How to identify fine Cognac: BNIC returns to Finland

Author: Pessi Honkasalo (Krogerus Attorneys, Helsinki, Finland)

Bureau National Interprofessionnel du Cognac v Oy Gust. Ranin, KHO 2011:120, Supreme Administrative Court of Finland, 30 December 2011

Journal of Intellectual Property Law & Practice (2012) doi: 10.1093/jiplp/jps103, first published online: July 10, 2012

A trade mark for the sales denomination of a Cognac, containing the term in the vernacular, was held to convey a false impression as to the origin of the drink under Article 16(c) of Regulation 110/2008.

Legal context

In accordance with Article 16(c) of Regulation 110/2008 on the definition, description, presentation, labelling and the protection of geographical indications of spirit drinks, and repealing Council Regulation 1576/89, the geographical indications registered in Annex III of the Regulation are protected against any ‘false or misleading indication as to the provenance, origin, nature or essential qualities on the description, presentation or labelling of the product, liable to convey a false impression as to its origin’. Under the said Annex III, the denomination ‘Cognac’, among others, is a geographical indication in product category No 4, wine spirits, the country of origin of which is France. Unlike Council Regulation 1576/89 laying down general rules on the definition, description and presentation of spirit drinks, Regulation 110/2008 contains a provision, Article 23(1), that the registration of a trade mark which contains or consists of an annexed geographical indication is to be refused or invalidated if its use would lead to any of the situations referred to in Article 16. The Regulation applies from 20 May 2008.

Sections 14(1)(1), (2) and (11) of the Finnish Trade Marks Act (7/1964, as amended by Law 56/2000) provide that a trade mark is not registered if it is contrary to law and order, or to morality; if it is liable to mislead the public; or if there is an obstacle to registration within the meaning of Council Regulation on the protection of geographical indications and designations of origin for agricultural products and foodstuffs. Under s 21(1) of the Act, after an opposition, the registering authority must revoke a trade mark registration to the extent there is an obstacle to registration. What the Act used to be silent about, however, is the relation between trade marks and the protection of geographical indications for spirit drinks; Regulation No 2081/92 to which the national statute refers does not, by virtue of Article 1(1), apply to such products. As of 1 January 2011, s 14(1)(11) was amended so that the list now includes also an obstacle to registration within the meaning of Article 23 of Regulation 110/2008.

Facts

Gust. Ranin Oy applied to the Finnish registration authority on 19 December 2001 for registration of a trade mark in the form of a bottle label. The pictorial mark consisted of words ‘COGNAC L&P V.S. HIENOA KONJAKKIA Lignell & Piispanen 40% Vol. Product of France 500ml’ (see Figure 1). ‘Lignell & Piispanen’ is the auxiliary trade name of Oy Gust. Ranin and ‘L&P’ is the abbreviation thereof. HIENOA KONJAKKIA is the Finnish expression for ‘fine cognac’ and, as any connoisseur of French brandy would know, the three-star appellation ‘VS’, or very special, indicates that the youngest eau-de-vie in the blend has aged for at least two years. By decision of 31 January 2003, the authority registered the mark under No 226350.

Figure 1

The Bureau National Interprofessionnel du Cognac (‘BNIC’) opposed the registration, but the registering authority dismissed BNIC's opposition and confirmed the validity of the mark. The Board of Appeals at the National Board of Patents and Registration of Finland similarly dismissed BNIC's appeal. BNIC then brought proceedings before the Supreme Administrative Court. Owing to the adoption of Regulation 110/2008 while the action was pending, the Supreme Administrative Court stayed the proceedings and referred the matter to the Court of Justice for a preliminary ruling. The case was consolidated with another reference and decided as Joined Cases C-4 and 27/10 Bureau National Interprofessionnel du Cognac [2011] ETMR 53 (discussed by Miguel Angel Medina González, ‘Protection of Geographical Indications against Translation, Generic Use, Evocation, and Other Potential Enemies’ (2012) 7 JIPLP 20).

The Court of Justice (First Chamber) ruled, inter alia, that subject to the limitations set forth in Article 23(2) Regulation 110/2008 is applicable to the assessment of the validity of the registration of a trade mark containing a geographical indication protected by the Regulation irrespective of whether that registration took place before or after the Regulation entered into force (para 37), and that Article 23(1) of the Regulation is directly effective (para 45).

Analysis

The Supreme Administrative Court started its legal assessment by reiterating that independently of the protection it enjoys under French law, the term ‘Cognac’ has been protected as a geographical indication under EU law since 15 June 1989, the date on which Regulation No 1576/89 entered into force. The trade mark at issue was registered after 1 January 1996, so that the limited derogation provided for in Article 23(2) of Regulation 110/2008 was inapplicable.

Consequently, it was to be decided whether the use of the mark led to any of the situations referred to in Article 16 of the Regulation. The Court noted that the intervening party's mark contained a geographical indication registered in Annex III, ‘Cognac’, as well as a common noun for and a translation of that indication in the partitive case (‘KONJAKKIA’). The proprietor of the trade mark had argued that in Finnish language the term ‘konjakki’ describes the kind of the product. However, it follows from Article 15(3) of the Regulation that the geographical indication ‘Cognac’ may not—as in cannot—become generic; names that have become generic may not be registered in Annex III. Under Article 14(2), the geographical indication Cognac ‘shall not be translated on the label nor in the presentation of the spirit drink’.

The trade mark had been registered for a wine spirit drink which, as such, complies with the specifications of the technical file provided for the geographical indication at issue. Notwithstanding, the mark also contained the Finnish expression HIENOA KONJAKKIA and adverted to the auxiliary trade name of a Finnish company, but did not mention the producer of the drink. This, held the Court, was liable to convey a false impression as to its origin. According to the Court, the inscription ‘Product of France’ in small characters did not tone down the impression that the product designated by the trade mark would be of Finnish origin. The trade mark was therefore considered a misleading indication within the meaning of Article 16(c) of the Regulation.

On those grounds the Supreme Administrative Court annulled the decisions of the registration authority and of the Board of Appeals at the National Board of Patents and Registration of Finland, and returned the matter to the former for cancellation of the registration of mark No 226350.

Practical significance

KHO 2011:120 serves as an effectual reminder of the legal effect of European Union regulations. By Article 288 of the Consolidated Version of the Treaty on the Functioning of the European Union:

A regulation shall have general application. It shall be binding in its entirety and directly applicable in all Member States.

From the date that an EU regulation enters into force, it automatically forms part of the domestic legal order of each Member State and requires no implementing legislation at national level. Unless there is an explicit requirement to that effect, it is actually illegitimate for a Member State to adopt national execution measures (see Case 39/72 Commission v Italy [1973] ECR 101; Case 34/73 Fratelli Variola v Amministrazione italiana delle Finanze [1973] ECR 981). In accordance with settled case law of the Court of Justice, regulations ‘operate to confer rights on individuals which the national courts have a duty to protect’ (Bureau National Interprofessionnel du Cognac, para 40).

Figure 2

In the proceedings that formed the other limb of Joined Cases C-4 and 27/10 between the same parties, KHO 2011:119, the Supreme Administrative Court rendered its judgment on the same day. This case concerned a pictorial trade mark including the endorsement ‘KAHVI-KONJAKKI Cafe Cognac Likööri – Likör – Liqueur 21% Vol Lignell & Piispanen 500 ml’ (see Figure 2). In English, KAHVI-KONJAKKI reads ‘café cognac’; likööri and likör are the Finnish and Swedish words for liqueur, respectively. The Court, following the advice it had received from Luxembourg, noted that the product for which the trade mark had been registered did not meet the specifications set for the used indication. The use of the mark was therefore held to exploit the reputation of Cognac's registration under Regulation 110/2008 seeing that consumers, when confronted with the name of the product, would trigger in their mind an image of the product whose designation is protected. Oy Gust. Ranin's trade mark fell foul of both Articles 16(a) and (b) of the Regulation by being a direct commercial use and evocation of the geographical indication for which the BNIC acts as a watchdog.

In both judgments the Supreme Administrative Court emphasized that because the trade marks at issue were in violation of Article 16 of the Regulation and their registrations therefore had to be invalidated under Article 23(1) of the same, it was unnecessary to consider whether there would be any grounds for cancellation on the basis of national law alone.

Repackaging of pharmaceutical products imported in parallel

Author: Pessi Honkasalo (University of Surrey – School of Law)

NV Organon v Paranova Oy, KKO 2011:7, Supreme Court of Finland, 26 January 2011

Journal of Intellectual Property Law & Practice (2011), doi: 10.1093/jiplp/jpr031, first published online 31 March 2011

The Supreme Court of Finland held that the package layout of medicinal products could have created an inappropriate impression as to the commercial origin of the products or the relationship between the manufacturer and the parallel importer, but since the claimant had not opposed the presentation until 77 working days from the date of the defendant's notification, it could not asserts its right of prohibition.

Legal context

In accordance with section 10a(1) of the Trade Marks Act (7/1964, as amended), the proprietor of a trade mark may not prevent the use of the trade mark on goods that the proprietor, or another person with his consent, has placed on the market under his trade mark within the territory of the European Economic Area. However, subsection (2) provides that this does not apply if the proprietor has justifiable grounds for objecting to the goods being placed on the market once again, in particular if alterations have been made to the goods or if they have deteriorated after having been placed on the market. The content of section 10a is thus essentially the same as that of Directive 2008/95 of the European Parliament and of the Council to approximate the laws of the Member States relating to trade marks, Article 7.

The Court of Justice of the European Union has stated that part of the specific subject matter of the trade mark right is the right attributed to the proprietor of preventing any use of the trade mark which is likely to impair the guarantee of origin (Case 102/77 Hoffmann-La Roche v Centrafarm [1978] ECR 1139, para 7). According to the Court of Justice, the change brought about by any new carton or relabelling of a trade-marked medicinal product creates by its very nature real risks for this guarantee of origin that the mark seeks to protect (Case C–348/04 Boehringer Ingelheim and Others [2007] ECR I-3391, para 30).

Interpreted in the light of Article 36 of the Treaty on the Functioning of the European Union, Article 7(2) of the Directive and therefore section 10a(2) of the Act mean that the trade mark owner may legitimately oppose the further marketing of a pharmaceutical product where the importer has repackaged the product and reaffixed the trade mark unless (see Case C–427/93 Bristol-Myers Squibb v Paranova [1996] ECR I-3457, para 79):

– reliance on trade mark rights would contribute to the artificial partitioning of the markets between Member States,
– the repackaging cannot affect the original condition of the product inside the packaging,
– the new packaging clearly states who repackaged the product and the name of the manufacturer,
– the presentation of the repackaged product is not such as to be liable to damage the reputation of the trade mark and of its owner, and
– the importer gives notice to the trade mark owner before the repackaged product is put on sale.

Facts

Organon had registered in Finland the trade marks MERCILON and MARVELON, which it uses for medicinal products it manufactures. Paranova, a parallel importer of medicinal products, had imported into Finland products put on the market by Organon within the European Union and sold those products after they were repackaged under a parallel import licence issued by Fimea, the Finnish Medicines Agency.

The packages of medicinal products offered to the public by Paranova carried both its mark and Organon's trade mark MERCILON or MARVELON. Uppermost on the front side of the outer packaging was Organon's trade mark; undermost was Paranova's complex mark consisting of a coloured pentagonal design and a stylised trade name and between, in smaller characters, were appellations ‘parallel importer’ and ‘re-packager’ in Finnish and Swedish, the national languages of Finland. Information about Organon as the manufacturer of the pharmaceutical and the proprietor of its trade marks was either on the back or the narrow side of the outer packaging.

Paranova had given notice to Organon of its intention to commence the parallel import of both Mercilon and Marvelon products. Organon opposed the supplied specimens of the repackaged products, eight (as regards Mercilon) and 77 (as regards Marvelon) working days from the date of notification. Despite such reactions, Paranova commenced imports. Organon instituted proceedings and pressed for a declaration of infringement, prohibition of proceeding with and repeating said infringements, destruction or alteration of infringing product packages as well as compensation for damages.

Analysis

Lower courts had found that Paranova had presented sufficient evidence of the necessity of repackaging, of the product per se remaining unaffected, of the new packaging clearly stating who repackaged the product and of the trade mark owner being given notice before the repackaged products were put on sale. The point of dispute before the Supreme Court was whether the presentation of the repackaged products was such as to be liable to damage the reputation of Organon or its trade marks.

It was undisputed that the packaging would be somehow defective, of poor quality or untidy, which incidents were held in Bristol-Myers Squibb v Paranova to be capable of eroding public confidence and damaging the trade mark's reputation in that regard. However, it was noted in Boehringer Ingelheim and Others that the condition of damage is not limited only to matters of inadequate presentation: a repackaged pharmaceutical product may also be presented inappropriately where the packaging is liable to create the impression that there is a commercial connection between the parallel importer and the trade mark proprietor. If the trade mark is used in a way that may give rise to the impression that there is a special relationship between the two undertakings, it may constitute a legitimate reason within the meaning of Article 7(2) of the Directive (Case C–63/97 BMW [1999] ECR I-905, para 51). This is a question of fact to be decided in the light of the circumstances of the case.

The Supreme Court noted that, when trade-marked goods have been put on the Union market by the trade mark proprietor or with his consent, a reseller is free to make use of the trade mark in order to bring to the public's attention the further commercialisation of those goods. The mere fact that the reseller derives an advantage from using the trade mark does not disapply the exhaustion of the rights conferred by the mark. Moreover, it does not appear from the provisions or case law that a parallel importer of pharmaceutical products could not additionally use its own distinctive mark on the new packaging. The decisive circumstance, according to the Supreme Court, is the overall impression of the packages, which should be assessed having regard to the information that the parallel importer gives and the way that information and respective marks have been emphasised on the different sides of the package.

It was held that displaying both Organon's and Paranova's trade marks together on the front side of the packaging was capable of associating the medicinal product with the person who carried out the repackaging. This had given the public a false impression of the commercial origin of the medicinal products and the relationship between the manufacturer and the parallel importer. Paranova had failed to show that there was no detriment to the repute of Organon's trade marks owing to the presentation of the repackaged product. Organon had therefore a prima facie entitlement to prohibit the use of trade marks MERCIOLON and MARVELON in relation to sales packaging notified and imported into the Finnish market by Paranova.

Practical significance

Of interest is the Supreme Court's analysis concerning Organon's power to assert its right of prohibition. Neither the Trade Marks Act nor the Directive contains an express provision on the consequences a trade mark owner may incur if it neglects to object to the parallel importer's form of packaging within a reasonable period of time. The Supreme Court stated that the forfeiture of the right to prohibit does not mean the forfeiture of the exclusive rights conferred on the proprietor. It is merely a matter of losing the special entitlement provided for in Article 7(2) of the Directive in relation to goods that have been put on the market in a manner that exhausts the rights conferred by a trade mark.

Conversely, such forfeiture would not apply where the same goods are repackaged in a way not previously notified to the trade mark owner, provided that there still exist legitimate reasons for the opposition. Similarly, a trade mark entitles the proprietor to prohibit the use of the mark in question where goods are repackaged in a way that the proprietor has not previously intervened in with relation to a different trade mark.

In this case, Organon was found to have hung back on its other opposition for a longer period thatn was deemed reasonable under the circumstances. The action was dismissed insofar as it was based on the use of trade mark MARVELON.