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The Court of the European Union ruled one of Adidas’ figurative trademarks invalid.
The above European Union figurative trademark was registered on May 21, 2014.
However, the Belgian company, Shoe Branding, with its “two parallel stripes” mark which it intended to have registered for shoes, in order to bypass opposition from Adidas, applied to have the Adidas trademark of three black stripes on a white background, annulled.
Following Adidas’ second appeal, the EU court confirmed, on June 19, 2019, the invalidity of the trademark consisting solely of the design of three parallel black stripes on a white background.
The distinctive character of the trademark is understood as being that which allows the consumer to distinguish and identify the product or service from competitors’ products or services of the same kind. In other words, the trademark refers to a particular commercial origin. This requirement is also intended not to exclude retailers from the possibility of using a basic sign to display their product or service to consumers.
This is why a descriptive or “too ordinary” sign for a design cannot be considered as a trademark.
One of the main questions that led to the debate was how to assess when distinctiveness through use is acquired.
Adidas argued that the notion of use of the trademark should be interpreted in the same way as the notion of genuine use of a trademark, which sometimes includes the use of that trademark in forms that differ from the form covered by the registration.
However, the EU court reiterated that the notion of use of a trademark must be interpreted as referring, in the first instance, to the use of the trademark in the form in which it is registered and, secondly, where applicable, to the use of the trademark in forms which differ only in the slightest variations. In other words, the forms used must be considered as generally equivalent to the form subject to registration.
In order to demonstrate that its trademark had acquired a distinctive character through use, Adidas provided elements which, according to the EU court, could not be taken into consideration because they deviated from the essential characteristics of the registered trademark (black stripes on a white background). The EU court ruled that the examples provided, such as those presented below (white stripes or thick stripes on a black background), differ from the sign covered by the disputed trademark.
After having ruled that the disputed trademark was “an ordinary figurative mark”, the EU court added that the simpler a mark is, the less likely it is to have a distinctive character and the more it is modified, the more likely the essential characteristics are affected and thus alter how the mark is perceived by the relevant public.
In addition, Adidas only demonstrated the use of its claimed trademark in five Member States, which did not seem sufficient for the EU court to overrule the lack of distinctiveness.
However, Adidas may still file an appeal with the European Union Court of Justice in order to have its trademark recognized.
Adidas will need to prove that its three parallel black stripes alone allow the consumer to associate the product with its name and justify that distinctive character through use has been acquired in all the territories of the European Union.
It is not all over yet for Adidas… To be continued.
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One of the aims of the French PACTE Law (Action Plan for Business Growth and Transformation) is to increase gender equality within companies.
Since 2011, members of the Board of Directors or the Supervisory Board of limited liability companies (sociétés anonymes) must be appointed “with the aim of achieving a balanced representation of women and men”.
With regard to publicly listed limited liability companies and companies that exceed certain thresholds (500 employees and a net turnover or total assets of €50 million for three consecutive years), the proportion of either male or female members of the Board of Directors or the Supervisory Board cannot be less than 40%. If such Boards have 8 members or less, the difference between the number of male and female members may not be more than 2.
Until now, any appointment made in violation of these rules was considered invalid, however the law specified that such invalidity did not make the process, in which the irregularly appointed member took part, invalid.
The PACTE Law eliminates this exception and now allows a judge to rule on the invalidity of the process and deliberations in which the irregularly appointed member participated.
The PACTE Law also introduces the following new provisions:
– The requirement to seek a balanced representation of men and women on the Board of Directors or the Supervisory Board has been extended to the members of the Management Board.
– In making recommendations to appoint Deputy Chief Executive Officers, the Chief Executive Officer must now endeavor to seek a balanced representation of women and men. The Board of Directors is required to put in place a procedure that ensures throughout the appointment process, that there is at least one male and one female among the candidates for Deputy Chief Executive Officer positions. The Supervisory Board is also required to comply with this requirement when appointing members to the Executive Board.
Although the law currently does not specify any penalty for failure to comply with these requirements, members of such Boards may nonetheless be held liable for non-compliance.
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In a decision dated May 9, 2019 (1), for the first time, the French Cour de Cassation upheld a mutual termination agreement (rupture conventionnelle) involving an employee declared unfit for his position by the occupational physician (médecin du travail).
The mutual termination agreement of an employment contract is provided for in Articles L. 1237-11 to L. 1237-16 of the French Labor Code.
The law does not provide for any exceptions to establishing a mutual termination agreement between an employer and an employee; nevertheless, the requirements for approval are as follows:
– For unprotected employees by an employee representative mandate, the termination agreement must be approved by the Administration;
– For employees protected by an employee representative mandate (2), approval from the labor inspection authority is required.However, there have been some serious doubts about whether employment contracts can be mutually terminated in certain specific situations.
As an example, before mutual termination agreements were first introduced into the Labor Code (3), the French Cour de Cassation ruled that any mutually termination of an employment contract is not allowed during the period of suspension of an employment contract due to a work-related accident (4).
More importantly, the French administration clearly excluded the possibility of signing a mutual termination agreement in cases where the employee benefited from specific protection against dismissal (during maternity leave, an absence following an occupational accident or due to an occupational disease) (5).
In recent years, the French Cour de Cassation has given several judgments approving mutual termination agreements in the following situations:
– Between an employer and an employee with whom there is a dispute (6);
– Between an employer and an employee declared fit pending certain conditions after an occupational accident (7);
– Between an employer and an employee with a diagnosed occupational disease or who has suffered an occupational accident (8 and 9). The judgment stated that the termination occurred “during the period of suspension due to an occupational accident or disease“.
– Between an employer and an employee, during the periods of suspension of the employment contract to which the employee is entitled during maternity leave (10);
Nevertheless, the French Cour de Cassation recalled, in each of these judgments, that the mutual termination agreement must be devoid of any defect of consent (error, violence, misrepresentation) or fraud on the part of the employer.
In this respect, the French Cour de Cassation recently ruled (11) that the existence of acts of psychological harassment does not in itself impact the validity of the termination agreement, unless consent has not been properly obtained. In other words, acts of psychological harassment are not grounds on their own to annul the mutual termination agreement. However, the line between psychological harassment and psychological violence is quite thin, so that in practice, in the event of psychological harassment, the employer takes the risk that the lack of consent may be retained by the judges and the mutual termination agreement may be cancelled.
In the decision of May 9, 2019, the French Cour de Cassation clarified that it is possible to mutually terminate an employment contract with an employee declared unfit for his/her job by the occupational physician and as such, the contract is no longer suspended.
This means that it is now possible to bypass certain protective requirements for employees declared unfit, including:
– the employer’s duty to reassign the employee to a new position, which may be burdensome if the company is part of a group;
– the re-instatement of salary payments in the absence of a reassignment or termination of the employment contract within one month;
– the possibility of initiating a dismissal procedure only if it can be demonstrated that it is impossible to reassign the employee to another position;
– the payment of a specific severance amount in the event of professional incapacity, which is equal to twice the amount of the dismissal indemnity and compensatory payment in lieu of notice period.However, unless the employee negotiates compensation for termination in excess of the minimum compensation (12) to encourage him to renounce its protective status, it is not in the employee’s interest to consent to a mutual termination agreement of his/her employment contract.
In the judgment of May 9, the judges ruled against the defect of consent since the employee did not allege it and considered that proof of the employer’s fraud was not established, since the employee had 15 days to withdraw before the termination agreement was duly approved and in order.
The French Cour de Cassation also recalled that fraud must be proven by the person who invokes it and cannot be presumed.
Nonetheless, as a precautionary measure and in order to avoid the risk of judges retaining the grounds of fraud or lack of consent, we advise to inform the unfit employee, for whom a mutual termination by agreement is being considered, of the consequences of such a mutually agreed termination.
(1) Cass. Soc., May 9, 2019, o.°17-28767
(2) Mandates specified in articles L. 2411-1 et L. 2411-2 of the French Labor Code
(3) The Mutual termination agreement was first introduced into the French Labor Code through Law no. 2008-596 of June 25, 2008, although prior to that it was used in practice without a specific legal framework.
(4) Cass. Soc., June 29, 1999, no. 97-40426; Cass. Soc., January 4, 2000 no. 97-44566
(5) Circ. DGT no. 2009-04 of March 17, 2009, no.1.2.
(6) Cass. Soc., May 23, 2013, no. 12-13865
(7) Cass. Soc., May 28, 2014, no.12-28082
(8) Cass. Soc., September 30, 2014, no.13-16297
(9) Cass. Soc., December 16, 2015, no.13-27212
(10) Cass. Soc., March 25, 2015, no. 14-10149
(11) Cass. Soc., January 23, 2019, no. 17-21.550
(12) In the event of a mutual termination agreement, the compensation is at least equal to the legal severance pay or, in companies whose industries are represented by the MEDEF, the CGPME or the UPA (French inter-professional employers’ organizations) , to the relevant contractual severance pay if it is higher.
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On April 11, 2019, the Law “for the growth and transformation of enterprises” (PACTE Law) was adopted by the French Parliament.
With regard to commercial companies’ requirement to appoint a statutory auditor, three major considerations deserve attention:
1/ The thresholds that trigger the requirement for commercial companies to appoint a statutory auditor have changed
The PACTE Law specifies and standardizes the thresholds beyond which the appointment of a tatutory uditor is mandatory for all commercial companies.
Article 20 of the PACTE Law provides that commercial companies (which include SA, SCA, SAS, SAS, SARL, SNC, SCS) are required to appoint a statutory auditor if they exceed two out of three thresholds which will be defined in a forthcoming French decree and are expected to be modelled on the European thresholds for statutory audits, i.e.:
4 million Euro in gross assets (at the close of the financial year)
8 million Euro in turnover (at the close of the financial year)
50 employees (average number of employees during the financial year)
2/ The adoption of thresholds that trigger the requirement to appoint a statutory auditor for commercial companies that control or are controlled by other companies
For any parent company, within the meaning of Article L. 233-3 of the French Commercial Code, the obligation to appoint a statutory auditor is stipulated when the group it forms with the company or companies it controls exceeds the thresholds set forth in the reform applicable to all commercial companies (see 1, above).
For subsidiaries held directly or indirectly by one of the companies mentioned above, the obligation to appoint a statutory auditor is required for any “significant” subsidiary, i.e., one that exceeds thresholds that will be set by decree on the basis of three criteria: gross assets, turnover excluding tax or average number of employees employed during the financial year.
3/ The reform comes into effect beginning in 2019
The National Assembly rejected the three-year transitional period put forward by the Senate and stipulated that the measure would become effective as from the first financial year following the publication of the forthcoming decree on increased audit thresholds and by September 1, 2019 at the latest.
With regard to the statutory auditors’ terms of office which expire after the Annual Shareholders’ Meeting or the relevant body approving the financial statements for the sixth financial year, for financial years ending on or after 31 December 2018, companies will be exempt from the obligation to appoint a statutory auditor provided that:
– the sixth financial year closed no more than six months before the decree on thresholds became effective;
– at the time of the current financial year-end, the company has not exceeded two of the three future thresholds;
– the Shareholder Meeting and appointment of a statutory auditor will not have taken place before Article 20 comes into effect (on or before 1 September 2019).An exception has been granted to overseas departments where the effective date of the reform has been postponed until 2021.
If the current terms of office of the statutory auditors are not immediately affected by the reform and continue until they expire – with the exception of early resignations – companies that approve the term of office of their statutory auditors after the entry into force of Article 20 of the PACTE Law and the decree on thresholds may apply the new thresholds in order to determine whether or not they should renew or appoint a statutory auditor.
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Failure to take care of one’s physical fitness, to comply with the Club’s physical training program and adopt a lifestyle in accordance with one’s profession constitutes serious ” unsporting ” misconduct that justifies the termination of the fixed-term contract.
Article L. 1221-1 of the French Labor Code is explicit in that “the employment contract is executed in good faith“. Derived from good faith, loyalty is a reciprocal duty which neither the employer nor the employee can deviate from, even if the employment contract makes no reference to it.
In a decision of 20 February 2019 (1), the French High Court of Appeal (Cour de cassation) ruled on a dispute between a professional basketball player and his employer. Victim of an injury that occurred in the course of his professional activity, the player on leave has continuously refused to follow the medical care protocol set by the team’s doctor to attend physiotherapy sessions, even though the player is required to do so by virtue of his contract and of the collective agreement.
In these circumstances, the employer terminated the fixed-term employment contract early on the grounds of serious misconduct. However, the professional player considered that his employer could not legitimately require him to perform any activity related to his employment during the suspension of the employment contract due to his sick leave.
This decision is noteworthy for three reasons.
First, while the legislator has never taken a stance on the definition itself of the duty of loyalty, the High Court of Appeal has constantly defined its scope. This decision confirms that loyalty is required for all contracts, regardless of the sector of professional activity.
As such, the sports sector is no exception to the traditional rule according to which an employee is required to be loyal in his professional relationship with his employer; the professional sports player must also not commit acts contrary to the interests of the company, which are likely to damage its reputation or performance (2).
Consequently, loyalty is as much a part of the game on a basketball court as it is in the changing rooms.
Second, and even more importantly, the duty of loyalty extends beyond unexpected changes in an employment contract (3). Even when the performance of the employment contract is suspended by an occupational accident or disease, the duty of loyalty remains, unlike the duty to provide work in return for compensation.
Underlying this, the High Court of Appeal reaffirms the spirit of Article L. 1226-18 of the Labor Code, which stipulates: “when an employee who has suffered an occupational accident or disease holds a fixed-term employment contract, the employer may not terminate the contract during the periods of suspension of the contract unless he can justify either a serious misconduct on his part or a case of force majeure“.
To justify the dismissal of the basketball player on the grounds of violating the duty of loyalty, the High Court of Appeal agrees with the reasoning of the judges that serious misconduct results from the only fact that he did not “lend himself to the care necessary to restore his physical potential in relation to the injury“, whereas he was contractually and conventionally bound even during his work absence following an occupational accident.
It should be noted that the High Court of Appeal strictly applies the principle according to which a reason based on the employee’s personal life may justify disciplinary dismissal if it constitutes a breach of a duty pursuant to the employee’s employment contract.
Finally, reciprocity in the employment relationship can be also demonstrated by the employer’s and employee’s obligation to ensure health and safety.
While an employer is required to ensure that its employees can adapt to changes in their jobs throughout the duration of their contract (4), the fact remains that the Labor Code also requires each worker to take good care, based on the worker’s training and abilities, of his or her health and safety, as well as that of the other persons who are affected by the worker’s actions or failures to perform at work (5).
However, we would have been surprised if the High Court of Appeal had reasoned differently and acknowledged that, for the sake of privacy, the employee should be completely exempted from his or her duty of loyalty. After as, the athlete employee was advised of the health measures after his accident, specifically to ensure his physical recovery.
This being said, from now on, one might expect that serious misconduct will also be whistled at on the benches of the labor courts…
(1) Cass. Soc. 20/02/2019, n°17-18.912, M/ c/Sté JDA Dijon basket: by noting that “during the period of work absence following his work-related accident, the employee had not attended an appointment to organize the physiotherapy sessions prescribed by the team’s attending physician and that he had not made himself available for the physiotherapist for the purposes of following the medical care protocol”, the Court of Appeal “highlighted the existence of a breach by the employee of his duty of loyalty, making it impossible to maintain the employment contract”;
(2) Cass. Soc. 12/10/2011, n°10-16.649 ; Cass. Soc. 21/11/2018, n°16-28.513 F-D ;
(3) Cass. Soc. 18/03/2003, n°01-41.343 ; Cass. Soc. 30/03/2005, n°03-16.167, FS-PB ;
(4) Art. L. 6321-1 C. trav;
(5) Art. L. 4122-1 C. trav.
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“The main name to note is Delphine Brunet-Stoclet, who handled sensitive and high-stakes litigation on behalf of well-known clients and assisted them with issues surrounding the filing of new trade marks. Marie André-Nivet was recently promoted to senior associate and is also notable”
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