(CN) – Designer Christian Dior has the right to sue a retailer for reselling its upscale lingerie to a discount store, so long as Dior can prove that the breach of license agreement damaged its prestigious image and its “aura of luxury,” Europe’s highest court ruled.
The Court of First Instance allowed Dior to pursue its trademark infringement claim against Societe Industrielle Lingerie (SIL) and Copad, the discount store that bought Dior’s luxury lingerie.
Dior’s license agreement with SIL had stipulated that the store would not sell Dior merchandise to discount stores outside its distribution network without Dior’s permission.
Faced with a lawsuit, the resellers pleaded trademark exhaustion, saying the goods had been put on the market with Dior’s consent.
The French Cour de Cassation asked Europe’s high court to weigh in on Dior’s trademark rights over its licensed merchandise.
The court said Dior could sue for breach of licensing agreement “only if it can be established that, taking into account the particular circumstances of the case, such resale damages the reputation of the trademark.”