Unauthorised fashion upcycling held unlawful by French first instance court

The Tribunal Judiciaire de Paris, building on its earlier approach to upcycling [see IPKat here], recently held that the use of “COCO”, “CHANEL”, and/or the fashion brand’s figurative mark consisting of two intertwined “C”s on upcycled Chanel products constituted trade mark infringement under Article L713-2 of the Intellectual Property Code (IPC). Additionally, it ruled that the defendant company had undertaken misleading commercial practices under Article L121-4(9) of the Consumer Code, by unduly ensuring consumers that it was engaging in lawful acts.

Background

Chanel SAS (claimant) is a famous luxury fashion house engaged in the design and manufacture of clothing, jewellery, accessories, perfumery, and beauty products. It is the proprietor of the word marks “COCO” and “CHANEL”, as well as the figurative mark below, which are registered, inter alia, in Classes 14, 25, and 26 of the Nice Classification, for jewellery, clothing, and dressmaking articles.

Kamad Reworked (KR, defendant) is a company producing upcycled goods. Some of those goods, such as necklaces, bracelets, earrings, and belt chains, were produced by upcycling buttons and belt buckles bearing Chanel’s trade marks.

Despite Chanel’s cease-and-desist request, KR denied any infringing activity on grounds that it was upcycling genuine Chanel products. Nevertheless, the defendant agreed to cease selling the items bearing Chanel’s marks upon exhausting its stocks. Not satisfied with this response, Chanel sued KR on grounds of trade mark infringement and unfair competition.

Court’s decision

Chanel argued that KR’s unauthorised use of its trade marks on everyday accessories, sold at significantly lower prices than its own products, caused dilution and tarnishment, and should therefore be prohibited. Although the exhaustion of rights provided by Article L713-4 of IPC could have allowed the defendant to avoid liability, the modification of the products originally marketed by Chanel rendered that provision inapplicable.

The court, agreeing with Chanel, assessed KR’s use of Chanel’s marks and found that the relevant public would ‘immediately attribute’ the defendant’s products to the claimant, particularly because of the very high degree of distinctiveness enjoyed by the latter. Alternatively, in most cases likelihood of confusion would not even matter because of double identity – as identical signs were used on identical goods.

KR emphasised that its own sign was also engraved on the upcycled products and that a disclosure on its website warned consumers that, upon purchase, they would buy a ‘Kamad creation and not a creation of the brand from which the upcycled item originates’, thereby preventing confusion. However, the court decided that these could not rule out a likelihood of confusion as they could not prevent consumers from associating the products with Chanel, or, at the very least, establishing a link between the two undertakings. This was because KR’s sign was only engraved on the back of its products – making it unnoticeable at the time of purchase, as opposed to the Chanel signs appearing on the more visible front parts – and the disclosure was written in a very small font size, which is not usually read by consumers.

Moving on to the unfair competition claims, the court emphasised that a practice is misleading where it intends to state or give the impression that the sale of a product is lawful when it is not. With an attempt to confute Chanel’s allegations, KR argued that the certificate of authenticity it provided its consumers together with the items they purchased prevented consumers from being misled as to the origin of the goods. The certificates essentially stated that the item in question was ‘derived from an authentic piece’ but was ‘an original Kamad creation’, and that Kamad was an ‘independent upcycling brand’ who did not ‘collaborate with the brands from which the upcycled pieces originate’.

The court considered these phrases to be misleading since they led consumers to believe that the sale of products stamped with Chanel’s trade marks was lawful. This finding was further supported by Chanel’s lack of authorisation and its express intention to prevent the use of its marks in this manner, as demonstrated in the cease-and-desist request. Consequently, the court held that KR also engaged in misleading commercial practices, causing unfair competition.

Comment

As this case demonstrates, unlicensed upcycling is a risky practice within the fashion industry. On one hand, there are valid concerns grounded in the sustainability and circularity of fashion products; on the other, the rights and interests of IP rightholders must be respected. This tension requires a balancing activity where these two opposing interests are weighed against one another in any given case. Generally speaking, in order for the scales to tip in favour of the defendants, they first need to ensure that their practices can clearly be identified as ‘upcycling’, rather than merely using parts of existing fashion items to create new ones. In other words, upcyclers should ‘create a product of higher quality or value than the [initial product]’ by ‘reduc[ing] the need for new raw materials’ [see here]. But that might not be enough, as this case shows. 

In this instance, it is difficult to see how KR added value to the alleged second-hand Chanel products by attaching buttons or belt buckles bearing Chanel’s logos to its jewellery. One can argue that it attempted to avoid using new raw materials. However, doing so by particularly – if not solely – using components featuring the luxury fashion house’s marks while placing its own sign on the back or less noticeable parts, suggests free-riding on Chanel’s reputation and distinctiveness, rather than genuine upcycling.

A possibly genuine upcycler?

That said, it is not contested that the current doctrine of exhaustion effectively prohibits upcyclers from debranding products. Debranding gives the trade mark proprietors a legitimate reason to oppose the resale of their products, rendering the doctrine inapplicable. To overcome this hurdle, some commentators like Bernardo Calabrese suggested a more ‘honest product fashioning’ which would, in this case, require the upcycler to affix its trade mark next to, or bigger than Chanel’s, making its own sign appear prominently to communicate the message of upcycling more explicitly. While this suggestion may help some upcyclers benefit from the doctrine of exhaustion, it does leave the door open for dishonest practices where a company attaches its logo on another brand’s products with no real intention of upcycling, but rather to free ride on that brand’s reputation or to imply a non-existent collaboration. In any event, the modifications made to the original Chanel products prevent KR, and many other upcyclers in similar positions, from relying on the doctrine of exhaustion, rendering it a ‘less reliable safe harbour for upcycling than one may think’.

Moreover, as emphasised by the Court of Justice of the EU, in cases concerning luxury goods, the ‘aura of luxury’ they enjoy and communicate to consumers must be upheld [see here]. According to the Court, this aura is impaired when luxury products are displayed at discount stores. A similar line of reasoning can be applied to the case at hand: Chanel’s aura of luxury was likely impaired when its trade marks appeared on products sold at significantly lower prices.

Finally, the most interesting aspect of this decision was the role that the so-called certificates of authenticity played on the assessment of unfair competition. Although the defendant attempted to provide clarification by stating that consumers did not purchase Chanel products or that its items were neither licensed nor endorsed by Chanel, the unlawfulness inherent in using Chanel-labelled buttons or medals rendered the disclaimer an unlawful commercial behaviour. However unappealing this may sound, reassuring consumers that a company is engaged in honest and lawful practices, when certain unlawful acts have taken place, is a misleading practice. It must, therefore, be prohibited to allow consumers to make informed decisions based on accurate information.

In sum, this case demonstrates that French jurisprudence maintains its stance against unauthorised upcycling, not only on the grounds of trade mark infringement, but also unfair competition. Although the outcome may be frustrating to some, it seems that unauthorised upcycling will remain prohibited until a change is made in the law – e.g., by introducing an upcycling exception [see here].

Image credit: Gemini