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Is the discounter damaging the brand’s reputation? Aldi Süd was successfully ordered by the Düsseldorf Higher Regional Court to cease selling perfume products of the JOOP! and Calvin Klein brands.

When Marilyn Monroe was asked what she wore to bed, she replied: “To sleep, I just wear a few drops of Chanel Nº 5”. This phrase has become an integral part of Chanel’s advertising image and has given the fragrance iconic status. Fashion houses spare no expense and effort to attract other film stars in huge advertising campaigns for their commercials. Fragrances are abstract, appeal to our emotional centre and are an ideal projection surface for ideas and images of an entire house. The average consumer who cannot afford a Birkin has the opportunity to at least acquire a piece of luxury in the form of a perfume as part of the brand image. After all, it is no secret that the big houses no longer finance themselves through haute couture, but their income comes primarily from the sale of accessories, cosmetics and, above all, perfumes.

In order to maintain the exclusive aura of perfumes, the houses make use of selective distribution systems via selected perfumeries, special cosmetics retailers and department stores. Chanel women’s perfumes are usually displayed on specially lit black and white glossy shelves to evoke the feeling of a Chanel boutique.

If, on the other hand, a perfume is offered at Aldi next to the checkout aisle or in a grab box, the brand’s luxury image could be instantly destroyed and the product would appear to be nothing more than an ordinary perfume that Marilyn would not have touched. Therefore, Aldi Süd was successfully ordered before the OLG Düsseldorf to refrain from selling perfume products of the JOOP! and Calvin Klein brands (OLG Düsseldorf, judgement of 29.06.2023 – 20 U 278/20).

The plaintiffs considered the distribution by Aldi to be an infringement of their trade marks. In principle, trade mark owners have no right to injunctive relief as soon as the trade mark goods have been put on the market in the European Economic Area with their consent(exhaustion pursuant to Art. 15(1) UMV). Here, too, exhaustion occurred because the perfumes were put on the market with the consent of the trade mark proprietors.

By way of exception, the trade mark proprietors are entitled to injunctive relief despite exhaustion if there are legitimate reasons for the trade mark proprietor to oppose the further marketing of the trade mark goods, in particular if the condition of the goods is changed or deteriorated after they have been put on the market (exception under Art. 15(2) UMV). A legitimate reason in this sense may also be damage to the reputation of the trade mark. However, the interest of the trade mark owner in protecting the reputation of the trade mark must be weighed against the interest of the reseller.

In the case of goods of a luxury and prestigious character, the reseller must be careful not to damage the reputation of the trade mark by detracting from the luxury and prestigious character of the goods in question and from the luxurious aura they emanate. In order for the exception to the exhaustion principle to apply, it must be concretely proven that the use of the trade mark in the reseller’s advertising substantially damages the reputation of the trade mark in the specific case. Such substantial damage may be present if the trade mark appears in an environment that could substantially harm the image that the proprietor has been able to create for his trade mark. Whether the resale by the discounter damages the reputation of the trade mark depends in particular on the circle of addressees to whom the goods are to be resold and on the specific circumstances of the sale of prestige goods.

Here, the question arose in the lower court as to whether the specifically sold perfumes “JOOP! Jump” and “Calvin Klein ckIN2U” are luxury goods at all, which have a luxury image. The lower court rejected this and dismissed the action because the products had not reached a certain “luxury level”.

According to the OLG Düsseldorf, however, it is not the products but the brands that must have reached a certain “luxury level”. The fact that this is the case results from the selective distribution system of the trademark owners. It is harmless that their perfumes are also available at DM and Rossmann because, unlike at Aldi, they are presented there in a separate department. The “mid-price segment” of the perfumes is also harmless because they continue to enjoy a luxurious aura through the brand.

In any case, the specific way in which the goods were presented at Aldi considerably damaged the reputation of the trade marks. This is because the perfumes were offered indiscriminately and without separation from the other assortment (liquor, computer goods, pyjamas, etc.) in the “grab box” and thus equated with “everyday goods”. As a result, the interest of the trade mark owner prevails and there is an exception to the principle of exhaustion, so that injunctive relief is available against Aldi.

In conclusion, it can be said that trade mark owners want to keep the reputation of the trade mark very high, especially for perfumes, and in view of the existential financial importance of these goods, they do everything in their power to maintain the reputation. As soon as a luxurious reputation of the trade mark has been achieved, there are good prospects of success in this respect.

OLG Düsseldorf, judgement of 29.06.2023 – 20 U 278/20