CAMPBELL & THISELTON/PCI CLAIM AGAINST PERFUMANIA'S SALE OF BOUCHERON

CAMPBELL & THISELTON/PCI CLAIM AGAINST PERFUMANIA'S SALE OF BOUCHERON fragrances in the U.S. centers on interpretation of patent law. The U.S. District Court for the Southern District of New York currently is considering a suit filed by Campbell & Thiselton, the exclusive distributor of Boucheron scents in the U.S., and PCI Parfums et Cosmetiques International, the French licensor of the products, charging that Perfumania's sale of Boucheron fragrances infringes patents held by PCI.

The suit appears to be the first attempt by a U.S. fragrance marketer to use patent law to stem the sale of diverted products.

Givenchy successfully used copyright law as a basis to obtain permanent injunctions barring Drug Emporium and C&C Beauty Sales from selling the Amarige women's scent in the U.S. ("The Rose Sheet" Sept. 20, 1993, p. 3). An appeal by Drug Emporium is pending. Trademark law also has been used as the basis for cosmetic diversion suits but with limited success.

Campbell & Thiselton and PCI filed the suit against Perfumania Dec. 30, 1993. Perfumania filed a motion to dismiss the suit Feb. 23, and the plaintiffs filed an opposition to the motion to dismiss March 31.

The complaint focuses on a section of U.S. patent law that states, "whoever without authority makes, uses or sells any patented invention, within the United States during the term of the patent therefore, infringes the patent." PCI was granted three U.S. patents for various Boucheron bottles in September 1992 and holds a fourth patent issued to Alain Boucheron in October 1992. The complaint alleges that Perfumania has no authority to sell the Boucheron products and that the discount retailer is engaged in a willful act of infringement.

The plaintiffs request that Perfumania be permanently enjoined from further infringing its patents. They also are seeking treble damages, Perfumania's profits from the sale of the patented products and attorney's fees, interest and costs.

In its memo supporting the motion to dismiss, Perfumania asserted that the U.S. patent law's "first sale doctrine prohibits [the plaintiffs] from controlling distribution embodying their patent after the first sale."

The retailed maintained that under the first sale doctrine, "when the patentee, or the person having his rights, sells a machine or instrument whose sole value is in its use, he receives a consideration for its use and he parts with the right to restrict that use." Perfumania also asked the court to dismiss the suit because "a licensee does not having standing to bring a patent infringement action."

In an affidavit accompanying the memorandum, Perfumania VP Jerome Falic, who oversees purchasing and merchandising, noted: "Perfumania has regularly purchased and sold Boucheron fragrances. The merchandise in Perfumania's inventory has been purchased from domestic suppliers and is being sold through Perfumania's retail stores."

In their March 31 brief, Campbell & Thiselton and PCI respond that "there is no exhaustion of patent rights arising through Perfumania's purchase of Boucheron fragrance products in the patented bottle designs from unauthorized sources in the United States." The plaintiffs continue, "The exhaustion rule only applies where the sale is one which the seller had the authority to make in this country."

The plaintiffs' argument hinges on the fact that they believe the products sold by Perfumania are being imported from overseas by the unidentified domestic suppliers. Therefore, the first sale doctrine does not apply, they argue, because the importers did not have the authority required under the patent law to make the first sale in the U.S. Campbell & Thiselton commented that it does not believe that any of the products sold by Perfumania are products first sold domestically by Campbell & Thiselton to its authorized retailers and then later diverted.

The plaintiffs conclude, "A decision for Perfumania would give it a free ride on the exclusive licensee that has invested heavily in advertising and promoting a patented product within its territory and would debase the image it has carefully crafted." Campbell & Thiselton noted that it has spent about $17 mil. since 1989 to advertise and promote Boucheron products. As of March 18, Campbell & Thiselton's sales of Boucheron fragrances sold in the patented bottles were approximately $22 mil.