Can a supplier control the prices at which its distributor resells its products? If not, how will these restrictions be enforced? As a general rule, suppliers would seek to protect their intellectual property (IP) rights from intellectual property rights (IPR) violations by the explicit conditions and protection provided by the distribution agreement. The typical provisions used to protect the type of intellectual property from such an infringement are: selective distribution is the case where the supplier designates a distributor under a “selective distribution system” in which it appoints additional distributors only if they meet certain criteria. It is a unique system specifically used to allow the supplier to retain control of its distribution network, particularly with regard to quality control, while working with EU and UK competition rules. Selective distribution agreements are often used by luxury brands to ensure the maintenance of the quality of the product and the commercial will of the brand. Some of the rules for distribution agreements differ with respect to the application of a selective distribution model. How can a supplier protect its intellectual property from violations by its distributors and third parties? Are technology transfer agreements common? A list of the main provisions that are usually, but not always, contained in the distribution agreements: the distribution contract sometimes contains provisions regarding the price to be paid by the distributor when ordering the goods. The distribution agreement may relate to a specific price or a price-fixing criterion. It may stipulate that the merchant must pay the customer`s most preferred price. Confidentiality agreements or clauses between companies clearly operating at different levels of negotiation, such as suppliers, distributors or representatives, are likely to benefit more from the exemption available under the VRBE. A supplier can also prevent a distributor from selling to consumers, leaving wholesale and retail levels separate.
However, it cannot agree otherwise with a trader that he should not treat certain customers. There are “soft measures” that can be taken by suppliers to show distributors the benefits of focusing on their assigned customers or on the territory. However, such measures should not be an agreement and traders should not be penalized for it. Seemingly unilateral actions can be considered consensual. Once the supplier has a selective distribution system or network in place, it can prevent its distributors or distributors from selling to resellers who are not members of that network. The prohibition on the supply of discount outlets would be considered an interference with pricing policy, unless the ban was imposed as part of the protection of the charm and prestigious image of a brand or brand in a selective distribution system (which gives products a luxury aura) and the discounts include a violation of a trademark licence (Copad SA v Christian Dior, C-59/08).