Again, the ECJ fails to give trademark owners clear guidance in relation to the scope of their mark
The Grand Chamber of the ECJ, composed of no less than 13 ECJ judges (out of a total of 27), has handed down its long-awaited judgment in the CELINE matter, a referral case from the Cour d'Appel de Nancy (France). It deals with the question whether the unauthorized use of a mark to designate a shop or company, without however using the mark for any goods or services offered, is to be regarded as use of the sign as a trademark against which the proprietor of the mark may take legal action, and whether the proprietor may be barred by Art. 6 (1) (a) of the Directive (and the respective national provisions), according to which the proprietor of a trademark shall not be entitled "to prohibit a third party from using, in the course of trade, his own name or address."
The claimant, Céline SA, is a company incorporated under that name since 1928. Its principal activity is the creation and marketing of articles of clothing and fashion accessories. It is the proprietor of a word mark "CÉLINE", applied for on 19 April 1948 and registered, inter alia, for "clothes and shoes", which remains in full force.
The defendant, Celine SARL, claims that its predecessor-in-title was registered on 25 September 1950 in the Commercial and Companies Register in Nancy in relation to the operation of a menswear and womenswear business, trading as ‘Céline’. The company itself was registered on the companies register in 1992 in order to operate a business trading in ready-to-wear garments, lingerie, clothing, furs, apparel and various accessories under that name.
CÉLINE SA filed a claim with the TGI of Nancy and obtained an injunction and damages. Céline SARL appealed the judgment on the grounds that it was not using the mark to distinguish any of the goods for which it was protected, but only to designate the company or shop, which use, in addition, was protected by Art. 6 (1) (a) of the TM Directive. The Cour d'Appel submitted the question to the ECJ.
The question may appear simple at first sight: Both companies are obviously using the same sign, and both are operating in the same line of business (clothing). However, the ECJ has lately shown a tendency towards a case-by-case approach in assessing whether a mark is being used as a trademark, i.e. in its function to distinguish, in the course of trade, goods and services from goods and services of others. Even where the proprietor goes against the use of an identical sign for the very same goods and/or services for which the mark is registered, the ECJ ruled, the owner of the trademark may only prevent such use if the following four conditions are satisfied:
- that use must be in the course of trade;
- it must be without the consent of the proprietor of the mark;
- it must be in respect of goods or services which are identical to those for which the mark is registered, and
- it must affect or be liable to affect the functions of the trade mark, in particular its essential function of guaranteeing to consumers the origin of the goods or services.
The Opel case, in particular, decided upon earlier this year, has left many trademark owners puzzled. The ECJ not only ruled that the use of the OPEL trademark on model cars does not constitute use of the mark as registered for motor vehicles.
"Where a trade mark is registered, inter alia, in respect of motor vehicles, the affixing by a third party, without the authorisation of the proprietor of the trade mark, of a sign identical to that mark to scale models of that make of vehicle, in order faithfully to reproduce those vehicles, and the marketing of those scale models, do not constitute use of an indication concerning a characteristic of those scale models".
It also held that use of a mark on toys only amounts to infringement of the mark as registered for toys
"if that use affects or is liable to affect the functions of the trade mark as a trade mark registered for toys".
In other words, it ruled that the simple fact of a double identity - use of the same mark for the same goods - is not in itself sufficient any more to argue an infringement of that mark, but that one also has to look at whether the mark is being used to distinguish the goods from those of other players.
Following this doctrine means that the use of brands like VW, BMW or Porsche on model cars does not serve to distinguish the goods from those of other manufacturers of model cars and may therefore not be objected to by the respective car manufacturers as owners of the trademarks, because that brand would rather be, say, Mattel, Matchbox or Minichamps.
This result is clearly unsatisfactory, to say the least.
Taking this argument further would mean that car manufacturers can no longer sue the makers of car parts bearing or consisting of that car manufacturer's brand and also having a decorative function (e.g. the Mercedes star, or the Jaguar cat , or wheel caps bearing the original manufacturer's marks), because the brand would not be used to identify the manufacturer of the parts but only "in order faithfully to reproduce those vehicle parts", to use the ECJ's words. Because the brand - being itself the part, or being placed on a spare part on which it is used as decoration - would not be used to distinguish these goods from those of another spare parts manufacturer.
Take another example: Barbie could henceforth be sold with miniature GUCCI, PRADA and LOUIS VUITTON fashion, or such fashion could be produced by any maker of Barbie accessoires, without the consent of the respective trademark owners, because clearly the brands would not serve to distinguish the makers of these toy clothes (e.g. Mattel's) from those of other makers of toy clothes.
One can only guess what the ECJ's decisions will mean for the spare parts and accessoires industry. In any event, it has made the enforcement of trademarks much more difficult where these marks are only used as a secondary source indicator (i.e. a designation identifying not the manufacturer of this particular derivative product (spare parts, model cars), but of the original product (the car as such).
In looking at the use of a mark as a company name and/or trade name (or shop name), the ECJ follows its very narrow interpretation of the scope of protection offered by trademarks. It insists on the legally correct, but somewhat useless definition:
21 The purpose of a company, trade or shop name is not, of itself, to distinguish goods or services. The purpose of a company name is to identify a company, whereas the purpose of a trade name or a shop name is to designate a business which is being carried on. Accordingly, where the use of a company name, trade name or shop name is limited to identifying a company or designating a business which is being carried on, such use cannot be considered as being ‘in relation to goods or services’ within the meaning of Article 5(1) of the directive.
This is nothing new and nothing spectacular. But the real question (and this is a very old discussion) is: where do you draw the line? And can you draw a clear line? What, if the shop name appears on price tags for clothes? What, if the shop name is also affixed above the shelves on which the goods are displayed? What, if the bag in which the goods are carried away bears the shop's name? And what if the shop has both its own branded bags and bags provided by some of its suppliers showing their mark? Does the sign designate the goods or the shop?
Instead of offering clear guidance on the subject of company names, the ECJ has again stuck to its case-by-case approach. Rather than adding some flesh to its judgment by defining clear criteria as to when the use of the mark as a trade name or company name constituted infringing use of the mark, it has referred the case back to the Cour d'Appel which will be left with the same empty wording as in the Opel case. The outcome reads like this:
26 (...) the unauthorised use by a third party of a sign which is identical to a registered mark in relation to goods or services which are identical to those for which that mark is registered cannot be prevented under Article 5(1)(a) of the directive unless it affects or is liable to affect the functions of the mark, in particular its essential function of guaranteeing to consumers the origin of the goods or services.
27 That is the situation where the sign is used by the third party in relation to his goods or services in such a way that consumers are liable to interpret it as designating the origin of the goods or services in question. In such a case, the use of the sign is liable to imperil the essential function of the mark (...).
28 In the main proceedings, it is for the national court to determine whether the use by Céline SARL of the Céline sign affects or is liable to affect the functions of the ‘Céline’ sign, particularly its essential function.
Thank you, ECJ - that was not worth the ink.
Once there, the ECJ still had to make some sort of statement in relation to Art. 6 (1) (a):
"The trade mark shall not entitle the proprietor to prohibit a third party from using, in the course of trade, his own name or address. "
The court had ruled earlier that this provision is not limited to the names of natural persons (Anheuser-Busch, Case C-245/02, paragraphs 77 to 80 - must have been the time when the ECJ still had a legal opinion of its own).
At least, the Court did not offer something new, but stuck with its earlier findings that the claimant can only prevent the other company from using its company name if the use by that company of its company name or trade name is in accordance with honest practices in industrial or commercial matters, which, again, was for the national court to find out.
Before this judgment, if I had been the owner of a trademark for clothes, I would have had no qualms whatsoever suing a clothing retailer over his use of my mark as a company name or on his shop. This is particularly true considering that many brand owners have their own flagship stores in which they are selling their brand exclusively, and on which the brand is also the shop name.
Now, I had better think twice.