Striking trademark judgements of the European Court of Justice in 2005

European ‘federal’ law has become an important factor in the trademark arena. Council Regulation 40/94 on the Community trademark (the Community Trademark Regulation) has created a trademark that is valid throughout the European Union, while Council Directive 89/104/EEC to approximate the laws of the member states relating to trademarks (the Trademarks Directive) has harmonised national trademark laws. Over the years the European Court of Justice (ECJ) and the European Court of First Instance have developed a significant body of case law interpreting the Community Trademark Regulation and the Trademarks Directive. In 2005 the ECJ handed down a number of critical decisions.

Use of trademarks by third parties

On March 17 2005 the ECJ delivered a judgment in which it clarified its case law on the legitimate use of a trademark by third parties who are not the owners of the trademark (C-228/03). In so doing, the ECJ interpreted Article 6(1)(c) of the Trademarks Directive.

The case arose from a dispute between The Gillette Company and The Gillette Group Finland Oy and LA Laboratories Ltd Oy. Gillette is the registered owner of the GILLETTE and SENSOR trademarks in Finland. Under these trademarks Gillette markets various razors, including those composed of a handle and replaceable blade, as well as blades sold separately. LA Laboratories also marketed razors composed of a handle and replaceable blade and blades sold separately. LA Laboratories sold blades under the trademark PARASON FLEXOR while affixing to the label a sticker stating “All Parason Flexor and Gillette Sensor handles are compatible with this blade”. Gillette argued that the conduct of LA Laboratories constituted an infringement of its GILLETTE and SENSOR trademarks. In its opinion, the practices of LA Laboratories created an undue connection in the minds of consumers between the products marketed by LA Laboratories and those of Gillette. Furthermore, Gillette maintained that consumers were given the erroneous impression that LA Laboratories had been authorised to use the GILLETTE and SENSOR marks.

In the context of an action brought against LA Laboratories by Gillette, the Korkein Oikeus (the Finnish Supreme Court) referred a number of questions to the ECJ for guidance on the limitations that the Trademarks Directive places on the protection conferred by a trademark.

In response, the ECJ first repeated its earlier case law that the essential function of a trademark is to guarantee to the end user the identity of origin of the goods or services bearing the trademark. The end user should be able, without any possibility of confusion, to distinguish the goods or services from others that have another origin. Therefore, a trademark guarantees that all the goods or services bearing that trademark have been manufactured or supplied under the control of a single company that is responsible for their quality. The ECJ also noted the need to ensure the free movement of goods and freedom to provide services in the common market and thus sought to reconcile this objective with the essential function of a trademark as described above.

The ECJ then referred to Article 6(1)(c) of the Trademarks Directive. According to this provision, a trademark owner may not prohibit a third party from using the trademark when such a use is necessary to indicate the intended purpose of a product or service, in particular as accessories or spare parts. The ECJ added the condition that the third party at issue should use the trademark in accordance with honest practices in industrial or commercial matters.

Regarding the criterion of necessity, the ECJ held that this yardstick requires the national court to verify whether the use of the trademark by the third party is, in practice, the only means of providing the public with comprehensible and complete information as to the intended purpose of the product. In making that assessment, the national court must take account of the nature of the public for whom the product marketed by the third party is intended.

As to the condition of honest use, the ECJ held this to be essentially the expression of a duty to act fairly in relation to the legitimate interests of the trademark owner. That condition will not be satisfied if, for example:

  • the trademark is used in such a manner as to give the impression that there is a commercial connection between the third party and the trademark owner;
  • use of the trademark affects its value by taking unfair advantage of its distinctive character or repute;
  • use of the trademark may damage its reputation; or
  • the third party presents its product as an imitation or replica of the product bearing the trademark of which it is not the owner.

In the view of the ECJ, the fact that a third party uses a trademark that it does not own in order to indicate the intended purpose of its product does not necessarily mean that it is presenting that product as being of the same quality as, or having equivalent properties to, the product bearing the trademark. However, the national court must verify whether, in a particular case, the use of the trademark is in accordance with honest practices in industrial and commercial matters.

Finally, the ECJ held that the same conditions as regards the necessity of indicating the intended purpose of a product or service and as regards honest use apply if the third party markets a product with which the spare parts or accessories are intended to be used.

This case is an important addition to ECJ case law concerning the exercise of trademark rights. It will primarily be of interest to producers of products for which there is an important secondary market for disposables or spare parts. It is quite common that the prices for the primary products take into account the profits that will be generated through sales in the secondary market. Therefore, any measures that may act to reduce the market share of the supplier in the secondary market may have important commercial repercussions.

Distinctiveness of part of a slogan

On July 7 2005 the ECJ delivered its judgment in a case resulting from a dispute between Société des produits Nestlé SA and Mars UK Ltd (C-353/03). The judgment addressed the question of whether a part of a trademark (Nestlé’s advertising slogan “Have a break”) may acquire a distinctive character following the use of that trademark as part of or in conjunction with another trademark (Nestlé’s registered trademark HAVE A BREAK…HAVE A KIT KAT).

The case followed on the heels of the judgment that the ECJ delivered on October 21 2004 in OHIM v Erpo Möbelwerk (Case 64/02 P). In that case, the ECJ had ruled on the possibility of registering a slogan (“Das prinzip der bequemlichkeit”) as a trademark. The ECJ held that slogans should not be subject to registration criteria that are stricter than those applicable to other types of signs. Every trademark must be capable of identifying the product as originating from a particular company and thus distinguishing it from those of other companies. Despite the above, the ECJ acknowledged that, although the criteria for assessing distinctiveness are the same for the various categories of marks, the relevant public perception will not necessarily be the same for each category. Therefore, it may prove more difficult to establish distinctiveness for specific categories of trademarks.

As to the distinctiveness of a part of a slogan, the ECJ held that the distinctive character of a trademark may be acquired as a result of the use of that trademark as part of or in conjunction with another registered trademark. Whether inherent or acquired through use, the distinctive character of a trademark should be assessed in relation to the goods or services in respect of which registration is applied for and the presumed expectations of an average consumer of the category of goods or services in question. With regard to the acquisition of distinctive character through use, the identification, by the relevant class of persons, of the product or service as originating from a given company should be the result of the use of the sign as a trademark. In order for that condition to be satisfied, the sign in respect of which registration is sought need not necessarily have been used independently.

Furthermore, the ECJ reiterated its established case law that the evidence capable of demonstrating that the sign has come to identify the product or service concerned should be assessed globally. For such assessment, the following factors may be taken into consideration:

  • the market share held by the mark;
  • how intensive, geographically widespread and longstanding use of the mark has been;
  • the amount invested by the brand owner in promoting the mark;
  • the proportion of the relevant class of persons who, because of the mark, identify goods as originating from a particular company; and
  • statements from chambers of commerce and industry or other trade and professional associations.

As it often does in cases brought before it at the request of a national court, the ECJ articulated only a number of general principles. It is now for the national court (ie, the Court of Appeal (England and Wales)) to apply these principles and resolve the dispute between Nestlé and Mars.

Protection of retail trade activities by service trademarks

In its judgment of July 7 2005 in Praktiker Bau und Heimwerkermärkte AG v Deutsches Patent und Markenamt (C-418/02) the ECJ gave guidance on the question of whether retail trade in goods may constitute a service within the meaning of Article 2 of the Trademarks Directive and, if so, whether the registration of a service trademark in respect of such retail trade is subject to the specification of certain details.

The ECJ was asked to rule on a number of questions referred to it by the German Bundespatentgericht (Federal Patents Court). In the underlying German procedure, Praktiker Bau und Heimwerkermärkte AG had filed an application for registration, at national level, of the trademark PRAKTIKER for the service of “retail trade in building, home improvement, gardening and other consumer goods for the do-it-yourself sector”. However, the Deutsches Patent und Markenamt (the German Patent and Trademark Office) rejected its application. It held that the concept of retail trade did not denote distinct services having autonomous economic significance. That concept related only to the distribution of goods as such. The economic activities that formed the core of goods distribution, in particular the purchase and sale of goods, were not services for which a trademark could be registered. Trademark protection could be achieved only by applying for the registration of a trademark in respect of the goods distributed in each case.

Praktiker Bau brought an appeal before the Bundespatentgericht against the decision rejecting its application. It argued that the economic trend towards a service society necessitated a reappraisal of retail trade as a service. The consumer’s purchasing decision would increasingly be influenced not only by the availability and price of a product, but also by other aspects such as the variety and assortment of goods, their presentation, service levels, advertising, image and the location of the store. Services provided in connection with retail trade enabled retailers to distinguish themselves from their competitors. As a result, such services ought to be eligible for protection by service trademarks.

As the German provisions for the registration of a national trademark are based on the Trademarks Directive, the Bundespatentgericht decided to stay the proceedings and ask the ECJ whether the concept of services includes services provided in connection with retail trade in goods and, if so, whether the registration of a service trademark in respect of such services is subject to the provision of specific details.

First, the ECJ held that the concept of services contained in Article 2 of the Trademarks Directive covers services provided in connection with retail trade in goods. It noted that the objective of retail trade is the sale of goods to consumers. That trade includes, in addition to selling itself, all activities carried out by the trader for the purpose of encouraging consumers to buy. This involves selecting the assortment of goods offered for sale and offering a variety of services aimed at inducing the consumer to buy from the trader at issue rather than from a competitor. No overriding reason based on the Trademarks Directive or on general principles of Community law precludes those services from being covered by the concept of services within the meaning of the Trademarks Directive. Moreover, the Office for Harmonisation in the Internal Market (Trademarks and Designs) also accepts service trademarks for the retail trade as Community trademarks. Therefore, the ECJ concluded that the trader is entitled to acquire protection of its trademark for services provided in connection with retail trade in goods.

Second, the ECJ ruled that, for the purposes of registration of a trademark for such services, it is not necessary to specify in detail the service(s) for which registration is sought. To identify those services, it is sufficient to use general wording such as “bringing together a variety of goods, enabling customers to conveniently view and purchase those goods”. However, the applicant should specify the goods or types of goods to which those services relate. In the ECJ’s view, such details will make it easier to apply the provisions relating to conflicts with earlier trademarks and to determine the exclusive right conferred on the proprietor.