Enlisting the Copyright Law In Battling the ‘Gray Market’
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Parfums Givenchy U.S.A. is testing a new weapon in the war the luxury-goods industry is waging against diversion — the mysterious migration of their products out of authorized channels of distribution and into discount and off-price stores. In a lawsuit filed last week in Los Angeles, Parfums Givenchy contends that Drug Emporium Inc. has violated copyright laws by importing and selling without permission its Amarige perfume — or at least the opulent box in which the fragrance is packaged. “This is a whole new approach in pursuit of the age-old problem of diversion,” said Robert L. Brady, president of the United States arm of the French cosmetics and fragrance company Parfums Givenchy S.A. “For what I think is the first time, a fragrance company is using the copyright laws instead of the trademark laws to protect the distribution of its products.” Lawyers who specialize in intellectual-property law agreed, although they said it was an unorthodox use of copyright laws. “This is a novel application of the section, to put it mildly,” said Douglas J. Wood, a lawyer with Hall, Dickler, Lawler, Kent & Friedman. “They are using the copyright act to prevent the importation of their products, which would typically be fought under the trademark act.” The trouble is, trademark law protects luxury-goods companies against the importation of counterfeit goods, not unauthorized distribution of products made themselves. A provision of Federal copyright law, however, prohibits the importing of copyrighted material without the permission of the copyright owner — and has been brought to bear in a case similar to this one. Last Christmas Eve, the United States Court of Appeals for the Ninth Circuit determined that a Los Angeles record store owner, Edmundo Perez, had violated copyright laws by purchasing recordings manufactured abroad and importing them to the United States without the permission of BMG Music, CBS Inc. and A&M Records Inc., the companies holding the copyrights. “But for the fact that the copyrighted matter in the BMG case is a recording and Parfums Givenchy’s copyright exists in its box, there’s no difference,” said Eugene A. Ludwig, the fragrance company’s lawyer at Covington & Burling. “The precedent is there.” Robert E. Lyons, president of Drug Emporium Inc., a Powell, Ohio, operator of a chain of drugstores, said, “Drug Emporium only sells first-class merchandise at fair and low prices to our customers.” He declined to comment further. Diversion ‘Out of Control’ Manufacturers of fine perfumes, cosmetics, watches, accessories and other luxury items fight a constant battle against diversion. Parfums Givenchy, for instance, often buys out inventories of its goods from stores not authorized to sell them. “On a worldwide basis, diversion has gotten out of control and has hurt the prestige fragrance and cosmetics manufacturers tremendously by eroding their exclusivity,” said John Horvitz of Horvitz & Associates, a cosmetics industry consulting company. “In many cases today, companies that had previously turned a blind eye to diversion are now tightening the screws a bit.” More : query.nytimes.com |