It is now well established that the validity of Community Designs can be challenged, under Article 25 of the CD Regulation (Regulation 6/2002/EC), on the basis of earlier CTM registrations. A recent case before the (European) Court of Justice (Jose Manuel Baena Grupo v Herbert Neuman and Andoni Galdeano del Sel; Joined Cases C-101/11P and C-102/11P) illustrates the limits of such a challenge, however.
Baena Grupo, a Spanish company with significant commercial interests in the area of heat transfers (see the website www.jmb.es), owned a Community Design (426895- 0002) for a human-like cartoon figure (see the figure below) which was to be applied as ornamentation to certain types of clothing and headgear, as well as stickers.
The owners of an earlier CTM registration (no. 1312651) for a very similar human-like cartoon figure (see the figure below) applied to invalidate the Community Design under Article 25(1)(b) and Article 25(1)(e) of the CD Regulation.
OHIM's Cancellation Division found in favour of the applicant to invalidate under Article 25(1)(e). In the Division's view, the mark protected by the CTM was used in the subsequent CD and the use of the CD could therefore be prohibited by the CTM owner. Baena Grupo appealed against this decision. The Board of Appeal dismissed the appeal but under Article 25(1)(b) rather than Article 25(1)(e) of the CD Regulation. In the Board's opinion, the CD did not make use of the earlier CTM. However, according to the Board, the overall impression made by the CD was not different to that of the CTM. The CD therefore lacked the necessary individual character to be valid. The CD owner appealed again, this time to the General Court. The Court annulled the Board's decision and rejected the invalidity action. In a detailed analysis of the two cartoon characters, that would have done justice to a spot the difference competition, the Court noted, in particular, that the facial expression of the CTM character, when combined with its forward leaning position, suggested anger. This feeling of anger was absent from the CD character. The Court concluded that the relevant informed user (young consumers of t-shirts, hats and stickers) would note the feelings associated with the different characters. On this basis, the two characters created a different overall impression on the informed user in spite of the numerous similarities between the two images and the high degree of freedom of the designer of the CD, which had been accepted by the Court.
Given that the CTM registration owned by Messrs Neuman and Galdeano del Sel is the principal logo of their El Nino fashion chain (see the website www.elninostore.com), they appealed against this adverse decision to the (European) Court of Justice. The Court of Justice rejected the appeal (Joined Cases C-101/11P and C-102/11P), even though it had the backing of the CTM Office.
The principal ground of appeal related to the General Court's finding that the two designs created a different overall impression on the informed user. The criticisms were threefold.
- First, Messrs Neuman and Galdeano del Sel (and OHIM) argued that the General Court had been wrong to base its comparison of the earlier trade mark and the contested design on the imperfect recollection that informed users were said to retain after seeing the two figures. It was their (Messrs Neuman and Galdeano del Sel's) view that the comparison should be based on a comparison of the two human figures when they were placed side-by-side. This was said to be the nature of the comparison under design law. The imperfect recollection comparison was said to be an aspect of the comparison of two trade marks under trade mark law.
In considering this argument, the CJEU began by noting that Community Design legislation (Regulation No. 6/2002) does not include a definition of an "informed user". However, the Court confirmed its own earlier definition in PepsiCo v Grupo Promer Mon Graphic, C-281/10P), namely that an informed user lay somewhere between an average consumer (of the type known in trade mark law) who need not have any specific knowledge and who, as a rule, makes no direct comparison between the trade marks at issue, and an expert in the commercial area concerned who is attributed with detailed technical expertise. Thus, an "informed user" under design law was not a user of average attention, but a particularly observant one, either because of his personal experience or because of his extensive knowledge of the relevant commercial sector.
It followed, in the Court's view, that the very nature of the informed user (as defined above) means that, when possible, he will make a direct comparison between the earlier trade mark and the later (Community) design. Having said that, however, the Court went on to find that, since Community Design legislation did not specifically require such a direct comparison, it would be wrong to limit the assessment of overall impression on the informed user to such a (direct) comparison which might be impractical or an uncommon practice in the commercial area at issue. Bearing all of the above in mind, the CJEU found that the General Court had not erred in law by basing its reasoning on the imperfect recollection of the informed user's overall impression of the two silhouettes.
- The second criticism of the General Court's ruling on overall impression that was raised by Messrs Neuman and Galdeano del Sel (and OHIM) was that the Court had only considered the likely effect of the earlier trade mark and the (Community) design on the perception of a very narrow group of the public, namely young users of merchandise such as caps, stickers and T-shirts. The appellants argued that the Court should have considered the overall impression created in the minds of the general public as a whole.
This line of argument was also rejected by the CJEU, but without any detailed consideration of the principle that was being raised, namely should the comparison be made bearing in mind the whole of the relevant population or just a very narrow sample of that population (namely young people, children and users of printed matter, including advertising materials). The Court's view was that the Board of Appeal had defined the whole of the relevant public as young people, children and users of printed materials. The General Court had simply accepted that definition and made its decision accordingly. The CJEU therefore ruled that it could not be validly complained that the General Court "did not base its examination of the silhouettes on the whole of the relevant public".
- The third criticism of the General Court's consideration of overall impression was that they had placed too much emphasis on the facial expressions of the two silhouettes when deciding the issue.
The CJEU dealt with this simply and in a way that they often do when faced with difficult issues. They classified the matter as a question of fact. Since, under EU case law, the General Court has exclusive jurisdiction over findings of fact and the CJEU refuses to overturn those findings (of fact), unless they are so ludicrous as to be blatantly wrong, the Court declined to consider this criticism.
In the writer's view, there is no doubt that, if the design protected by the CD in this case had instead been protected by a CTM, then an invalidity action brought against that CTM would have succeeded, given the overall similarity between the two characters. This CJEU decision suggests that different rules apply in the area of designs and that an invalidity action brought on the basis of an earlier, conflicting right (registered design or registered trade mark) will be rather more difficult to sustain, although the precise position will, to a degree, be dictated by the degree of freedom that the designer had in developing the later design.
Baena Grupo may have won this particular battle, but there may be a price to pay further on down the line, since they should expect that their infringement rights will now be significantly narrower than they might have been if this invalidity action had never been brought.
As to the very important issue of creating "a different overall impression on the informed user", the position following the Baena Grupo case is as clear as mud. It seems that the informed user will be assumed to make a direct comparison between the two designs, except when it is either impractical to do so or an uncommon practice in the commercial area at issue to do so. These exceptions might seem to be quite high hurdles to jump in evidential terms. However, don't worry, because in the Baena Grupo case, the CJEU approved the "informed user's imperfect recollection of the overall impression" test that had been followed by the General Court, even though there was little or no evidence on the questions of whether, in that case, a direct comparison of the designs was possible, or practical or uncommon (to the trade). The position, when comparing two designs, which had become somewhat clearer following a number of EU national court decisions, has now been blurred by both the General Court and the CJEU in this latest decision. This is certainly not the first time that this has happened in EU trade mark and design practice and unfortunately, the writer has no doubt, it will not be the last.