Luxury perfume sold at discount store and the choice of selective distribution systems

News  >  IP law  >  Luxury perfume sold at discount store and the choice of selective distribution systems

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Arbeitsrecht-Anwalt-Rechtsanwalt-Kanzlei-MTR Legal Rechtsanwälte

Brand-name perfumes exude an air of exclusivity, and who better to preserve their luxurious reputation and make sure they do not end up in a bargain bin than an experienced IP lawyer.

The protection of intellectual property is of fundamental importance to businesses. A lawyer who is well-versed in IP law can ensure that immaterial assets receive comprehensive protection, explains commercial law firm MTR Legal Rechtsanwälte, whose team of legal experts includes IP lawyers.

One of the core areas of IP law is trademark law and compliance with trademark protection. Particularly in the case of luxury goods, businesses place a premium on ensuring that the upscale ambience is maintained right through to the sales stage. To achieve this, they make use of selective distribution systems, which are intended to ensure, among other things, that luxury items do not end up in a bargain bin.

But that was effectively what happened to one brand-name perfume that was put on sale at a discounter. This type of store did not exactly align with the desired image for the perfume, to the point where the manufacturer took issue with it being sold via this distribution channel and decided to sue. In a judgment from June 29, 2023, Düsseldorf’s higher regional court – the Oberlandesgericht (OLG) Düsseldorf – ruled that selling the brand-name perfume at a discounter amounted to a trademark infringement in this instance (case ref.: I-20 U 278/20).

The key factor in the OLG Düsseldorf’s view was how the perfume was presented at the discount store. Though the bottles were displayed in glass cabinets, these were located right next to a number of bargain bins. This presentation was found to lack any sense of exclusivity and failed to live up to the perfume’s luxurious character. The court contrasted this with the situation at drugstores, which, for the most part, have a separate area for perfumes that ensures their compliance with the associated trademark rights. The same could not be said of the discounter due to the lack of physical separation.

The end result is that the store can no longer continue selling the perfume as it has done until now. However, damage may have already been done to the perfume’s image. To prevent this from happening, businesses can turn to an experienced IP lawyer who can probe whether there are loopholes in the chosen selective distribution systems and propose ways of closing these loopholes.

MTR Legal Rechtsanwälte advises on all aspects of IP law, including trademark law.

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