The fate of trademark-related contracts upon the sale of a business (fonds de commerce)

Commentary on the Cour de cassation, Commercial Chamber, judgment of 18 February 2026 — Published in the Bulletin

Article L. 714-1, paragraph 2 of the French Intellectual Property Code provides that the total transfer of a business, including pursuant to a contractual obligation, entails the transfer of the rights attached to the trademark, unless otherwise agreed or unless this clearly follows from the circumstances of the transfer.

This solution reflects the fact that the customer base attached to a trademark and to the business operating under that trademark are one and the same, and are therefore intended to follow the same fate.

Does the same hold true for contracts attached to those trademarks, in that they may serve to secure or grow that customer base?

The Commercial Chamber of the Cour de cassation recently had occasion to rule on this question, in a decision of 18 February 2026 published in the Bulletin.

The case concerned charentaise slippers and various trademarks with a quaintly old-fashioned appeal. These trademarks had been the subject of a trademark licence granted to a long-standing partner of the trademark owner, who was itself a slipper manufacturer. The partner had also been granted the right to distribute the owner’s slippers bearing the trademarks in question.

Following successive receivership and liquidation proceedings affecting the owner’s business, the question arose as to whether the licensee still benefited from the licence agreement attached to those trademarks, together with the distribution agreement, given that no formal termination had taken place. It was thus the licensee who sought to compel the successive transferees of the business to continue performing the licence agreement — the licence agreement having ultimately proved to be a liability rather than an asset.

The Cour de cassation’s answer, dismissing the appeal, was NO: while trademarks automatically follow the fate of the business, the same is not true of contracts linked to those trademarks. The Court specified that the transferee of the business and of the trademarks must consent to the assignment of the contracts attached to it.

This solution has the merit of simplicity and is consistent with the provisions of Article 1216, introduced into the Civil Code in 2016. Indeed, it may be noted that a co-contracting party will not necessarily wish to remain bound to a transferee of the trademark whom it has not approved. Article 1216, paragraph 1 of the Civil Code specifies in this regard that a contracting party (the transferor) may transfer its status as a party to the contract to a third party (the transferee), with the agreement of its co-contracting party (the transferred-against party). This approval mechanism is, however, overridden in the context of court-ordered receivership proceedings, since the transferee of the business under a transfer plan may apply to the court for the compulsory continuation of key contracts in its favour (Article L. 642-7 of the Commercial Code). This nonetheless remains only an option.

The solution also makes sense insofar as it appears that, in this case, the successive transferees were unaware — at least on the face of the decisions — of these contracts. In particular, these contracts were not mentioned among the list of contracts transferred under the transfer plan, nor were they mentioned among the assets offered for sale by the court-appointed liquidator, in the course of the successive judicial sales/liquidations.

A restrictive reading must therefore be given to the notion of “rights attached to the trademark”, such that contracts attached to the trademark fall outside its scope.

This raises two further questions for consideration:

Could a clause in the licence agreement override the Court’s position?

Could a provision running counter to the intuitu personae nature of the contract (i.e., “regardless of who owns the trademark, the contract remains in force for as long as the trademark subsists”) bring about the automatic transfer of the contract? This type of clause is indeed often tempting to include in trademark coexistence agreements, where the parties make coexistence conditional upon compliance with certain undertakings, and it is particularly useful to ensure that a transferee of the business or of the trademark does not consider itself released from all obligations. Article 1216, paragraph 2 points us in this direction: this agreement [of the transferred-against party] may be given in advance, in particular in the contract entered into between the future transferor and transferred-against party, in which case the assignment takes effect against the transferred-against party once the contract entered into between the transferor and the transferee is notified to it or it acknowledges it.

Would the outcome have been different had the licence agreement been recorded on the French Trademark Register?

Pursuant to Article L. 714-7 of the Intellectual Property Code,[1] such recordal renders the contract enforceable against third parties. As a result of the contract’s recordal, the third party — namely the future transferee of the trademark — is thus presumed to be aware of the existence of the contract, and therefore also of any automatic transfer clause it may contain. In such a situation, the transferee would be well advised to ask the transferor to terminate or cancel the contracts in progress or, if the acquisition takes place in the context of court-ordered receivership or liquidation proceedings, to expressly note whether or not the contracts encumbering the trademark are being taken over.

[1] Article L. 714-7 of the Intellectual Property Code: Any transfer or amendment of the rights attached to a registered trademark must, in order to be enforceable against third parties, be recorded on the national trademark register.