On 14 March 2023, the Italian Supreme Court issued its decision No. 7378/2023 (Chantecler S.p.A. v Gens Aurea S.p.A.) on selective distribution systems and trademark exhaustion. The Italian Supreme Court recalled that selective distribution systems may exclude trademark exhaustion, insofar as they are implemented to protect luxury trademarks and are compliant with EU competition law (including Commission Regulation (EU) 2022/720 of 10 May 2022 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices). The Italian Supreme Court stated that it is up to trademark owners to prove the existence of a valid selective distribution system. This includes the burden of demonstrating that the members of such systems are selected on the basis of – and are compliant with – objective criteria set forth in the relevant selective distribution agreements. Accordingly, the Supreme Court confirmed the conclusion of the appealed decision, where the Court of Appeal of Milan found that twenty-five out of ninety-nine members did not comply with the location requirements imposed by the trademark owner.
Originally published by April, 2023
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