Greek consumers perceive dominant word indication on garments as a source identifier, not as embellishment

Author: Manos K. Markakis (IP LAW GREECE, Athens)

Journal of Intellectual Property Law & Practice (2015), doi: 10.1093/jiplp/jpv064, first published online: April 15, 2015

Judgment No 1876/2014 of the Athens Three Member Civil Court of Appeal (Greek Community Trade Mark Court of 2nd Instance), 21 March 2014

The Athens Court of Appeal ruled that the average Greek consumer of garments perceives a word sign prominently displayed on a garment front as an origin indicator and, accordingly, rejected the relevant ‘decorative use’ defence as unsubstantiated.

Legal context

The ‘decorative use’ of someone else's trade mark is not a statutory infringement defence expressly laid down in the Trade Mark Directive, the Community Trade Mark (CTM) Regulation or the Greek Trade Mark Act. However, the Court of Justice of the European Union (CJEU) carved decorative use out of infringing subject matter in the course of examining the conditions of application of Article 5(1) and (2) of the Trade Mark Directive. In particular, the CJEU has ruled, in Case C-408/01 Adidas-Salomon AG et al v Fitnessworld Trading Ltd (paragraphs 39 and 40), that:

the fact that a sign is viewed as an embellishment by the relevant section of the public is not, in itself, an obstacle to the protection conferred by Article 5(2) of the Trade Mark Directive, where the degree of similarity is none the less such that the relevant section of the public establishes a link between the sign and the mark. By contrast, where, according to a finding of fact by the national court, the relevant section of the public views the sign purely as an embellishment, it necessarily does not establish any link with a registered mark.

In addition, according to the judgment of the CJEU in Case C-102/07 Adidas AG et al v Marca Mode CV et al (paragraph 34):

the public's perception that a sign is a decoration cannot constitute a restriction on the protection conferred by Article 5(1)(b) of the Trade Mark Directive when, despite its decorative nature, that sign is so similar to the registered trade mark that the relevant public is likely to perceive that the goods come from the same undertaking or, as the case may be, from economically-linked undertakings.

The requirement of the sign being viewed ‘purely’ as an embellishment is not further elaborated in the case law of the CJEU. In view of the absolute character of the concept of ‘purity’, it may be argued that, for the decorative use defence to operate, 100% of the relevant public must perceive the contested sign as serving 100% decorative and 0% source-identifying function. However, such a monolithic legal test is impracticable in real life, particularly when it is dependent upon the impalpable and constantly fluctuating consumer perception. Inevitably, the qualification of a disputed use as ‘decorative’ is always a case- and fact-specific exercise.

Facts

In the autumn of 2006, Jumbo (a large retailer located in Athens) offered for sale children's athletic suits bearing the ‘CHAMPION COLLEGE’ sign. Champion Products Europe Ltd (a clothing manufacturer located in Dublin) issued a warning letter to Jumbo complaining about infringement of its ‘CHAMPION’ trade marks. Following negotiations, Jumbo and Champion entered into a settlement agreement, finalizing the matter on 3 November 2006. Under the agreement, Jumbo undertook, among other things, to refrain from commercializing any garment bearing the ‘CHAMPION COLLEGE’ sign or any other indication identical with, or confusingly similar to, the ‘CHAMPION’ trade marks. In addition, Jumbo promised to pay Champion a minimum amount of 15,000 euros as a contractual penalty in the event of breach of its cease-and-desist undertaking.

In November 2007, Jumbo offered for sale toddlers' sleeveless pullovers bearing the term ‘champion’ emblazoned across the front breast section. This wording was written in lower case stylized font and painted in the same colour used for decorating the pullover's side-lines. The contested ‘champion’ sign did not appear on any other part of the pullovers. However, Jumbo's trade mark (which enjoys reputation in Greece) featured both on (a) the sewn-in care label and (b) the swing tag attached to the pullover by a plastic joiner. Apart from the ‘champion’ term and Jumbo's trade mark, no other word or figurative signs were placed upon the contested pullovers. Moreover, no further use of the ‘champion’ sign was made in the course of promoting/offering the contested pullovers. Instead, the pullovers were simply identified by reference to the generic term ‘sleeveless pullover’ in conjunction with their size, namely the corresponding toddler's age (eg 23 months). An indicative photo presenting the contested pullovers is shown on the right.

In January 2008 Champion instigated main infringement proceedings against Jumbo before the Athens Three Member First Instance Civil Court (CTM Court of 1st Instance) asserting as grounds of action, among others, trade mark infringement and breach of contract. In particular, Champion invoked (a) its earlier trade mark registrations CTM
000122630 ‘CHAMPION’, CTM 000122598 (above, right), GR 69657 (left) and GR 81821 (below, right) (all covering articles of clothing in Class 25), as well as the settlement agreement of 2006. Relying upon these rights, Champion claimed, among other things, (a) a permanent injunction against the commercialization of any garment bearing the ‘champion’ sign, (b) an award of moral damages for trade mark infringement and (c) an award of the contractually fixed penalty for breach of contract.

In defence, Jumbo argued, among other things, that the contested ‘champion’ wording was not used ‘in the trade mark sense’ but merely in a decorative manner ‘as a pure embellishment’. Expanding upon the decorative use defence, Jumbo further argued that the contested term (a) solely contributed to the overall aesthetic value created by the pullover's adornment (ie this is why it is written in stylized font and painted in the same colour as the side-lines) and (b) appears on the garment's section where the average consumer (namely, the toddler's parent, guardian or relative) normally expects to read a laudatory message concerning the garment wearer (ie not the manufacturer's mark). Given that both labels of the contested pullovers prominently bore Jumbo's famous trade mark, any risk of confusion with, or dilution of, the asserted Champion marks should be ruled out. Similarly, the settlement agreement cannot be held breached, since Jumbo's undertaking should be narrowly construed to cover origin-identifying uses only.

In September 2010 the court issued preliminary Judgment No 5610/2010, partially upholding the action. In particular, the court dismissed Jumbo's defences and ruled that (a) the asserted trade marks of Champion have acquired high reputation among the relevant Greek consumers, (b) the contested wording was perceived by the relevant public as an origin indicator and (c) a likelihood of consumer confusion/association was created as a result of the commercialization of the contested pullovers. Nevertheless, the court ascertained that it was unable to safely assess Champion's damage on the basis of the evidence included in the case file to that date. Therefore the court ordered Jumbo to disclose to Champion certain figures in connection with the sales of the contested pullovers.

In compliance with the order, Jumbo produced official documentation establishing total sales of 3,817 items throughout the material period of two months, the total retail value of which amounted to 38,132 euros. In July 2012, the court handed down definitive Judgment No 3549/2012, under which the court (a) permanently enjoined Jumbo against commercializing any garment bearing the ‘champion’ indication, (b) awarded Champion the amount of 40,000 euros (plus interest) as moral damages and (c) awarded Champion the amount of 15,000 euros (plus interest) as a contractual penalty. Jumbo appealed and Champion cross-appealed.

In March 2014 the Athens Three Member Civil Court of Appeal handed down the final judgment on this long-running dispute. Under the final judgment (a) both the appeal and the cross-appeal were dismissed and (b) both judgments under appeal were affirmed in their entirety, thereby also ratifying the first instance damage and penalty awards. Notably, the overall compensation award of 55,000 euros amounted at the time of delivery of the appeal judgment (ie calculating also legal interest) to the total of approximately 80,000 euros.

Analysis

The appellate court focused its analysis on Jumbo's decorative use defence. First, the court noted that the limitations to the trade mark right (ie descriptive use, use of customary terms, etc) must generally be applied narrowly. Secondly, the court noted that, in the context of consumer confusion, ‘use as a trade mark’ is any use that is capable of generating confusion/association, in the sense that a non-negligible portion of the relevant public may apprehend the used sign as serving a source-identifying function. Thirdly, the court observed that, as a general principle, decorative use is logically conceivable as regards figurative trade marks; however, it is hard to conceive how a word mark can be used as such, as a pure embellishment.

Following the above preliminary considerations, the court then evaluated whether the contested label actually served a purely embroidering function. Following examination of the layout/design of several (third-party) garments brought in by the parties (many of which bore the manufacturer's mark on the same section as in the contested pullovers), the court reached the conclusion, relying also upon the teachings of experience, that (a non-insignificant section of) the garment-buying public perceives the sole word sign prominently displayed on the garment front as an origin indicator, not as mere ornamentation. Therefore, considering (a) the close similarity between the contested indication and the asserted reputable trade marks and (b) the identity of the goods in question, the court concluded that a risk of consumer confusion (in the sense of association) was obviously created.

Regarding breach of contract, the court upheld Jumbo's proposed narrow interpretation of the cease-and-desist undertaking (namely, that it should be limited to ‘trade mark use’ only). Nevertheless, in the light of the analysis and conclusion regarding the trade mark infringement ground, the undertaking was, almost automatically, deemed to have been breached.

Practical significance

The decorative use will continue to ‘fly’ as valid infringement defence; though with clipped wings. Even if the defendant can establish the prima facie decorative function of the contested use, an additional evidential threshold will need to be met: the contested use must still not be perceived by a non-negligible portion of the relevant public as (also) serving an origin-identifying function. Proving the latter may be a highly burdensome task, particularly if (a) the asserted trade mark has acquired reputation or high distinctive power or (b) other players in the relevant business sector implement the same or similar branding methods (as the contested use), thereby educating and formatting consumer perception accordingly.

The annotated judgment brings good news for trade mark owners, as it effectively restrains ‘hands-off’ situations, where the trade mark owner must tolerate the decorative use of identical or similar signs by third parties.

Disclosure of interest

The author represented in court the plaintiff in the above litigation proceedings, both at first instance (two trials) and on appeal (one trial). However, the views expressed in this article are personal to the author and in no way reflect the views of the author's clients.

Balancing tool or escape clause? Proportionality in temporary relief proceedings before the Greek courts

Author: Nikos Prentoulis (Prentoulis Lawyers & Consultants)

Single-Member First Instance Court of Athens, Decision No 4209/2014

Journal of Intellectual Property Law & Practice (2014) doi: 10.1093/jiplp/jpu135, first published online: August 1, 2014

A recent judgment of the Athens First Instance Court in preliminary injunction proceedings over trade mark infringement illustrates how the principle of proportionality may be (mis-)used.

Legal context

Within a ‘classic’ likelihood of confusion and famous trade mark violation case, the interesting part of the judgment lies in the court's interpretation of Article 155 of Greek Law No 4072/2012 on Trade Marks, which subjects any corrective measures for trade mark infringement to the balancing ‘hand’ of the principle of proportionality, in conformity with Articles 3(2) and 10(3) of Directive 2004/48.

Proportionality is no stranger to European intellectual property law (see Article 20 of the ‘InfoSoc’ Directive 2001/29) and it also informs the application of Articles 692(1), 692(3), 731 and 732 of the Greek Code of Civil Procedure, setting out the powers of Greek judges in temporary relief proceedings to ‘provisionally regulate’ the disputed ‘situation’, without being bound by the particular demands of the litigants. However, the express inclusion of the principle of proportionality in the normative ethos of the recently revised Greek trade mark law, centralizes its role in trade mark adjudication.

Facts

Hard Rock initiated preliminary injunction proceedings against a Greek entity, based in Athens, trading in apparel, accessories and souvenirs on the well-known Paradise beach in the island of Mykonos. Hard Rock alleged unauthorized use of its Greek and Community HARD ROCK CAFE and Community ROCK SHOP trade marks for similar goods and services and on store signage. The action was accepted and the preliminary injunction request was granted, but the court dismissed the applicant's request to publish the decision either on the internet (in a web news portal) or in the press. According to the court, the defendant had ‘already’ (presumably at the time of the hearing in November 2013) ceased the unauthorized use of the marks. Accordingly, the orders for preliminary injunction and seizure of infringing items constituted ‘adequate’ corrective measures. Publication of the judgment was further specifically denied due to the ‘limited scope’ of the infringement, obviously as a result of the cessation of the infringement.

Analysis

One can reasonably question this particular part of the judgment. ‘Heralding’ that it has stopped the alleged infringement, after the end of the high-season in the Greek islands (May–September), the defendant should not have impressed anyone. The minimal commercial interest in the tourist market in the Greek islands after September is common knowledge in Greece; just ask any anti-counterfeiting manager responsible for the territory. Post-September trade mark infringement in the Greek islands could be of ‘limited scope’, but infringement between May and September is by definition severe. Significantly, Hard Rock filed the action in early July, which can only mean that the infringement subsisted within the high season.

Moreover, why would anyone who has ceased the use of the claimant's marks ever set foot in the courtroom (unless he is waiting for next May)? Conventional wisdom and IP practice in Greece state that taking down marks and then appearing in court to argue against an injunction is usually a sign that one does not particularly savour committing oneself to not repeating the use of the marks in the future.

One may argue that the qualities of the infringing behaviour should not inform the application of proportionality and render it a ‘punitive’, ‘outing’ mechanism. So, why does the judgment mention it?

But even if that were the case, publication of the judgment is per se a standard corrective measure of trade mark infringement, even in temporary relief proceedings. Considering that trade mark law undeniably also protects consumers' interests, publication has long been advocated and consistently granted as an effective remedy for IP infringement. Moreover, Greek trade mark law, via its recent revision in 2012, explicitly provides for publication of judgments as a civil remedy in trade mark infringement cases. In addition, privacy concerns cannot hinder publication since court judgments are a matter of public interest, subjected to the demand for transparency of the exercise of the judiciary powers within a democratic society.

Accordingly, publication of a preliminary injunction judgment can essentially be hindered when the case is a doubtful one or when the impact of the infringement has indeed been minimal. But non-publication cannot be justified by the defendant having ceased the use of the marks involved. Moreover, by all standards, the infringing use of a well-known mark both on goods and store signage in Mykonos in the summer is anything but minimal.

In addition, the order for the provisional seizure of infringing items and store signage, which had already been removed by the defendant, appears acutely incompatible with the court's own reasoning. The version of proportionality inferred from the particular judgment should direct the court against such (fruitless) seizure.

The court may very well have had good reasons for rejecting the publication request, but such reasons are not evident in its reasoning; nor can they even be inferred from it. The court makes no reference, for example, to a possible swift compliance to a cease and desist letter before legal action, or any fact or circumstance that could validate its reading of proportionality.

Practical significance

Proportionality is a tool. This is not a very nice word in the human rights vocabulary, from which proportionality originates but, in adjudication terms, it is a very accurate definition. As a tool, it allows the court of a statutory law jurisdiction to ‘maneouvre’ within the particular factual environment of the case in order to deliver a sound and fair judgment. But ‘fair’ does not mean ‘free-ride’ (at least not in cases where leniency is not warranted); proportionality is not a ‘forgive and forget’ mechanism.

And this is where the danger of an interpretation of proportionality along the lines of this judgment lies: in distorting its role as a balancing tool of overly strict corrective measures and subverting the clear pro-IP rights spirit of the Greek trade mark law.

One may argue that the concerns raised above are somewhat ‘disproportionate’ themselves; this may just be an isolated ‘over-leniency’ case. But one cannot stress enough the importance of not mistaking proportionality for a single-sentence escape mechanism when, right or wrong, any court considers certain remedies as overly austere.

In defence of Greek courts, it should be mentioned that in another recent judgment of the Single-Member First Instance Court of Athens in main proceedings (555/2014), proportionality was genuinely employed to limit publication of the operative part of the judgment in the press and not also on the internet. Publication on the internet might have been more effective. Still, this judgment illustrates the intended role of proportionality.