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    The 2019 Finance Act introduced a general anti-abuse corporate tax rule that allows the tax administration to disregard an arrangement or series of arrangements which:

        i. Having been put in place for the main purpose or one of the main purposes of obtaining a tax advantage that defeats the object or purpose of the applicable tax law; and

        ii. Are not genuine with respect to all relevant facts and circumstances.

    This new general anti-abuse rule, a consequence of the transposition of Article 6 of the ATAD Directive (Council Directive 2016/1164/EU of July 12, 2016), replaced and supplemented the anti-abuse rule that applied previously, specifically to the parent company regime.

    In its position published on July 3, 2019, the tax authorities provided a number of clarifications as to the interpretation of this general anti-abuse rule (BOI-IS-BASE-70).

    1. Clarification of the arrangements covered by this rule

    a. An objective which is primarily tax-oriented, contrary to the object or purpose of the applicable tax law

    The analysis of the objective, which is mainly tax-oriented, “is based on a factual assessment, which takes into account, in particular, the assessment of the tax advantage that would be obtained (…) in proportion to all the gains or advantages of any kind obtained by the means of the arrangement in question.

    However, it is unfortunate that the administration does not specify the methods for assessing and comparing such benefits, particularly in the case of benefits that are difficult to quantify by nature, such as those based on, for example, an organizational or personal asset objective.

    The notion “object or purpose of the applicable tax law” refers to the objective pursued by the legislator through the enactment of the rules in question.

    Since the texts do not specify such objectives, the analysis should take into consideration the discussions held when such rules were put in place.

    b. Notion of a “non-genuine” arrangement

    An arrangement is considered as non-genuine to the extent that it is not put in place for valid commercial reasons which reflect the economic reality.

    Moreover, if these economic reasons are marginal in relation to the tax advantage obtained, the economic reason could be considered invalid.

    Finally, the administration has taken a position on arrangements involving asset holding structures, specifying that economic reasons should be considered valid if these companies have “financial activities” or if they meet an “organizational objective” (BOI-IS-BASE-70, n°40).

    2. Correlations with other anti-abusive measures

    a. Tax law abuse

    The general anti-abuse rule is a corporate tax base rule, distinct from the tax law abuse procedure of Article L. 64 of the LPF, which allows the administration to exclude fictitious or exclusively tax-related acts and which provides specific guarantees and sanctions applicable in the event of abusive arrangements.

    In practice, these two systems coexist and the administration will be able to choose between one or the other, subject to complying with the terms of their application.

    b. “Mini” tax law abuse

    The “mini” tax law abuse procedure concerns all taxes, with the exception of corporate income tax.

    The “mini” tax law abuse procedure will apply to adjustments notified as from 1 January 2021, relating to prior acts or acts carried out as from 1 January 2020.

    c. Anti-abuse rule for mergers, spin-offs or partial asset transfers

    The general anti-abuse rule does not apply if the disputed transaction concerns a merger, spin-off or partial contribution of assets and is intended to unreasonably benefit from one of the special regimes mentioned in I of Article 210-0 A of the CGI.

    In this case, the administration could challenge the transaction solely on the basis of Article 210-0 A, III of the CGI specifically targeting this type of transaction.

    3. Effective date of the anti-abuse rule

    These rules are applicable to financial years beginning on or after 1 January 2019 but, according to the tax authorities, the date on which the arrangement was put in place has no bearing on whether the general anti-abuse clause is applicable.

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    The Court of the European Union ruled one of Adidas’ figurative trademarks invalid.

    Adidas: back to the starting blocks for Adidas' three-stripe Trademark

    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.

    Adidas - Logos

    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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    Since January 1, 2016, individuals whose employment income falls within certain brackets are required to pay the “universal healthcare contribution”, also known as the “PUMA tax”.

    Prior to January 2019, those required to pay this tax included individuals:

        – Whose employment income was less than 10% of the annual French social security cap (or “PASS”) (i.e., €3,973 in 2018, the amount of the PASS in 2018 being €39,372), and

        – Who did not receive any replacement income, and

        – Whose capital earnings were greater than 25% of the PASS (i.e., €9,843 in 2018).

    The PUMA tax was based on capital earnings, and in some cases increased with respect to livelihood and standard of living factors. The tax rate was set at 8%.

    The Tax was amended by the 2019 French Social Security Financing Act.

    Since January 1, 2019, individuals required to pay the PUMA tax include those whose employment income is less than 20% of the PASS (i.e. €8,104.80 in 2019, the amount of the annual PASS 2019 being €40,524). As such, the threshold for tax liability has doubled.

    The PUMA tax base, however, has been reduced by a rebate equal to 50% of the PASS (€20,262 in 2019) and will now be capped at eight times the PASS (€324,192 in 2019).

    The new PUMA tax rate has been set at 6.5%.

    A linear reduction mechanism for this rate has also been put in place. The rate decreases in proportion to earned income and becomes zero when the liability threshold is reached.

    To date, although the number of taxpayers subject to the PUMA tax has increased, both the base and the tax rate of this contribution have been reduced.

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    A new episode of protecting the famous red sole in China prompted us to consider this subject.

    In China and for the first time in this country, it could be conceded that a color affixed to a specific area could constitute a trademark.

    On February 3, 2010, the luxury shoe brand Christian Louboutin filed an international trademark application to protect, particularly in China, “the red color (Pantone No. 18.1663TP) applicable to the sole of the shoe”.

    After several rejections of Louboutin’s application by the Chinese courts, on the grounds that the trademark in question was devoid of any distinctive character, the case was brought before the Second Instance. It was then recognized that such a sign could constitute a trademark. However, this decision, which demonstrates a certain flexibility on the part of the Chinese trademark courts, remains provisional. The case must again be brought before the Chinese Trademark Review and Arbitration Committee, and the validity of Louboutin’s design trademark could still be called into question.

    But what does French law provide in this regard? While in theory it is not excluded to file a color as a trademark, cases of granting registration are rare.

    Article L711-1 of the Intellectual Property Code defines “a trademark or service mark” as “a sign capable of being represented graphically to distinguish the goods or services of a natural or legal person. Such signs […] can be established through the layout, combinations or shades of color“.

    Like any trademark, such a sign must be distinctive, i.e., allow a consumer to identify the commercial origin of the designated products/services in relation to their competitors’ products/services. However, a color is rarely perceived as a distinctive element, and it generally acquires its distinctiveness through use. In other words, because of its widespread use, a consumer will immediately associate the color with the entity behind the trademark. This is the case for Milka‘s lilac color, Hermes‘ orange or Tiffany‘s aqua blue, which are now registered, known and recognized trademarks.

    In addition, such a sign should be identifiable through a clear and precise graphic design. This condition cannot be met by simply reproducing the color on paper; the color shade must be clearly identified and specific using an internationally recognized color code, such as Pantone.

    Recent case law points out that trademarks consisting of a color do not easily meet these two conditions. However, this does not mean that they will be totally unprotected.

    Some colors are part of the visual identity of companies but do not benefit from brand status. However, in the event that a competitor adopts the same colors in order to mislead the public, the company may benefit from protection claimed on the basis of unfair competition.

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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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    After examining a taxpayer’s personal tax situation, the tax administration considered that the transfer of securities at a derisory price, made between members of the same family, constituted a disguised gift.

    For that purpose, the Court implemented proceedings for abuse of process in order for the transfers disguised as gifts to be reclassified and to apply the transfer tax on gifts and the corresponding penalties.

    For the Committee on tax law abuse, called on for the case, the operation revealed, contrary to what the tax administration claimed, an indirect gift and not a disguised gift.

    In a March 18, 2019 decision, the Paris Court of Appeal ended up following the reasoning of the tax administration by qualifying the operation at issue as a disguised gift.

    First of all, the Court indicated that “a disguised gift is one that is done under the guise of a contract in return for payment. Although from a legal point of view, the operation is legitimate, the administration has the right to establish the genuine nature of the deed. Among the circumstances making it possible to characterize a disguised gift is the stipulation of a derisory price.

    The Court then considered that “evaluating the securities at a symbolic value, unrelated to the real value of the property, which actually corresponds to a sale at an unusually low price, establishes the gratuitous nature of the agreements and the absence of any counterpart to the deed.

    Although, in this instance, it was an exaggerated case of abuse of process, given the fictional nature of the deed, this legal precedent and the creation of a “mini abuse of tax law” by the most recent Finance law remind taxpayers of the special attention paid by the tax administration to operations of asset restructuring, as well as the necessity for those taxpayers to seek tax advice prior to any restructuring, allowing them to structure their operations as best as possible.

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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.

© Schmidt Brunet Litzler