Case C-149/11 Leno Merken BV v Hagelkruis Beheer BV, Opinion of Advocate General Sharpston, 5 July 2012
Journal of Intellectual Property Law & Practice (2012) doi: 10.1093/jiplp/jps159, first published online: October 11, 2012
The use of a Community trade mark in one Member State may not be sufficient to establish genuine use in the Community to show proof of use in an opposition or to defend a revocation action. It depends on how the market for the particular goods or services is defined.
The facts of this case are sparse, being limited to the identity of the parties and the services in question, which are essentially legal services. Various matters were agreed by the parties, including the similarity of the marks and the services and the fact that the use shown by Leno would have satisfied the requirement for proof of use, had the earlier mark been a national registration. No details of the market in question or the specific use made of the mark by Leno were provided to the ECJ. This left the only outstanding issue to be the question of genuine use in the Community.
There has been much speculation as to whether the action was artificially created to address the issue. Leno is a firm of trade mark attorneys and is part of the Knijff Group of trade mark attorneys. It does appear that Leno has a genuine interest in the trade mark ONEL. Aside from this, that the situation is one of concern and interest to trade mark attorneys and owners. The AG appears to be satisfied that there is a real issue at stake, as were the seven Member States which submitted observations, so the point may be moot. Indeed, European trade mark attorneys have a venerable history of constructing appropriate test cases for troublesome issues, which perhaps reflects the prohibitive cost and risks of litigating such issues in commercial disputes rather than any innate mischievousness.
The questions which were posed can be paraphrased thus:
(1) Must Article 15(1) of Council Regulation 207/2009 (‘the CTM Regulation’) be interpreted as meaning that use of a Community trade mark within the borders of a single Member State is sufficient to constitute genuine use of that trade mark, given that, had it been a national trade mark, such use would have been regarded as genuine use in that Member State?‘Is genuine use in one Member State always enough to show genuine use in the Community?’ to which the AG answered ‘no’. The AG based her conclusion on a statement in the ECJ decision in VITAFRUIT (Case C-416/04) that territorial scope of use is only one factor to be taken into account or genuine use. However, that decision dealt with sales to one customer only in a Member State and the conclusion may not necessarily translate to more extensive use in one Member State only.
(2) If Question 1 is answered in the negative, can the use of a Community trade mark within a single Member State as described above never be regarded as genuine use in the Community?‘Is genuine use in one Member State never enough to show genuine use in the Community?’ to which the AG by implication answered ‘no’.
(3) If the use of a Community trade mark within a single Member State can never be regarded as genuine use in the Community, what requirements apply—in addition to the other factors—in respect of the territorial scope of the use of a Community trade mark when assessing genuine use in the Community?‘If genuine use in one Member State is never enough to show genuine use in the Community, what needs to be shown?’—in response to which the AG referred to the market in the Community as a borderless internal market for the goods or services in question.
(4) Alternatively, must Article 15 of the CTM Regulation be interpreted as meaning that the assessment of genuine use in the Community should be carried out wholly in the abstract, without reference to the borders of the territory of the individual Member States (and that, for example, market share (product markets/geographic markets) should be taken as the point of reference)?‘Is the assessment a Community-wide internal market assessment, without consideration of Member State borders?’—to which the AG answered by implication ‘yes’. The actual answers of the AG were as follows:
Article 15(1) … must be interpreted as meaning that (i) use of a Community trade mark within the borders of a single Member State is not, of itself, necessarily sufficient to constitute genuine use of that trade mark, but (ii) it is possible that, when account is taken of all relevant facts, use of a Community trade mark within an area corresponding with the territory of a single Member State will constitute genuine use in the Community.Thus, genuine use in one Member State is not necessarily enough, and certainly not always enough, to show genuine use in the Community. Depending on the facts, genuine use in an area which happens to constitute one Member State might be enough in a particular case to show genuine use in the Community but this is not the test and it would be merely coincidental.
Genuine use in the Community within the meaning of Article 15(1) is use that, when account is taken of the particular characteristics of the relevant market, is sufficient to maintain or create market share in that market for the goods and services covered by the Community trade mark.What is important is the relevant commercial market for the goods or services, considered in respect of the borderless Community internal market, and whether the use is sufficient to maintain or create market share in light of the particular characteristics of that commercial market.
The questions referred in general terms to genuine use in the Community, without being limited to the context of proof of use in a national opposition. Therefore, the referring court and the AG were willing to deal with this as a topic equally applicable to proof of use in oppositions and revocation actions for non-use. The ECJ's approach is, however, open to speculation.
The issue of genuine use of a Community trade mark involves many nuances. Revocation for non-use is one the main methods of clearing the so-called ‘dead wood’ and of addressing the perceived problem of the cluttering of that register—a factor specifically discussed by the AG. As against this, any dilution of the principle that genuine use in one Member State is enough, could replace certainty with an element of doubt. To trade mark owners and attorneys, doubt equals risk and is to be avoided. If genuine use of a Community trade mark in one Member State does not suffice in all cases to show genuine use in the Community, it is likely that national business owners from the smaller Member States will be inclined to revert to filing national trade mark registrations.
The principle that genuine use in one Member State is enough to show genuine use in the Community dates back to the inception of the Community trade mark system. The questions posed by the referring court referred to the non-binding Opposition Guidelines of the Office of Harmonization for the Internal Market (OHIM) and Joint Statement No 10 by the Council and the Commission of the European Communities entered into the minutes of the Council meeting at which the CTM Regulation was adopted which stated: ‘The Council and the Commission consider that use which is genuine within the meaning of Article 15 in one country constitutes genuine use in the Community’. At the time, there were only 10 EU Member States, and such a definitive statement was regarded as uncontroversial. There may also have been an element of seeking to ensure that the Community trade mark system was attractive to users and to create certainty in terms of its effect. As the Community trade mark system and European Union grow in tandem, the perceived problem of cluttering and the accession of many new small Member States mean that the principle is increasingly being called into question as to whether genuine use in one Member State justifies the Community-wide monopoly being maintained.
This change in attitude prompts the question as to whether Community trade mark owners who filed their trade marks in previous years have a legitimate expectation that genuine use in one Member State would maintain their registration. While not specifically referring to this question, the AG pointed out that a Community trade mark registration which is revoked for non-use can be converted into a national application in a Member State where there has been genuine use. However, this generally incurs additional fees and results in an application which must proceed through the usual national examination procedures and may be refused on absolute or relative grounds. Even if the national application is accepted, the applicant has no enforceable rights in the meantime. Whether damages can be claimed dating back to the effective date of the application also depends on national law. This can be particularly important as revocation actions often arise as a defense to an infringement action and there is thus a strong likelihood that such issues will occur when there is an infringement which requires urgent action.
The significance of how the market is defined will become paramount if the AG's Opinion is followed, akin to its importance in competition law. Markets can have different characteristics depending on language obstacles, transportation or investment costs or consumer tastes and habits. The extent of use which will suffice to establish genuine use will vary hugely from an expensive, niche product (eg armoured tanks) to a fast moving consumer product, to a product which has a very limited geographic appeal (eg powdered milk or the example given by the AG, Scottish deep-fried chocolate bars).
Ultimately, the impact of this case will depend on whether the decision of the Court of Justice of the EU follows the AG's Opinion and how it frames—or reframes—the answers to the questions. In general, a large majority of ECJ decisions follow the AG's Opinion but the percentage is much lower where controversial cases are concerned.
This particular issue merges political issues (are all Member States equal?) with implications for existing registrations which might be vulnerable to attack depending on the outcome. It also rows back on the encouraging impression given at the launch of the Community trade mark system in the Joint Statements that national trade mark holders could safely move to use of Community trade marks without fear of loss of rights. It could ultimately signify a move away from the Community trade mark system for trade mark owners with national rather than international businesses, if the AG's Opinion that Community trade marks are for those trading at Community level only is followed.