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    There’s been a victory for Laguiole, the village in Aveyron famous for its knives bearing a bee insignia on the handle, which since March 5, 2019 has benefited from the Paris Court of Appeal ruling that cancelled twenty brands using the “Laguiole” name.

    The municipality had been fighting for over twenty years against a Val-de-Marne businessman who in 1993 registered the Laguiole name as a trademark in France to designate not only knives, but linen, clothing and fertilizers as well. The range of products sold under that name did not come from the Laguiole municipality at all, and most of them were even imported products. The patent applicants were not citizens from the municipality either.

    As such, the Laguiole village craftsmen were deprived of the possibility of manufacturing or selling products under the “Laguiole” brand without being sued for counterfeiting. “Even with a locally made product, I would’ve been declared a counterfeiter, sometimes even up against Chinese products,” explained Thierry Moysset, manager of La Forge de Laguiole, a company manufacturing the ‘authentic’ Laguiole knife.

    In 2010, the municipality brought the case before the Tribunal de Grande Instance of Paris (district court), in hopes of obtaining the cancellation of the “Laguiole” brands. The case was dismissed and the ruling confirmed on appeal in 2014. However, in late 2016, the Court of Cassation introduced a new episode in the legal proceedings by partially annulling the Court of Appeal ruling; it noted that the Municipality had proven that the brands being sued had been registered maliciously.

    The case was finally judged on March 5, 2019 by the Paris Court of Appeal (Court of referrals), which ruled in favour of the Aveyron village, considering that the contentious brands had been registered “fraudulently” within the framework of a “strategy aimed at depriving the Laguiole municipality and its citizens of using the name”. In addition to the invalidity of the 20 brands registered, the municipality of Laguiole received $50,000 in compensation for the non-pecuniary damage suffered. The Court assessed that the Municipality had been deprived of its name and its reputation harmed.

    It is worth noting that to fight against such practices, the Hamon Law dated March 17, 2014 had already given territorial authorities new means of defence by allowing them to be informed by France’s National Institute of Intellectual Property (INPI) of any application for registering a trademark incorporating the name of the municipality or a similar name and by giving them the right to oppose its registration.

    This legal saga clearly sums up just how hard it is to protect the name of a regional authority in the face of a competing brand. A ruling that could therefore reveal the judges’ determination to protect local and “Made in France” interests.

    Caution: the ruling should nevertheless be taken with a grain of salt. Some Laguiole brands are still on the market and the businessman can still file another appeal.

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    To prevent potential conflicts of interest, the regulated agreements procedure currently provided for in the French Commercial Code for public limited companies (sociétés anonymes) subjects agreements entered into between the company and one of its directors or main shareholders to prior authorisation from the Board of Directors, then to approval by the shareholders. The agreements for which one of those parties is indirectly concerned are subject to the same procedure (Article L. 225-38 of the French Commercial Code).

    Article L. 225-40 of the French Commercial Code provides that the “person interested” by the agreement cannot participate in the vote, without however indicating whether that interest can be indirect.

    Whereas the aim of this procedure is to comprehend agreements that do not reveal organic links between the contracting parties but that are nevertheless representatives of a conflict of interest hidden by contractual or company arrangements.

    Article 66 of the PACTE law intends to remove the ambiguity, by explicitly targeting both the person directly concerned and the one indirectly concerned. No definition of indirect interest is provided although the concept remains difficult to grasp.

    The article also proposes that the shares held by the person concerned, directly or indirectly, be taken into account for calculating the quorum when the general assembly’s decision is made dealing with the approval of the agreement in order to, in particular, facilitate making that decision.

    The same article plans to re-establish the right (eliminated in 2011) for any shareholder to request a list of current agreements concluded by the company under normal conditions (Article L. 225-39 of the French Commercial Code).

    Lastly, certain provisions are foreseen solely for listed companies:

    – The company governance report must mention the agreements concluded between the company representatives of the public limited company (SA) or limited partnership with shares (SCA) and any controlled company within the meaning of Article L. 233-3 of the French Commercial Code (modification of Article L. 225-37-4 of the French Commercial Code).

    – The company website must include the publication of certain information (list to be determined by order in French Council of State) concerning the regulated agreements at the latest at the time the said agreements are entered into (creation of Article L. 225-40-2 of the French Commercial Code).

    Although the changes foreseen have commendable objectives aimed at reinforcing control and transparency within companies and meeting the need of transposing Directive 2017/828/EU “Shareholders Rights II”, care should be taken not to overly complicate interactions used in the business world, where legal security and rapidity are essential.

    The Pacte law is currently under examination. We will inform you of the conditions for the effective implementation of these new provisions with a direct impact on the regulated agreements procedure currently provided for in the French Commercial Code.

© Schmidt Brunet Litzler