French Court awards Substantial Damages to CEP Horphag Violated Agreements and Misappropriated the Pycnogenol Trademark in Bad Faith - Brief Article

Townsend Letter for Doctors and Patients, April, 2002

The Court of Appeals in Bordeaux, France, has found that Horphag Research Ltd. of Guernsey acted in bad faith when, starting in 1990, it unfairly usurped the rights of the French company Centre d'Experimentation Pycnogenol (CEP), the original and principal supplier of the authentic French Pycnogenol extracts. Horphag falsely misrepresented itself as the manufacturer of CEP's Pycnogenol and failed to carry out in good faith its contractual obligations vis a vis CEP, according to a final decision made by the Bordeaux Court of Appeals on June 26, 2001.

Since 1969, CEP has been the origin of Professor Jack Masquelier's Pycnogeaol. During the early 1990s, CEP transferred its Pycnogenol business to International Nutrition Company (INC), which now is the worldwide supplier of the authentic French Pycnogenol extracts.

The Bordeaux Court also decided that Horphag's registration of the Pycnogenol trademark in the USA was obtained in bad faith, because the American trademark application was filed behind CEP's back. Hiding its American application from CEP, Horphag defrauded CEP of the rights it had per its contract with Horphag. The Court noted that CEP acted correctly and in good faith during the period when Horphag usurped CEP's position. The Court specifically stated that the cause of the many legal conflicts that arose after 1990 is to be found solely in Horphag's attempts to unfairly appropriate CEP's Pycnogenol product and trademark.

The recent French decision gives full credit to CEP and Professor Jack Masquelier and their primordial and prominent role in the invention, research and development of the Pycnogenol product. Horphag's claims in this respect were denied by the Court, which made its decision as a final resolution of the relationship between CEP and Horphag.

The Court awarded damages to CEP in the amount of 2.5 million French Francs. Even though the actual harm caused by Horphag greatly exceeds this amount, the awarding of damages is an underlining by the Court of Horphag's bad faith in this matter. Horphag's counterclaims for damages were denied by the Court.

By filing applications for the Pycnogenol trademark in the USA and other countries without informing CEP, the Court found that Horphag overstepped the boundaries of its contractual relationship with its principal: CEP. Horphag wrongfully endowed itself with a right of ownership of the Pycnogenol trademark, which it had neither created, nor used for the first time. According to French law, so said the Bordeaux Court, Horphag's American trademark application constitutes an act of bad faith toward CEP.

The Bordeaux Court of Appeals has now confirmed earlier decisions, made by the High Court of Paris, by the Austrian Supreme Court and by the Thailand Intellectual Property Court. On 20 December 2000, the Paris High Court confirmed INC's title to the French Pyonogenol trademark and ruled that Horphag infringed on INC's French Pycnogenol trademark. The Paris Court prohibited Horphag and its French distributor from continuing their violation of INC's rights on penalty of a fine of 5,000 French Francs for each recorded offense. The Austrian and Thai Courts made similar decisions, concluding that Horphag was not at the origin of the Pycnogenol trademark and did not have any Pycnogenol trademark registration when it encroached on CEP's rights starting in 1990.

According to Bert Schwitters, owner of INC and Director of CEP, the Bordeaux decision will undoubtedly reinforce INC's position in the Pycnogenol trademark worldwide. "The landslide victory we obtained in Bordeaux," says Schwitters, "has confirmed what we have been saying during the last 10 years. The Pycnogenol trademark did not and does not belong to Horphag Research of Guernsey. The trademark was coined by Dr. Jack Masquelier to distinguish his authentic French Pycnogenol product. The time will come when INC will be recognized as the rightful owner of the Pycnogenol trademark not only in France, Austria, Australia, Indonesia, China and many other countries around the world, but also in the USA. Until then, we'll be happy to distinguish our product as Masquelier's[R] Original OPCs in America."

Correspondence:

International Nutrition Company (INC)

Mailing address: L'Estoril, Bloc C

31, Avenue Princess Grace

Monte Carlo, Monaco 98000

Phone 377-93506285

Fax 31-206393916

Email: info@inc-opc.nl

Centre d'Experimentation Pycnogenol (CEP)

C/o De Zodde 16

1231 MB Loosdrecht

The Netherlands

Phone 31-35-6565655

Fax 31-35-6565669

Email: info@pycnogenol.tm.fr