by Rodrigo Borges Carneiro
September 01, 2003
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In a recent unanimous decision (judgment occurred on April 04, 2003) the third panel of the Superior Court of Justice awarded patrimonial damages to the producer of luxury goods of the well-known mark "LOUIS VUITTON" and its local distributor, as a result of dilution of the value of the mark perceived by consumers, due to sales of counterfeited products for a small percentage of the price of the original product.
The decision of Special Appeal n° 466761 originated from an action, filed in 1998 by Louis Vuitton and its local distributor against a company called Caliente Comércio de Modas, established in a famous shopping mall in the city of Rio de Janeiro.
The reporter judge Justice Nancy Andrighi highlighted that the consumer of luxury goods agrees to pay a high price due to the promise of exclusivity and quality. In these circumstances, the counterfeiting generates an immediate patrimonial damage, since it vulgarizes the mark in the consumer’s eye, and consequently dilutes the value of the mark, affecting sales of the original product.
Justice Nancy Andrighi’s decision represents an evolution of the traditional jurisprudence which required evidence of actual damage, an element always difficult to prove.
The Panel has also granted an award for moral damages cumulatively with patrimonial damages, based on the notion that sales of counterfeited products will reflect on the reputation established by the mark on the market.
Awards of moral damages to legal entities in cases involving the dilution of the reputation of a mark will tend to become more common as a reflection of similar decisions, including the abstract of the Superior Court of Justice n° 227 (Legal entities can bear moral damages), and the interpretation of the new Civil Code, law n° 10.406/2002, which extended to legal entities the protection of personal rights, usually limited to natural persons, and among them, the protection of one’s reputation, name and image.