The Authors' Take - The misconstrued notion of consent in EU trade mark law

The Misconstrued Notion of Consent in EU Trade Mark Law

by Alina Trapova

A registered trade mark grants its owner an exclusive intellectual property right to exploit a particular sign in relation to certain goods and/or services. The proprietor is free to authorise further parties to use his/her trade mark in various ways. This often takes place by way of licensing agreements, assignments and transfers. As this is said to be a core principle of the EU trade mark framework, it is crucial to determine precisely the facts and circumstances giving rise to the owner’s consent allowing another undertaking to make use of their trade mark.

Consent appears in EU trade mark law in various contexts. This article analyses it in two particular circumstances – firstly, in the context of the doctrine of exhaustion of trade mark rights, and secondly, within the requirement to prove genuine use of a trade mark. Having studied the jurisprudence in both instances, it quickly unfolds that the notion of consent has been directly imported from the exhaustion doctrine into the proof of use cases without any sound and independent reasoning. The strict standard in the exhaustion of rights doctrine is justified since proving the trade mark proprietor’s consent in these cases extinguishes his/her exclusive trade mark rights. In contrast, establishing consent within the proof of use requirement bears the contrary function – safeguarding the trade mark proprietor’s right.

The article examines the different rationale underpinning both instances, as well as the global market impact, which naturally prompt a more relaxed standard as far as consent in proof of use cases is concerned.

[This is an Authors' Take post, which provides readers with an insight into current IP scholarship, featuring preliminary comments and thoughts from authors of articles accepted for publication in forthcoming issues of the Journal of Intellectual Property Law & Practice (OUP).] 

How to justify decisions while rejecting evidence: a further comment

Earlier this year the jiplp weblog posted a Current Intelligence note, "How to justify decisions while rejecting evidence" by Tomasz Rychlicki (Patent and Trade Mark Attorney, Poland, and a long-standing member of the JIPLP Editorial Board). This blog has now received a response from two Polish practitioners, Jakub Mrozowski and Michał Siciarek, both of LDS Lazewski Depo & Partners, Warsaw.  

This blog is pleased to reproduce Jakub and Michal's response in full below, and thanks them for taking the trouble to supply this most instructive comment. This is what they write:

With reference to this note from Tomasz Rychlicki posted via JIPLP blog and the corresponding discussion on the JIPLP Readers and Writers LinkedIn Group regarding the decision of the General Court in Case T-235/12, CEDC International sp. z o.o. v OHIM (Shape of a blade of grass in a bottle), as insiders to this case, we would like to provide a short commentary on the interesting points not covered in the note.

The decision in this case touched upon three important issues. As Tomasz rightly noted, to a large extent the case concerns the issue of the admissibility of evidence not filed within the initial deadline (filed together with the appeal to the OHIM’s Board of Appeals) and the issue of proper justification of OHIM’s decision when excersing its discretionary power to either allow or deny belated evidence. However, this decision represents also an important point in the discussion on genuine use of several trade marks on the same product, in particular with regard to 3D trade marks.

Procedural issues

As some readers may recall, there was a time when the General Court used to consider all sorts of evidence submitted together with the appeal to the Board of Appeal as being submitted in due time (due time = in time to file the appeal). Since, however, OHIM did not greatly appreciate this practice, it appealed one of the decisions of the General Court and so this liberal era has ended with a Solomonic judgment delivered by the Grand Chamber of the Court of Justice in Case C‑29/05 P Kaul. The Court of Justice of the European Union (CJEU) wisely considered the arguments of both sides and said that OHIM may accept or reject belated evidence, but that it needs to present a justification of its decision to do so and that certain situations or factual elements may favour taking belated evidence into account.

From that time onwards, the case-law has been a bit shaky, but seems to be settling down again to a fairly liberal approach. The decision in Case T-235/12 provides a thorough overview of the recent case-law in this respect and also analyses a number of arguments of the parties relating to situations in which the belated evidence should or should not be accepted. We will thus not go into more detail in this respect, but rather encourage anyone struggling with the belated evidence issue to take a look at the judgment.

Genuine use of 3D trade marks

However, we would like to bring the readers attention to essential issue underlying the decision and in the proceedings before the OHIM, which is that of the proper standard of assessment of genuine use of the 3D trade marks. 

The case concerned the opposition against a CTM application for a 3D trade mark based on earlier 3D trade marks, each representing a simple bottle with a single blade of grass inserted inside:

 Above: one of the earlier national trade
marks (left); the contested 3D mark (right)

These trade marks were all registered without labels, but were only used on the market with labels with various word and graphical trade marks on them. As proof of use request was filed, OHIM had to analyse the issue of genuine use of earlier 3D trade marks. During the opposition proceedings the opponent presented numerous items of evidence, but only with visuals of the product in front view where blade of grass is visible behind the label:

Examples of genuine use presented before
OHIM's Opposition Division

The Opposition Division found that the evidence provided was insufficient to establish genuine use of the earlier 3D mark and that the presence of a label containing the term ‘żubrówka’ and the representation of a bison on the bottle marketed altered the distinctive character of that mark in the form in which it was registered. On appeal to OHIM’s Board of Appeal the opponent supplemented the evidence with visuals of the product from both sides and from the back, including affidavits:

Visuals presented together with the appeal to OHIM's Board of Appeal 

The Board of Appeal still however found that the opponent did not prove genuine use (and more specifically, the nature of use) of the earlier 3D trade marks, basing its opinion on the analysis of images of the trade marks in views from front only and finding that the label had overshadowed the blade of grass placed inside the bottle. OHIM did not take into account new items of evidence submitted together with an appeal presenting views of the product from various sides (where the label did not cover the blade of grass) and OHIM failed to present any reasoning in this respect.

One of the arguments relied upon in the application for annulment was that three-dimensional trade marks may be perceived by consumers from various sides, including sides where the blade of grass is clearly visible and label does not cover it in any way. All in all, the nature of 3D trademarks requires the analysis of the proof of use perceived from various sides, while the OHIM its analysis to the front view only, which is characteristic for figurative trademarks. The Court agreed with this argument and presented its opinion in various paragraphs, in particular:

[64] First, Mr K.’s statement and the appended presentations of the bottle, seen from the front, two opposite sides and the back, were, prima facie, likely to be truly relevant to the outcome of the opposition brought before OHIM since, had they been taken into account, they would have been likely to call into question the Board of Appeal’s assessment ...:  first, that ‘the diagonal line was not affixed to the outside surface and did not appear on the label itself’; second, that ‘as a result of the presence of the label, it was impossible to see what was behind it on or in the bottles’; and, third, that ‘in those circumstances, the applicant had not proven the nature of use of its earlier three-dimensional French mark’.

[65] It is important to note in that regard that the three-dimensional nature of a mark such as that at issue precludes a static, two-dimensional vision and calls for a dynamic, three-dimensional perception. Thus, a three-dimensional mark may, in principle, be perceived from a number of sides by the relevant consumer. As regards proof of use of such a mark, it must therefore be taken into account not as a reproduction of how it is viewed in two dimensions, but rather as a presentation of how it is perceived in three dimensions by the relevant consumer. It follows that presentations from the side and the back of a three-dimensional mark are, as a rule, likely to be truly relevant for the purposes of assessing the genuine use of that mark and cannot be rejected solely on the ground that they are not reproductions from the front.

All in all, the decision in Case T-235/12 gives the holders of 3D trade marks yet another argument in favour of the possibility of joint use of several trade marks at the same time which is still considered genuine. And this fits well in the discussion on genuine use of several trade marks, present in decisions such as Cases T-29/04 (CRISTAL), C-553/11 (PROTI), C-12/12 (LEVI) or C-252/12 (SPECSAVERS).

And recently, paragraph 65 of the decision in Case T-235/12 found its way to the Court of Justice Annual Report for 2014 (among few other cases from the IP field). The quote can be found in the CJEU Annual Report on page 146.

We look forward to readers’ comments and examples of other cases touching upon this very interesting area.

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.