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Case Pierre Cardin : it is prohibited to prohibit passive sales to its distributors

Paris Court of Appeal, 15 September 2020

Mr. Pierre CARDIN and the SOCIETE DE GESTION PIERRE CARDIN (hereinafter “Cardin”) sued a retailer and a wholesaler for counterfeiting.

The latter made counterclaims and argued that Cardin was infringing competition law by including clauses specifying that internet sales by the licensee would be subject to the licensor’s agreement in its exclusive license contracts.

Not surprisingly, the Paris Court of Appeal specified that it constitutes an anti-competitive practice to require an exclusive distributor to prohibit marketing via its website since it prohibits passive sales.

Passive sales are defined by sales which are concluded at the request of a customer, located outside the territory that has been exclusively allocated to the distributor, and who visits the distributor’s website and contacts it to conclude a sale.

Thus, by including contractual clauses in these exclusive license contracts which have the effect of restricting passive sales, Cardin implemented measures contrary to the rules of competition.

Cardin was thus ordered to compensate the wholesaler with the amount of 150,000 euros for its commercial and moral prejudices.

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