Is it possible to combine infringement and unfair competition actions?

In 2015, luxury goods company Hermès took a Parisian jewelry company to court, accusing it of using its iconic “chaîne d’Ancre” motif to create a range of products including bracelets, necklaces, earrings and cufflinks.

 

Hermès considers itself the victim of acts of counterfeiting and unfair competition.

 

The case raises an age-old question: can materially identical facts be punished on both the grounds of counterfeiting and unfair competition?

 

For the Cour de cassation, in its most recent decision in the Hermès case[1], the marketing of counterfeit products creates a risk of confusion that justifies a conviction for unfair competition.

 

The question arose because counterfeiting and unfair competition are two legal bases with very different purposes:

  • protection of an intellectual property right for one,
  • sanction of disloyal behavior for the other.

 

In practice, however, actions for counterfeiting and unfair competition are often similar, if not identical. In fact, they are regularly filed in the same proceedings, generally as a main and subsidiary claim, and sometimes as a supplementary claim.

 

The link between these actions is crucial, because different objects mean different losses that need to be fully compensated.

 

Faced with the difficulty of demarcating the boundary between these two grounds, and more specifically unfair competition, which encompasses a very wide variety of situations, the Cour de cassation has long laid down the condition of the existence of “distinct facts” in order to admit the cumulation of actions for infringement and unfair competition.

 

An examination of the shifting and sometimes casuistic case law has led to a definition of “distinct facts”: a fact must be considered distinct from infringement if, taken on its own, it would have constituted an act of unfair competition[2]. And case law analyzed by legal scholars shows that creating a risk of confusion in the mind of the public is an act of unfair competition distinct from counterfeiting[3].

 

In the Hermès case commented on, the lower courts[4] found that the mere marketing of an entire range of counterfeit products featuring the Hermès emblematic “anchor chain” motif created a risk of confusion in the minds of consumers, which was characteristic of unfair and parasitic competition. This solution ran counter to that adopted by the French Supreme Court four years earlier, in 2018[5], which had held that the marketing of a range of infringing products was not sufficient to characterize acts of unfair competition distinct from those punishable as counterfeiting.

 

On the basis of this precedent, my jeweller, who had been convicted on appeal, appealed to the Court of Cassation. It argued that the marketing of a range of products and the reproduction of an emblematic product were insufficient to characterize the commission of acts of unfair competition distinct from those punishable as counterfeiting.

 

In a pendulum swing characteristic of evolving and refining jurisprudence, the Cour de cassation reverses its 2018 decision.

It rejected the argument and upheld the appeal court’s finding that the marketing of an entire line of jewelry copying the emblematic motif to which Hermès had devoted substantial promotional investment created a risk of confusion in the minds of customers.

 

[1] 1st Civil Court, May 25, 2023, no. 22-14.651

[2] A. Lawrynowicz-Drewek, “Marque – L’évolution de l’appréciation d’un fait distinct de la contrefaçon”, Propriété industrielle, ed. Lexis Nexis, n°7, July 2021, study 21

[3] See, for example, Cass. com. July 1st, 2008, no. 07-14.741 or Cass. com. June 15, 2010, no. 08-18.279.

See also: M. Malaurie-Vignal, “Concurrence déloyale – Contrefaçon et effet de gamme”, Contrats Concurrence Consommation, ed. Lexis Nexis, n°3, March 2017, comm. 52; J. Lapousterle and J. Passa, “Fasc. 240: Domaine de l’action en concurrence déloyale”, JurisClasseur Concurrence Consommation, ed. Lexis Nexis, July 19, 2023

[4] TGI Paris, 3e ch. 4e sect., 30 mars 2017, n°15/07853 et CA Paris, pôle 5 ch. 1, January 11, 2022, no. 20/15934

[5] 1st Civil Court, October 24, 2018, No. 16-23.214

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