Prior seizures: finally a check on the loyalty of the Petitioner?

Court of Cassation, Commercial Division, December 6, 2023, 22-11.071, Published in the Bulletin

In our December issue, we take a look at a ruling handed down by the Commercial Chamber of the French Supreme Court on December 6, concerning the seizure of counterfeit goods.

As a useful reminder of the importance of loyalty on the part of the applicants in this area, the ruling states that, in application of :

• article 716-7, now L. 716-4-7, paragraphs 1 and 2, of the French Intellectual Property Code, read in the light of article 3 of Directive 2004/48/EC of the European Parliament and of the Council of April 29, 2004 on the enforcement of intellectual property rights
• and article 10 of the French Civil Code, the person seeking authorization to proceed with a seizure for counterfeiting must be honest in the statement of facts supporting the request for seizure for counterfeiting, in order to enable the judge to authorize a proportionate measure.

The facts underlying the ruling were classic: the Carrefour hypermarkets marketed through its points of sale a tennis shoe reproducing, on its lateral part, a figurative element constituting, according to the companies of the PUMA group, an imitation of three figurative trademarks owned by the company Puma SE and exploited by PUMA. Puma France.

The Puma companies obtained, on petition, an order issued by the delegate of the president of a judicial court on August 25, 2017, authorizing a counterfeit seizure on the premises of a Carrefour store. On the basis of the seizures made, the Puma companies sued Carrefour for trademark infringement, trademark counterfeiting and unfair competition.

In its defense, CARREFOUR argued that the seizure reports were null and void for breach of the duty of loyalty, since the request presented by the PUMA companies, in the context of this non-adversarial procedure, had concealed the facts.

• That CARREFOUR HYPERMARCHES was the owner of trademarks for the sign in question
• INPI and EUIPO had ruled that there was no likelihood of confusion following PUMA’s oppositions.

The 2^nd Chamber of the PARIS Court of Appeal in fact upheld CARREFOUR’s argument, and declared the infringement seizure reports null and void, since the applicant for the measure had failed to present all the objective facts that would have enabled the judge to fully grasp the issues at stake in the trial for which he was being asked to grant authorization to carry out this measure, which was an exception to ordinary law, and thus to fully exercise his power to assess the circumstances of the case.

The Commercial Chamber of the Cour de Cassation dismissed the appeal, stating succinctly that :

“The Court of Appeal correctly held that the PUMA companies had breached their duty of loyalty when submitting the request, and that the infringement proceedings should therefore be annulled.

The judgment is therefore approved, both insofar as it upheld the nullity of the seizure reports, and insofar as it upheld the liability of the PUMA group companies and condemned them for their unfair attitude, and ordered them to pay compensation of… €10,000.

In addition to the insights it provides for intellectual property specialists, who traditionally have a strict appreciation of the principle of fairnessthe question of extending the scope of this case law to commercial seizures, and especially to computer seizures in unfair competition cases.under article 145 of the French Code of Civil Procedure.

As a reminder, this provision organizing the authorization of so-called “in futurum” measures makes it possible to obtain judicial authorization to carry out a certain number of necessary measures for the purpose of gathering evidence with a view to a trial on the merits.

The surprise effect, and the highly inquisitorial nature of these procedures, which make it very easy to appropriate a large amount of sensitive data from a competitor, under the guise of preparing for litigation, has opened the door to numerous abuses, with the temptation being great for certain unscrupulous players and their advisers to submit to the judge, in the context of a non-adversarial request, a scenario that is oriented, or even truncated, in order to obtain the authorization and judicial blank check necessary to proceed with such seizures.

This is a major loss, since the data entered by computer on the basis of key words – often including personal exchanges, or even exchanges with lawyers – are irrevocably known and exploitable by competitors, who are by definition aggressive and have little regard for ethics.

The entry into force of the provisions relating to the protection of business secrecy (Articles L.151-3 et seq. of the French Commercial Code introduced by Law no. 2018-670 of July 30, 2018) has made it possible to protect the interests of entities that are “victims” of these measures, by introducing a sequestration of seized data.

However, it has only very partially curbed this tendency: the practice of sequestration is still very empirical, and the case law of lower courts remains heterogeneous in many respects.

There are many examples of sensitive data being “leaked” under the guise of such measures.

As a result, the claimant’s duty of loyalty is frequently invoked in disputes concerning the withdrawal or enforcement of measures in futurum.

However, the various chambers of the Cour de Cassation have taken very different views of the scope of this procedural obligation in the case of so-called “3145” petitions.

Thus :

• if the First Civil Chamber ruled that, in 2005, in application of article 10 of the French Civil Code, the parties are obliged, by virtue of the principle of fair discussion, to produce and, where appropriate, communicate in good time the elements in their possession, in particular when they are likely to modify the opinion of the judges.

1st Civ., June 7, 2005, appeal no. 05-60.044, Bull. 2005, I, no. 241.

• The 2^nd civil chamber for its part, in a judgment also published, covering very similar facts of concealment from the retraction judge, did not hesitate to quash a judgment handed down by the PARIS Court of Appeal, on the grounds that the retraction judge “was required to assess the merits of the petition solely in the light of the conditions set out in article 145 of the French Code of Civil Procedure. “In other words, by verifying the applicant’s loyalty, the lower courts had added a condition to the law.

Civil 2, March 20, 2014, 12-29.568, Published in the bulletin

Thus, in the interests of healthy competition and business ethics, it would be highly desirable for the ruling handed down by the Commercial Chamber to herald a reinforced requirement, ab initio, of loyalty on the part of claimants by the Civil Chambers in charge of controlling the validity of “saisies 145”.