to sell them on the Internet without the permission of the brand owner ?
 And if the brand owner is willing to grant a license, which limitations can
he impose on the reseller ?
consequently
 What recommendations for the drafters ?
Avv. Marco Venturello
THE ISSUE TO BE DISCUSSED

The products are original and genuine, the packaging has not been
modified

There is not a problem of illegal parallel imports

The limits of the free use of a third party’s trademark, the notion of
exhaustion, descriptive v. distinctive use of a trademark

The notion of consent and of licence: issues concerning the drafting
Avv. Marco Venturello
THE ISSUE TO BE DISCUSSED
-
The conflicting interests:
 the trademark owners would like to have a full control of the chain of
distribution of their branded products (extension of the exclusivity
rights, of the legal monopoly granted by the IP rights)
 the distributors (chain of distribution) would like to be free to trade,
both from a geographical point of view (exhaustion of IP rights and
parallel imports) and from the point of view of the different channels
of distribution (e.g. Internet)
Avv. Marco Venturello
THE ISSUE TO BE DISCUSSED
-
The distribution of products:
 In the “material world”
 Through Internet: in this latter case there is a specific need to use the
trademark
Avv. Marco Venturello
THE FIELDS OF LAW INVOLVED
 IP law: in this presentation limited to trademark law [see TRIPs, Regulation
(EC) No 207/09 and Directive 2008/95/EC]
 Contract law [see Directive 2000/31/EC]
 Antitrust law [see The Treaty on the Functioning of the European Union and
Commission Regulation (EC) No 2790/1999 – Commission Regulation
(EC) No 330/2010]
 Unfair competition law [see Paris Convention for the Protection of Industrial
Property]
Avv. Marco Venturello
ANTITRUST LAW
 Quoted from the IDI website
“Under EC Antitrust law the distributor must be free to use Internet
because the promotion through Internet is considered (if not specifically
directed to customers outside the territory) as a «passive sale» that
cannot be inhibited. This means that a general prohibition to advertise
on Internet would make the distribution agreement contrary to EC
Antitrust law. The supplier may however verify that the advertising
conforms to his image, provided this is not used as a pretext for simply
inhibiting the use of Internet.”
Avv. Marco Venturello
ANTITRUST LAW
 Quoted from the IDI website
“It is advisable to avoid any clause prohibiting the distributor to
establish Internet sites and to sell through Internet, because this could
be seen as a hard-core restriction which would cause the agreement not
to be exempted by Regulation 2790/1999. The supplier may however
exercise a certain control over the use of his trademarks by the
distributor, for instance by requiring that any advertising with his
trademarks (including Internet) will be subject to his prior approval.”
Avv. Marco Venturello
AGREEMENT ON TRADE - RELATED ASPECTS
OF IP RIGHTS (TRIPs)
Part I — General Provisions and Basic Principles
Article 6
Exhaustion
For the purposes of dispute settlement under this Agreement, subject to
the provisions of Articles 3 and 4 nothing in this Agreement shall be
used to address the issue of the exhaustion of intellectual property rights.
Avv. Marco Venturello
AGREEMENT ON TRADE - RELATED ASPECTS
OF IP RIGHTS (TRIPs)
Part II — Standards concerning the availability, scope and use
of Intellectual Property Rights
Article 17
Exceptions
Members may provide limited exceptions to the rights conferred by a
trademark, such as fair use of descriptive terms, provided that such
exceptions take account of the legitimate interests of the owner of the
trademark and of third parties.
Avv. Marco Venturello
Regulation (EC) No 207/09, of 26 February 2009, on the
Community Trade Mark
Article 12
Limitation of the effects of a Community trade mark
A Community trade mark shall not entitle the proprietor to prohibit a
third party from using in the course of trade:
(a) his own name or address;
(b) indications concerning the kind, quality, quantity, intended purpose,
value, geographical origin, the time of production of the goods or of
rendering of the service, or other characteristics of the goods or service;
(c) the trade mark where it is necessary to indicate the intended purpose
of a product or service, in particular as accessories or spare parts,
provided he uses them in accordance with honest practices in industrial
or commercial matters.
Avv. Marco Venturello
Regulation (EC) No 207/09, of 26 February 2009, on the
Community Trade Mark
Article 13
Exhaustion of the rights conferred by a Community trade mark
1. A Community trade mark shall not entitle the proprietor to prohibit its
use in relation to goods which have been put on the market in the
Community under that trade mark by the proprietor or with his consent.
2. Paragraph 1 shall not apply where there exist legitimate reasons for the
proprietor to oppose further commercialization of the goods, especially
where the condition of the goods is changed or impaired after they have
been put on the market.
Avv. Marco Venturello
Dior / Evora
judgment of the Court, November 4, 1997, Case no. C-337/95
On a proper interpretation of Articles 5 and 7 of Directive 89/104
(today Directive 95/08), when trade-marked goods have been put on the
Community market by the proprietor of the trade mark or with his
consent, a reseller, besides being free to resell those goods, is also free to
make use of the trade mark in order to bring to the public's attention the
further commercialization of those goods.
Avv. Marco Venturello
Dior / Evora
judgment of the Court, November 4, 1997, Case no. C-337/95
The proprietor of a trade mark may not rely on Article 7(2) of Directive
89/104 (today Directive 95/08) to oppose the use of the trade mark, by
a reseller who habitually markets articles of the same kind, but not
necessarily of the same quality, as the trade-marked goods, in ways
customary in the reseller's sector of trade, for the purpose of bringing to
the public's attention the further commercialization of those goods,
unless it is established that, given the specific circumstances of the case,
the use of the trade mark for this purpose seriously damages the
reputation of the trade mark.
Avv. Marco Venturello
Dior / Evora
judgment of the Court, November 4, 1997, Case no. C-337/95
A balance must be struck between the legitimate interest of the
proprietor of the trade mark in being protected against resellers using his
trade mark for advertising in a manner which could damage the
reputation of the trade mark and the reseller's legitimate interest in being
able to resell the goods in question by using advertising methods which
are customary in his sector of trade. In the case of prestigious, luxury
goods, the reseller must not act unfairly in relation to the legitimate
interests of the proprietor of the trade mark.
Avv. Marco Venturello
Dior / Evora
judgment of the Court, November 4, 1997, Case no. C-337/95
On a proper interpretation of Articles 30 and 36 of the Treaty (today
Articles 36 and 42 of the Treaty on the Functioning of the European
Union), the proprietor of a trade mark or holder of copyright may not
oppose their use by a reseller who habitually markets articles of the same
kind, but not necessarily of the same quality, as the protected goods, in
ways customary in the reseller's sector of trade, for the purpose of
bringing to the public's attention the further commercialization of those
goods, unless it is established that, having regard to the specific
circumstances of the case, the use of those goods for that purpose
seriously damages their reputation.
Avv. Marco Venturello
Dior / Copad
judgment of the Court, April 23, 2009, Case no. C-59/08
Where a licensee puts luxury goods on the market in contravention of a
provision in a licence agreement but must nevertheless be considered to
have done so with the consent of the proprietor of the trade mark, the
proprietor of the trade mark can rely on such a provision to oppose a
resale of those goods on the basis of Article 7(2) of Directive 89/104
(today Directive 95/08), as amended by the Agreement on the European
Economic Area, only if it can be established that, taking into account the
particular circumstances of the case, such resale damages the reputation
of the trade mark.
Avv. Marco Venturello
Pierre Fabre Dermo-Cosmétique
judgment of the Court, October 13, 2011, Case C-439/09
45.
Pierre Fabre Dermo-Cosmétique also refers to the need to
maintain the prestigious image of the products at issue.
46.
The aim of maintaining a prestigious image is not a legitimate aim
for restricting competition and cannot therefore justify a finding that a
contractual clause pursuing such an aim does not fall within Article
101(1) TFEU.
Avv. Marco Venturello
Pierre Fabre Dermo-Cosmétique
Opinion of the Advocate General Mazák, Case C-439/09
38.
PFDC also claims that the ban is objectively justified due to the
major risk of an increase in counterfeited products due to internet sales,
with the resulting dangers for consumer health, and the risk of freeriding which could lead to the disappearance of the services and advice
provided in pharmacies as the owners of internet sites could free-ride on
the investments of distributors who do not have such sites.
39.
In my view, the threat of counterfeiting and the risk of free-riding
are valid concerns in the context of selective distribution.
Avv. Marco Venturello
Pierre Fabre Dermo-Cosmétique
Opinion of the Advocate General Mazák, Case C-439/09
40.
However, I am uncertain how the distribution by a selected
distributor of a manufacturer’s products via the internet could itself lead
to an increase in counterfeiting and how any detrimental effects resulting
from such sales cannot be counteracted by adequate security measures.
As regards the question of free-riding, given that the setting-up and
operation of an internet site to a high standard undoubtedly entails costs,
the very existence of free-riding by internet distributors on the
investments of distributors operating out of a physical outlet cannot be
presumed. Moreover, I consider that a manufacturer can impose
proportionate and non-discriminatory conditions on its selective
distributors selling via the internet in order to counteract such freeriding, thereby ensuring that the manufacturer’s distribution network
operates in a balanced and ‘equitable’ manner. In the light of such
considerations, it would appear that the general and absolute ban is
inordinate and not commensurate with the risks in question.
41.
PFDC’s claims concerning counterfeiting and free-riding would
appear therefore, subject to verification by the referring court, to be
unfounded.
Avv. Marco Venturello
MODEL CLAUSES
 Quoted from IDI website
model contract in the version distributor friendly
(Internet) The Distributor may advertise the Products and/or his activity
as Distributor of the Supplier on Internet. Such advertising shall comply
with Article 4.2 [4.2 (Conformity to the Supplier’s indications). Any
advertising and promotion regarding the Supplier and/or the Products shall
conform to the general standards indicated by the Supplier]
(Use of the Trademarks) The Distributor may use the Supplier's trademarks, trade names or any other symbols (hereafter «Trademarks»), for the
purpose of advertising the sale of the Products and identifying himself as
Distributor of the Supplier.
Avv. Marco Venturello
MODEL CLAUSES
 Quoted from IDI website
model contract in the version supplier friendly
(Internet) The Distributor may advertise the Products and/or his activity
as Distributor of the Supplier on Internet, provided he informs the Supplier
so that the latter can check that such advertising conforms to his trademark
image. The costs of such advertising will be borne, unless otherwise agreed,
by the Distributor.
(Use of the Trademarks) The Distributor shall use the Supplier's trademarks, trade names or any other symbols (hereafter «Trademarks»), but only
for the limited purpose of advertising the sale of the Products and
identifying himself as Distributor of the Supplier, such use of the
Trademarks being made in the Supplier's sole interest. Any use of the
Trademarks on the Distributor's letter paper, on advertising materials or on
any other materials addressed to third parties or on Internet (especially on
the Distributor's site, if any) shall require the prior written consent of the
Supplier.
Avv. Marco Venturello
Some examples of web-sites selling branded products:
•
Saldi Privati: www.saldiprivati.com
•
Privalia: www.privalia.it
•
Vente Privée: www.vente-privee.com
•
Yoox: www.yoox.com
•
SoloAltoDesign: www.soloaltodesign.net
Avv. Marco Venturello
Avv. Marco Venturello
(with the contribution of Dott. Arda Paragamyan)
Via Vittorio Amedeo II n. 17, Torino, Italy
Tel. 011 5185831
Fax 011 5185850
E-mail [email protected]
Internet web site www.sleuresis.it
Avv. Marco Venturello