Trade mark infringement as a proper reason for non-use

Author: Meriem Loudiyi (INLEX)

Chronopost v DHL Express France [2015] R 2425/2013-4, The Fourth Board of Appeal of OHIM, 28 January 2015

Journal of Intellectual Property Law & Practice (2015) doi: 10.1093/jiplp/jpv114, first published online: June 23, 2015

The Fourth Board of Appeal of the Office for Harmonisation in the Internal Market revoked a decision of the Cancellation Division that had cancelled the Community trade mark WEBSHIPPING, owned by Chronopost, on the grounds of non-use. The Board of Appeal upheld the appellant's position that trade mark infringement incurred by its direct competitor constituted a proper reason for non-use. Additionally, the Board of Appeal pointed out that the concept of ‘proper reason for non-use’ was not limited to the cases covered by the previous rulings.

Legal context

Article 51 of the Community trade mark (CTM) Regulation 40/94 states that a CTM shall be declared invalid on application to the Office for Harmonisation in the Internal Market (OHIM) or on the basis of a counterclaim in infringement proceedings if in a continuous period of five years the trade mark in question has not been put to genuine use in a significant part of the European Community in connection with the goods or services in respect of which it is registered, unless the owner of the trade mark proves that there is a proper reason that justifies this non-use.

Facts

Chronopost and DHL (France) both provided international express mail services, and were thus direct competitors in this market. Chronopost was the owner of the CTM WEBSHIPPING (registered on 7 May 2003) and of the French trade mark WEBSHIPPING.

In September 2004 Chronopost brought an action against DHL before the Paris Court of First Instance alleging infringement of its CTM. They wanted an order that DHL pay damages for the illegal use of this trade mark, as well as prohibiting the use of that trade mark in the Community. In March 2006 the court held that DHL had infringed Chronopost's French trade mark, but did not adjudicate on the infringement upon the CTM. On appeal by Chronopost the Court of Appeal of Paris, acting as a second instance CTM Court, held that DHL had infringed both the French trade mark and the CTM, and prohibited DHL from using this trade mark in the French territory, subject to a periodical penalty in the event of infringement. A subsequent appeal by DHL to the French Supreme Court was dismissed on 23 June 2009.

In July 2012 DHL brought before the Cancellation Division of OHIM a revocation action seeking to cancel Chronopost's CTM on the ground of non-use. Invited to provide evidence of use of this trade mark, Chronopost was unable to provide any proof, but alleged that the non-use of its CTM was justified by ‘proper reasons’.

The reasons invoked by Chronopost were the infringement of its trade mark by DHL as well as the fact that the trade mark dispute had been going on since 2004. In other words, Chronopost underlined the fact that they had been prevented from using their own mark due to the intensive use which had been made of the trade mark by DHL in the whole European Community in relation to identical products and services. Indeed, it could not freely use the subject mark, as the consumer would not understand that identical services could be provided under the same trade mark by the two main actors and competitors in this field of activity.

In October 2013 the Cancellation Division upheld DHL's action and revoked the rights of Chronopost over the mark. The Cancellation Division held that the concept of proper reasons for non-use must be interpreted narrowly, the only two proper reasons for non-use being force majeure and abnormal bureaucratic obstacles. Accordingly, it considered that an infringement procedure was not a proper reason, and cancelled the CTM for non-use.

Chronopost appealed in December 2013 to the Fourth Board of Appeal, which upheld it on the basis that the fact that the mark was already used by an infringer completely prevented the legitimate owner from using its own trade mark. It thus recognized trade mark infringement as a new ‘proper reason’ justifying the non-use of the trade mark.

Analysis

This decision is innovative, given that it recognizes trade mark infringement as a new ‘proper reason’ for non-use. As the Board of Appeal mentioned in its decision, the CTM Regulation does not define the concept of ‘proper reason’ for non-use. This concept was defined by the Court of Justice of the European Union (CJEU) in the landmark case of Le Chef de Cuisine (Armin Häupl v Lidl Stiftung & Co. K [2007] Case C 246/05). In that decision, the CJEU considered that, for proper reasons for non-use to apply, it was not necessary for the obstacle to be impossible (an unreasonable obstacle being sufficient) but that this obstacle must be independent of the trade mark owner's will.

The Board also noted that, although the most usual case of proper reasons for non-use is the seemingly never-ending process for obtaining a marketing authorization for medicinal products, it would be an error to restrict this concept only to that kind of case. By doing so, the Board of Appeal enlarged the restrictive list of acceptable ‘proper reasons’ for non-use.

Notwithstanding the fact that the question regarding the definition and application of this concept had already been raised in European Instances, the Board of Appeal considered that the WEBSHIPPING case could not be covered by the previous decisions, given that for the very first time, the applicant for revocation was also the infringer.

In this sense, the Board confirmed that the fact that the mark in question was already used by an infringer was to be considered as a ‘proper reason for non-use’ for it completely prevented the legitimate owner from using its own mark freely, as there was a real risk of confusion in the consumer's mind, especially as the mark was used for identical services. Moreover, the Board highlighted that, by using the trade mark, the legitimate owner would have indirectly enhanced the value of its direct competitor's mark, constituting therefore an unreasonable obstacle for trade mark use being independent to the owner's will.

The Board therefore concluded that ordering the cancellation of such a mark would imply that a mark could be systematically infringed until it becomes vulnerable to cancellation for non-use, which would be completely unfair, for it would mean that an infringer could benefit from his illegal act.

Practical significance

Unsurprisingly, the decision of the Board of Appeal shows how European instances are open to take into consideration economic factors in their legal reasoning. This decision has the virtue of being legally founded as well as business-orientated, and therefore is the correct one.