The foundation of the modern fragrance industry can be traced to fragrance producers established in the south of France during the sixteenth century, even though the world had already been privy to the trade and production of fragrances from as long as the Mesopotamian civilization.

For centuries fragrance manufacturers found themselves located near their growers in order to quickly obtain their resources. By the nineteenth century, many of these essences were shipped to Paris to be purchased by hundreds of small perfume houses, which mixed and sold their compounds in branded retail products like fine fragrances, soaps and cosmetics.

Throughout the nineteenth century, the fragrance industry was mostly constituted of family enterprises with small staff, often comprising related individuals who spent their entire careers in the same firm. This made it very easy to maintain proprietary information about distillation techniques, the composition of signature fragrances and other elements of the production process.

However, during the twentieth century, the radical increase in the price of land, led to overseas outsourcing of the manufacturing processes to countries like India and Algeria where land and labour is inexpensive. Accordingly, the smaller perfumeries disappeared and were replaced by larger companies and corporations. This change endangered the most valuable asset of the fragrance houses i.e. formulas and chemical compositions to their secret signature scents, which could be easily obtained, copied and shared by employees with access to the relevant information.

For centuries many industries have struggled to maintain confidentiality and Chartreuse liquer, and Meissen porcelain manufacturers, for instance, effectively confronted such provocations. Since the 17th century, monks of the Chartreuse Order have produced Chartreuse. In 1903 when the french government appropriated the order’s monastery, exiling the monks and selling their distillery along with Chartreuse trademark to private investors, they failed to recreate the complex formula of the monks, who had wiped away every single trace of their secret recipe on expulsion from France. Today, the Order has re-established itself in France owing to their secret recipe maintained for centuries, due to avoidance of verbal communication and extremely limited transfer of proprietary information.

Yep, these monks make a vow of silence for life and only two monks know the formula for Chartreuse at any time.

Messien porcelain on the other hand were not so fortunate. The inventor Johann Böttiger, an alchemist who discovered how to make porcelain, relocated his shop to avoid the prying eyes but was given away by his disloyal staff. Although cheated, the brand continues as Messien Couture and deals with a range of luxury goods as manufacturer and retailer. The diversification allowed the brand to survive and even continue to retain and capture its customer base. The brand is known for its logo of crossed swords which has been carried on since the 1720s.

While smart, the fragrance industry can’t really expect its employees to take a vow of silence, moreover with technological development which enables reverse engineering and stringent governments imposing disclosure regulations, the industry seems to have grown more and more vulnerable to discovery.

THEN HOW MAY THIS INDUSTRY SURVIVE & STILL MANAGE TO COMPETE WITHIN ITSELF?

In the United States, it is legally permissible to acquire trade secrets via reverse engineering, as it prevents the possibility of trade secret law being manipulated into protecting monopolies and their innovations, a right under the exclusive purview of federal patent law, as established in the case of Chicago Lock Co. versus Fanberg. Although unauthorised use of information acquired by the method of reverse engineering can be restricted by federal legislation to that effect.

The European Union has also taken a liberal approach when it comes to trade secrets and reverse engineering, however it may be contradictory to the domestic laws of countries such as Italy wherein, trade secrets are recognised as a separate form of intellectual property.

While some essences are still deemed luxury, owing to their esteemed branding and sky-high pricing, the fragrance industry has trickled down to the consumer market, making it extremely difficult for the employers to protect their formulas and compositions and the legal field is filled with lawsuits of claims of misappropriation made by former employers of perfumers and flavorists who joined competing firms.

The tragedy faced by Givaudan is a great example of the possible reasons why fragrance industries can’t rely much on trade secrets. In 2013 Givaudan Fragrances Corp. sued its employee Krivda (vice-president) (D.N.J. Oct. 25,2013) for misappropriating 600 of its proprietary formulas and selling it to Mane a director competitor, when he switched jobs.

At the trial, Givaudan provided detailed evidence Mane capitalising 34 of the formulas which were misappropriated. However, faced a dilemma as in order to establish a meaningful claim of trade secret misappropriation, an owner must convey information about the secret both to the court and to the defendant. Once the information is voluntarily disclosed it is no longer protectable as a trade secret, as it has already been compromised. This inability cost heavily to Givaudan as the trial could only proceed in relation to restricted information and in 2014, Krivda and Mane were exonerated of all liability by a federal district court jury.

The thing that however, impacted this corporation the most was the fact that Mane had obtained all the information without incurring the cost of reverse engineering (which would have been a legally permissible method) and within the estimated market viability window of the product, due to lack of time lag incurred in the reverse engineering and development of the competing product.

Reverse engineering technologies have also pushed forward the “dupe industry” which replicates luxury scents and makes them available at cheaper rates, for example Pirate Parfum, ZARA, Avon, Eau De Toilette and many more.

Another very important example of this can beLVMH’s fragrance compounding facility outside Paris, which produces supplies of its most popular scents, i.e. “Miss Dior Chérie”, “Dior Homme”, and “Kenzo Flowers”, which were earlier supplied by Givaudan, Firmenich and IFF, after these companies had developed the respective formulas. While LVMH claimed that there were subtle modifications in these blends, it could be very well presumed that this was merely a tacit way to avoid contractual or legal obligations.

This spells trouble for the fragrance houses, as LVMH is a major client in the fragrance industry owing to its brands such as Givenchy and Dior, continually commissioning the development of new products that capitalise on their deep R&D expertise. These companies could contractually preclude clients such as LVMH from certain uses of newly developed formulas, or from obtaining supplies of certain fragrance compounds from other sources. Such terms, however, would be difficult to negotiate in light of the bargaining advantage that analytic technologies now provide to these industry clients.

HOW TO FACTOR IN OTHER INTELLECTUAL PROPERTY IN THE FRAGRANCE INDUSTRY ?

PATENTS

Patent laws provide patent holders all over the world with a twenty-year window to monopolise, manufacture, use, and sell their inventions. These patents also provide a sweeping protection against unauthorised use of reverse engineering. But the dilemma of full disclosure continues to remain a problem.

Another issue with the patent marks lies in the fact that the fragrance industry aims to market pure luxury and exclusivity to its fine fragrances which leaves less of a scope for utility. Moreover, it is pertinent to note that the market viability of a high end product lasts way beyond twenty years, and in fact in some cases longevity in the market makes these fragrances more valuable.

And even though the fragrance industry does not primarily rely on patents to protect the formulas used to produce fragrances there have been thousands of applications in the US covering perfume compositions based on the product’s useful capacity to supplant noxious odours or – more dubitably – to promote physical and mental health.

COPYRIGHTS

Copyright registration compared to a patent is much easier to acquire because the registering author must simply claim that his work is more than de minimus original expression.

Copyrights are easier to obtain and provide lengthy terms of protection and in that sense appear to be an attractive means of protection for the fragrance industry. Fragrances are ultimately converted into visual symbols comprising a formula which can be copyrighted. But copyrights don’t provide the desired protection against the danger of reverse engineering, it can assist in perhaps curbing infringement till a certain limit. It allows for the scope of “fair use” and hence

Copyright allows perfumers to protect their fragrance formulas in the role of an author or an artist creating original aesthetic work. But is is not possible in each case.

A classic representation of this legal position is the 1970’s case between the French fragrance manufacturer De Laire and the couture house Rochas. The two firms got into an agreement. According to the terms of the agreement the fragrance manufacturer agreed to divulge the formulas of his fragrances to the couture house in exchange for the latter’s promise to purchase from the fragrance house all concentrates of any new fragrances that the fashion house chose to add to its perfume line. However, after providing the couture house with the formula for one or two perfumes, but subsequently receiving no orders to produce them, the fragrance manufacturer claimed copyright infringement which was denied by the court, stating that perfumes are practical works and therefore eligible only for patent protection. Furthermore, since perfumes are not tractable to meaningful and consistent description by those who perceive them,they cannot be considered copyrightable works of intellect”.

However, this viewpoint was somewhat flipped in the decision of Mugler versus Monilard in 2001, where it was held that the perfume Angel by Thierry manufactured by Mugler was not merely a work of technical skill but also an original work eligible for copyright.

In 2006, the French Court decided that perfumes like L’Oreal, Prestige, Parfums Cacharel, Parfums Ralph Lauren and Parfums Guy Laroche could also be registered under the copyright law. A similar mindset was also echoed by the Dutch Courts.

It was however also the first time that “smell-alikes” or “dupes” came into existence. The case dealt with Jean-Paul Gaultier’s perfume Le Mâle and its dupes. Gaultier’s perfume manufacturer, Beauté Prestige International, sued a competitor, Senteur Mazal for infringing the copyrights and trademarks of Gaultier’s perfumes by which it marketed “smell-alikes” sold at prices much lower than those of the Gaultier products. The court favoured the plaintiff on the basis of the previous decisions.

The Dutch and the French point of view emphasised the role of the perfume creator. It was found that a perfume could reveal the personality of its creator and therefore was an original work eligible for protection under the copyright law. It did not entertain the issue of what constitutes the “revelation” of a work.

However in 2013 the French courts determined unequivocally that fragrance was not a copyrightable expression in the case of Société Lancôme v. Patrice Farque. In this decision the court separated the act of creating the fragrance and the act of perceiving the fragrance. The court held that while the development of a perfume may involve certain creative intellection beyond the technical know how of its production the concept of its originality cannot be broadly communicated because it cannot be sufficiently perceived.

TRADEMARKS (TRADE DRESS)

Worldwide domestic laws have been giving a wider berth to non-traditional trademarks, however these aren’t exactly consistent with each other. International conventions like the TRIPS agreement and the European Union Trademark Directives don’t expressly permit or prohibit Trademark protection for fragrances however International courts and national laws have made it difficult or impossible to register them.

For example in France and Germany, National laws prohibit scent marks by limiting protection to marks that can be visually represented.

However, this does not mean that there exist no scent marks. The first scent mark in the United States was registered in 1991 for a floral scent used to brand sewing thread which denoted that “the scent of a product may be registered if it is used in a non-functional manner.”

Marketers have been using fragrances as a part of selling experiences and lifestyles to create an overall luxurious environment and a multi-sensory trade dress for their customers to relate their products with.

Gradually, fragrances became a part of the trade dress since it was clear that copyright and patents won’t be able to provide the appropriate degree of protection needed.

With very little intellectual property protection in place, fragrance producers have little control over the use of their products but Trademark protection can offer an untapped customary benefit, at least in the U.S. by virtue of the Lanham Act.

According to the Lanham Act, a fragrance manufacturer may be able to assert the claim of unfair competition or “passing off”, in case of unauthorised use of its fragrance, claiming that “marking” the air with the well-known perfume was attempting to lead consumers to believe that there is a legitimate association between the infringer and the fragrance manufacturer.

PROTECTION BEYOND THE SCENT : CHANEL

The protection of fragrances is not only limited to their scent but also their packaging, casing or bottles.

Many luxury fragrance manufacturers have been taking legal measures to protect the designs of their perfume bottles under the trademark law.

Recently Chanel Limited, the French luxury brand tried to register the shape of its bottle “No.5” Fragrance as a registered trademark in the US. the brand claimed that it had been suffering huge losses not only it’s goodwill but also financially because of continuous counterfeiting of the perfume bottle.

Under the Lanham Act, Both registered and unregistered trademarks are protectable, however registered trademarks enjoy few more layers of protection. The trademarks not only enjoy nationwide protection but it is also presumed that the registered Trademark is valid, applicant of the trademark is true and Bonafide owner and finally, that the trademark is in continuous use and cannot be claimed by infringers even on the basis of lack of information about the registration of the mark. Furthermore the owner of the registered trademark can also claim punitive damages three times more than Normal amount.

The brand submitted to separate applications for its No. 5 perfume bottle. The first application claimed the number “5” word mark and the second application claimed the rectangular shaped container with bevelled sides, a thinner neck and on top horizontal rectangular faceted shape mark.

However the US Trademark registry has objected to the design Trademark application on the grounds of non distinctiveness. The registry supported its action by stating that the mark applied for is not inherently distinctive and the shape of the perfume bottle is very basic in nature and common in the cosmetics, fragrance and perfume industry. The specimen device mark submitted by Chanel only had one difference namely, the horizontal rectangular faceted bottle stopper which in the view of the registry was not distinctive enough. The application with word mark “5” is past the preliminary stage and has been published for opposition.

The brand has also applied for registration of the mark “No. 5 Chanel” and “Chanel No.5” in India and the same was registered on 15th of January, 2023.

Chanel also engaged in a legal suit in China against Yiwu Ai Zhi Yu Cosmetics, which created N°9 Flower of Story perfume that was highly similar to the distinct trade dress of the CHANEL N°5 classic perfume bottle.

In a first instance Trial Court hearing back in 2020, legal counsel acting for Chanel Wanhuida Intellectual Property, relying largely on Article 6 (1) of the Anti-Unfair Competition Law in China, proved that the defendant company Ai Zhi Yu acts amounted to unfair competition.

The main basis for determining whether the packaging and decoration of the product constitute a certain influence is first, whether the product has a certain market reputation in China and is known to the relevant public; and second, whether the packaging and decoration of the product have distinctive features that distinguish the source of the product.

Despite arguments from the defendant that the Chanel N°5 bottle was not ‘distinctive’ nor ‘original’. In a hearing judgement in 2020 – Chanel was able to prove that:

• Through continuous, large-scale, and extensive sales and promotion of its perfume products in mainland China, the Chanel N°5 classic perfume bottle and packaging have gained a high reputation and reputation in the industry and among Chinese consumers, and the bottle and packaging serve as a key source identifier of the perfume.’
• The layout and design of the Chanel N°5 bottle shape, as well as the colour of the characters on the front label, are distinctive, and the arrangements of the trade dress of the infringing N°9 product were highly similar to the Chanel N°5 product, which was likely to ‘confuse and mislead’ consumers.

Other perfume companies such as Dior have also been taking measures to protect the exclusivity of its fragrances. Recently, it filed an international application with the WIPO to obtain the registration of the shape of its famous “J’adore” perfume bottle and gained tremendous success.