Hauck v Stokke: CJEU clarifies ‘nature of goods’ and ‘substantial value’ exceptions in relation to shape marks

Author: Jonty Warner (King & Wood Mallesons)

Hauck GmbH & Co KG v Stokke A/S and others, Case C-205/13, EU:C:2014:2233, Court of Justice of the European Union, 18 September 2014

Journal of Intellectual Property Law & Practice (2014) doi: 10.1093/jiplp/jpu226, first published online: December 23, 2014

The Court of Justice of the European Union has provided clarification regarding the interpretation of the grounds in Articles 3(1)(e)(i) and (iii) of the Trade Marks Directive which preclude the registration as trade marks of signs which consist exclusively of the shape which ‘results from the nature of the goods themselves’ or the shape which ‘gives substantial value to the goods’.

Legal context

Article 3(1)(e) of Council Directive 89/104 on Trade Marks (subsequently repealed and re-enacted) provides:
The following shall not be registered or if registered shall be liable to be declared invalid: …

(e) signs which consist exclusively of:

the shape which results from the nature of the goods themselves, or

the shape of goods which is necessary to obtain a technical result, or

the shape which gives substantial value to the goods.

Stokke sold its famous ‘Tripp Trapp’ children's chair, in particular, in the Scandinavian and Dutch markets for several decades. The chair comprises sloping uprights and sliding plates, which can be adjusted so that the chair continues to fit a child as it grows older. In 1998, Stokke obtained a Benelux trade mark registration for the following shape resembling the ‘Tripp Trapp’ chair:

Hauck made and sold two children's chairs named ‘Alpha’ and ‘Beta’. Stokke brought an action against Hauck before the District Court of The Hague for infringement of copyright in the ‘Tripp Trapp’ chair and infringement of its Benelux trade mark registration. Hauck counterclaimed for a declaration that the mark was invalid. The court decided that Hauck had infringed Stokke's copyright, but upheld Hauck's counterclaim that the trade mark was invalid on the grounds that the sign consisted exclusively of a shape corresponding to the grounds for invalidity set out in Articles 3(1)(e)(i) and (iii) of the Trade Marks Directive in that the shape of the ‘Tripp Trapp’ chair resulted from the nature of the product itself and the appearance of the ‘Tripp Trapp’ chair gave the product substantial value. The Court of Appeal of The Hague upheld the decision in relation to the findings of both copyright infringement and invalidity of the mark. In relation to the grounds for invalidity under Article 3(1)(e), the Court of Appeal considered that the attractive appearance of the chair gave it substantial value and its shape was determined by the very nature of the product, it being a safe, comfortable, reliable children's chair.

On further appeal, the Netherlands Supreme Court referred three questions to the Court of Justice of the European Union (CJEU), summarized as follows:
1. Does the ground for refusal in Article 3(1)(e)(i) refer to a shape which is indispensable to the function of the goods, or can it also refer to the presence of one or more substantial functional characteristics of goods which consumers may possibly look for in the goods of competitors?

2. Does the ground for refusal in Article 3(1)(e)(iii) refer to consumers' motive for purchasing the goods? Further, does the ground only apply if the shape is the main or predominant value of the goods, or does it also apply if other substantial values of the goods (such as safety, comfort and reliability) exist? When assessing whether the value is ‘substantial’, is the opinion of the majority of the relevant public decisive, or can the opinion of a portion of the public suffice (if so, what size must the portion of the relevant public be?)

3. Can the grounds for refusal in Article 3(1)(e)(i) and (iii) be applied in combination?

Nature of the goods

The CJEU has consistently held that the various grounds for refusal of registration in Article 3 must be interpreted in the context of the public interest underlying them. In relation to the shape objections in Article 3(1)(e), the court followed the Opinion of Advocate General Szpunar that each of the provisions of Article 3(1)(e) pursued the same objective and, accordingly had to be interpreted in a consistent manner.

In Philips (Case C-299/99, EU:C:2002:377) the CJEU had decided that the rationale underlying Article 3(1)(e)(ii) (shape of goods necessary to obtain a technical result) was to prevent trade mark owners gaining a monopoly on technical solutions or functional characteristics of a product which a user was likely to seek in the products of competitors. Meanwhile, in Lego Juris v Office for Harmonization in the Internal Market (OHIM) (Case C-48/09 P, EU:C:2010:516), the court had identified that the aim of Articles 3(1)(e)(ii) and (iii) was to prevent trade mark protection, effectively extending indefinitely the life of rights which the EU legislature intended to be subject to limited periods (ie, predominantly registered designs but also patents).

Taking these objectives into account, the CJEU emphasized that, in accordance with its decision in Lego Juris, the ground for refusal in Article 3(1)(e)(i) would not apply if another element of the shape of the goods, such as a decorative or imaginative element which was not inherent to the generic function of the goods, played an important or essential role. The CJEU rejected the interpretation that Article 3(1)(e)(i) would only apply to signs consisting exclusively of a shape which was indispensable to the function of the goods in question. Such a restrictive interpretation would not, the court said, allow producers of goods scope to make a ‘personal essential contribution’ to the product and would effectively limit the provision to refusal of protection for products whose shape was prescribed by legal standards or ‘natural’ products, which had no substitute.

Accordingly, the court concluded, the ground for refusal in Article 3(1)(e)(i) extends to signs which consist exclusively of the shape of a product with one or more essential characteristics which are inherent to the generic function or functions of that product and which consumers may be looking for in the products of competitors.

Substantial value

The second question concerned Article 3(1)(e)(iii), ie, shapes which give substantial value to the goods. The Dutch Court of Appeal had decided that, although the shape of the ‘Tripp Trapp’ chair gave it significant aesthetic value, it also had other characteristics (such as safety, comfort and reliability) which gave it essential functional value. The CJEU held that Article 3(1)(e)(iii) could apply to the shape of products where, in addition to its aesthetic function, the shape also performs essential functions. Otherwise, it noted, products which have essential functional characteristics in addition to a significant aesthetic element would not be covered, and the objectives of Article 3(1)(e) would not be fulfilled.

Further, the presumed perception of the sign by the average consumer was not decisive in considering this ground, but was one of a number of factors which had to be considered. As indicated by the Advocate General, other criteria could include the category of goods concerned, the artistic value of the shape in question, its dissimilarity from other shapes in common use on the market, a substantial price difference in relation to similar products, and the development of a promotion strategy focusing on the aesthetic characteristics of the product.

Grounds to be applied independently

The third issue was whether the provisions of Articles 3(1)(e)(i) and (iii) could be applied in combination. Noting that the three provisions of Article 3(1)(e) were set out successively, and that the word ‘exclusively’ was used, the CJEU concluded that they should be applied independently of each other. Accordingly, even if only one of the three provisions fully applied to a sign, the court stated that a sign consisting exclusively of the shape of a product could not be registered.

Practical significance

The case will now return to the national court for it to apply the CJEU's ruling. Given, in particular, the finding in the Dutch proceedings that the shape of the Tripp Trapp chair gives it significant aesthetic value in addition to those characteristics that give it essential functional value (such as safety, comfort and reliability), it appears likely that the finding of invalidity will be upheld. The CJEU's decision is likely to mean that applicants will continue to face significant obstacles in registering shape marks, especially when such marks are for the shape of the product, even when such shapes have acquired distinctive character through use. In many cases, of course, it will be possible for design protection to be obtained, albeit for a limited period, provided this is applied for before, or shortly after, public disclosure.

In the meantime, the CJEU will hear argument in due course on a reference from the High Court, England and Wales, in Société des Produits Nestlé SA v Cadbury UK Ltd [2014] EWHC 16 (Ch) (C-215/14) concerning Nestlé's application to register the shape of the Kit Kat chocolate bar as a UK trade mark. The main focus of the reference is on the issue of acquired distinctiveness but Arnold J has also sought clarification in respect of Article 3(1)(e).

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