When it comes to tackling infringers, it helps to think outside the box. Where the source of infringing goods is hard to reach, taking the fight to a less obvious but more accessible part of the supply chain can effectively cut the link between the products and the marketplace. However, such creative action will not always be available or advisable, and brand owners contemplating it should consider the guidance given by the ECJ in Frisdranken Industrie Winters BV v Red Bull GmbH (Case C-119/10).
The RED BULL energy drink is known worldwide and its success has sparked countless me-too brands and copycats. The ones at issue in this case went under various names, including BULLFIGHTER, PITTBULL, RED HORN, LONG HORN and LIVE WIRE. They were all produced and marketed by Smart Drinks Ltd., a British Virgin Islands company.
The BVI entity did not work alone, however. It contracted with a Dutch entity, Frisdranken Industrie Winters BV ("Winters"), to fill its branded cans with drinks. Essentially, Smart Drinks supplied Winters with empty cans branded with BULLFIGHTER and the other subject marks, and with the extract used to make the drinks. Winters then prepared the extracts in accordance with instructions from Smart Drinks, filled and sealed the cans, and placed them at Smart Drinks’ disposal. The latter then exported the product.
Red Bull sued Winters for infringement of International Registrations for RED BULL with effect in the Benelux. It argued that Winters had infringed because by filling the branded cans it was effectively "using" trademarks that were confusingly similar to RED BULL.
Red Bull succeeded at first and second instance and obtained an injunction against Winters in respect of the BULLFIGHTER, PITTBULL and LIVE WIRE cans, all of which were regarded as confusingly similar to the registered RED BULL mark.
On further appeal by Winters, however, the Hoge Raad der Nederlanden thought the issue was not so clear-cut and asked the ECJ for guidance on whether Winters’ mere filling of branded cans amounted to "using" the infringing marks.
ECJ Kicks the Can
The ECJ shared the referring court’s misgivings. Winters’ activities were not as clearly "use" of a trademark as the lower Dutch courts had presumed.
Under Article 3 of the Directive, use of a trademark for the purposes of infringement was defined as:
(a) affixing the sign to the goods or to the packaging thereof;
(b) offering the goods, or putting them on the market or stocking them for these purposes under that sign, or offering or supplying services thereunder;
(c) importing or exporting the goods under the sign;
(d) using the sign on business papers and in advertising.
In the ECJ’s view, Winters had done none of those things. It had not itself affixed the signs to the cans; that had been done before the cans were delivered. It had not itself offered the goods, placed them on the market, or stocked them with the intention to do so, but rather only filled the branded cans, sealed them and waited for Smart Drinks to collect and export. Nor indeed was the importing or exporting handled by Winters, but rather solely by Smart Drinks. Finally, Winters had not itself used the infringing marks in business papers or in advertising – its sole role had been to fill and seal the cans, under instructions from Smart Drinks.
The ECJ accepted that Winters had played a role in making it possible for Smart Drinks to market goods under infringing marks. However, in doing so it was merely providing a technical service without any interest in the way in which the cans were presented to the consumer. Rather, the Court found, Winters "only creates the technical conditions necessary for the other person to use" the signs, and was not actually "using" them itself.
The Court drew an analogy with Internet service providers such as Google, where "the fact of creating the technical conditions necessary for the use of a sign and being paid for that service does not mean that the party offering the service itself uses that sign".
Winters had done nothing to promote the goods or to assist Smart Drinks in doing so, and its involvement was not apparent to the consumer. Moreover, even if "use" had been found, the service provided by Winters was that of filling cans, and the Court did not regard that technical service as similar to the non-alcoholic beverages for which Red Bull’s mark was protected.
Taking all of this into account, the Court held that, in the circumstances of this case, Winters could not be regarded as having used the trademarks appearing on the cans.
Production line service providers like Winters will no doubt drink deeply of this judgment. It provides welcome reassurance that acting in a purely technical capacity with no interest or involvement in branding, further handling or marketing is unlikely to expose them to liability for trademark infringement.
Still, the fact that this case went before four courts before it was resolved may have some supply chain service providers contemplating the possibility of seeking cost indemnities from the manufacturers who instruct them. For brand owners, though, the judgment is equally important.
It is not always easy or even possible to bring an infringement action against the source of infringements, and the ability to cut goods off at some other stage in the production line can be very valuable.
The decision in Frisdranken shows that in circumstances like those in this case, such an action is unlikely to hold water. By the same token, though, the ruling suggests that there are factors that could tip the scales in the other direction.
Had Winters itself been contracted to apply the infringing marks to the cans, for example, it would arguably have been "affixing" the mark in a way that brought its actions within the scope of "use", even if it had been doing so only on the instructions of Smart Drinks. Likewise, had Winters itself exported the goods onward for Smart Drinks instead of merely holding them for collection and export by the latter, its actions could have counted as "exporting" for the purposes of "use".
Of course, even circumstances like these would not necessarily have amounted to a slam dunk for Red Bull. Winters could have argued that it was still merely providing a technical service under instructions (application of labels, filling of cans, exporting to an address on Smart Drink’s instructions) without any interest in how the goods were presented to the market. However, on balance, it seems likely that such activities would be seen as going beyond the merely "technical" even though the service provider might not itself have any interest in the branding or in the marketing of the goods.
It would still be possible that use in respect of services like packaging, filling and exporting might escape infringement on the basis that they are not similar to goods for which relevant trademarks are protected. However, these are issues of fact for national courts, and if the service provider’s activities are sufficiently involved with branding and getting goods to markets, then that could tip the balance in favour of the brand owner. The can might be half full, after all.