On 17 November 2017, the District Court of Noord-Holland (Haarlem) rendered a decision in preliminary relief proceedings regarding the use of a trade mark by its owner (and franchisor). After only 5 days the Court of Appeal of Amsterdam reversed this decision with an appeal decision in a so-called ‘Turbo appeal’.
The parties in this case were the Association of Etos Franchisees (hereinafter: the ‘Association’) on the one hand and ETOS B.V. (hereinafter: ‘ETOS’), ALBERT HEIJN B.V. (hereinafter: ‘AH’) and AHOLD NEDERLAND B.V. (hereinafter: ‘AHOLD’) on the other hand. ETOS and AH are both part of the koninklijke Ahold Delaize N.V., an international food retail group, with multiple formats such as supermarkets, convenience stores, hypermarkets, online grocery, online non-food, drugstores, wine and liquor stores. ETOS is a drugstore with around 550 stores in the Netherlands of which 250 stores operate under franchise.
ETOS is the proprietor of several trade mark registrations and a broad range of “own trade mark” products that are sold in ETOS stores, including the franchise stores.
In January 2017, ETOS presented their intention to sell its private label products in the supermarkets of AH. The Association demanded ETOS not to proceed with this for various reasons including that because of the nature of the franchise the private label products are (exclusively) part of the ETOS franchise formula. Secondly the Association had partly initiated and financed the creation and promotion of these products. In addition this is one of the reasons for the shopping public to visit the ETOS stores.
On 14 July 2017 ETOS confirmed that ETOS and AH had decided not to sell the private label products in the AH stores. This decision was made to avoid a public discussion between the parties, which could cause damage to the ETOS brand in general. As a result, the Health and Beauty products of AH would be sold under another trade mark.
In the week of 6 November 2017 AH however started to sell “CARE” products in its Healty & Beauty line. The content and the packaging of these products were identical to the private label products that are sold in the ETOS stores. The only significant difference is the trade mark.
In preliminary injunction proceedings the Association demanded that the sale of the “CARE” products in the AH cease with immediate effect because of the agreement made in July.
The presiding judge considered that it is not only important to check the meaning of the words in the agreement but also what the parties could both reasonably have attributed to this agreement in the given circumstances and what they could reasonably expect from each other in this respect.
Taking this into consideration, the presiding judge came to the conclusion that the email of 14 July 2017 in which ETOS confirmed that the private label products would not be sold in the AH stores, could not be interpreted as a notification that the products, which were already produced, would be sold under another trade mark, but in the same packaging. The presiding judge ruled that it is not reasonable to expect that the Association had taken this consequence into consideration on the basis of this agreement. In addition, the judge considered that this would not make sense in the light of the fact that the shopping public visits the ETOS stores because of these specific products.
Only five days later, the Court of Appeal of Amsterdam reversed the judgment at first instance. The Court of Appeal ruled that the parties only agreed that no private label products (Etos branded) were to be sold in AH stores but that they did not agree anything on the sale of private label products in AH stores using another brand like CARE. The conclusion of the Court of Appeal is that AH does not violate the agreement with the Association by selling the products under the CARE-trademark in its AH stores for a limited period of time.
However, the Court of Appeal mentioned that if there were other circumstances, the above conclusion could be different. This would include if ETOS does not comply with the general obligation to protect the franchise formula. This could be the case if the franchisor is willingly profiting from the reputation of a certain brand that was built by the franchisees by launching products under that name in competing stores. In this case, such circumstances were however not established by the Court of Appeal.
One of the lessons learned from this decision is that when contracting in the Netherlands it is important to consider that the purely textual meaning of the words in the agreement is not (always) definite. In the end it is decisive what the parties could both reasonably have attributed to an agreement in the given circumstances and what they could reasonably expect from each other in this respect.
Last but not least, this case is a good example of the possibilities of a turbo appeal in the Netherlands. In case the decision in preliminary injunction proceedings is not favourable, the possibility to appeal is open. In really urgent cases however, it is possible to start a turbo appeal and to have a decision of the Court of Appeal in a strict time period even as short as five days.