The recent opinion of Advocate General Wahl in the European Court of Justice (CJEU) in Iron & Smith v Unilever (C-125/14) considered the interrelationship between national trade marks, on the one hand, and Community trade marks with a reputation on the other, and subsequently the scope of protection afforded to an earlier Community trade mark with a reputation.
In particular, the Court considered questions relating to the interpretation of Article 4(3) of the Trade Mark Harmonisation Directive and whether the registration of a later national trade mark may be refused where a Community trade mark, which enjoys a reputation in other parts of the European Union, is not widely known in the EU member state where the registration is sought.
Article 4(3) reinforces Recital 10 of the preamble of the Directive and emphasises the fundamental importance of ensuring consistency and coherence in the level of protection afforded to registered trade marks throughout all EU member states.
The case relates to Unilever’s opposition, based on their earlier Community registration for the trade mark IMPULSE, to the Hungarian trade mark application made by Iron & Smith Kft for the coloured figurative sign “be impulsive”; the latter mark being used for a range of feminine hygiene products that are sold in Hungary.
The Hungarian Trade Mark Office found that Unilever sold large quantities of deodorant under the IMPULSE mark in both the United Kingdom and Italy, with the brand enjoying a market share of 5% and 0.2% respectively in these countries. On this basis, despite the Hungarian Office indicating that there was no acknowledgeable market share for IMPULSE deodorants in Hungary, they declared that the (IMPULSE) mark had a reputation in a substantial part of the European Union, and, given this reputation, that there was a risk of the later mark (be impulsive (stylised)) taking unfair advantage. The Hungarian Office therefore rejected Iron & Smith’s application on the grounds stipulated in Article 4(3) of the Directive.
Iron & Smith appealed to the Budapest Municipal Court seeking an annulment of the decision, raising doubts on the Hungarian Office’s interpretation of Article 4(3). The Budapest Court sought a preliminary ruling from the CJEU on the following issues:
1) Is it sufficient, for proving that a Community trade mark has a reputation within the meaning of Article 4(3), for the earlier Community mark to have a reputation in a member state different to that where the opposition is being lodged?
2) Are the principles relating to genuine use applicable in the context of territorial scope?
3) If the proprietor of an earlier Community trade mark has proved that the mark has a reputation in countries other than where the application for the later national trade mark has been lodged, may the proprietor also be required to adduce conclusive proof in relation to the territory where the application is sought?
4) If the mark has been extensively used in a substantial part of the European Union but is relatively unknown to the relevant national consumer in the territory where the application is sought, what facts must the earlier Community trade mark proprietor prove to show that use of the later mark is taking an unfair advantage, or causing detriment to, the reputation or distinctive character of the earlier mark?
In relation to these questions Advocate General Wahl split the analysis of Article 4(3) into two conditions; the first condition was establishing that an earlier Community Trade Mark enjoys a reputation in a substantial part of the European Union, and the second condition was that use of the later national trade mark must take unfair advantage of, or be detrimental to, the distinctive character or reputation of the earlier Community right. In his reasoning AG Wahl indicated that both conditions must be met in order for the criteria of Article 4(3) to be satisfied. However, he proposed that there was no requirement to prove a likelihood of confusion between the earlier mark with a reputation and the later national mark.
In his analysis of questions 1 – 3, AG Wahl indicated that Article 4(3) reflects the idea that the value of a trade mark extends beyond an indication of origin, but also reflects the ‘advertising function’ of the mark, such that what is protected by a registered trade mark is an indication of the economic success of the mark.
In his consideration of the first condition, AG Wahl indicated that difficulties in evaluating the scope of Article 4(3) arise as the legislation is silent as to the geographical territory within the European Union that must be covered in order to establish that a reputation has been acquired.
In regards to establishing a reputation, AG Wahl turned to the principles established in General Motors (C-375/97) and Pago International (C-301/07), which indicate that for a reputation to be established in a substantial part of the European Union, the mark must be known by a significant part of the relevant public in a substantial part of that territory. Even though the factual background in these cases was somewhat different to that in the present dispute, AG Wahl inferred from their reasoning that reputation in one member state, may, provided that a significant part of the public concerned by the goods and services claimed in the later right coincides with the relevant public in that same member state, be sufficient to establish a reputation in the European Union. His reasoning behind this analysis was based on the principle of uniformity, and indicated that protection throughout the European Union would be compromised if a Community trade mark with a reputation could only enjoy that reputation in the geographical area where the reputation was established.
Wahl reiterated that reputation depends on the relevant market for the goods and services under consideration and that it is for the national court to establish whether the earlier Community mark enjoyed a reputation in a substantial part of the European Union.
In analysing this issue, it is for the national court to take a global consideration of the relevant factors, taking into account the market share held by the earlier mark, the intensity and geographical extent of the use, the duration of use and the size of the investment made by the undertaking in promoting the mark. Therefore, the establishment of a reputation in a substantial part of the European Union is based on a knowledge threshold requirement that incorporates both geographical and economic factors. The significance of the relevant market for the goods and services in question is of particular importance when undertaking this analysis. However, this analysis does not have to include the consumer from within the territory within which the opposition is based.
The relevance of the concept of genuine use was also considered when evaluating whether the earlier Community mark had established a reputation. However, it was considered that genuine use and reputation pursued different objectives and therefore could not be considered in the same analysis. Furthermore, the criteria for genuine use must be distinguished from those applicable to assessing reputation.
Even if a proprietor of an earlier Community mark can establish that it exhibits a reputation, the referring EU national court will still need to determine whether the (opposed) later national trade mark takes, or will take, an unfair advantage of or will be detrimental to the distinctive character of the earlier mark. It is therefore conceivable that the first condition of Article 4(3) could be met, yet the proprietor of the earlier right does not satisfy the second condition and therefore cannot enforce any rights.
A key element of this case was that the prior Community right for IMPULSE did not encompass a reputation in Hungary and might have actually been unknown to the relevant public in that territory. AG Wahl therefore indicated that it is for the referring (Hungarian) Court to determine whether the prior Community mark, as used in the United Kingdom and Italy, was known to the relevant Hungarian consumer. However, he did propose that just because the earlier mark may not enjoy a reputation in a particular EU country, it does not automatically indicate that it is totally unknown to the relevant public in that country.
AG Wahl observed that the Court in General Motors indicated that the later mark can only be detrimental to the earlier mark with a reputation, if there is a sufficient degree of knowledge of the earlier mark, as only with this degree of knowledge would it be possible for the relevant public to make the association between the two marks, even if they have dissimilar goods, and thus be capable of having a detrimental effect on the earlier mark.
The knowledge of the relevant public in the EU member state where protection for the later trade mark is being sought is therefore of the upmost importance when determining whether the later national trade mark is capable of causing a detriment to the earlier mark and thus satisfying the second condition. This does cause some issue with the principle of uniformity. However, it was considered by AG Wahl that the territorial scope of protection afforded to a trade mark proprietor should only extend to prohibit uses that affect the function of the trade mark in question. Thus, if the mark is not known in an EU territory, the likelihood of there being any detriment to the earlier mark is limited, and therefore the later national mark cannot be seen as taking an unfair advantage.
The European Court has previously indicated that a link must be established in the mind of the relevant consumer between the earlier Community mark with a reputation and the later national mark. In regard to this, AG Wahl proposed that those who make a link between the marks must equate to a commercially pertinent proportion, such that the commercial implications of this proportion will be considerable. The establishment of a commercially pertinent proportion is of particular importance in the free-riding situation that is of relevance in this case, as it is difficult to conceive that free-riding can occur where the relevant consumer in the specific territory in which the opposition has been brought is unaware of the prior mark. The European Court had also specified that even if the link is established, the risk of detrimental effect cannot remain a simple assumption.
The European Court had previously proposed that the issue of assessing injury to the prior Community mark must take account of all the relevant factors and take a global assessment of the strength of the earlier mark, the relevant public and the goods and services covered by the marks. It is therefore for the proprietor of the earlier mark to prove actual and present injury to the mark, or that a serious likelihood of injury will occur in the future. In regard to this, the European Court has set the standard of proof in relation to blurring or tarnishment high, and it is for the proprietor to show evidence of a change in the economic behaviour of the average consumer of the goods or services.
It is the AG’s opinion that the stronger the reputation and more immediately and strongly the earlier mark is brought to mind by the later national mark for which registration is sought, the greater the likelihood that the later mark is, or will be, taking an unfair advantage.
The AG therefore indicated that the marketing of the goods and services of the later mark would be made easier in light of Unilever’s earlier mark. However, it is for the referring (Budapest) Court to look at how widely the prior mark (IMPULSE) is known and the image it conveys. Therefore, unlike in establishing reputation, particular importance is placed upon the knowledge of the relevant public in the member state where the later registration is sought and the opposition is brought.
In summary, for the conditions of Article 4(3) to be satisfied, it is sufficient for reputation to be established in an EU member state other than in the territory where the reputation is relied upon (and the opposition is brought) and it must be established that a commercially pertinent proportion of the relevant public in the member state in question (in the present case, Hungary) create a link with the earlier mark.
The opinion of AG Wahl in this case highlights how seriously the courts look at achieving consistency throughout all EU member states, through its reinforcement of the position that reputation in one member state can be relied upon in another member state, even if there is no knowledge of the mark in that territory.
A further interesting point raised by AG Wahl relates to the second condition of Article 4(3). AG Wahl indicates that a proprietor of an earlier mark may seek to rely upon Article 4(3) of the Directive, after the registration of the later mark, to declare that later mark invalid. It is proposed that a proprietor may be able to establish a reputation in their earlier mark, yet still be unsuccessful in opposing the later national trade mark, as they do not satisfy the second condition imposed by Article 4(3). In spite of this, AG Wahl indicates that, if the first condition is met from the start of any proceedings, then, providing the second condition is subsequently met, a declaration of invalidity in respect of the later national trade mark could still be envisaged at a subsequent stage. This is an interesting comment which might present a situation whereby a proprietor of an earlier mark with a reputation in one member state (for example, Italy or the UK), having failed in an opposition in a different EU country (e.g. Hungary), has another opportunity to remove a competing mark in that different member state (for example, Hungary), should they subsequently be able to show in an invalidation action that a proportion of the relevant (Hungarian) consumers now link the two marks and that this proportion is commercially impacting on the proprietor of the earlier mark.
Henry Ford once said that “You can’t build a reputation on what you are going to do”. It seems that, in European trade mark matters, this may soon, like history, be “bunk”.