Could Dior sue SIL for trade mark infringement?
The answer to this question lies in Article 8(2) of the EU Trade Marks Directive. This provides that a brand owner can sue a licensee for trade mark infringement where the licensee breaches a licence term relating to one of a specific list of criteria (which the ECJ considered to be an exhaustive list), including a term relating to “the quality of the goods manufactured or the services provided by the licensee”. Here, whilst the lingerie itself was of the permitted quality, it was being sold through a prohibited kind of outlet. Despite this, the ECJ found in Dior’s favour, on the basis that “the quality of luxury goods [such as these] is not just the result of their material characteristics, but also of the allure and prestigious image which bestows on them an aura of luxury”. So, “an impairment to that aura of luxury is likely to affect the actual quality of those goods.” An earlier ECJ decision (L’Oreal, in 1980) had already held that a selective distribution system can preserve the
