Counterfeit Goods and the Seller's Implied Warranties in France

Is a seller obliged to warrant that goods are not counterfeit?

French law contains no explicit provision obliging a seller to warrant that the goods sold do not infringe the intellectual property rights of a third party. There is no article that says, in so many words, "the seller guarantees the goods are not counterfeit". And yet a buyer who discovers that what they bought infringes someone else's trademark, patent or design is far from remediless. The protection comes from two directions, one domestic and one international.

In a domestic sale governed by French law, case law infers the warranty from Article 1626 of the Civil Code, which obliges a seller to warrant the purchaser against dispossession of the goods bought — the garantie d'éviction, or warranty against eviction. In a contract for the international sale of goods, the warranty is provided expressly by Article 42 of the Vienna Convention — the United Nations Convention on Contracts for the International Sale of Goods (CISG) — in relation to third-party industrial and intellectual property rights.

The implied warranty under Article 1626 of the Civil Code

Article 1626 of the Civil Code provides that, even where the contract says nothing about it, the seller owes a warranty against eviction as a matter of law:

"Although no stipulation as to warranty has been made at the time of the sale, the seller is obliged as of right to warrant the purchaser against a dispossession of the thing sold which he may suffer in whole or in part, or against encumbrances alleged on that thing, and not declared at the time of the sale."

This warranty against eviction is one of the seller's core, automatic obligations under French sales law. It guarantees the buyer's peaceful possession and enjoyment of the thing sold: the seller must not itself disturb that enjoyment, and must protect the buyer against a disturbance — a trouble — coming from a third party who asserts a right over the goods. It is the same broad guarantee that surfaces across French commercial law whenever a buyer's or distributor's peaceful use of goods is threatened; here it is applied to the specific case of counterfeit.

Counterfeit as a form of dispossession

Where goods turn out to be counterfeit, the true holder of the infringed intellectual property right can act against the buyer to stop the sale, seize the goods, or have them destroyed. The buyer is, in substance, dispossessed of what it bought. French case law has drawn the logical conclusion: the warranty against dispossession provided for by Article 1626 also applies when the dispossession is due to the counterfeit character of the goods sold (Cour de cassation, 13 March 2008). The buyer of counterfeit goods can therefore turn against its own seller on the footing of Article 1626.

The limit: a buyer who knew the risk

The warranty is not unconditional. It does not apply if the buyer was aware of the risk of dispossession at the time of the sale. A buyer who bought with eyes open — knowing the goods might be infringing — cannot later invoke the guarantee to escape the consequences of that choice. The real question, then, is how a court decides whether the buyer knew.

The "professional purchaser" question — and the 2008 shift

For a time, French courts answered that question by looking at the buyer's status. To hold that a buyer could not have been unaware of the counterfeit character of the goods — and so should be denied the Article 1626 warranty — courts relied on the fact that the buyer was a professional purchaser (acheteur professionnel), that is, someone carrying on trade in the same field. Being in the business was treated, in effect, as knowing.

That approach appears to have been overruled by the decision of the Cour de cassation of 13 March 2008. There, the Court ruled that, in the absence of any proof that a buyer had effective knowledge of the counterfeit character of the goods, a court of appeal may not rely on the sole fact that the buyer was a professional purchaser to relieve the seller of its warranty against dispossession.

The express warranty under Article 42 of the Vienna Convention (CISG)

Where the sale is international, the position is set out expressly. The Vienna Convention — the United Nations Convention on Contracts for the International Sale of Goods (CISG), adopted at Vienna on 11 April 1980, to which France is a party — provides for a seller's implied warranty that the goods sold do not infringe the intellectual property rights of third parties.

When the Convention applies

Under its sphere-of-application rules, the Convention applies to contracts of sale of goods between parties whose places of business are in different States:

• when those States are Contracting States; or
• when the rules of private international law lead to the application of the law of a Contracting State.

Because France is a Contracting State, a sale by a French seller to a buyer established in another country will frequently fall within the Convention — either directly, or because the applicable-law rules point to French law.

What Article 42 requires

The seller's obligation to guarantee that the goods do not infringe third-party intellectual property is set out in Article 42 of the Convention:

"(1) The seller must deliver goods which are free from any right or claim of a third party based on industrial property or other intellectual property, of which at the time of the conclusion of the contract the seller knew or could not have been unaware, provided that the right or claim is based on industrial property or other intellectual property: (a) under the law of the State where the goods will be resold or otherwise used, if it was contemplated by the parties at the time of the conclusion of the contract that the goods would be resold or otherwise used in that State; or (b) in any other case, under the law of the State where the buyer has his place of business.

(2) The obligation of the seller under the preceding paragraph does not extend to cases where: (a) at the time of the conclusion of the contract the buyer knew or could not have been unaware of the right or claim; or (b) the right or claim results from the seller's compliance with technical drawings, designs, formulae or other such specifications furnished by the buyer."

Two consequences follow. First, a seller of goods located in France is bound by an implied warranty that the goods do not infringe third-party intellectual property rights in the jurisdiction where the buyer has its place of business — and, if the seller knew that the goods were to be resold in other countries, in those other countries too. The territorial reach of the warranty tracks where the goods were expected to end up.

Second, the seller is relieved of the warranty where the buyer knew or could not have been unaware of the third party's right or claim, and also where the infringement results from the seller's compliance with technical drawings, designs, formulae or other specifications furnished by the buyer. A buyer who dictates the very specifications that cause the infringement cannot then hold the seller to the warranty.

The professional purchaser under Article 42 — and the same 2008 question

The professional-purchaser reasoning has surfaced under the Convention as well. In a decision of 19 March 2002, the Cour de cassation held that a company that had bought counterfeit goods could not have ignored, in its capacity as a professional purchaser (acheteur professionnel), that the goods were counterfeit, and could consequently not rely on the warranty set out in Article 42(2)(a) of the Vienna Convention. It may be argued, however, that this 2002 decision was overruled by the Cour de cassation's decision of 13 March 2008 — the same decision that reshaped the analysis under Article 1626 — so that professional status alone should no longer be enough, under either regime, to impute knowledge to the buyer.

Article 1626 and Article 42 CISG compared

The two routes protect the same interest — a buyer who has unwittingly acquired infringing goods — but they differ in source, scope and the knowledge test they apply. The table sets the essentials side by side.

Why the "professional purchaser" point matters so much

In counterfeit disputes, the parties rarely argue about whether the goods were infringing — that is usually established by the third-party rights holder's action. The fight is about knowledge: could the buyer invoke the warranty, or had it forfeited it by knowing (or being taken to know) what it was buying? That single question decides who bears the loss of the counterfeit.

Before 2008, a seller sued on the warranty had an easy argument to run against a trade buyer: you are a professional in this field, so you could not have been unaware the goods were fake. If accepted, that reasoning transferred the loss back to the buyer without any proof of what the buyer actually knew. The 13 March 2008 decision closed that shortcut for Article 1626: professional status is a circumstance, not a substitute for proof, and the seller must now establish the buyer's effective knowledge to be released.

Under Article 42 CISG the text itself sets a different bar — "knew or could not have been unaware" — which is more forgiving to the seller because it admits constructive knowledge. But even there, the same 2002/2008 tension applies: the argument that a professional buyer must be taken to have known, simply because of its trade, is exactly the shortcut the 2008 decision calls into question.

What this means in practice — for sellers and buyers

The two warranties allocate the risk of counterfeit between seller and buyer, and both sides can plan around them.

How our French lawyers can help

Counterfeit disputes put a seller and a buyer on opposite sides of the same loss, and the outcome turns on fine questions of applicable regime, territorial scope and proof of knowledge. Our French business lawyers advise sellers on allocating and limiting IP-infringement risk in their contracts and supply chains, and advise buyers who have been dispossessed of counterfeit goods on recovering from their seller under Article 1626 or Article 42 CISG. We work in English with clients selling into and out of France.

This article is general information on French law, current at the date shown. It is not legal advice and does not create a lawyer-client relationship. Whether the Article 1626 warranty or Article 42 of the Vienna Convention applies, and how the buyer's knowledge is assessed, depends on the facts of each sale and the applicable law. For advice on your situation, consult a lawyer qualified in France.