Counterfeiting of trademarks and designs: the many facets of the Palladium judgment – Commentary

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Introduction
Facts
Decision
Comment

Introduction

On November 15, 2021, the Lyon Court of Appeal issued an interesting decision covering a wide range of intellectual property issues.(1) Among the interesting points addressed by the Court were:

  • design validity and infringement;
  • trademark infringement; and
  • unfair and parasitic competition.

Facts

In 2003, the Palladium company filed the following IP rights:

  • French design n° 03 0904-004 for his “Baggy” shoes. Seven views have been reproduced, including those shown in Figures 1 and 2; and
  • figurative mark No 03/3239720, in class 25 for clothing and footwear (Figure 3).

Figure 1: first view of the Baggy shoe

Figure 2: second view of the Baggy shoe

Figure 3: figurative mark

Palladium became aware that the commercially related companies Yoobizz, Sissi Perla and Aubestar marketed infringing shoes bearing the trademarks PALMBEACH and YANGBOKAI and reproducing the characteristics of its Baggy shoes. Palladium sued the companies in 2014.

The basics of the action were:

  • infringement of Palladium’s design and trademark; and
  • unfair and parasitic competition.

Believing that the judgment rendered by the Tribunal de Grande Instance of Lyon in October 2018 was not satisfactory, Palladium and Sissi Perla both appealed the decision.

Decision

Several points were submitted to the Court of Appeal, including:

  • the validity of the Baggy shoe design;
  • their infringement;
  • infringement of the PALLADIUM trademark; and
  • the issue of unfair and parasitic competition.

Baggy Shoe Design Validity
Regarding the validity of the Baggy shoe design, it has been argued that the appearance of the Baggy shoes was a version of a previous Palladium shoe design, the “Pallabrousse”. This design, which was inspired by the military model “Pataugas”, had been declared invalid in 2011.

In rejecting the invalidity of the Baggy shoe model, the judges described the essential characteristics of Baggy shoes, Pallabrousse shoes and Pataugas shoes. The appearance of Baggy shoes was characterized by significant differences – not insignificant details. This gave them a different overall impression from previous shoe designs. The Court thus upheld the validity of the design.

Counterfeit Baggy Shoe Design
The potential infringement of the design of the Baggy shoe could therefore be analyzed. The judges compared their appearance with those bearing the PALMBEACH and YANGBOKAI brands.

All of the shoes were high-top canvas sneakers characterized by an upper, a rolled-up tongue, and a circular badge on each side. According to this comparison, the essential characteristics of the Baggy shoes were reproduced on the PALMBEACH and YANGBOKAI shoes, and the impression produced by the models was identical. Therefore, the offense was admitted.

PALLADIUM Trademark Infringement
With regard to trademark infringement, it was argued that the PALLADIUM mark was not a genuine design mark. Sissi Perla further argued that the reproduction of the typeface was not objectionable as it could be reproduced by dozens of other marks, especially since the signs were different visually, phonetically and conceptual.

Regarding the PALLADIUM and PALMBEACH trademarks, the appeal judges confirmed the position of the trial judges as to the existence of a likelihood of confusion. However, surprisingly, they rejected the judgment of the previous judges regarding the PALLADIUM and YANGBOKAI brands. While the trial judges had affirmed that there was no risk of confusion between the signs (considering that the marks had no other point in common than the same number of letters, the general shape of the logo and the typography ), the appellate judges took an opposite position. They specified the following:

[W]When the YANGBOKAI sign is observed at a distance greater than 20 cm, as is the case with shoes, whether worn or displayed on the shelves or in the window of a store, or represented on a sales site, a similarity appears between the Palladium and Yangbokai inscriptions, of which it should be noted that they are both in relief and formed by a kind of rubber placed on a base of the same color.

The judges added that:

the vertical of the Y recalls the vertical bar of the P, the following A is common, the N presents two verticals like the two LL of the Palladium, the B and the O by their shapes evoke the A and the D of the Palladium and the I ends the term by a vertical like the second leg of the M of Palladium.

In view of the above, the signs had a very similar visual impression, justifying the admission of a likelihood of confusion. Unlike the previous judges, the appellate judges looked at the concrete and actual use of the marks in trade to affirm that YANGBOKAI also constituted an infringement of the PALLADIUM mark.

Parasitic competition
Finally, among other measures requested by Palladium, the Court upheld the judgment that the companies Sissi Perla and Aubestar had engaged in parasitic competition by taking advantage of the visibility of Palladium’s Baggy model to sell their own products.

Comment

Regarding design rights, this decision is not particularly original, and it was to be expected. Nevertheless, it is always imperative that judges recall the general principles of law. The way they described the process of analyzing the validity of a design and taking into account the existence of counterfeit behavior (i.e. through a detailed analysis of the designs, the identification of their essential characteristics and a comparison of their overall impressions) is also extremely interesting. .

Regarding trademark law, the most important part of the decision dealt with how the context of sale and the way consumers would see and perceive the marks were considered (and more specifically the comparison of the appearance of the letters , which are seen and read by consumers at a certain distance) and how the judges admitted a risk of confusion between two brands that are a priori different.

Finally, the decision stresses the importance of multiplying parallel rights to protect products against counterfeiting.

For more information on this subject, please contact Audrey Dufrenoy or Clément Birault to INLEX IP Expertise by phone (+33 1 56 59 70 90) or email ([email protected] Where [email protected]). The INLEX IP Expertise website is accessible at the address inlex.com.

Endnotes

(1) Case No. 18/08615.


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