Brands: Overview

In recent months the supermarkets have continued to wage war against brand owners, not only by selling "lookalike" products but by stocking large quantities of branded products purchased abroad at prices considerably lower than available from the usual channels in this country. Jeans, sportswear and perfumes have been particularly targeted and brand owners accused of exploiting consumers by selling at inflated prices.

Clearly many brand owners do not regard supermarkets as the most desirable outlets for their products for a variety of reasons connected not necessarily with price but with the image of their products and the desirability for sales staff to make personal contact with customers. Unfortunately for brand owners the Government is far from sympathetic. The Government Minister for Competition and Consumer Affairs has made it clear that he regards the end of "price fixing" by brand owners as a top priority. It has been reported that measures may include a change to the trade marks legislation and applying pressure to foreign governments, possibly through the World Trade Organisation. As yet there has been little or no progress. A spokesperson at the DTI commented recently: "These things do not happen overnight".

Behind the headlines lie a number of intertwined legal issues of some complexity which go to the very heart of the conflict between free trade policies and intellectual property rights. These issues include the principle of exhaustion of rights, the law on selective distribution agreements and the ambit of trade mark infringement, particularly across national boundaries. A recent European Court of Justice case, Dior v Evora which concerned the sale of Christian Dior perfume by an unauthorised distributor, was not decided in the brand owner's favour. However, the Advocate General in the Silhouette case has now opined that the concept of international exhaustion is not compatible with European law, offering some hope to brand owners in the EU that they may be able to prevent parallel imports from outside Europe in the future. The Court's judgment is expected very shortly. Please contact us if you would like further information.