In a guest post for Class 46, Alice Fratti discusses a recent case that illustrates how law and marketing can protect brand value and the customer experience for everyone enjoying the allure of luxury:

A recent decision by the Court of Milan’s illustrates how the control of distribution channels is crucial in preserving the prestige of luxury goods. The ruling reinforces the importance for brand owners of protecting selective distribution, and for retailers it serves as a warning that cutting corners on brand presentation can potentially have serious legal and reputational consequences.

We are reminded by this case that luxury is crucially about experience, not just products. It is about the presentation of a product and the story that unfolds throughout the customer’s retail experience. Selective distribution is therefore much more than a legal safeguard; it is an essential component of luxury brand management.

The case

In an order dated 3 March 2025 which was confirmed on appeal on 9 June 2025, the IP Chamber within the Court of Milan ruled in favour of Chanel against the companies operating Acqua & Sapone, a leading Italian retail chain in the mass-market sector, which is engaged in the sale and distribution of personal care, beauty, hygiene, and household cleaning products.

Acqua & Sapone manages a widespread network of retail outlets throughout Italy, offering branded consumer goods to the general public at competitive prices.

The evidence presented in the case showed that the products were sold in a mass-market environment, within the same premises where a wide variety of goods from different product categories – none possessing any aura of luxury – were also sold, even if displayed in separate areas within the store. In particular, the products were kept in drawers rather than displayed on shelves.

The Court upheld Chanel’s request and prohibited the sale and advertising of Chanel perfumes outside the authorised selective distribution network. The Court found that the specific sales methods adopted by Acqua & Sapone impaired the brand’s aura of luxury, thereby justifying a derogation from the principle of trade mark exhaustion.

General principles of selective distribution

Chanel’s commercial strategy, similar to other luxury brands, is based on an accurate system of selective distribution. Article 1(g) of Regulation (EU) 720/2022 (VBER) defines selective distribution as a system in which the supplier agrees to sell goods or services only to distributors selected on the basis of specified criteria, and such distributors agree not to sell those goods or services to unauthorised resellers.

This system ensures not only quality and professionalism in the sales process but also a shopping experience aligned with consumer expectations. The Court of Justice of the European Union (CJEU) has repeatedly emphasised, most notably in the Coty case (Case C-230/16), that the quality of luxury goods derives not only from their material characteristics but also from the prestige and aura of exclusivity that surround them, from the experience of product selection to the particular packaging at the end of the customer’s sale.

Trade mark exhaustion and its exceptions

The Chanel case directly touches upon the principle of trade mark exhaustion. Article 5(1) of the Italian Industrial Property Code (c.p.i.) provides that the trade mark owner cannot oppose the further commercialisation of a product once it has been placed on the market within the European Economic Area by the owner or with their consent. However, Article 5(2) introduces an exception: the owner may object to further commercialisation if legitimate reasons exist.

Jurisprudence and legal doctrine confirm that selling luxury products outside the authorised network, in conditions detrimental to the brand’s image, represents precisely such a scenario. However, recognition of this exception requires a precise and specific assessment of the sales methods adopted by the unauthorised reseller, with the need to demonstrate that these practices harm the prestige and exclusivity of luxury products.

Final considerations

The Chanel litigation demonstrates how law and marketing intersect in the defence of luxury goods. Selective distribution is not merely a legal instrument; it is an essential component of the brand’s consistency in the market space and one that is worth protecting.

Alice is counsel at Trevisan & Cuonzo in Italy, which represented Chanel in this case and is a member of MARQUES