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    In a ruling dated 13th June 2018 (CE plén. 13-6-2018 n° 395495), the Council of State has finally clarified the notion of an “active holding company,” which it defines as a company: “whose principal activity, in addition to managing a portfolio of investments, is to play an active role in the management of the group’s policy and the running of its subsidiaries and, where relevant and on a strictly internal basis, the provision of specific administrative, legal, accounting, financial and property services.

    Before the 13th June ruling, only the Cour of Cassation have issued a definition of active holding companies. The Council of State’s definition builds on the definition issued by the Cour of Cassation, adding that management must be the company’s “principal” activity.

    As such, companies with non-controlling minority shares in businesses may qualify for “active holding company” status.

    Furthermore, the Council of State mentions a certain number of factual elements to be used to prove “active holding” status, notably including:

    – Minutes from meetings of the company’s board of directors attesting their involvement in the management of their subsidiaries’ policies; or else

    – The existence of a contract for administrative and strategy and development support, specifying that the holding company will play an active role in the strategy and development of its subsidiaries, without compromising their respective autonomy as legal entities.

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    The Court of Justice of the European Union has decided on Tuesday 12 June and has sided with Christian Louboutin: a colour, when placed on a product or part of a product, may be registered as a trademark in the European Union insofar as it allows the consumer to identify the origin of the purchased product.

    Court of Justice of the European Union, Grand Chamber, 12 June 2018, C-163/16, EU:C:2018:941, Mr. Louboutin and Christian Louboutin SAS vs. / Van Haren Schoenen B.V.

    Christian Louboutin will therefore retain its trademarks in the European Union, consisting exclusively of colour 18-1663 TP of the Pantone colour chart, placed on the sole of its high-heeled shoes.

    Among its numerous trademarks, the Benelux trademark was registered in 2010 in the “shoes” class and, as of 2013, in the “high-heeled shoes” class. This trademark is described as consisting of “the colour red (Pantone 18-1663 TP) applied on the sole of a shoe as represented (the contour of the shoe does not form part of the trademark but is used to show the placement of the mark)”.

    In 2013, Mr. Louboutin and his company filed a lawsuit for trademark infringement against a Dutch company named Van Haren, which had marketed high-heeled shoes with red soles in 2012.

    In its defence, Van Haren argued that the trademark invoked was invalid due to the fact that this trademark was solely constituted of the shape of the product in question (in this case, the sole of a high-heeled shoe).

    Having been called upon by the Hague Tribunal, the Court of Justice of the European Union (CJEU) responded to its interlocutory question regarding the validity of the colour trademark (Pantone red 18-1663TP) invoked by Christian Louboutin.

    According to its decision of 12 June 2018, the Court decided that the term ”shape” mentioned in the law must be construed according to its common meaning. However, a colour in itself, when not delineated in space, does not constitute a shape.

    This applies even if the shape of the product (or part of the product) plays a role in delineating the colour in its space: the sign for which trademark protection was sought cannot be considered to consist of its shape, for which no registration was requested, but rather only as the application of a colour on a specific area of the product, in this case, a positional mark.

    While this decision is a legal decision, the work and investments of Mr. Louboutin to ensure the monopoly of Pantone 18-1663 TP red soles have also ensured this favourable decision. Indeed, the impact of the considerable investments made by Mr. Louboutin and his Company to promote his “colour trademark” and their communication efforts on their red-soled shoes should not be downplayed. They have largely contributed to giving a strongly distinctive characteristic to the red-coloured soles as a result of constant use.

    In addition, given the numerous decisions of the European Union Intellectual Property Office (EUIPO) refusing to register positional marks for “lack of distinctive character”, we can only temper the future enforcement of the general rule set by the CJEU.

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    Order n°2016-1635 dated 1 December 2016 required companies, other than those whose securities are admitted to trading on a regulated market, to declare their beneficial owners with the registry of the Commercial Court where their head office is located.

    Decree n° 2018-284 dated 18 April 2018 was created to clarify the system for declaring beneficial owners. These clarifications came into effect on 21 April 2018.

    The two following provisions of the decree should be highlighted:

    1. The definition of the “supervisory power” exercised by the beneficial owner

    Before 21 April 2018, article R. 561-1 of the French Monetary and Financial Code indicated that the beneficial owner of a company was the natural person:

    – Either directly or indirectly holding more than 25% capital or voting rights in the company;

    – Or exercising, via any other means, a supervisory power over managing, administrative or executive bodies of the company or over the general meeting of shareholders.

    The new decree specifies the notion of “supervisory power” and amends article R. 561-1 of the French Monetary and Financial code to this end.

    As of 21 April 2018, the supervisory power is now defined “within parts 3 and 4 of section I of article L. 233-3 of the French Commercial Code”.

    The notion of “supervisory power” is thus clarified and a natural person shall be considered as fulfilling the review criterion in the two following cases:

    – Either, he/she determines, via the voting rights in his/her possession, the decisions in the company’s general meeting (article L. 233-3, I, part 3);

    – Or, he/she is a member or shareholder of the company and holds the power to appoint or to remove a majority of members of the administrative, executive or supervisory bodies of this company (article L. 233-3, I, part 4).

    2. The default beneficiary owner

    Before 21 April 2018, the texts did not indicate how to process a case where it is impossible to identify a natural person as a beneficial owner on the basis of criteria established in the first paragraph of article R. 561-1 of the French Monetary and Financial Code.

    From 21 April 2018, the registry practice has been enshrined in the new decree. Article R. 561-1 now specifies that, when no natural person can be identified, the beneficial owner is the natural person or persons or, if the company is not registered in France their equivalent under foreign law, who legally represents the company, namely;

    a) The manager or managers of partnerships, limited partnerships, limited liability companies, limited stock partnerships and civil societies;
    b) The managing director of limited companies with a board of directors;
    c) The sole managing director or the chairman of the board of limited companies with a board of directors and a supervisory board;
    d) The President and, if needed, the managing director of simplified joint stock companies.

    If the legal representatives mentioned in letter a) or letter d) are legal persons, the beneficial owner is the natural person or persons who legally represent these legal persons.

    Even if the companies concerned by this obligation are presumed to have submitted their declaration by 1 April 2018 at the latest, the new aforementioned rules shall apply for the filing of any corrective statement required in the event of amendment to the initially declared beneficial owners resulting in a change to the shareholding or control of the company.

© Schmidt Brunet Litzler