Castel Frères is one of France’s largest wine companies which strongly defends its trade mark rights in China, an important market for the company. Counterfeit wine is a real issue in this territory and Castel Frères has just won a battle against Chinese infringers… from France.

Castel Frères is the holder of the French trademark n°3551386 filed on 23 January 2008 and registered for still wines (class 33) and of the European Union trademark n°6785109 filed on 17 March 2008 and registered for still wines (class 33). These marks are the Chinese equivalent of the term “CASTEL”.

On 25 February 2009, Mr. Li Yu and Mrs. Chen filed an identical French trade mark for identical or similar goods and then started using the trade mark.

Considering that such acts were infringing its rights, Castel Frères filed an action for trade mark infringement, among other claims.

The main issue in this decision was whether or not the use of a trade mark by a third party in the context of a mere exportation to another country without any other use in the French territory, constitutes an infringing act.

Article L. 713-2 of the French Intellectual Property Code prohibits the reproduction, use and affixing of a mark, without its owner’s authorization. In addition, Article L. 716-10 of the same Code states that a person who “without legitimate reason”, imports or exports goods under an infringing mark shall be liable to a three-year imprisonment and a fine of € 300.000.

On 10 July 2007, the French Supreme Court (“Cour de Cassation”) considered, in light of these articles, that the holding of products bearing an infringing mark in France but for export to third countries where they are lawfully marketed, did not constitute a use in the course of trade, thus creating a “legitimate reason” exception.

In a decision dated 17 January 2018, the Cour de Cassation held that the European Union Directives, including article 5, paragraph 1 of Directive No. 89/104/EEC of 21 December 1988 to approximate the laws of the Member States relating to trade marks, establish full harmonization, by defining the exclusive right enjoyed by trade mark holders in the European Union.

The French Supreme Court held that the decision of 10 July 2007 did not comply with this harmonization principle as this Directive as well as subsequent Directives do not include such a “legitimate reason” exception so that the refusal to acknowledge infringement in that kind of situations cannot be upheld.

The Supreme Court judges thus approved the decision of the Court of Appeal who noted that the trade mark was affixed in France, a territory in which it was protected, and concluded that infringing acts were thus committed, even if the products bearing the trade mark were intended to be exported to China.

The Cour de Cassation thus overturned its jurisprudence, leading to a victory for Castel Frères against the Chinese infringers.

Case Ref. Cour de Cassation, Com., 17 January 2018, No. H 15-29276