201809.16

€510,000 in Damages for Counterfeits of Rims and Unfair competition

Mr. R. operates the websites rsimport.com and eurojante.com. The BMW companies have been informed that these tunning websites have a large number of BMW and MINI branded rims. Therefore, BMW managed to obtain the right to conduct a so-called saisie-contrefaçon conducted in the premises of Mr. R. Under French law, saisie-contrefaçon relates to Article 7(1) of the Directive 2004/48/EC of 29 April 2004 on the enforcement of intellectual property rights, which reads:
Member States shall ensure that, even before the commencement of proceedings on the merits of the case, the competent judicial authorities may, on application by a party who has presented reasonably available evidence to support his claims that his intellectual property right has been infringed or is about to be infringed, order prompt and effective provisional measures to preserve relevant evidence in respect of the alleged infringement, subject to the protection of confidential information. Such measures may include the detailed description, with or without the taking of samples, or the physical seizure of the infringing goods, and, in appropriate cases, the materials and implements used in the production and/or distribution of these goods and the documents relating thereto. Those measures shall be taken, if necessary without the other party having been heard, in particular where any delay is likely to cause irreparable harm to the rightholder or where there is a demonstrable risk of evidence being destroyed.
BMW also made reference to a bailiff’s report providing a description of the websites. Subsequently, BMW sued Mr. R. on the grounds of intellectual property infringement (four well-known trademarks and twenty-three industrial designs) and of unfair competition. On January 6, 2017, the Tribunal de Grande Instance of Paris decided in favor of BMW. Mr. R. appealed to the Paris Court of Appeal. On September 11, 2018, the court upheld the Tribunal de Grande Instance (Paris, Pôle 5, 1ère ch., Sept. 11, 2018, No. 107/2018).
With respect to counterfeiting, the Court of Appeal had to insist on the fact that, as an expert, Mr. R. could not “attempt to exonerate himself from his responsibility by claiming that he was not aware of the counterfeit nature of the products in question”. The court added:
The repeated use of the trademarks in circumstances suggesting that there was a link between the products offered on the websites Rs-import.com and Eurojante.com and [BMW], put Mr. R. in a position to benefit from the image and reputation that is attached to these trademarks in a way which is likely to be prejudicial to them since BMW is unable to control the quality of the products offered by Mr. R., or the conditions under which they are offered to consumers“.
In terms of damages, under Articles L. 521-7 and L. 716-14 of the French Code of Intellectual Property. The court must consider separately:
  • the negative economic consequences of counterfeiting, including loss of profits and loss suffered by the injured party;
  • the moral damage caused to the latter (but BMW had probably not raised that issue); and
  • the profits made by the infringer, including the intellectual, material and promotional investment savings that the counterfeiter made.
The court states that “the volumes of counterfeit goods bought and resold by Mr. R. in the 5 years preceding the date of the subpoena are not precisely known“, the interested party having only partially provided the required accounting documents. Nevertheless, it is known, on the basis of accounting documents relating to one supplier:
  • That for the period 2011 to 2014;
  • Imports were made for an annual average of € 28,000;
  • Sales were made for an annual average of € 13,600.
However, the saisie-contrefçon revealed the involvement of a second supplier about which the accounting books were not provided by Mr. R. It should be added that the website Europjante.com claimed “20 000 satisfied customers. The price of the rims varied on average from € 600 to € 1,000 per batch of 4 (and sometimes up to € 1,700). The court infers a turnover, “all brands combined, of € 1,600,000 per year, or € 8,000,000 for the last five years, which can be reasonably attributed to 15% to counterfeit products, or € 1 200,000“. After applying a margin rate of 30%, the court concludes that the profits realized by Mr. R. over the related 5 years are of about € 360,000. The court also compensates up to € 100,000 for the loss related to the value of the intellectual property rights (for all IPRs, that is to say, 23 models and 4 famous brands). In the end, damages for infringement amount to € 460,000.
With respect to unfair competition, the court noted certain findings transcripted on the bailiff’s report, namely that the websites contained the following sentences:
  • We have the BMW rims you need! “;
  • These BMW rims are not second hand but new ones of German quality, guaranteed for a minimum of one year by the manufacturer“.
In addition, the court takes into account the prices displayed, cheaper than those of BMW. The court also stated:
By (…) displaying [the rims], particularly on the Eurojante.com website, as ‘new, of a German quality, guaranteed for a period of at least one year by the manufacturer’, capable of being installed on many vehicles, [Mr. R. led] the consumer to believe that these products could have originated from BMW or were of an equivalent quality to the BMW products.
Under French law, the unfair competition action can only succeed if the claimant is able to demonstrate facts that are different from the ones required for the intellectual property infringement action to succeed. In the present case, the above-mentioned facts clearly constituted acts distinct from counterfeiting. As a result, the court ordered Mr. R. to pay 50 000 € in damages to BMW on the grounds of unfair competition.
This judgment of the Paris Court of Appeal of 11 September 2018 would be exemplary if, in addition, the court had ordered the publication on the home pages of the concerned websites for a time, albeit limited, but which would have let the consumers know that the goods were counterfeits.

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