Politics and policy appear to be dominant themes in recent case law from the UK and Europe on brand issues. Brand owners powers to use their trademark registrations to control their channels of distribution and maintain fortress Europe as demonstrated by the parallel imports case below is strengthened, but they remain vulnerable to use of their trademarks by competitors in comparative advertising.
Foreign governments get a boost too with the right to have their own Geographical Indications (GI) protected in Europe from 3 April 2006. But ordinary brand owners are going to lose the protection of an examined register and have to take on a greater responsibility to defend their rights.
The Court of Appeal recalled that shape marks were not to be abused to combat competition and the European Court of Justice (ECJ) tacitly favoured the interests of those who buy and sell companies over the interests of a Ms Emanuel's right to control her own name.
It is becoming ever more difficult to register shape marks, but the validity of the O2 bubbles is a triumph for brand creatives.
In Europe we have the doctrine of Community exhaustion of trade mark rights. The trademark infringement provisions do not entitle the proprietor to prohibit the use of a trademark in relation to goods which have been put on the market in the Community under that trade mark by the proprietor or with his consent. But otherwise even genuine goods from outside the Community can be treated as infringing if there is no consent to their sale here.
For brand owners, its fortress Europe as parallel importers cannot prove consent. Following the ECJ decision in Davidoff the parallel importer has the burden of showing consent and must establish an unequivocal renunciation of trade mark rights by their proprietor. This tends to mean that brand owners can now get summary judgement. Although we said they could have done this after Silhouette was decided, its only now brand owners are taking advantage. Honda, Roche, Hewlett Packard, Sony and Sun Microsystems have all recently claimed their rights.
Judge Fysh had much enjoyment in March with a case on Cuban cigars which got more complicated by counterfeiting claims but it went the same way to his mind - but not to that of the Court of Appeal on 8 March 2007. In their attempt to prove consent the defendant tried to rely on an economic linkage between the retail outlets (casas) that had sold the cigars to the importer and the brand owner. Even though Cuba might be a socialist republic with a command economy, the casas had an external 50% shareholder who was active in their management and the Judge concluded that neither the brand owner nor the outlets were organs of the Cuban State. Nor were the outlets ‘economically linked’ to the brand owner within the meaning of ECJ jurisprudence. The Court of Appeal did not disagree with that. However they did think that Judge Fysh had not assessed the evidence of unequivocal implied consent correctly and held that this case was one where consent could be implied. The main reason was that the casas had provided invoices that contained instructions in various European languages to facilitate export. (Apparently these documents were also supposed to but did not show "Not for Resale". They probably do now). Some also had limits that suggested commercial quantities were permitted. This passed the unequivocal consent test. The trademark owner had not just turned a blind eye to parallel trade - he had done something to facilitate it. It was also held that unequivocal does not impose a standard of proof beyond the normal civil standard, it simply refers to the nature of the consent to be proved.
The judgement by Jacob LJ ends with a caveat that it does not follow that the defendant can repeat his purchases and importation - so it may only be a theoretical route round Davidoff after all.
It seems sadly inevitable that the UK registry will follow the Danes and abolish relative grounds examination and adopt an OHIM like examination practice. The consultation completed on 17 May 2006. After giving way on the previous occasion this was suggested in 2002, this one has the whiff of a foregone conclusion.
That prediction proved correct when the registry announced the results on 2 August 2006.
The action point for brand owners is that they need more than ever to maintain a watch service. Although the basic costs of this are low, the cost in terms of review and decision making time is considerable, especially if entirely subcontracted to your agents. Tedious as it may be, we recommend that marketing departments have a member of their own staff review watch notices. A framework for scoring the conflicts to decide which reach an action threshold is a useful tool.
As the next item shows though, if you decide to oppose you must do a proper job as you will not get
If you choose to oppose the registration of a UK mark you cannot argue invalidity as a defence if you are sued for infringement. That is the import of a decision by the Chancellor on 17 March 2006. Oh yes you can say the Court of Appeal on 12 January 2007.
The Chancellor followed the 2005 SPAMBUSTER decision which had held that a decision by the Registry on validity created a cause of a action estoppel preventing invalidity being pleaded again in the Court. Richard Arnold in that case expressly distinguished his fact scenario from the case where the earlier action in the Registry was an opposition. This case now extends cause of action estoppel to this scenario too. Cause of action estoppel is powerful because it covers not just the grounds that were raised but also those that might have been. He also held there would have been issue estoppel and commented tellingly "The defendants have only themselves to blame if their evidence at that stage was not, as they now suggest, the best then available to them."
The case was something of a David & Goliath battle that is not over yet. The Jones had successfully survived L'Oreal's opposition to get SPECIAL EFFECTS registered as a trademark. Their company then made an infringement claim against L'Oreal. Meanwhile L'Oreal have registered SPECIAL FX as a Community Trademark. The Jones opposition against that registration failed and is now under appeal. The Chancellor cautiously excludes issues of estoppel by the OHIM proceedings from his decision.
In January the Court of Appeal had another encounter with a Philips three headed razor trademark and had to explain the original June 2002 ECJ judgement once again. On the last occasion it was the mark on the left that was found to be invalid as being essentially functional - the shape of the goods which is necessary to obtain a technical result. The original ECJ judgement was made somewhat opaque at best by being excessively strewn with the functional word. The test was that a sign consisting solely of the shape of the product is unregistrable if it is established that the essential [functional] features of that shape are attributable only to the technical result.
First identify the essential features. On the evidence the judge at first instance found that the clover leaf of the new mark on the right was not an essential feature. Once more the consumer carried the day - if he would not notice this detail it was not an essential feature. Even though this could have been the end both courts ran through the rest of the test.
Next consider whether those features (considering the mark as a whole) are attributable to the technical result. It seems that razor face plates perform an essential function of stretching the skin and raising the hairs. There was a conflict of expert evidence on the role of the lower area of the face plate and whether it came into contact with the skin. One can imagine that over all these legal arguments many smooth and not so smooth chins have been rubbed since the same mark has now been held invalid in Sweden, France, Germany, Spain and Italy. Gentlemen your chins are obviously a fine market.
The question of functionality is a preliminary question that has to be determined and overcome before any consideration of inherent or acquired distinctiveness. This does not seem to be the way that OHIM work. They prefer to go straight to distinctiveness issues or at least remain silent on the reasons why a shape passes the functionality hurdle.
As a consolation prize the Court of Appeal reversed the original decision that these device marks (not shape marks) were functional too.
While we are on the subject of shape marks, its worth noting that the European Court of Justice (ECJ) rendered its decision on the shapes of the werther's original sweets on 22 June 2006. There were two cases - C-25/05 P dealt with the wrapped sweet and C-24/05P with the naked caramel in its original shape which now appears to have been modernised. OHIM had rejected the applications as devoid of distinctive character (rather than functionality as Philips above) so the applicant had attempted and failed to provide evidence of acquired distinctiveness.
On the main issue the ECJ considered that the lower court had applied the correct and established case law in assessing distinctive character by reference to the perception of the relevant public in exactly the same way as for any other mark and by expecting to find some difference from the norms or customs of the sector.
The appellant was reminded that an appeal to the ECJ lies on a point of law only so an appeal on the appraisal the evidence was inadmissible.
The ECJ did however vindicate OHIM's ability to conduct its own enquiries and find well known facts in assessing distinctiveness. They held "It follows that the competent bodies of OHIM may be led to base their decisions on facts which have not been alleged by the applicant for the mark" In the case on the shape of the sweets themselves the ECJ was apparently less happy that OHIM had not produced its examples but held the appeal inadmissible in this respect because the issue had not been raised below.
In both cases OHIM asked for and was awarded its costs.
It was back in 2003 that Patten J asked The European Court of Justice for advice in an appeal by Dyson against the refusal of its application to register as a trademark the concept of a transparent dust bin on a vacuum cleaner. He wanted to know how to appraise the evidence of acquired distinctiveness that Dyson wanted to rely on. At long last, the Advocate-General issued an opinion on 14 September 2006.
Instead of answering the question, Advocate-General Léger took on the role of the original trademark examiner and decided that the application should have been refused because it wasn't graphically represented with sufficient certainty. This followed the commission's intervention in the case. If that were not enough, the Advocate General also berated the registrar for not raising the objection that the sign consisted exclusively of the shape which is necessary to octane a technical result. This leaves the British court rather embarrassed because their question had been framed with the specific injunction to the ECJ that the mark was not a shape. The significance is that if it were a shape mark you could have all the evidence in the world and not be able to overcome the objection.
In crusading style, the opinion suggests: "some people will seek, through trade mark rights, not to protect a distinctive sign, but to protect industrial creations or innovations, which are covered by other intellectual property rights and whose term of protection is generally limited in time."
On 25 January 2007, the ECJ followed the first part of the A-G's Opinion. In their judgement the ECJ decided only what they termed "the preliminary matter of whether Dyson's application was for a sign". They held it was not. It was a concept that appealed only to the imagination, not one of the five senses. If Dyson were allowed to register this concept relating to such a non-specific subject-matter, he would obtain an unfair competitive advantage.
The ECJ did not go on to consider the issues relating to registerability of shapes and entirely sidestepped the original question.
It seems likely that even more transparent plastic shrouds will appear on our household cleaning equipment in the future.
Using a competitor's numbering system in your catalogue is not taking unfair advantage of the reputation of that distinguishing mark. This 23 February 2006 ECJ judgement is likely to put an end to Siemens' dispute with VIPA over a catalogue of programmable controllers sold to a specialist public. In this case the balance favoured use of the trademark. As the ECJ put it:
"In the present case, if a different core element were to be used for the order numbers of goods distributed by VIPA and intended for use with Siemens controllers as add-on components, the users concerned would be required to look in comparative listings for the order numbers corresponding with the goods sold by Siemens. That would be disadvantageous, as the national court pointed out, to consumers and to VIPA. The possibility that there would be restrictive effects on competition in the market for add-on components to the controllers manufactured by Siemens cannot therefore be excluded."
A month later in the UK, Mr Justice Lewison allowed Hutchinson's defence to a trademark infringement claim in respect of O2's bubble trademarks. Viewed as a whole , Hutchinson's campaign was a fair and objective price comparison that did not take unfair advantage of or denigrate O2's trade marks or brands. He also held these challenging registrations to be valid which is great news for designers who want to stretch the limits of concepts to use as brands.
An appeal was filed by O2 against the infringement allegation and in a judgement of 5 December 2006 questions were referred to the ECJ as Case C-533/06 to clarify the scope of lawful comparative advertising. O2 say it would have been enough to refer to the O2 brand and the bubbles were taking unfair advantage. The first question asked whether use in comparative advertising was trademark use and the second asked whether the use of the trademark must be "indispensable".
The ECJ answered the questions in their judgement of 12 June 2008. Yes you can infringe a trademark by using it in a comparative advertisement and that is so irrespective of whether or not the comparative advertisement satisfies all the conditions laid down in Article 3a of Directive 84/450 under which comparative advertising is permitted. They could say that fairly comfortably because the Court of Appeal had said there was no likelihood of confusion in this case and that was essential for trademark infringement in this case. Therefore the answer is at odds with the 31 January 2008 opinion of the the Advocate General that the comparative advertising directive (now consolidated as 2006/114/EC) deals with the situation exhaustively to the exclusion of the trademark directive. The Advocate General sidestepped the real question about trademark use saying "there is no need to pursue the examination, bristling with difficulties, of the conditions on which Article 5(1)(a) and (b) of Directive 89/104 apply". The ECJ were brave enough to focus us back on the essential function of the trademark to guarantee origin. However they did note that they were not interpreting the 5 (1) a question because this was not an identical sign. To that extent the judgement is perhaps not as helpful as it first appears since most comparative advertisements do use the identical sign - this was a rare example that did not.
The ECJ decided it id not have to answer the second question. The Advocate General also could not find any basis for implying into the Directive a requirement of indispensability. Instead of a sidestep, this time rather more opinion than was needed was offered:
I would, moreover, add that as a matter of fact going, however, far beyond what is necessary to answer the first part of the second question, it is difficult to imagine that H3G can have taken unfair advantage of the use in the advertisement at issue of bubbles similar to O2’s bubbles trade marks, in view of the fact that the advertising in question also explicitly identifies the competitor by means of references to the O2 trade mark, the lawfulness of the use of which is no longer disputed by O2, and that, as is clear from the order for reference, consumers associate images of bubbles in the context of mobile phones with O2. So if a link with the competitor is already established by means of the reference to O2’s trade mark, without any objection on the subject from O2, I do not see what unfair advantage H3G could gain from the additional use in the advertisement at issue of signs similar to the bubbles trade marks likewise owned by O2.
If you have a problem in the UK Registry, the issue can leapfrog the courts and go straight to the ECJ. When acting as an Appointed Person on an appeal from the Registry in 2003, David Kitchin asked the ECJ whether a trade mark corresponding to the name of the designer could be refused registration on the ground that it would deceive the public.
On 30 March 2006 the ECJsaid it could be registered. A designer can't sell her name and goodwill and keep it. On the facts, the EE name had been passed around a lot, but the brand owner would still guarantee the characteristics and qualities of the garments. The ECJ did suggest that a fraudulent act that made the consumer believe that Elizabeth Emmanuel had designed the goods could be dealt with outside trademark law. The UK submitted that the average consumer was not so naive as to be confused anyway.
Although consumer confusion between signs is the test for infringement, it does not follow that trademark law is consumer protection law - a common misapprehension. The policy of trademark law favours the economic interests of brand owners and their need to retain control of the goodwill their investment has nurtured.
Geographical Indications are not trade marks - they do not guarantee a specific commercial origin but they do guarantee that the goods comply with politically approved criteria which include place of production. With effect from 31 March 2006 a new species has been introduced a ‘traditional speciality guaranteed’ which replaces certificates of special character. The UK only had one Traditional Farmfresh Turkey.
From 3 April 2006 Europe will also acknowledge foreign GIs and the applications don't need to be government sponsored. The new legislation is Regulation (EC) No 510/2006 of 20 March 2006. When applications are made we can expect to see them here.
One of the most notorious recent cases involving the GI system in England is the protection of MELTON MOWBRAY for pork pies. The application was filed on 13 February 2004 but did not get published until 4 April 2008. Northern Foods whose factory was outside the area and did not satisfy the criteria in any event took exception to the approval by the government of the GI and took not one but two judicial reviews of the decision culminating in a question being referred to the ECJ about the legitimacy of the arbitrary geographical boundary where the pies can be produced. Note: it was reported in November 2006 that Northern Foods have resolved their differences and will conform to the new rules within five years. The Telegraph reported the triumph of the advertisement on 5 April 2008 and has a picture of the real pie - much better than my stock photograph.
These signs are typically very descriptive and excluded traders or overwhelmed brands are likely to feel aggrieved. Nevertheless countries should defend their cultural exports and a degree of reciprocity is to be welcomed. Gourmets of the world can expect to delight in greater guarantees that speciality names start to mean something again and for the lawyers evidence to be eaten is always of special interest.
After the ECJ decided on 7 July last year that a limping mark (one used alongside a more distinctive brand) could become distinctive the UK registry has had to revise its practice on examination of evidence of acquired distinctiveness. The new policy statement was published on 12 April 2006.
Several other practice amendment notes that did not change practice were pushed out just before the holiday too. Since Britain is about to enter a Right Royal Period in celebration of the Queen's 80th birthday, the Patent Office did their loyal best and published a list of The Names of the Royal Family as Pan 04/06 which cannot without consent be registered as trademarks.
Following the trail set by OHIM, you can now renew international registrations online paying from your deposit account or by credit card.
Anyone in Europe can deal with the UK Registry and Patent Office after the 1 April 2006 rule change.
The European Court of Justice tells us that if consumers know what a mattress is they can sleep on it but otherwise the word can be a trademark. This insightful answer was delivered to the Barcelona court who were concerned about the validity of the German word for mattresses MATRATZEN that has been registered as a trademark for mattresses in Spain.
Probably the biggest barrier to free movement of goods and achievement of all the Commission's ambitions is that its members purport not to understand each other despite all our wondrous education and automatic translation.
Bye! Feel free to comment!
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Copyright 29 June 2008