ECJ decision in the CÉLINE case: Another frustrating non-judgment

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.

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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.

(see Arsenal Football Club; Case C-206/02, and Adam Opel, Case C-48/05).

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).

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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.

Ferrero vs. UEFA, part II

Lately, there has been an interesting inflation of EM 2008 marks registered in Germany. It offers an insight into a highly interesting legal fight between Ferrero and UEFA.

Ferrero, who has just filed a cancellation action against UEFA's EM 2008 CTM word mark, seems intent on using at least some kind of EM 2008 mark for itself in the run-up to the EURO 2008 in Austria and Switzerland. A quick search on the German trademark register revealed no less than four word/device marks for EURO 2008 and one word mark application, which is still pending (and has been so since 2003). In addition, another Ferrero word mark application for Österreich-Schweiz 2008 , applied for on 25 April 2004, is pending. This application enjoys priority over its English language equivalent, UEFA's international registration designating the EC (reg. no. 000807494) for Austria-Switzerland 2008.

Or ist this just a tactical move to make the German Patent Office (or better still, the Federal Patent Court, or one of the civil courts) declare the mark invalid on absolute grounds, or to obtain an judgment confirming that the EM 2008 portion of the word/device marks lacks distinctiveness? If this turns out to be, then the UEFA may find itself in an uncomfortable position if it tries itself to enforce the mark.

Ferrero would not be the first to file for a mark which it considers unregistrable on absolute grounds to gain certainty hereon. The word mark, at least, looks like a tough case, given the time it has been pending since it was filed on May 14th, 2003. And if the German Patent and Trademark Office continues to refuse to register the mark, odds are the UEFA will have a similarly hard time doing so, or enforcing its CTM in Germany, even if it manages to keep it in force. As long as a cancellation action against the CTM is pending, no decision will be rendered on the merits, and it is difficult to say whether courts will be inclined to grant interim relief on the basis of a mark in respect of which not only a cancellation action is pending, but which was also refused protection in Germany on absolute grounds.

Another interesting legal question: Does a national court, called upon as a Community Trademark Court, have the authority to refuse an injunction in respect of a mark which would not be registrable according to its national laws (in particular if the same mark is known to have been refused registration)? Or is it bound by the registration? Luckily, there is plenty of time to think this question over until the Games begin.

In the meantime, feel free to choose your favourite Ferrero EM 2008 mark.

Ferrero takes on UEFA over EM 2008 mark

Ferrero files cancellation against UEFA's EM 2008 mark

It looks as if Ferrero, a maker of chocolates (i.a. kinder products), has learnt its lesson from the FIFA World Cup in Germany in 2006. As can be seen from OHIM's website, FERRERO has recently (14 August 2007) filed a cancellation action against UEFA's EM 2008 word mark (CTM 004905411), registered for the marketing of the upcoming 2008 European Football Championships to be held in Austria and Switzerland. The mark is registered for a wide variety of goods, from dispensers of kitchen towels to vehicle lubrication. It is meant to secure the EURO 2008's official sponsors the exclusivity they pay for. However, in German speaking countries, EM stands for Europameisterschaft (European Championship). It is used as a generic abbreviation for any European championship from boxing to snooker. So EM 2008 could well be be considered a generic term for a European Football Championship by German (and Austrian) standards.

Ferrero's fight against the attempts by organizers of international sports events to secure extensive protection for their trademarks and logos has something of a tradition. In April 2006, when FIFA's enforcement of its Fußball WM 2006 mark (for Fußball-Weltmeisterschaft, German for Football World Cup) was at its nastiest, it obtained the cancellation of the mark before the German Federal Court of Justice (BGH). In a parallel decision, Ferrero also obtained the reversal of the Federal Patent Court's decision not to cancel the trademark WM 2006 (for Weltmeisterschaft 2006, or World Cup 2006) for most of the goods claimed, in particular for everyday consumer goods (I won't list them in detail here, the list of goods and services fills 10 of the decision's 37 pages...).

Not without a cause: Ferrero has a long tradition of including collectible photos of players of the German Mannschaft with two of its most popular chocolate products (duplo, hanuta) before important tournaments such as World Cups and European Championships, usually featuring the competition's name on it.

A very interesting side aspect of the story is that FERRERO is actually an official sponsor of the UEFA European Football Championships in Austria and Switzerland in 2008. So on the face of it, Ferrero may actually be acting against its own interests in cancelling the mark.

Another cancellation is pending against the UEFA's EURO 2008 mark (CTM 003410529), filed by Julius Erdmann Beteiligungsgesellschaft mbH based in Cologne.

Looking at UEFA's CTM portfolio and pending applications, one may be tempted to think that there are more marks that may face cancellation actions, if and when they are registered. Word marks such as POLAND UKRAINE 2012 (CTM 005760012), CROATIA HUNGARY 2012 (CTM 005759956) or ITALIA 2012 (CTM 005759725) , but also EURO 2012 (CTM 004327854) and EURO 2016 (CTM 005486899) look like invitations to file for cancellation.

As far as Germany is concerned, UEFA has not been lucky with its its EURO 200X mark. In 2004, the Federal Court of Justice turned down UEFA's infringement claim in an action against a manufacturer of balls featuring a EURO 2000 logo, albeit not UEFA's official logo. The decision was based on the grounds that the "EURO 2000" word element in UEFA's word/device mark EURO 2000 lacked distinctiveness. During the proceedings, UEFA had itself admitted that EM 2000 was generally understood to refer to the then ongoing European Football Championships and therefore descriptive. This argument does raise the question why UEFA is now applying for the above word marks, which do not appear to be any more distinctive for the respective editions of the same championship.

Let's hope that the European legal machinery will decide on the cancellation in time. When Ferrero obtained the cancellation of the FIFA mark in April 2006, it was almost too late for most companies to jump on the WM 2006 train, which had long left the station by then.

P.S.: Ferrero seems well prepared to fight this through, see here.

O2 gives Deutsche Telekom Magenta Blues

Yet another colour CTM cancellation action

On the face of it, Red Bull and Deutsche Telekom have only little in common. While the incumbent former telecoms monopolist struggles hard to reverse the trend of a steadily declining clientele, Red Bull's sales of its Energy Drink have been growing at a breathtaking pace. When it comes to trade marks, however, they face a similar problem.

Both companies are owners of colour trademarks consisting of two colours (CTM 000212753 for Deutsche Telekom, and CTM 002534774 for Red Bull), and both colour trademarks are being attacked on the grounds that they do not meet the criteria set by the Community Trademark Regulation, more specifically Art. 4 of the Regulation, which reads as follows,

A Community trade mark may consist of any signs capable of being represented graphically (...).

and Art 7 , according to which

1. The following shall not be registered:

(a) signs which do not conform to the requirements of Article 4

One may wonder why these marks have been registered in the first place, if they do not conform to these requirements However, as mentioned earlier, the troubles for owners of colour trademarks are fairly new. They stem from a 2004 decision by the ECJ, which ruled, in respect of abstract colour marks consisting of two or more colours, that

a graphic representation consisting of two or more colours, designated in the abstract and without contours, must be systematically arranged by associating the colours concerned in a predetermined and uniform way."

Trademark owners all over Europe have been asking themselves what to make of this. Whilst they were still thinking, some malevolent competitors have filed invalidity actions: XL Energy Marketing Sp. z o.o. and Boost Drinks Ltd. in the case of Red Bull, O2 - one of Germany's big four mobile telecoms network operator - in the case of Deutsche Telekom. While Red Bull's competitors seem to haven an own interest in using the colours for their products, O2's motivation appears to be purely altruistic. Its corporate colour has been navy blue ever since it took over the former network operator VIAG Interkom.

The prevailing question in the briefs exchanged by the parties before the OHIM seems to be whether the conditions for registration of a mark have to be met at the time of registration only, or whether a subsequent change in the interpretation of the law (the Community Trademark Regulation), triggered by the much-discussed Heidelberger judgment in the instance, shall affect the validity of the registration. The law offers no clear guidance:

Article 51: Absolute grounds for invalidity

1. A Community trade mark shall be declared invalid on application to the Office or on the basis of a counterclaim in infringement proceedings,

(a) where the Community trade mark has been registered contrary to the provisions of Article 7 (...)

The parties are now fighting over whether the marks should not have been registered by OHIM had it been aware of the "correct" interpretation of the law (in which case the mark may be subject to cancellation for invalidity), or whether the registration of the mark was in accordance with the law at that time. Deutsche Telekom understandably argues that the ECJ's decision marks a change in the law itself, whereas O2 argues that a change of interpretation does not alter the law as such.

The question as such is highly interesting: Can a trademark that was registered in line with the legal requirements of the time of its registration be declared invalid on the grounds that the interpretation of the law changed through the years? That would effectively render a huge amount of trademarks vulnerable to cancellation. It would create a considerable legal incertainty as to the validity of trademark rights, the avoidance of which is the very raison d'être of registered trademarks. Each and every new ECJ judgment on the registrability of signs would trigger a series of new cancellation actions. It remains to be seen how OHIM and - in all likelihood, unless the matters are settled - the CFI (and eventually even the ECJ) respond to that question.

By the way, it is interesting to see how much Deutsche Telekom, notorious for its huge trademark budget, is investing into the defence of its two-colour trademark when it owns a single colour CTM trademark (001353358) for the colour magenta, which it has so far widely used and enforced quite successfully. The infringement action of Deutsche Telekom against Mobilcom, a mobile communcations reseller, led to two landmark judgments (here and here) by the Federal Court of Justice, Germany's highest civil court, on the enforceability of trademarks (albeit based on the national German registration). Its interest in this action may therefore be more academical, after all.

Not so for Red Bull, whose colour mark has repeatedly given it wings in its enforcement campaign. A cancellation of the mark would probably leave it with a nasty hangover. Not something Red Bull people are likely to be used to.