Chanel subsequently sued Caud for trade mark infringement, objecting that its luxury goods were (i) being marketed in a self-service discount store, (ii) displayed in a shed located on a trading estate, (iii) sold with damaged packaging caused by excessive and careless handling and (iv) advertised by poor quality posters advertising a 30% discount.

The French trial court stated that the conditions in which the goods were sold were detrimental to Chanel's reputation. and that infringement had accordingly taken place.  This decision has since been upheld on two further appeals.

Source: "Sale of luxury products in poor condition constitutes trademark infringement" by Xavier Buffet Delmas and Laura Morelli (Hogan Lovells), on International Law Office here.