IP Report 2013/I

Reported by Professor Dr. Alexander von Mühlendahl, J.D., LL.M.

Among the widely debated issues concerning the elements necessary to establish “genuine use” of a Community trademark (CTM), the question whether use in one Member State is or may be sufficient is or was probably the most controversial. It was expected that the Court of Justice would provide clarity and guidance when, early in 2011, the Dutch Court of Appeal in The Hague referred a series of questions to the Court of Justice revolving around that issue. The Court finally rendered its judgment in the final days of 2012.

In an opposition case before the BENELUX IP Office (BOIP), the applicant (trademark OMEL) had challenged the genuine use of the earlier CTM (ONEL). It was agreed that use had been made of ONEL, registered for services in cl. 35, 41, and 42, in The Netherlands but not beyond. The opposition was dismissed, the BOIP considering that use in The Netherlands in that case was not sufficient. The applicant appealed to the Appeal Court in The Hague, and that court referred the following questions to the ECJ:

1. Must Article 15 (1) of [Regulation No 207/2009] be interpreted as meaning that use of a Community trademark within the borders of a single Member State is sufficient to constitute genuine use of that trademark, given that, had it been a national trademark, such use would have been regarded as genuine use in that Member State (cf. Joint Statement No 10 regarding Article 15 of [Regulation No 40/94] and the Opposition Guidelines of the OHIM)?
2. If Question 1 is answered in the negative, can the use of a Community trademark within a single Member State as described above never be regarded as “genuine use” in the Community as referred to in Article 15 (1) of [Regulation No 207/2009]?
3. If the use of a Community trademark within a single Member State can never be regarded as genuine use in the Community, what requirements apply – in addition to the other factors – in respect of the territorial scope of the use of a Community trademark when assessing genuine use in the Community?
4. Or else – as an alternative to the above – must Article 15 of [Regulation No 207/2009] be interpreted as meaning that the assessment of genuine use in the Community should be carried out wholly in the abstract, without reference to the borders of the territory of the individual Member States (and that, for example, market share (product markets/geographic markets) should be taken as the point of reference)?

The Court considered all the questions together, referred to its earlier case law regarding genuine use, and stated that the territorial scope of use “is not a separate condition for genuine use but one of the factors determining genuine use, which must be included in the overall analysis and examined at the same time as other such factors.” (para. 36 of the judgment).

In reaching its conclusion the Court emphasised the nature of CTMs as being unitary in character and instruments for the internal market, which precludes making genuine use dependent on any consideration of the boundaries between Member States (emphasis added):

42 The purpose of the system of Community trademarks is thus – as can be seen from recital 2 to Regulation No 207/2009 – to offer on the internal market conditions which are similar to those obtaining in a national market. In that context, if it were held that particular significance should be given, in the framework of the Community arrangements for trademarks, to the territories of the Member States, that would frustrate the objectives described in paragraph 40 of this judgment and would be detrimental to the unitary character of the Community trademark.

43 Admittedly, a systematic examination of Regulation No 207/2009 reveals that reference is made in the wording of certain of its provisions to the territory of one or more Member States. It should be noted, however, that such references are made particularly in relation to national trademarks, in the provisions relating to jurisdiction and procedure in legal actions relating to Community trademarks and in the rules dealing with international registration, whilst the phrase ‘in the Community’ is generally used in connection with the rights conferred by the Community trademark.

44 It follows from the foregoing considerations that the territorial borders of the Member States should be disregarded in the assessment of ‘genuine use in the Community’ within the meaning of Article 15(1) of Regulation No 207/2009.

The Court then turned to a number of additional arguments:

50 Whilst there is admittedly some justification for thinking that a Community trademark should – because it enjoys more extensive territorial protection than a national trademark – be used in a larger area than the territory of a single Member State in order for the use to be regarded as ‘genuine use’, it cannot be ruled out that, in certain circumstances, the market for the goods or services for which a Community trademark has been registered is in fact restricted to the territory of a single Member State. In such a case, use of the Community trademark on that territory might satisfy the conditions both for genuine use of a Community trademark and for genuine use of a national trademark. (…)

52 Some of the interested persons to have submitted observations to the Court also maintain that, even if the borders of the Member States within the internal market are disregarded, the condition of genuine use of a Community trademark requires that the trademark should be used in a substantial part of the Community, which may correspond to the territory of a Member State. They argue that such a condition follows, by analogy, from Case C 375/97 General Motors [1999] ECR I 5421, paragraph 28, Case C 328/06 Nieto Nuño [2007] ECR I 10093, paragraph 17, and Case C 301/07 PAGO International [2009] ECR I 9429, paragraph 27).

53 That argument cannot be accepted. First, the cases in question concern the interpretation of provisions relating to the extended protection conferred on trademarks that have a reputation or are well known in the Community or in the Member State in which they have been registered. However, the requirement for genuine use, which could result in an opposition being rejected or even in the trademark being revoked, as provided for in particular in Article 51 of Regulation No 207/2009, pursues a different objective from those provisions.

54 Second, whilst it is reasonable to expect that a Community trademark should be used in a larger area than a national mark, it is not necessary that the mark should be used in an extensive geographic area for the use to be deemed genuine, since such a qualification will depend on the characteristics of the product or service concerned on the corresponding market (cf., by analogy, with regard to the scale of the use, Ansul, paragraph 39).

The Court finally also rejected a de minimis rule:

55 Since the assessment of whether the use of the trademark is genuine is carried out by reference to all the facts and circumstances relevant to establishing whether the commercial exploitation of the mark serves to create or maintain market shares for the goods or services for which it was registered, it is impossible to determine a priori, and in the abstract, what territorial scope should be chosen in order to determine whether the use of the mark is genuine or not. A de minimis rule, which would not allow the national court to appraise all the circumstances of the dispute before it, cannot therefore be laid down (cf., by analogy, the order in La Mer Technology, paragraphs 25 and 27, and the judgment in Sunrider v OHIM, paragraphs 72 and 77).

The Court in the end answered the questions as follows:

Article 15 (1) of Regulation No 207/2009 of 26 February 2009 on the Community trademark must be interpreted as meaning that the territorial borders of the Member States should be disregarded in the assessment of whether a trademark has been put to ‘genuine use in the Community’ within the meaning of that provision.

A Community trademark is put to ‘genuine use’ within the meaning of Article 15 (1) of Regulation No 207/2009 when it is used in accordance with its essential function and for the purpose of maintaining or creating market share within the European Community for the goods or services covered by it. It is for the referring court to assess whether the conditions are met in the main proceedings, taking account of all the relevant facts and circumstances, including the characteristics of the market concerned, the nature of the goods or services protected by the trademark and the territorial extent and the scale of the use as well as its frequency and regularity.

Remarks
The case had caught the attention of the trademark community like no other case in recent years. Seven governments (and, as usual, the Commission) had submitted observations, again without parallel in recent years. The views of interested organisations differed also.

The outcome is not surprising. It was never realistic to expect that the Court would adopt a rule according to which genuine use would require use in more than one Member State, or that use in one Member State would always be sufficient. The Court once again, as it did on many other occasions, adopted an “all circumstances” rule. The ball is now back on the playing field of national authorities (in infringement cases and oppositions or cancellations based on CTMs), and of OHIM. They will have to grapple with the somewhat obscure analysis of the Court: No per se rule, no relevance of national boundaries, but still consideration of the markets involved, and thus also the territorial scope of the markets and the scope of use. I would add as an element the question of time. Use immediately subsequent to the expiry of the initial grace period must be seen in a somewhat different light than use long after that initial period.

There is one particular phrase in the judgment which will continue to “plague” parties, namely the statement that limited territorial use may be sufficient where the market for the goods or services is limited: “ (…) it cannot be ruled out that, in certain circumstances, the market for the goods or services for which a Community trademark has been registered is in fact restricted to the territory of a single Member State. In such a case, use of the Community trademark on that territory might satisfy the conditions both for genuine use of a Community trademark and for genuine use of a national trademark” (para. 50). That sentence should however be taken with some caution before being generalized, because it merely applies to the argument that the territorial scope of use should “by the nature of the marks” be larger for CTMs than for national marks.

The issue of territorial scope of use is unlikely to reach the Court again by way of a reference, but individual cases reaching the Court via the General Court may well arise. I assume that the Court will then defer to the General Court and consider the issue of genuine use a question of fact. In the end this will give the General Court the central role in determining the contours of genuine use, including the issue of its territorial scope.

Reported by Professor Dr. Alexander von Mühlendahl, J.D., LL.M.

Until very recently, under Spanish law the proprietor of a later registered trademark had a complete defence (unless in bad faith) against an infringement action brought on the basis of an earlier trademark until the later registration was invalidated. The Court of Justice, having dealt with the same issue arising under design law almost exactly one year earlier, in Case C-488/10 – Celaya, was again presented by the same court – the first-instance CTM court in Alicante – with the same question, this time under trademark law.

In an infringement action pending before the Juzgado de lo Mercantil n°1 de Alicante y n°1 de Marca Comunitaria, the court decided to stay the proceedings and referred to the ECJ, for a preliminary ruling, the following question:

In proceedings for infringement of the exclusive right conferred by a Community trade mark, does the right to prevent the use thereof by third parties in the course of trade provided for in Article 9 (1) of [the Regulation] extend to any third party who uses a sign that involves a likelihood of confusion (because it is similar to the Community trade mark and the services or goods are similar) or, on the contrary, is the third party who uses that sign (capable of being confused) which has been registered in its name as a Community trade mark excluded until such time as that subsequent trade mark registration has been declared invalid?

The Court followed its ruling in the Celaya case and concluded as follows:

Article 9 (1) of Council Regulation (EC) No 207/2009 of February 26, 2009 on the Community trade mark must be interpreted as meaning that the exclusive right of the proprietor of a Community trade mark to prohibit all third parties from using, in the course of trade, signs identical with or similar to its trade mark extends to a third-party proprietor of a later registered Community trade mark, without the need for that latter mark to have been declared invalid beforehand.

Remarks
For a report on the Celaya case, we refer to BARDEHLE PAGENBERG IP Report 2012/I.

It is not surprising that the Court in the FCI case adopts the same analysis and reaches the same conclusion as it did in the Celaya case as regards conflicting designs decided almost exactly one year earlier.

The judgment and the question referred are based on the assumption that the defendant was proprietor of a later CTM registration. It would appear only logical to assume that the reply would have been exactly the same if the proprietor had relied on an earlier national registration of a conflicting mark.

As appears in some detail from the judgment, as well as from the Opinion of the Advocate General Mengozzi (November 15, 2012) (who had also been the Advocate General in the “Celaya” case), under Spanish law the proprietor of a later registered trademark had a complete defense to an infringement action until this later mark was declared invalid. In the meantime, the Spanish Supreme Court has abandoned its own case law and now takes an intermediate position, namely that a claimant may combine infringement claims with claims for a declaration of invalidity and obtain relief ex tunc. For more details we refer to the Remarks in this issue by Xavier Fàbrega on the BOSS decision of the second-instance Alicante CTM Court. Even this intermediate approach is at odds with the Court of Justice judgments in “Celaya” and “FCI”.

It should be pointed out that under the current UK Trade Marks Act, any registered trademark is deemed not to infringe any other (earlier) registered trademark (cf. Section 11 (1): “A registered trade mark is not infringed by the use of another registered trade mark in relation to goods or services for which the latter is registered (but cf. Section 47 [6] [effect of declaration of invalidity of registration]”.) That provision now is clearly beyond the scope of the Trademark Directive, whose Article 5, governing the rights conferred, is substantially the same as Article 9 CTMR. Proprietors of later registered U.K. trademarks certainly cannot rely on their registration as a defense to an infringement action brought on the basis of earlier CTMs, but it should also be clear that such defense is not available either in purely national conflicts.

Reported by Xavier Fàbrega Sabaté

The Alicante Appeal Court has issued a ruling rejecting the case law doctrine according to which a trademark is deemed as not infringed if the infringer has used a trademark (similar to the allegedly infringed one) registered in his name.

Hugo Boss Trademark Management GmbH & Co. KG (hereinafter Hugo Boss) filed a lawsuit for infringement of the trademark BOSS against the importer and seller of goods identified with the sign B055, which had been registered as a Spanish trademark by the defendant. In the lawsuit, Hugo Boss also requested the trademark registration B055 to be invalidated and asked for an interim injunction.

On June 27, 2011, the Community Trademark Court No. 2 of Alicante granted the interim injunction requested by Hugo Boss. The defendant appealed this decision, arguing that the use of the sign B055 was covered by a trademark registration. Consequently, he was not infringing the trademark BOSS, but using his own trademark B055.

Until recently, this argument was successful in Spain. Article 34 (1) of the Trademark Law 17/2011 confers on the owner of a registered trademark “the exclusive right to use it in the course of trade”. On the basis of this “exclusive right to use”, the Spanish courts have applied a line of case-law known as “immunity by virtue of registration”, according to which there is no unlawful act as long as the alleged infringer is using his own registered trademark. Thus, the use of a registered trademark does not amount to infringement of an earlier trademark (no matter how similar both signs are), unless the later trademark is declared invalid. Moreover, the owner of the later trademark may only be found liable for damages if the court deems that said trademark had been filed in bad faith.

This jurisprudential doctrine was altered by the Supreme Court in two decisions rendered on April 4, 2012 and June 29, 2012, according to which the cumulative filing of an infringement action and an invalidity action allowed the competent court to declare the invalidity of the defensive trademark retroactively, thus finding that the defendant never had any exclusive right to use the trademark registered in his name. Therefore, it is not necessary to prove that the later trademark had been filed in bad faith in order to claim damages from the infringer.

In its ruling of November 29, 2012, the Alicante Appeal Court follows the new doctrine of the Spanish Supreme Court and rejects the defendant’s argument that the registration of B055 provides protection against any claim of infringement. According to the Court, Hugo Boss correctly brought  a joint infringement and invalidity action seeking the cancellation of the trademark B055. Consequently, if the invalidity action is successful, the contested trademark will be declared invalid ex tunc, and the import and selling by the defendant of goods bearing the sign B055 will no longer be covered by any exclusive rights..

Remarks
This decision follows not only the most recent doctrine of the Spanish Supreme Court, but also the Opinion rendered by the Advocate General Mengozzi of the European Court of Justice on November 15, 2012 (in Case C-561/11 Fédération Cynologique Internationale v Federación Canina Internacional de Perros de Pura Raza), following a reference for a preliminary ruling from the first-instance Community Trademark Court No 1 of Alicante. The court requested a ruling whether, in the case of dispute between the owners of two registered trademarks, an infringement action must be preceded by an invalidity action against the later trademark.

In the words of the Advocate General, the problem underlying this question is “a matter of lively debate among Spanish legal commentators and in Spanish case law”, and he expressly referred to the line of case law known as “immunity by virtue of registration”, whereby the fact that a trademark has been registered protects its owner against infringement proceedings.

In the meantime, the Court of Justice delivered its judgment in the case (on February 21, 2013). For more details, see the Report by Alexander von Mühlendahl earlier in this issue.

The ruling of the Alicante Appeal Court confirms the reversal (initiated by the Supreme Court) of the previous line of case-law, and deprives potential infringers of the shield conferred by the registration of a trademark similar to the infringed one. However, this ruling does not entirely follow the ECJ judgment which does not sanction that the claimant must also obtain a declaration of invalidity of the later registered trademark in order to find infringement. The Alicante Appeal Court still requests the cumulative filing, with the main infringement action, of an invalidity action against the later registered trademark. Anyway, this ruling will surely have a positive impact on trademark owners as it finally puts an end to the “insurance” against infringement claims and liability for damages as previously conferred by a trademark registration.

Reported by Karin Costescu

The German Federal Patent Court rejected a cancellation request of a U.S. company against the German trademark “smartbook” of Smartbook AG stating that a registered trademark can only be declared invalid on grounds of lack of distinctiveness and descriptiveness (Section 8 [2] No 1 – 3 German Trademark Act) if it can be established beyond any doubt that these grounds existed at the relevant times, i.e. both at the date of registration of the trademark and at the date of the decision about the cancellation request. If such an assessment is not possible, the trademark must remain registered, in particular in marginal or doubtful cases.

Smartbook AG is the owner of the German trademark no 305 05 515 “smartbook” (word mark), filed on February 01, 2005 and registered on May 31, 2005, covering a large list of goods in classes 07, 09 and 14, inter alia computer, notebooks and laptops.

Since the year 2009, Smartbook AG and a U.S. company argue about the mark “smartbook”. The U.S. company requested the cancellation of the trademark “smartbook” and the slogan “smartbook for smart people” of Smartbook AG.

The German Patent and Trademark Office (GPTO) accepted the cancellation request of the trademark “smartbook” in 2011, considering that, at the time of registration, the mark was descriptive and devoid of distinctiveness. According to the GPTO, the term “smart” had become a synonym for “device-related intelligence”, and “-book” was introduced by the term “notebook” for portable computers. Consequently, the composite term “smartbook” would simply refer to “a portable computer with device-related intelligence”. Smartbook AG appealed to the Federal Patent Court and obtained the rejection of the cancellation request.

In essence, the Federal Patent Court emphasized that the finding of absolute grounds after a mark has been registered – in the present case lack of distinctiveness and descriptiveness – is subject to strict conditions. Furthermore, the absolute grounds of Section 8 (2) No 1–3 of the German Trademark Act are based on the specific interests of the competitors – contrary to other absolute grounds, such as the exclusion of misleading marks or marks which are contrary to morality, which are expressions of the public interest. Consequently, as the present mark “smartbook” had been used unchallenged for around four years (i.e. the time between registration of the trademark “smartbook” in May 2005 and filing of the cancellation request in December 2009), the Federal Patent Court was of the opinion that such a long period is a clear indication that the relevant interests of the competitors were not affected.

As regards the inherent distinctiveness of the mark “smartbook”, the Federal Patent Court ruled that the mark had neither a direct meaning in relation to the goods in question at the time of registration in May 2005, nor was a future descriptive use of the composite mark “smartbook” foreseeable. According to the generous standards established by the German Federal Supreme Court, even a little degree of distinctiveness of a mark is sufficient to overcome the absolute bar of protection.

Only in case an average consumer perceives the mark in question immediately and without any further thinking as an obvious descriptive indication in relation to the goods and services concerned, the mark lacks any distinctive character. The mere theoretical possibility that the mark in question could convey a statement of facts is not sufficient to deny the distinctiveness of the mark.

The appeal to the German Federal Supreme Court has been granted and already filed (Case I ZB 57/12).

Remarks
The decision is noteworthy because it underlines the difficulties in obtaining cancellation of marks which, under present understanding, clearly appear to lack distinctive character or are descriptive, but where it is difficult if not impossible to obtain a clear picture of customer perceptions at the time of registration. Thus, it can be assumed that the relevant consumers today would associate the term “smartbook” with an “intelligent” portable computer, particularly in light of the common terms smartphone, notebook, netbook etc. The cancellation request failed, however, because of the difficulty of establishing the presence of absolute grounds at the time of registration, and any doubts in this regard were resolved in favor of the trademark proprietor. As the case has been appealed to the German Federal Supreme Court, it will be interesting to see whether the approach of the Federal Patent Court, which is actually in line with previous Supreme Court case law, will be upheld.

Registration of “smartbook”, it should be pointed out, does not mean that any use of “smart” or “book” or a combination of these terms would automatically result in a finding of infringement. As an additional remark in this context it should be mentioned that the Office of Harmonization (OHIM) has recently accepted the Community trademark application “ULTRABOOK” (word mark) of the company Intel, filed on May 31, 2011 and published on September 12, 2011, covering various computer goods in class 09.

Reported by Dr. Philipe Kutschke

The claimant Haribo, the German producer of the famous fruit gums “Goldbären”, challenged the distribution of Chocoladenfabriken Lindt & Sprüngli’s chocolate bear wrapped in a golden foil, comprising Lindt’s company name and logo as well as the designation “TEDDY”. The defendant is a famous chocolate producer, known throughout the IP community for its – so far (in Germany) unsuccessful, and (in Austria) successful – attempts to challenge distribution of a competitor’s chocolate bunny allegedly infringing Lindt’s trademark rights in the shape of the “GOLDEN BUNNY” (reported previously in IP Reports 2012/II, 2011/I, 2008/II and 2006/I).