The recent judgment in ONEL has provided guidance on what factors should be considered when determining whether there has been genuine use of a CTM in the Community. In recent years there has been a lot of discussion about the use requirements relating to CTMs and how much use is necessary in order to maintain a registration. There has been a growing awareness that CTM owners who have no intention of using their marks in any significant portion of the EU still have rights that block competitors from entering the EU marketplace at all.
The ONEL case focussed on the controversial issue of what constitutes genuine use of a CTM (Case C - 149/11 Leno Merken v Hagelkruis Beheer B.V.). The CJEU was asked to consider whether use of a CTM within a single Member State is sufficient to constitute genuine use of the mark throughout the EU. To date there has been no clear guidance on the minimum geographical extent of use required of a CTM in order to be able to show genuine use of that mark, although OHIM has opined that use in one EU Member State should be sufficient.
If a CTM is not used for any continuous period of 5 years following the date of registration, it will become vulnerable to cancellation by third parties for non-use (unless there are acceptable reasons for such non-use, which are rarely found). In opposition and infringement proceedings, a CTM registration that has been registered for a period of over five years must generally have been put to genuine use in the Community, in connection with the goods and services in respect of which it is registered and on which reliance is placed, in order for the proprietor to rely on it against a later identical or similar mark.
We reported the background to the ONEL case in full in our Spring 2010 issue. In brief, the Benelux IPO (BIPO) rejected an opposition based on an earlier CTM that had been used only in the Netherlands, holding that use in only one EU country was not genuine use "in the Community". The BIPO considered that such limited use did not justify the wide-reaching exclusive rights granted by a CTM.
In the resulting reference to the CJEU, the Advocate General considered that, in determining whether a CTM had been put to genuine use, a combination of factors must be considered. Use of a CTM within the national borders of a single Member State is not, of itself, necessarily sufficient to constitute genuine use. The AG's concern here was that the wide protection granted by a CTM may not be appropriate where the mark is intentionally being used at a national level thereby preventing competitors the opportunity to use the same or a similar mark within the internal market for goods or services identical or similar to those covered by the earlier CTM registration.
As you would expect, use outside of the EU is irrelevant in showing genuine use of a CTM. The factors to be considered are whether the use of the mark is sufficient to maintain or create market share within the EU for the goods and services covered by the CTM registration and whether it contributes to a commercially relevant presence of the mark in relation to the protected goods and services in the common market.
The ONEL Case Decided, At Last
The CJEU issued a decision agreeing with the Advocate General's opinion and also offered some quantifiable guidance on what factors should be considered when determining genuine use.
These factors include: the characteristics of the market concerned, the nature of the goods and/or services protected by the trade mark and the territorial extent and scale of the use as well as its frequency and regularity. With reference to the issue of ‘territorial extent', the assessment will be made on a unitary basis, such that physical borders of Member States should be disregarded and use will instead be assessed based on the Community as a single territorial entity. Use need not be over an extensive geographical area, as this is only one of the factors to be considered.
The CJEU also held that it is for national courts to assess whether or not the genuine use conditions are met, taking into account all of the relevant factors on a case-by-case basis.
This decision does provide some, although not a great deal of, clarity as to what factors will be considered in determining what is sufficient to constitute genuine use in the Community.
It is, however, the decision the CJEU had to make in order to ensure that the core of the CTM concept survives, namely, that a CTM registration is a unitary right and that the EU should be treated as a single market.
Ignore national borders, the CJEU says. Simple. Practically speaking, however, it may be quite difficult to meet these abstract requirements. For instance, many companies find themselves observing national boundaries for a variety of reasons: the business does not translate into all of the EU Member States, regulatory provisions, financial limitations, commercial and co-existence agreements with third parties and so forth. Also, what about proprietors who obtain CTMs for goods that are sought out by only a limited number of consumers, and perhaps in only a small part of the EU? Should they be required to show a particular scale of use, and if so, what level of use is sufficient? How will each of the factors evidencing genuine use be weighed?
If the point of the exercise is to show that a CTM has been genuinely used in the Community, should evidence relating to territorial extent be more persuasive than evidence of the characteristics of the market concerned? Only time will tell.
Generally speaking, trade mark proprietors need more certainty in order to be able to form a realistic view of how vulnerable their CTMs may be, not least in evaluating the strength and/or weakness of their position in conflicts with third parties. CTM owners contemplating enforcement action based on rights subject to use requirements should consider whether they have enough use to support those rights first. ONEL at least confirms that national boundaries technically do not matter, but in borderline cases the jury is still out on what actually does. It may be that the best course of action is to seek national rights where a brand owner truly has no interest that justifies protection at a Community level. Caution to CTM owners going forward.