David versus Goliath chocolate trade mark dispute: does size count when applying the concept of genuine use?

Author: Valentina Torelli (Salvador Ferrandis & Partners, Madrid, Spain)

Reber Holding GmbH & Co KG v OHIM, Wedl & Hofmann GmbH, C-141/13 P, EU:C:2014:2089, Court of Justice of the European Union (CJEU), 17 July 2014

Journal of Intellectual Property Law & Practice (2014) doi: 10.1093/jiplp/jpu175, first published online: September 19, 2014

This long-running dispute saw a small and medium enterprise (SME) opposing a large corporation for the exclusivity in the word Walzertraum, which featured in both their trade marks for goods in the same market sector. Resolving this dispute, the CJEU clarified what it is meant by genuine use within the European Union, what criteria are to identify it, what its purpose is, irrespective of the size of the undertakings concerned.

Legal context

Article 43(2) of Regulation 40/94 on the Community trade mark (CTM) provided that, during the opposition proceeding before the Office for Harmonisation in the Internal Market (OHIM), a CTM applicant can require the other party to prove genuine use in the Community of the earlier CTM in relation to the goods and services for which it is registered and on which the opposition is based, unless there are proper reasons for non-use, and provided that two requisites are met:
* the earlier CTM has been used during a period of five years preceding the date of publication of the CTM application; and

* the earlier CTM has at that date been registered for not less than five years.
According to Article 43(3) of Regulation 40/94, the same rule applies to national trade marks in respect of proof of use in the Member States in which they are protected.

Finally, Rule 22(3) of Regulation 2868/95, implementing the CTM Regulation (as amended by Regulation 1041/2005), sets out the guidelines to substantiate the proof of use:
The indications and evidence for the furnishing of proof of use shall consist of indications concerning the place, time, extent and nature of use of the opposing trade mark for the goods and services in respect of which it is registered and on which the opposition is based, and evidence in support of these indications in accordance with paragraph 4.
Although the concept of genuine use is not expressly defined, Community legislation furnishes the criteria whereby the use of a trade mark in the relevant territory is qualified as genuine. In addition, the courts of the European Union have pronounced on this issue several times, addressing both practitioners and users in dealing with the proof of use.

Facts

Austrian company Wedl & Hofmann (W&H) applied to register the figurative mark represented below, mainly featuring the word ‘Walzertraum’, as a CTM for ‘coffee; instant coffee; decaffeinated coffee; sugar’ (Class 30), in August 2005.



A few days after publication of the CTM application, in February 2006, German company Reber opposed, claiming a likelihood of confusion with its earlier national word mark ‘Walzertraum’, registered for ‘bakery products, confectionery, chocolate and sugar confectionery’ (also in Class 30).

W&H cleverly asked for the proof of use of the German Walzertraum mark. While the initial opposition was upheld by the Opposition Division, it was subsequently rejected by the Board of Appeal for lack of probative value of the documents submitted by Reber. These were:
A written statement of Reber's manager, dated 31 January 2007;

Two undated photographs displaying the Reber confectionery;

Copies of the chocolates' monthly lists of sales for the period from March 2001 to December 2002;

Excerpts from Reber's website, displaying different kinds of chocolate marketed by the company, dated 30 March 2004 and 23 January 2007.
The Board of Appeal concluded that Reber had not proved genuine use of its national mark between the relevant period of 13 February 2001 to 12 February 2006. Some of evidence fell outside that period while the other documents, although belonging to that time frame, were insufficient to sustain proof of use under Rule 22(3) of Regulation 2868/95.

On appeal to the General Court, Reber presented two pleas in law. The first plea concerned the wrong interpretation of Articles 42(2) and 42(3) of Regulation 207/2009, in that the Board of Appeal erroneously denied the genuine use of the Walzertraum mark, given the volume of the sales and the number of sale points. The second plea referred to the violation of the principle of equal treatment as Reber had been discriminated against in comparison to multinational companies in respect to the proof of the genuine use. Said Reber, the proof of use is more complicated for a small and medium sized enterprise (SME), especially as regards the volume of sales, and this issue was treated in the present case differently to a previous dispute (R1101/2004-1), in which Reber succeeded in proving the genuine use of one of its marks in similar conditions, where the relevant goods were pralines. The General Court simply affirmed the Board of Appeal's decision as to the first plea in law and rejected the violation of the principle of equal treatment.

Before the Court of Justice of the European Union (CJEU), Reber appealed the contested decision on the same two grounds.

Analysis

The CJEU first observed that the pertinent legislation was Regulation 40/94, given that the Walzertraum CTM had been applied for on 16 August 2005. The court opened its reasoning about the wrong application of Article 43(2) and (3) of this Regulation, citing its previous judgments in Leno Merken C-149/11, EU:C:2012:816, para 29; La Mer Technology, C-259/02, EU:C:2004:50, para 27; and Ansul, C-40/01, EU:C:2003:145, para 43. Accordingly, the concept of genuine use is inherently connected with the trade mark's function as origin identifier of the goods and services for which the mark is registered. That said, use is genuine when it is directed at creating or maintaining a market share in the sector concerned for those goods and services.

The CJEU added that the assessment of the genuine use must be based on all the facts and circumstances relevant to establishing the real exploitation of the trade mark in the course of trade, according to rule 22(3) of Regulation 2868/95. To this extent, referring to its previous case law in Ansul, EU:C:2003:145, para 39, the court explained that, although the use of a mark does not always need to be quantitatively significant to be deemed genuine, the nature of the products and the geographical extent of the use are to be considered.

The CJEU thus concluded that the General Court did nor err in applying the concept of genuine use, considering that the Reber's Walzertraum mark had been geographically and quantitatively limited to a local and narrow exploitation: an annual sale of 40–60 kg of chocolates from March 2001 to December 2002, directed to 80 million German consumers and which occurred solely at the Reber confectionery in Bad Reichenhall, a town of 18 000 inhabitants.

The CJEU also rejected Reber's argument claiming that the assessment of its mark's genuine use should have considered the artisanal nature of the products for which the mark is registered, namely pralines. On the contrary, the court affirmed that such assessment must be based on the products and services as specified in the trade mark application, being simply chocolates in the present case, and not on a specific marketing concept.

Finally, the CJEU said nothing about Reber's marketing on the internet, since this was not a matter of law and it fell outside its competence, and confirmed that the Community and the national trade mark systems are autonomous so that neither the OHIM nor the European judicatures are bound by national decisions. As a consequence, the German decision recognizing the Walzertraum mark's genuine use was not relevant here.

In regard to the second plea in law, the CJEU did not expressly state whether the assessment of the genuine use was more complicated for SMEs than for multinational companies. As Reber only reiterated the same plea and arguments submitted before the General Court with the purpose of securing the revision of that claim, those arguments were inadmissible.

However, it seems that the CJEU agreed with the General Court's reasoning affirming that, when the genuine use of Reber's Walzertraum mark had been assessed, no discrimination had occurred as regards the company's size. The CJEU simply referred to the contested decision on the violation of the principle of equal treatment, both on the ground that the artisanal nature of the chocolates should not play any role in assessing the genuine use and that the General Court is not bound by previous OHIM's decisions.

Practical significance

The concept of genuine use has been conceived to create legal and commercial certainty as regards a real and relevant exploitation of both Community and national trade marks in the European Union Internal Market. This concept plays a fundamental role in trade marks' life cycles as it applies both to the opposition and the cancellation proceedings before the OHIM. Thus the Community legislation has set out the criteria to establish when the use of a trade mark is deemed to be genuine while the European judicatures, as in the Walzertraum case, have elaborated the relevant case law to avoid marks' token uses. Consequently, this ruling serves to enable trade mark holders to maintain their titles and their market shares by means of the use of a mark in connection with its essential function as a business identifier and with the specific products and services for which it is registered. Should it be possible to modify the assessment of the genuine use according to the companies' size, thus providing facilitated treatment for SMEs in respect to multinational corporations, it would lead not only to market distortions but also to violation of the mentioned principle of equal treatment.

No comments:

Post a comment